Cochlear tips bionic leap

From: News Interactive, Australia - 18 Feb 2003

DOMINANT bionic ear maker Cochlear today said it expects its full-year profit to race 40 per cent ahead from last year's result, after reporting a record first half net profit of $27 million.

Cochlear's chief executive Jack O'Mahony said the first half earnings results confirmed the company's long-term average growth targets of 20 per cent growth in system sales.

"The growth was in line with internal targets in all regions," he said.

"The Americas region, in particular, showed strong growth and improvement in market share."

Overall during the first half, system sales grew 22 per cent to 4,412 units.

Revenue was up 22 per cent to $146.6 million.

Cochlear said it was still enjoying a stronger market share position following the temporary withdrawal of one of its rivals products during the half.

Advanced Bionics Corp had to withdraw its latest hearing device from the United States market after the US Food and Drug Administration warned that cochlear implant patients could be at greater risk of contracting meningitis.

Today, Cochlear reiterated that its global market share position had increased to 65-70 per cent from 60-65 per cent as a result of its rival's problems.

However, it said as a result of the controversy some adults had delayed their decision to use bionic ear implants.

Cochlear said it believed the effect of the delays represented "short term market shifts" and that "the underlying growth trend remains at the 20 per cent level".

During the half year, its research and development expenditure running rate was held at a similar level to last year.

Cash generation had also been particularly strong, partly due to strong sales in May and June.

Cochlear had a net positive cash position of $16.5 million by the end of the first half compared with a net borrowing position of $13.7 million at the end of June 2002.

During the half, sales rose 39 per cent to $78.4 million in the group's Americas division following strong market share growth and the absence of its major rival for several weeks.

In Europe, sales rose 7 per cent to $42.1 million and the group's market share position improved with particular progress being made in central and eastern Europe.

In the Asia Pacific division sales rose 6 per cent to $25.7 million, with strong sales in China.

Cochlear declared a fully franked interim dividend of 33 cents a share, up from 21 cents in the previous corresponding period.

Cochlear's shares were 32 cents lower at $35.49 by 1031 AEDT.

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