Investors drown out Cochlear

Market takes dislike to $77.7m half year profit announcement

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite reporting a large lift in profit to $77.7 million for the six months to December 2012, investors have slammed Cochlear Limited's (ASX: COH) shares in trading so far today. At lunchtime, the shares are down 6%.

Analysts had been expecting Cochlear to report a profit of $80 million, and it may be the fact that Cochlear failed to beat market expectations that investors are shunning the stock today.

The world's biggest hearing implant maker, which has an estimated 65% of the market, recovered from a $20 million loss a year earlier, after being forced to recall its flagship series implant in September 2011. The recall followed a string of failures due to water entering the device through small cracks, and the company was forced to take a $100 million provision.

The recall came as major rival, Sonoma was preparing to re-release its own device after experiencing a recall of its own, and gave Cochlear's other rival, Advanced Bionics a chance to take some market share.

Despite recalling its CI500 implant, Cochlear was able to quickly switch to a previous model, limiting market share losses. The company has yet to announce when it will reintroduce the CI500 implant, despite taking action to fix the fault.

Earnings per share for the current half came in at 136.6 cents and the company announced a 40% franked dividend of 125 cents, an increase on last year's 120 cents.

The company also announced that it had record half year implant sales of 13,672 units, up 27%, and had maintained its EBIT margin, despite challenges such as the economic woes in Europe and the continued appreciation of the Australian dollar.

In a pleasing sign, sales in Asia Pacific rose 33% in constant currency terms, and the company stated that it has confidence in its long-term, sustainable growth prospects.

The Foolish bottom line

While the result may not have pleased the market, Cochlear appears to have plenty of drivers for growth in future years. A growing global footprint, sound balance sheet, leading market share and technology partnerships should all lead to the company improving on this result in the years ahead. Cochlear remains one of Australia's world-beating healthcare companies along with the likes of CSL Limited (ASX: CSL) and Sirtex Medical Limited (ASX: SRX).

The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Cochlear and CSL.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »