Cochlear Limited Is Expecting An Increase Of 8-12% In The Net Profit Of FY 2019

Cochlear Ltd.

Cochlear Limited (ASX: COH) is involved in the operations of providing implantable hearing solutions in many countries. On 16 October 2018, the Chairman of the company Mr. Rick Holliday-Smith addressed the shareholders at the Annual General Meeting and informed the shareholders that the company is expecting net profit to be in between $265- 275 million in FY 2019, which is an increase of ~8-12% on the previous year. Following this news, the share price of the company uplifted by 0.183 percent as on 16 October 2018.

Mr. Rick Holliday informed the shareholders that Cochlear reported a record net profit of $246 million for FY 2018, which is an increase of 10 percent from last year. FY 2018 was a busy year for the company, with a focus on building awareness and market access to cochlear implants, expanding the marketing activities and customer servicing capability and at the same time maintaining a commitment to product innovation through extensive investment in research and development.

The company also achieved an important milestone during the year reaching its 500,000th implant sale. The company witnessed an increased focus on hearing awareness with the World Health Organization (WHO) calling for broad-based public health actions to prevent and treat hearing loss. The company continued to increase its investment in health economics, as well as in market access capabilities, including collaborative partnerships with the medical research community. There was an increased focus on obtaining the clinical evidence that demonstrates the effectiveness of the company’s products and the importance of hearing for healthy ageing. 

The company’s earnings growth, combined with strong free cash flow generation, supported the 14% increase in the fully franked final dividend to $1.60 per share. This took dividends paid for the year to $3.00 per share, fully franked, an increase of 11% YOY. It reflected a payout of 70% of net profit. The company is currently leading the market with innovative new technologies that improve the quality of life of many people around the world. The company seek to support the growth of the industry, promote improved market awareness and search for novel new technologies that may enhance or leverage the company’s own innovation.

Cochlear welcomed the Australian Government’s decision in May 2018 to support R&D intensive companies like Cochlear, by changing the way tax incentives are structured. The announced changes will increase the cap on eligible expenditure from $100 million to $150 million, as well as increase the effective tax concession rate.

In FY 2019, the company is expecting growth across the business, underpinned by the significant investments made in product development and market growth initiatives over the previous few years. The company will continue to invest operating cash flows in activities aimed at building awareness and market access, with the objective to deliver consistent revenue and earnings growth over the long-term.

COH’s shares traded at $185.850 with a market capitalization of circa $10.7 billion as on 16 October 2018 (AEST 4:00 PM).

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