Strong developed market growth for Cochlear

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Cochlear (ASX:COH) has reported a six per cent increase in sales revenue to $639.6 million for the six months to December 2017.

The company said implant units fell two per cent to 15,972 but this was heavily impacted by Chinese Central Government tender units. Developed market units actually grew 12 per cent.

Reported net profit of $110.8 million was down one per cent.

According to CEO and president, Dig Howitt, “The positive momentum we have experienced across the developed markets over the past few years has continued into FY18 with a 12% increase in cochlear implant units delivered across these markets.

“Cochlear’s market leadership position has strengthened with new products broadening the portfolio and driving share gains. Over the past 18 months we have released the Nucleus 7 Sound Processor, the world’s first Made for iPhone cochlear implant sound processor, the Kanso Sound Processor, our first off-the-ear sound processor, the Nucleus Profile Slim Modiolar (CI532) electrode, the world’s slimmest electrode, and the Baha 5 SuperPower Sound Processor, with strong demand experienced for each product."

He continued, “Cochlear’s priorities are focused on the customer with activities aimed at building consumer awareness of cochlear implants and the importance of hearing to healthy ageing. We will continue to invest around 12% of sales in research and development (R&D) to strengthen our technology leadership position while expanding our investment in research and trials to build the clinical evidence that further demonstrates the effectiveness of our products."

The company reaffirmed its expectation of delivering reported full-year net profit of $240-250 million, with currency headwinds expected to moderate strong underlying business growth.

Mr Howitt said, “Positive momentum continues across the developed markets with the significant investments made in product development and market growth initiatives over the previous few years expected to underpin growth in FY18. The balance sheet and free cash flow generation remain strong and we continue to target a dividend payout ratio of around 70% of net profit.”