Cochlear share price on watch after reporting strong FY24 profit and dividend growth

This hearing solutions company delivered the goods over the 12 months.

| More on:
Woman presenting financial report on large screen in conference room.

Image source: Getty Images

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

The Cochlear Ltd (ASX: COH) share price will be on watch this morning.

That's because the hearing solutions company has just released its FY 2024 results and revealed strong top and bottom line growth.

Cochlear share price on watch following strong growth

  • Sales revenue increased 15% (12% in constant currency) to $2,258 million
  • Statutory net profit increased 19% (8% in cc) to $357 million
  • Underlying net profit increased 27% (15% in cc) to $387 million
  • Final dividend increased 20% to $2.10 per share
  • $75 million buyback

What happened during the 12 months?

For the 12 months ended 30 June, Cochlear reported a 15% increase in revenue to $2,258 million.

This was driven by growth across all business units. However, the star of the show was the key Cochlear implant business, which reported an 18% increase in revenue to $1,329.6 million. This was driven by a 9% increase in Cochlear implant units to 48,040. This reflects strong growth across the developed markets driven by the adults and seniors segment.

Cochlear's Services revenue increased 15% in FY 2025 to $672.3 million. This was driven by strong upgrade demand for the Cochlear Nucleus 8 Sound Processor. Management also notes that emerging market sound processor upgrade penetration is continuing to improve in a number of markets as funding improves.

Finally, the Acoustics business reported a 7% increase in revenue to $256.3 million. Management notes that its growth was weighted to the second half, which was up 15% in constant currency. This was driven by strong demand for the new 3 Tesla MRI compatible Cochlear Osia Implant which was launched in the US in December.

Cochlear's costs grew slower than revenue at 13% in FY 2024. As a result, its underlying net profit margin expanded to 18% (from 17%), excluding the impact of its cloud computing-related expenses, which is in line with its long term target. This led to its underlying net profit coming in 27% higher year on year at $386.6 million.

In light of its strong profit growth, the Cochlear board elected to increase its final dividend by 20% to $2.10 per share. This brought its total dividends to $4.10 per share, which is up 24% year on year.

In addition, its board has approved a $75 million share buyback.

How does this compare to expectations?

Cochlear's profit result was in line with the bottom end of guidance. Morgans was expecting the following:

FY24 tracking in line. We see little risk to FY24 underlying NPAT targeting A$385-400m (+26-31%) but view near-term underlying NPM reversion back to pre-COVID levels (c18%) as challenging, given little GPM expansion (50bp headwind from China production), along with ongoing investment in market growth activities and R&D expenditures (c12% of sales or higher).

Outlook

Management spoke positively about both FY 2025 and the long term. It said:

[W]e remain confident of the opportunity to grow our markets. There remains a significant, unmet and addressable clinical need for cochlear and acoustic implants that is expected to continue to underpin the long-term sustainable growth of the business

It also provided the following guidance for the year ahead:

We continue to target sales revenue growth of around 10%, with a net profit margin (pre-cloud investment) of around 18%. For FY25, we aim to help over 50,000 people to hear with a cochlear or acoustic implant, and expect to deliver underlying net profit of $410-430 million, a 6-11% increase on FY24.

The Cochlear share price is up 37% over the past 12 months.

Should you invest $1,000 in Cochlear Limited right now?

Before you buy Cochlear Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Cochlear Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 9 January 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear. The Motley Fool Australia has recommended Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Upset man in hard hat puts hand over face after Armada Metals share price sinks
Resources Shares

Why this $6.5 billion ASX 200 mining stock is tumbling today

The ASX 200 miner just found itself under heavy selling pressure on Friday.

Read more »

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
Earnings Results

Guess which ASX 200 stock crashed 8% on first-half profit decline and dividend cut

It has been a tough six months for this fried chicken seller.

Read more »

Business people discussing project on digital tablet.
Earnings Results

Results in! This ASX 200 stock is rising despite falling half-year profits and dividend cut

Let's see how the company performed during the six months.

Read more »

A man sitting at a computer is blown away by what he's seeing on the screen, hair and tie whooshing back as he screams argh in panic.
Earnings Results

This ASX small-cap stock is up 500% in 2024. Here's why it just crashed

What is disappointing investors today? Let's find out why they are selling this stock.

Read more »

A woman with bright yellow hair wearing a brightly patterned blouse reacts to big news that she's reading on her phone.
Earnings Results

Guess which ASX 100 share is sinking despite record results

This healthcare stock had a record half. Here's what drove its growth.

Read more »

A smiling woman looks at her phone as she walks with her suitcase inside an airport.
Earnings Results

Web Travel share price jumps 14% on half year results

Here's what this travel technology company reported this morning.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Earnings Results

Why is this ASX tech stock surging 24% to a record high today?

Shareholders of this tech stock will be celebrating today after it hit a record high.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Travel Shares

Guess which ASX 200 stock is falling amid 'challenging' outlook

Trading conditions aren't easy for this online travel agent right now.

Read more »