When asked exactly how long it will be before all markets had recovered to the same or better levels than before the pandemic, Mr Howitt said it was more likely to be years than months. I think the thing is that the bigger markets where we are in have bounced back quickly, so that is what gives us some confidence. But I think the tail could be quite long.
Cochlears sales in emerging regions, including Latin America and Brazil, were down 30 per cent for the first half (year-on-year), while sales in developed regions including the US, Japan and Korea for the period went up 5 per cent.
The impact of elective surgery pauses across the globe swung Cochlear to a full-year loss in 2020, though capital raises of more than $1 billion gave it a strong foundation to weather the storm.
On Friday it revealed sales had declined one per cent in constant currency terms to $742.8 million for the first half of fiscal 2021, though statutory net profit was up 50 per cent to $236.2 million. Underlying net profit, which excluded one-off payments including government assistance, was down four per cent to $125.3 million.
Cochlear shares closed the session 8.4 per cent higher at 221.68.
The company said it plans to repay $24.6 million in government help, the bulk of it from the JobKeeper program, that it received in the six months to December 2020.
Cochlear also received JobKeeper payments in April and May 2020, when sales revenue had dropped by 60 per cent, and used those payments to retain staff.
On a call with analysts, Mr Howitt championed Cochlears ability to grow market share across the US in this period, arguing that government support and the strong capital base of the business had helped sales staff remain focused on serving clients throughout the pandemic.
Through COVID, because we were financially secure we could say to our teams their jobs were safe… that has helped us lift share, he said.
The companys services revenue, which includes upgrades of hearing processors, saw sales drop by two per cent, however. Chief financial officer Stu Sayers said there had been some slowdown due to fewer in person appointments.
We saw a significant drop in recipients wanting to come in for their annual check ups, he said.
Analysts had been expecting a slow bounce back of surgeries but say beyond this there is long-term opportunity for the company to capture more market share.
On the back of COVID we still see: an under-penetrated and growing market opportunity; dominant market position; and a growing installed base from which to reap higher levels of processor and upgrade sales, Morgan Stanley analysts said in a note.
Business Briefing
Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for the Herald’s here and The Age’s here.
Emma reports on healthcare companies for The Age and Sydney Morning Herald. She is based in Melbourne.
