Cochlear (COH) H1 2025 earnings summary

Executive summary

• Net sales increased 6% in constant currency to $1,170m for HY25, driven by 13% growth in cochlear implant revenue and 22% in acoustics, while services revenue declined after a strong prior period.

• Underlying net profit rose 7% to $206m, with gross margin at 75% and operating expenses up 10% due to increased R&D and growth investments.

• Interim dividend increased 8% to $2.15 per share, representing a 68% payout ratio, and $19m of shares were repurchased.

• Strong balance sheet maintained with net cash of $383m, despite increased working capital and share buybacks.

Financial highlights

• Gross margin reached 75%, slightly above expectations, aided by higher ASPs in emerging markets.

• Underlying EBIT increased 8% to $275m, with EBIT margin at 24% and net profit margin at 18%.

• Operating cash flow declined 47% to $110m due to inventory build-up ahead of new product launches.

• Net cash position decreased to $383m, mainly from inventory increases and ongoing share buybacks.

• R&D spend maintained at 12% of revenue.

Outlook and guidance

• FY25 underlying net profit expected at the lower end of $410–430m guidance, reflecting lower services revenue and higher cloud investment.

• Cochlear implant unit growth forecast at ~10% for FY25, with strong adult referral rates and new product launches planned mid-year.

• Cloud investment program increased to $250m, with most spend in FY26–27 and completion by 2027.

• Gross margin expected at 74.5% for FY25, slightly below the long-term 75% target.

• R&D investment to remain at ~12% of sales revenue, with capex of $110–130m planned for capacity expansion.