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Cochlear's profit dented by US tax changes

Trevor Chappell  |  13 Feb 2018Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] Hearing implant developer Cochlear (ASX: COH) has paid shareholders a higher dividend and maintained its full-year guidance despite a dip in first-half profit due to the timing of a large Chinese tender and US tax changes.

Cochlear's net profit for the six months to December 31 fell one per cent from a year earlier to $110.8 million, partly due to a $5.5 million hit from a revaluation of deferred tax assets.

The full-year impact of tax changes in the US will be reduced by a lower corporate tax rate, the company said.

"Cochlear's market leadership position has strengthened with new products broadening the portfolio and driving share gains," chief executive Dig Howitt said in a statement.

Cochlear said it had increased its market share with the launch of the Nucleus 7 sound processor in the US, western Europe and Australia in the second quarter of the financial year.

The Nucleus 7 is the world's first sound processor that streams sound directly from Apple products.

Cochlear sold 15,972 implant units in the six months to December, down two per cent from a year earlier, due to changes in the timing of some tenders in China.

The company fulfilled a Chinese central government tender for 1,100 units in the first half of the 2016/17 financial year and will begin shipping 1,491 China tender units awarded in October 2017 in the second half of the current financial year.

Excluding those changes, unit sales were up five per cent.

Cochlear said a highlight of its first-half results was a 12 per cent lift in unit sales in developed markets, which includes the US.

It has also increased its interim dividend by eight per cent due to solid cash flow growth.

Cochlear maintained its forecast of a full-year profit in the range of $240 million to $250 million, up from $224 million in 2016/17.

"Positive momentum continues across the developed markets with the significant investments made in product development and market growth initiatives over the previous few years expected to underpin growth in FY18," Mr Howitt said.

Shares in Cochlear were down $3.77, or 2.2 per cent, at $168.02 at 1130 AEDT.

US TAX CHANGES, CHINA TENDER TIMING CRIMP COCHLEAR'S PROFIT

* First-half net profit down 1pc to $110.8m

* Sales revenue up 6pc to $639.6m

* Interim dividend up 10 cents to $1.40 per share, fully franked

 

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