Cochlear confident new hearing device will boost US sales
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 its underlying full-year profit.
The company - one of Australia's biggest healthcare groups, with a market capitalisation of $3.3 billion - revealed its results for the financial year to the market on Tuesday.
Excluding one-off expenses relating to the recall of one of its products 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.
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.
"We continued investing in key business drivers and remain confident in our ongoing growth," he said.
"Approval for sale of Nucleus 6 in Europe has just been received and product rollout is now under way."
Cochlear shares lifted by 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 the 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 the company had a difficult second half, with cash flow collapsing by 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.
"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 a share, up from $1.25.