COH +7.58%: Delivered a better-than-expected FY26 result with profit comfortably ahead of consensus despite broadly flat revenue. FY27 guidance points to earnings growth resuming as margins recover, although management remains cautious on the top line with only low-single-digit sales growth expected.
Key results:
- Sales revenue of A$2.34bn, broadly in line with A$2.35bn expected.
- Profit of A$322.4m, ~9% ahead of A$296.4m expected, although down 18% YoY.
- Cochlear Implant revenue of A$1.44bn, ~1% ahead of A$1.42bn expected, with implant units up 5%.
- Services revenue of A$634.9m, in line with A$635.7m expected.
- Acoustics revenue of A$273.3m, ~3% below A$282.5m expected.
- Final dividend of A$1.30ps, down from A$2.15ps.
For FY27, Cochlear is guiding to A$330–350m of underlying profit, implying growth of around 2–9%, alongside a gross margin of 70–71%. Revenue growth is expected to remain modest across developed and emerging implant markets, while Services growth should slow. The bigger opportunity is margin recovery: FY26’s net profit margin was just 14%, impacted by flat implant revenue, transitional costs and FX, with management targeting a return toward 18% over the medium term.
MM’s view: A solid result considering the difficult FY26 backdrop – the profit beat and FY27 earnings guidance suggest the worst of the margin pressure may be passing. The subdued sales outlook means the recovery will initially be driven more by margin normalisation than strong top-line growth – this doesn’t spark a huge amount confidence in a company that traditionally commands a premium for growth.
MM remains neutral toward COH
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