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Cochlear Limited (ASX:COH) researches develop and market cochlear implant systems for hearing impaired individuals. The Company's hearing implant systems include Nucleus and Baha and are sold both domestically and internationally.
On 19 February 2019, the company came up with its 1H FY19 results which ended as on 31 December 2018. As per the report, the business has delivered sales revenue growth of 11% i.e. 6% in Constant Currency terms in the 1HFY19 as compared to the corresponding prior period. Â
Cochlear delivered a net profit of $128.6 million, an increase of 16% on 1H FY18. Adjusting for the impact of the deferred tax asset revaluation in HY18, net profit increased by 11% on pcp. Operating cash flow increased by $71.4 million to $164.1 million, and the Board has declared a fully franked interim dividend of $1.55, an increase of 11% on the last year.
As per the release, revenue of Services business grew by 28% in the 1HFY19, with the strong uptake of the Nucleus 7 Sound Processor. Cochlearâs CEO & President, Mr. Dig Howitt said that the Services business continues to grow in importance as the companyâs recipient base grows, now representing almost 30% of sales revenue. Cochlear's recipients have enthusiastically embraced the Nucleus® 7 Sound Processor, the worldâs first Made for iPhone cochlear implant sound processor, which was launched in October 2017, with the addition of the Nucleus Smart App for Androidâ¢, which was released in June 2018.
For FY19, the company has reaffirmed its expectations of delivering reported net profit of $265-275 million, an 8-12% increase on FY18. The management expects to continue to achieve growth in revenue and earnings in the coming years, underpinned by the significant investments made in product development and market growth initiatives. The management will continue to invest its operating cash flows in activities, which would be aimed at building awareness and market access, with the objective of delivering consistent revenue and earnings growth over the long-term. The company is targeting to maintain the net profit margin, reinvesting any efficiency gains, currency or tax benefits into market growth activities, adapting the pace of investment to revenue growth.
Further, the company has many sizeable long-term investment projects which involve the development of the companyâs China manufacturing facility, with the construction phase expected to be complete by the end of FY20, and investments in IT platforms to strengthen the companyâs connected health, digital and cybersecurity capabilities. As previously advised, these projects are expected to increase capital expenditure levels to $80-100 million per annum over the next few years.
The position statement and free cash flow generation remain strong, and the management continues to target a dividend pay-out ratio of around 70% of net profit.
Now, let us have a quick look at Cochlear Limitedâs stock performance and the return it has posted over the last few months. The stock is currently trading at a price of $179.20, down by 7.824% during the dayâs trade with a market capitalization of ~$ 11.22 Bn. The counter opened the day at $175.0, reached the dayâs high of $ 181.710 and touched the dayâs low of $ 174.990 with a daily volume of ~212,031. The stock has provided a Year Till Date return of 11.15% & also posted gains of -5.49%, 24.60% & 2.76% over the past six months, three & one-months period respectively. The stock had a 52-week high price of $221.440 and touched 52 weeks low of $ 155.220, with an average volume of around 161,571.
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