Cochlear 1H profit slumps 73%

Cochlear Limited (ASX:COH) has reported a sharp 73% decline in net profit for 1H14 - said to be due to delays receiving approval for new products and ongoing patent disputes. 

Revenue fell 5% to $371.1 million, with cochlear implant unit sales falling 14% to 11,712. Bone anchored solution sales, by contrast, grew 19% to $45.9 million.

“This was a difficult half as we entered the period with no regulatory approvals for our new products in key markets,” Cochlear CEO Dr Chris Roberts said. “The good news is that we did obtain approvals and launched new products in the second half.”

Approvals in Europe and the USA for the company’s Nucleus 6 sound processor helped second-quarter sales improve 30% from the first, he said.

Cochlear also booked a $22.5 million patent dispute provision after a US jury found against the company during a patent violation lawsuit it had been defending itself against in a California court. Barring a successful appeal, Cochlear is facing penalties of up to US$131.2 million ($146 million).

The company benefited from a depreciating Australian dollar, but forex gains were offset by a reduction in profit from foreign exchange contracts.

For the second half of FY14, Cochlear is projecting a net profit in the range of $70-80 million, despite ongoing market pressures in the US where the company does not yet have all the expected regulatory approvals.

Cochlear said it expects sales to be augmented by the ongoing Nucleus 6 rollout, the anticipated launch of its Hybrid cochlear implant system in the US and the supply of around 1800 cochlear units as part of a Chinese government tender.

Cochlear (ASX:COH) shares were trading 9.95% lower at $53.03 as of around 2 pm on Tuesday.