Cochlear (ASX:COH) will pay an 8% higher dividend, with profits up 7% for the half year to the end of 2024 despite falling services revenue.
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Shareholders will receive $2.15 a share after the company reported sales of 25,390 cochlear units. COH reported solid sales growth across the U.S. and Asia Pacific and lower rates of growth across several Western European countries.
It reported strong growth in the adults and seniors segment, which gained 10% for the half-year, while there was a decline in demand for children. Sales revenue for Cochlear implants jumped 5% to $1,170 million, although services revenue dropped back 12% after a strong 29% growth in the previous half-year.
Cochlear says services revenue is down due to lower upgrade rates, likely because customers were satisfied with the Cochlear Nucleus 7 sound processor.
But, the company also blamed the cost of living pressures.
“In the U.S., cost of living pressures have been a factor delaying the replacement of ageing sound processing technology, as many recipients incur out-of-pocket expenses to fund their new sound processor,” the company reports.
Even with those issues, statutory net profit increased 7%, to $205 million.
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Cochlear is now preparing for the release of new products, including its “next generation cochlear implant and off-the-ear sound processor,” which are expected to be commercially available from mid this year, subject to local regulatory approvals.
For FY25, Cochlear now expects underlying net profit to be at the lower end of the $410-430m guidance range it provided last August, considering a lower contribution from services revenue and higher cloud-related investment.
COH opened at $304.54 today after a 0.7% dip through Thursday trade.
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