Blood on the share price of Cochlear (COH), the hearing implant company, after a disappointing earnings and sales update yesterday.
The shares tumbled more than 18% (or $11.66) to end at $52.88, after it revealed to the ASX that slowing sales of existing hearing products had slowed ahead of the launch of its new range in the important US and European markets.
Cochlear hit a new low for the past 12 months of $52.71 yesterday and the shares are now down more than $30 or well over third from the peak of $82.87.
As a result of the slowdown, earnings in the second half will be down sharply and the company’s final dividend will remain around the $1.25 level paid as the interim for the current year and the final for the 2011-12 financial year.
As both payments represented an increase of 4%, Cochlear shareholders will only get an increased total payment for the year of around 2%.
Cochlear said sales in the second half of 2013 ‘‘have been weaker’’ as the company waited for approval to sell its new Nucleus 6 product in the United States and Europe.
The product has already been launched in Korea and will be launched in Canada later this month.
But standing out from the statement was the, slower market growth, especially in the United States.
Although the company didn’t provide any detailed figures, it seems from the statement that possible users slowed their purchases of the old system ahead of the new launch, which has been slower than forecast, especially in the huge American market.
‘‘Regulatory approval for sale of Nucleus 6 in Europe is expected imminently,’’ Cochlear said in yesterday’s statement .
"Approval for sale in the USA is anticipated later this calendar year.’’
Cochlear said net profit for the full 2012-13 year was expected to come in between $130 million and $135 million, down sharply from the $158 million earned in 2011-12 (before the $100 million plus cost of a product recall in the previous financial year).
That means second half earnings this financial year will be as low as $22 million (based on first half earnings of $108 million), compared with $47 million in the six months to June 2012.
Earnings though will be sharply under the $180 million earned in 2010-11, before the recall.
Cochlear directors said the anticipated the final year dividend will be "at least $1.25 per share, which confirms our confidence in the future."
Cochlear Market Update
