Cochlear confident new hearing device will boost US returns
Cochlear is counting on the success of a new hearing device to drive sales in the US, after a slowdown in that market helped knock 16 per cent off underlying full-year profits.
The company - one of Australia's biggest healthcare groups with a market capitalisation of $3.3 billion - unveiled its latest results on Tuesday.
Excluding one-off expenses relating to the recall of one of its hearing aids last year, net profit fell to $132.6 million from $158.1 million. Revenue was down 3 per cent at $752.7 million.
Cochlear makes high-tech hearing implants and prosthetics sold around the world. It does most of its business in the US and has been struggling to cope with the slowdown in that market.
While US sales were down 4 per cent, chief executive Chris Roberts said regulatory approval of its new device, Nucleus 6, would help drive growth. "Approval for sale of Nucleus 6 in Europe has just been received and product roll-out is now under way," he said.
Cochlear shares rose 1.4 per cent on Tuesday to close at $60.
The emphasis on the new device has unnerved some analysts, who have watched Cochlear's competitor, Advanced Bionics, launch a similar device already.
"It's likely Cochlear and Advanced Bionics will go head to head in US," UBS healthcare analyst Andrew Goodsall said. "The clinics in Europe that have both products already are seeing market share go to Advanced Bionics."
Mr Goodsall said Cochlear's results also revealed it endured a difficult second half, with its cash flow collapsing 59 per cent and its debt rising from zero to $118 million.
Wilson HTM analysts said the company's weakness in the US and Europe suggested a loss of market share in those regions. However, it said the market could be underestimating Cochlear's ability to bounce back from a difficult 2012.
Cochlear warned the market in June that its net profit would be lower than expected, due to weaker full-year sales. However, implant sales were up 16 per cent.
While profits were buoyed by growth in the Asia Pacific region, Mr Roberts said that was unlikely to continue into the current period.
"It was an exceptionally good year driven by the central Chinese tender," he said. "It's not obvious that that's going to be repeated."
The company declared a final, partially franked dividend of $1.27 per share, up from $1.25.