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Profitable Cochlear flags further riches

AAP logoAAP 8/08/2016 By Trevor Chappell

Implantable hearing device maker Cochlear expects to lift its 2017 annual profit by up to 20 per cent, after strong demand for its products in most markets boosted profits in 2016.

Cochlear's net profit for the 12 months to June 30 is up 30 per cent on last year, to $189 million.

Profit was boosted by a weaker Australian dollar, the release of new products, and more focus on marketing direct to the consumer rather than just waiting for them to turn up at a clinic.

The bottom-line result was at the top of Cochlear's guidance of $180 million to $190 million.

Cochlear expects its 2017 net profit to come in at between $210 million and $225 million.

"We had a very strong July - ahead of forecasts - so we see that momentum continuing as we go into next year, (2016/17)," Cochlear chief executive Chris Smith said on Tuesday.

Mr Smith described the 2016 result as fantastic, with good growth across developed and emerging markets.

He said that as the population aged, more consumers were searching for smaller, wireless hearing devices to help them improve their quality of life.

In 2016, Cochlear introduced its first off-the-ear sound processor, called the Kanso, and the Nucleus Profile Slim Modiolar electrode, which Cochlear says is the world's thinnest electrode.

Cochlear said it had benefited from the rollout of five new products in 2016, the devaluation of the Australian dollar and a larger sales force.

Cochlear also had increased its spending on research and development, looking towards the pipeline of new products to be released over the next 18 to 36 months.

Mr Smith said unit sales of cochlear implants grew by double digits in nine of the company's top 10 markets in fiscal 2016 - most of them developed countries such as the US, UK, Germany, France and Australia.

Cochlear does not expect any immediate effect on its business from the UK's decision to leave the European Union but acknowledged that uncertainty could pull back economic growth and government spending on health.

Emerging markets - China, India and the Middle East - had a great year.

China grew strongly both in the private-pay and government tender markets.

Cochlear's shares were $2.12, or 1.65 per cent, lower at $126.47 at 1356 AEST.

IG market strategist Evan Lucas said Cochlear had delivered a good result, which was broadly in line with expectations, and the outlook was positive.

But the stock was already highly priced and a stellar result would have been needed to drive it up further.

COCHLEAR REVENUE, PROFIT LIFTS

* Annual net profit up 30pc to $189m

* Revenue up 23pc to $1.2bn

* Final dividend of $1.20, up 20 cents

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