Cochlear reports record profit and 500,000th implant sale

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Cochlear (ASX:COH) has reported 10 percent growth in profits for FY18 on the back of selling its 500,000th implant.

According to CEO and president, Dig Howitt, “The growth we have experienced over the past few years has continued in FY18. The business delivered strong growth in cochlear implant units and sales revenue, with net profit growing by 10% (10% in CC).

“We continued to execute on our strategy of investing to retain market leadership and drive market growth. Our market leadership position was enhanced by new product launches and improvements in the service offering to our customers. Market growth continued as awareness, indications and funding grew. And the expansion of direct-to-consumer marketing and focus on sales force expansion and effectiveness continued to support overall growth.

“The cochlear implant business grew strongly with CC revenue growth of 8% and unit growth of 8% (up 11% excluding Chinese Central Government tender units).

“Developed markets continued to perform well with unit growth increasing by 9%. Highlights include strong performances from the US and UK and solid unit growth across much of Western Europe, Australia and Japan. Emerging market units grew by over 15% (adjusted for the impact of lower Chinese Central Government tender units), with strong growth in the Middle East and the China private pay market."

The company said it sold its 500,000th implant in early FY18.

“While a wonderful milestone for the Company, it is also a reminder of the challenge, and opportunity, for Cochlear with fewer than 5% of the people who could benefit from an implantable hearing solution currently being treated,” said Mr Howitt.

The company reported net profit of $245.8 million, an increase of 10 percent on the previous year, and said it expects that to rise to $265-275 million in FY19.

“We will continue to invest operating cash flows in activities aimed at building awareness and market access, with the objective of delivering consistent revenue and earnings growth over the long-term. Through disciplined investment, we are targeting to maintain the net profit margin, reinvesting any efficiency gains, currency or tax benefits into market growth activities," continued Mr Howitt.

“Over the next few years, we have a number of large long-term investment projects including the development of our China manufacturing facility, with the construction phase expected to be complete by the end of FY20, and investments in IT platforms to strengthen our connected health, digital and cyber security capabilities. These projects are expected to increase capital expenditure levels to $80-100 million per annum over the next few years."