Cochlear Limited Reports Solid Growth in HY25 Amid Services Revenue Decline

Highlights:

• Solid Revenue Growth: Cochlear Limited (ASX: COH) reported a 5% increase in sales revenue to $1.17 billion, driven by strong demand for cochlear and acoustic implants, despite a 12% drop in Services revenue.
• Profit and Dividend Gains: Statutory net profit rose 7% to $205 million, with an 8% increase in interim dividends to $2.15 per share, maintaining a 68% payout ratio.
• Market Expansion and Future Plans: The company is set to launch a next-generation cochlear implant and off-the-ear sound processor by mid-2025, aiming to assist over 50,000 individuals in FY25.

Revenue Growth Driven by Cochlear and Acoustic Implants

Cochlear Limited (ASX: COH) has reported a 5% increase in sales revenue to $1.17 billion for the half-year ending December 2024, marking a 6% rise in constant currency. This follows a strong 20% growth in the first half of 2024. The company's revenue boost was primarily fueled by growth in cochlear and acoustic implants, though it was offset by a decline in Services revenue.

• Cochlear implant revenue surged 13% in constant currency.
• Acoustics revenue saw a robust 22% increase.
• Services revenue dropped 12% after an impressive 29% growth in HY24.

Profitability and Dividend Growth

Statutory net profit climbed 7% to $205 million, while underlying net profit mirrored this increase, reaching $206 million. The company's underlying net profit margin remained steady at 18%.

Cochlear's strong financial position enabled an 8% rise in interim dividend payments to $2.15 per share, maintaining a 68% payout ratio of underlying net profit.

Market Trends and Product Performance

The company experienced a 5% increase in cochlear implant units sold, reaching 25,390. Developed markets saw unit growth of 6%, with significant traction in the U.S. and Asia-Pacific regions. The adult segment continued its upward trend, growing by around 10%, whereas pediatric demand showed a slight decline following double-digit growth in HY24.

Acoustic implant sales performed exceptionally well, with a 50% increase in the U.S. due to the introduction of a new implant in late HY24. Expansion into new markets, including France and Italy, contributed to this growth.

Future Outlook: Innovation and Market Expansion

Cochlear is preparing to launch its next-generation cochlear implant and an off-the-ear sound processor by mid-2025, pending regulatory approvals. The company expects its FY25 underlying net profit to fall at the lower end of the previously forecasted range of $410-$430 million due to reduced Services revenue and increased cloud investment.

Despite the challenges, Cochlear remains optimistic about future market growth. The company aims to assist over 50,000 individuals with cochlear or acoustic implants in FY25, underscoring its commitment to innovation and market expansion.

At the time of writing, Cochlear continues to navigate a shifting market landscape, balancing technological advancements with evolving customer needs.

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