Cochlear Full Year Result: COH expects positive momentum to continue into 2018

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 COH’s total sales revenue increased by 12% in constant currency (CC) to $1,239.7 million in 2017, while total expenses rose by 10% in CC to $942.7 million. As a result EBIT rose 15% in CC to $315.6 million. The net profit result includes $20.0 million of currency translation impacts due to a higher Australian dollar, which saw the weighted average AUD/USD rise from around 73 cents to over 75 cents. Figures reported in CC terms provide a way of comparing results from period to period in a more meaningful manner by adjusting for currency movements in addition to gains & losses associated with foreign exchange instruments.

 62% of COH sales revenue is derived from Cochlear implants. Revenue in this business rose 10% in constant currency terms, with the number of units sold rising by 8%. The average selling price of implants eased due to $358.4 million. COH Services business is concerned with providing customer support including sound processor upgrades and accessories. This segment, which is responsible for 25% of COH’s sales revenue, oversaw a 10% increase in CC terms, driven by continued sales momentum of products including the Nucleus 6 Sound Processor and the Kanso Sound Processor, with sales rising 17% in CC terms. To illustrate the impact of upgrades, rates have exceeded 50% in several key markets including Australia and the UK.

 In geographical terms COH does its business in three key jurisdictions; The Americas (US, Canada and Latin America) which contributes 48% of sales revenue, EMEA (Europe, Middle East and Africa) which is 35% of overall sales revenue and Asia Pacific (Australasia and Asia) makes up 17% of sales revenue. In the Americas, revenue rose by 18% in CC reflecting growth in cochlear implant units of more than 15%. COH said that new product introductions and the success of awareness building campaigns have underpinned growth. EMEA revenue rose by 7% in CC driven by outcomes in Western Europe, where unit growth rose more than 10%. Asia Pacific sales, were helped by strong growth in India and Korea. Growth was balanced by lower tender outcomes, in particular around 1,900 Chinese Central Government tender units for the period, compared to over 3,300 units in FY16.

 Looking ahead, COH expects solid momentum in unit growth to continue in 2018. Net profit is expected to be weighted to the second half of the year, reflecting the launch timing of new products. Cochlear expects reported net profit to increase to $240-250 million. However, a firmer Aussie dollar is expected to create currency headwinds, as a result moderating strong underlying business growth and reducing underlying net profit growth by a few percentage points in the year ahead. COH is forecasting a weighted average AUD/USD exchange rate of 80 cents the 2018 financial year, compared to 75 cents in FY17.

 COH declared a final dividend of $1.40 a share. The full-year payment will total $2.70 and is up 17% on the 2016 fiscal year.


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