Cochlear Ltd. cuts dividends despite increase in profits

Market

© Frank U - Fotolia

Australian hearing implant manufacturer Cochlear Ltd. has posted a 56% rise in full-year profit but cut its annual dividend by 25%. Cochlear recorded a 15% year-on-year increase in sales at USD 941.9 million, a record for the company. However, a third of the increase was related to the declining value of the Australian dollar versus other major currencies. This was partly offset by a USD 16.3 million loss on foreign exchange contracts designed to protect against Australian dollar appreciation.

The company sold nearly 27,000 of its hearing implants over the last financial year. This led to a net profit of USD 145.8 million, up 56%. “This sales momentum also confirms the success of products rolled out across all product categories over the last two years, supported by a range of market expansion activities including broadened clinical indications and roll-out of online activities,” said Cochlear's CEO Dr Chris Roberts, commenting the results.

However, the company reduced its dividend by 25% for 2014-2015 with the aim of reinvesting in future growth. Markets nonetheless greeted the news with a strong drop in the share price. Increased hearing loss with age and fitting children suffering from hearing impairments is expected to continue to drive the business. The overall market for cochlear implants is expected to see some difficulties in the coming years, but innovation and internationalization are cited by Cochlear Ltd. as driving factors. In about 12 years, the company has increased the number of cochlear or bone-conduction implant beneficiaries 8-fold, says Chris Roberts.

Source: ABC News Australia

C.S.