Hearing implant company Cochlear has lifted its annual profit by 13% and says its results in the new financial year will be driven by the roll out of new products, but the news did nothing to lift investor sentiment.
The shares ended down just 9 cents yesterday at $58.66 after being off more than 70 cents during the day
The reason for the selling seems to be the fact that the company made its revised guidance issued last month and didn’t better it.
Cochlear said last month that it expected F09 total revenue to grow 15% to $695 million and Net Profit after Tax to grow 13% to $130.5 million and Core Earnings 12% to $137.7 million.
Cochlear said yesterday net profit was $130.54 million in the year ended June 30, up from $115.23 million in the previous year while core earnings rose 12% to $137.95 million.
"This result confirms the strength of Cochlear’s business in a complex and difficult global economic environment," chief executive Dr Chris Roberts said in a statement.
"Profit growth has been achieved together with the critical task of developing new products for market release."
Critical to the new product flow are its Cochlear Nucleus 5 system and the new Cochlear Baha sound processor BP100 which started to be available from June 30.
The take up of those after their approval by regulators will do a lot to drive earnings this year and in 2011.
Dr Roberts said the new products will underpin the company’s growth once they achieve final regulatory and reimbursement sign-off in the remaining jurisdictions.
Cochlear said while its 2009/10 results "will be influenced by the roll out of new products" this view included the timing of US Food and Drug Administration (FDA) approval for Cochlear Nucleus 5 in the US.
"These timings are not transparent," it said.
The company said it would update the market on its outlook at its annual general meeting in October.
"Cochlear’s strong balance sheet and the strong business fundamentals of this market provide flexibility in the current economic environment for sustainable growth.
"We anticipate growth will be biased to the second half of 2009/10," it added.
Cochlear will pay a fully franked final dividend of 95 cents a share, up 19% on the previous corresponding period. An interim of 80 cents was paid earlier in the year.
Total for the year of $1.75 a share is up 17% on 2008.
The company said that the clinical outcomes from Cochlear’s products continue improving as technology advances and medical knowledge expands. The health economics of restoring hearing remain favourable and will continue to influence reimbursement, which supports growth.
“This result confirms the strength of Cochlear’s business in a complex and difficult global economic environment,” said Dr Roberts.
“Profit growth has been achieved together with the critical task of developing new products for market release. The new and innovative Cochlear Nucleus 5 system and the new Cochlear Baha sound processor BP100 were available at 30 June 2009.
"These new products will underpin the growth once they achieve final regulatory and reimbursement sign-off in the remaining jurisdictions.
“Net cash provided by operating activities grew 73% to $147 million, allowing the payment of nearly $90 million of dividends and a reduction of net debt by $25 million to $108.6 million by year end. A new, three year global debt facility of $300 million was also established.”
"Product sales were up 23% to $711.8 million. In constant currency (that is restating F08 at F09 FX rates), sales were up 10%. Revenue, which included losses on FX contracts of $17.1 million, was up 15% to $694.7 million.
- Cochlear implant (CI) systems and accessories sales revenue grew 22% (7% in constant currency). CI unit sales of 18,553 grew 2%. There were no CI sales into the China donation market in F09 (F08, 700 units).
- Baha sales again grew strongly up 29% to $97.8 million (17% in constant currency).
- Regional sales growth;
- Europe sales of $318.9 million were up 14% in constant currency (up 24% in reported AUD);
- Americas sales of $300.4 million were up 10% in constant currency (up 29% in reported AUD), and
- Asia Pacific sales of $92.5 million were down 5% in constant currency (up 2% in reported AUD)."
The company said that the rise in net cash to $147 million enabled a further reduction in debt by $25 million. Net debt was $108.6 million by 30 June 2009 and this represented a further reduction in the net gearing ratio to 23% (F08 30%) defined as (net debt/net debt + equity).
A new long term debt facility of $300 million was in place by year end with a termination date of June 2012.
