Company Interview / Cochlear tunes into further growth

Key Points:

Cochlear (ASX:COH) posts 4% sales growth, led by strong emerging market momentum for its implant systemsServices revenue fell 10%, impacted by US cost-of-living pressures and consumer uptake of upgradesHigher operating expenses driven by long-term investment in R&D, sales, and marketingNucleus Nexa system launch receives positive global reception, further expanding accessibility

Cochlear’s full year sales rose 4% to $2.35 billion, driven by robust growth in its cochlear implant systems segment, which increased 12% in volume and 9% in related revenue. Dig Howitt states that emerging markets led this growth, highlighting strong launches for the Nucleus Nexa system in China, the Middle East, and Latin America. Developed markets also performed well, contributing to the overall momentum for the year. Howitt points to a tiered offering in emerging economies, providing advanced technology at various price points to increase accessibility.

Despite positive implant system sales, Cochlear (ASX:COH) experienced a 10% decline in its services sector, attributed primarily to cost-of-living pressures affecting US consumers. Howitt identifies that more people in the US are reconsidering upgrades due to out-of-pocket costs, though he reports no negative impact from changes to healthcare benefit schemes. The company’s commitment to long-term growth has seen a rise in operating expenses, particularly for R&D and sales and marketing investments.

Cochlear’s share buyback of up to $75 million underscores confidence in future potential, complemented by a dividend payout policy of approximately 70% of net profit. Howitt remains focused on raising global awareness of hearing loss and its treatable nature, while welcoming technological advances like Apple’s AirPods Pro as helpful in destigmatising hearing care.