REPORTING SEASON: Cochlear Limited (COH)

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Figure 1: Cochlear Limited 12 month chart


Cochlear Limited (COH) missed profit forecasts despite strong earnings growth

– Cochlear (COH) posted a weaker than expected $145.8m profit for the 12 months ended June 2015. Sales at the world’s largest maker of inner-ear hearing implants also fell short of consensus. The result was driven by favourable currency moves and a 3.2% rise in unit sales of its Cochlear implant systems.

– The Australian dollar’s depreciation against the greenback over the year boosted sales by $32.7m, as COH earned 83% of its sales offshore. Revenue in the Americas (its largest market) surged 26% on FY14 and accounted for 43% of sales. 40% of revenue was earned in Europe (second biggest market) and COH generated just 17% of income in Asia Pacific.

– Note that despite the 56% surge in earnings, the result came off a low base from a challenging 2014. Profits slid sharply by 29% in the prior year when regulators stalled the release of its Nuclear 6 implant – a stgice designed to automatically adjust to ambient noise.

– COH shares slumped following the weaker than anticipated result. Outgoing CEO Chris Roberts will be replaced by COH’s head of North America, Chris Smith at the end of August. COH declared a $1/s fully franked dividend, payable 1 Oct 15.

– Looking ahead, COH’s profit guidance for FY16 is for NPAT between $165m to $175m at FX rates of ~US$0.75. This represents between 13% and 20% growth in earnings.


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Steven Daghlian, Market Analyst,