Cochlear Limited (CHEOF) Q2 2025 Earnings Call Transcript

2025-02-13 19:27:14 ET

Cochlear Limited (CHEOF)

Q2 2025 Earnings Conference Call

February 13, 2025 06:00 PM ET

Company Participants

Dig Howitt - President & Chief Executive Officer

Stu Sayers - President of Asia Pacific & Latin America

Conference Call Participants

Andrew Goodsall - MST Marquee

David Low - JPMorgan

Saul Hadassin - Barrenjoey

David Stanton - Jefferies

Steve Wheen - Jarden

Davin Thillainathan - Goldman Sachs

Mathieu Chevrier - Citi

Craig Wong-Pan - RBC

Laura Sutcliffe - UBS

Lyanne Harrison - Bank of America

Presentation

Operator

Thank you for standing by, and welcome to the Cochlear Limited Half Year 2025 Results Analyst and Media Briefing. All participants are in listen-only mode. There will be presentation, followed by a question-and-answer session. [Operator Instructions]

I'd now like to hand the conference over to Mr. Dig Howitt, CEO and President. Please go ahead.

Dig Howitt

Good morning, everyone, and thanks for joining for our half year results presentation. Here with me today have Stu Sayers and Sarah Thom. And Stu who was our CFO until the end of December and is now President of Asia Pacific and Latin America. We'll talk about the result because it's the result for last half. And Sarah, as our new CFO, is here with me as well.

Okay. So thanks for joining. Let's get underway. And we have our mission upfront because that does guide all that we do at Cochlear and it also sets out our longer-run ambition and underpins our long-term strategy for growth.

So looking back at the first half of this year. Overall, we were pretty happy with the outcome. But clearly, as you look into it, there's some mixed results in there. So strong Cochlear implant revenue growth at 13%, Acoustics revenue, very strong at 22% and Services, which obviously talk more about declining by 12%. But all of that giving us a net sales increased to 6% in constant currency.

Our underlying net profit moved pretty much in line with sales on a reported basis with our profit up 7% to $206 million. Gross margin, that Stu will talk more about in line with our targets and our operating expenses up 10%, so a bit faster than sales, and that's not unusual for us early in the year, as we continue to invest into R&D and very much into driving growth.

Our balance sheet remains strong with $383 million in cash. Now that's come down a bit as we've been building up inventory ahead of new product launches, and Stu can talk a bit more to that.

The dividend up 8% to $2.15 and just short of our 70% payout ratio and we're maintaining our guidance range, but do expect to come in at the lower end of that range. And two contributors, which we'll talk more to, the lower services revenue and outlook for the year, and we've increased our cloud spending in this year, as we move into the final phase of our cloud transition....

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