Cochlear investors have pushed the company’s share price to one of its biggest intraday price falls since a profit warning last year, after the medical device maker announced a 73 per cent fall in interim net profit and implied it will miss its full year profit guidance as well.
Interim net profit slumped to $21.0 million due to cash put aside for a patent dispute, customers delaying purchases until new products are launched and foreign exchange contract losses.
Excluding the provision for the patent dispute, net profit fell 53 per cent to $36.8 million, the company said on Monday.
The company reported a 5 per cent fall in revenue to $371.1 million and a 54 per cent fall in earnings before interest and tax to $49.4 million, in the six months ended December 31.
The result fell far below expectations with consensus estimates of net profit of $59.3 million, EBIT of $81 million and sales of $387.9 million, according to FactSet Consensus reported in a Citi note.
Shares in the hearing implant manufacturer opened at $52.54, 10.8 per cent down on Monday’s closing price. By 11:08am AEDST the stock had recovered slightly to be down 9.8 per cent to trade at $53.10.
A profit warning in June 2013 wiped $665 million from the bionic ear maker’s market value, after its shares fell 18 per cent in a day.
On a volume basis, sales of Cochlear units fell 14 per cent to 11,712 in the period. The fall in unit sales was due to the delivery of 1,900 implants as part of a Chinese tender in the first half of 2012-13 not being repeated in the current period.
Chief executive Chris Roberts said the company had experienced a difficult period. However, he said new regulatory approvals gained at the beginning of the period had sparked a resurgence of sales towards the end of the half.
“The net effect of the timing of these approvals and launches was that quarter one sales continued to decline,” Mr Roberts said in a statement. “With the release of the new products, quarter two sales were up over 30 per cent on quarter one. There is sales momentum going into the second half.”
The company said it would deliver second-half net profit in the range of $70 million to $80 million, on account of sales of the Nucleus 6 sound processor in major markets and anticipated regulatory approval of the Hybrid cochlear implant system in the United States and its subsequent launch.
But this will leave the company short of the full-year net profit guidance of $133 million that it provided at its annual general meeting in October.
Cochlear’s implied guidance is for full year profit of $91 million to $101 million.
A reduction in foreign exchange hedging revenue and the cost of product launches were reported as the cause of flat profit growth over the 2014 financial year.
Cochlear shares have fallen 16 per cent over the past year and have traded between about $56 and $60 since October. The stock closed at $58.89 on Monday.
The company declared an unfranked dividend of 127¢ a share, which was a 2¢ rise on the interim dividend last year. The dividend will be paid on March 27.
Cochlear is the fifth most shorted stock on the Australian Securities Exchange with 14.5 per cent of issued shares reported to the corporate regulator as being held in short positions.
This story Administrator ready to work first appeared on Nanjing Night Net.