Hearing implant manufacturer, Cochlear Ltd (ASX: COH) has followed other strong results from lised companies reporting strong sales and profit growth in the first half of the year ending December.
The Sydney company today reported sales up six per cent and earnings before interest and tax (EBIT) up 11 per cent in constant currency terms.
A total of 16,740 Cochlear ‘bionic ear’ hearing implants were sold in the half.
Revenue of $712 million and EBIT of $177 million were powered by sales of its Nucleus 7 sound processor and a 26 per cent growth in the company’s service business.
Services include software upgrades delivered over the internet and apps available for iPhone and Android devices.
Cochlear’s CEO Dig Howitt said: “The Services business continues to grow in importance as our recipient base grows, now representing almost 30 per cent of sales revenue.”
Following the release of a competitor product in the US, sales were a little subdued compared to the previous four years which showed stronger growth.
Western Europe was affected by budget restraints, the Japanese market was strong and emerging markets showed 15 per cent growth.
Howitt said the company continued to focus on innovation, advancing developing of a totally implantable device and expanding its alliance with GN Hearing to develop connectivity and wireless technologies.
“As we look ahead, we have an exciting portfolio of products to be launched over the next 18 months, supported by our continuing commitment to invest around 12% of revenue, or over $170 million per annum, in R&D,”
Howitt said Cochlear had appealed the patent decision which awarded US268 million in damages against the company.
The company has arranged an insurance bond of US$335 million to stay the judgement pending an appeal.
“The Board is of the opinion it is probable that Cochlear’s appeal will result in the lawsuit being remanded to the District Court for a retrial on damages.
“Given the inherent uncertainties in assessing the likely damages amount of this case following the appeal, the Board is unable to make a reliable estimate of the amount that will ultimately be paid.”
The company maintained its provision for damages in its accounts of $21.6 million.
Subscribe to our free @AuManufacturing newsletter here.