The Cochlear Limited (ASX: COH) share price is soaring today, up more than 9% in response to the company’s FY20 result.
Cochlear reported a 6% fall in revenue to $1.4 billion as the cancellation of elective surgeries around the world continues to hurt.
A tale of two halves
The year was a story of two halves, starting positively, with sales up 14% but finishing much weaker, down 19%. The result was a 42% fall in profit to $154 million and an effective cancellation of the dividend.
Management previously reported the $416 million settlement of various legal cases, pending an appeal result in the US Supreme Court, which resulted in an accounting loss of $238 million.
Despite this, management continues to invest in the business, putting $180 million into research and development as it seeks to consolidate the company’s 60% market share.
The business remains reliant on its core implants, 61% of revenue, but the services unit continues to improve at 29%, which growth in emerging markets has hit 20% of sales.
Cochlear declined to offer guidance as elective surgeries around the world remain uncertain, particularly in the UK where they are yet to recommence and in parts of Australia.
The company managed to raise $1 billion during the COVID-19 sell-off but remains well off its highs.
Summary: The end to a difficult year with more uncertainty ahead, but strong leverage to lifting of restrictions.
For a detailed write-up on Cochlear’s FY20 result, check out this article from Rask Media’s Cathryn Goh: Cochlear (ASX:COH) share price on watch after FY20 profit takes a hit
This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.
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