Slide 1: FY22 Result Presentation
Hear now. And always FY22 Result Presentation 19 August 2022 Dig Howitt CEO & President Stu Sayers CFO © Cochlear Limited 2022 1
Slide 2: Cochlear's mission
Cochlear’s mission We help people hear and be heard. We empower people to connect with others and live a full life. We transform the way people understand and treat hearing loss. We innovate and bring to market a range of implantable hearing solutions that deliver a lifetime of hearing outcomes. 2
Slide 3: FY22 Summary
FY22 Summary Sales revenue up 10% (up 9% in CC*) Sales revenue $m in CC* $1,641m • Strong demand for acoustic implants and sound processor upgrades with all regions and product segments tracking above pre‐COVID levels • Cochlear implant revenue growth rates improved across the year with continued va
Slide 4: FY22 Operational review: Cochlear implants
FY22 Operational review Cochlear implants 57% of sales revenue Cochlear implant unit growth of 5% reflects continuing recovery from Cochlear implant sales revenue COVID, with variable recovery rates across countries $m in CC* $935m Developed markets • Second half volumes grew following a decline in
Slide 5: FY22 Operational review: Services
FY22 Operational review Services 31% of sales revenue Growing recipient base and access to sound processor upgrades Services sales revenue drive demand $m in CC* $504m • Revenue up 15% in CC • Growing recipient base increases sound processor upgrade opportunity • Improved access to clinics following
Slide 6: FY22 Operational review: Acoustics
FY22 Operational review Acoustics 12% of sales revenue Strong demand for new products and a recovery from COVID‐ Acoustics sales revenue related surgery delays $m in CC* • Revenue up 28% in CC $202m • Rollout of the Cochlear™ Osia® 2 System across Western Europe following CE Mark accreditation • Dem
Slide 7: Our mission
Our mission The passion that drives the organisation and focuses the strategy e Empower e Transform e Innovate Our strategy Where we focus our time and resources to create value e Growth opportunity e Strategic priorities e A stronger organisation Value creation How the outcomes of our activities im
Slide 8: FY22 Value creation: A healthier & more productive society
FY22 Value creation A healthier & more productive society Key achievements: Helping more people hear • We helped over 40,000 people hear with one – or two – of our cochlear or acoustic implants, providing an estimated net societal benefit of more than $6 billion over the lifetime of the recipients f
Slide 9: FY22 Value creation: Empowered customers
FY22 Value creation Empowered customers Key achievements: Providing convenience and confidence to customers • We became the first company to offer app‐based Remote Care solutions to both acoustic and cochlear implant recipients • Cochlear™ Remote Assist achieved FDA approval, enabling live video app
Slide 10: FY22 Value creation: A lifetime of hearing solutions
FY22 Value creation A lifetime of hearing solutions Key achievements: Market‐leading technology underpins over 60% global market share • Invested over $200m in R&D, 13% of sales revenue, with many new products and services achieving regulatory approval over the past few years across all parts of the
Slide 11: FY22 Value creation: Thriving people
FY22 Value creation Thriving people Key achievements: Shaping our culture • Continued to intentionally shape the culture that will enable us to grow and deliver for our customers in the future eg: training and leadership development programs • Employee engagement maintained at 80% Broadening incenti
Slide 12: FY22 Value creation: Sustained value
FY22 Value creation Sustained value Key achievements: Emission reduction targets • Targeting net‐zero emissions in our operations (Scope 1 and 2) by FY30 and across our value chain (Scope 1, 2 and 3) by FY50, aligned with SBTi • By the end of FY22, manufacturing at 5 of our 6 facilities had transiti
Slide 13: Profit & loss
Profit & loss Change Change $m FY22 FY21 (reported) (CC) Key points: Strong demand for sound processor upgrades and new acoustic Sales revenue 1,641.1 1,493.3 10% 9% implant products Gross margin % 75% 73% 2 pts 2 pts Gross margin back in line with the longer‐term target Continued investment in
Slide 14: Capital employed
Capital employed $m Jun22 Jun21* Change Key points: Trade receivables 308.4 262.1 46.3 Increase driven by growing sales revenue Building of safety stocks of both finished goods and some Inventories 270.2 216.1 54.1 componentry in anticipation of potential global supply chain shortages Less: Trad
Slide 15: Cash flow
Cash flow $m FY22 FY21** Change Key points: EBIT (underlying)* 382.7 326.3 56.4 EBIT benefits from strong sales growth and improved gross margin Depreciation and amortisation 73.0 76.4 (3.4) Increase in working capital to fund business growth. Includes an Changes in working capital and other (46.9
Slide 16: Dividends
Dividends FY22 FY21 % change Key points: Interim ordinary dividend (per share) $1.55 $1.15 35% Final ordinary dividend (per share) $1.45 $1.40 4% Total ordinary dividends (per share) $3.00 $2.55 18% % Payout ratio (based on underlying net profit) 71% 72% Full year payout in line with 70% target pa
Slide 17: FY23 Outlook
FY23 Outlook FY23 underlying net profit guidance range is $290‐305m, a 5‐10% increase on FY22 underlying net profit, an increase of 8‐13% when adjusted for the increase in cloud computing‐related expenses Key assumptions: • Guidance anticipates strong growth in sales revenue and ~18% underlying net
Slide 18: Supplementary information: Cochlear overview & strategy
Hear now. And always Supplementary information Cochlear overview & strategy 18
Slide 19: About Cochlear
About Cochlear For over 40 years, Cochlear has been the global leader in implantable hearing solutions. Cochlear commenced operations in 1981 as part of the Nucleus group and in 1995 listed on the Australian Securities Exchange. Today, it is a Top 50 listed Australian company with a market capitalis
Slide 20: Cochlear at a glance
Cochlear at a glance Business segments Global sales Market leader Cochlear Cochlear implant systems implants* % Cochlear™ Nucleus® > $1.6b $200m+ in annual R&D 57 Profile™ Plus with Slim Modiolar in sales revenue* Electrode (CI632) % % 60% > global market share** Services* Sound processor upgrades,
Slide 21: Investment proposition
Investment proposition Cochlear provides shareholders with an opportunity to invest in the global leader in implantable hearing solutions, in an industry that has the potential to grow over the long term. Global leader in implantable hearing solutions for over 40 years with over 60% global market
Slide 22: Financial history
Financial history Cochlear has a long track record of delivering growing sales revenue, profits* and dividends. Cochlear implants Net profit units $m underlying* 5% 18% in FY22 in FY22 Sales revenue Dividends $m per share 9% 18% in FY22 in CC in FY22 22 * Excluding one‐off and non‐recurring item
Slide 23: Our mission
Our mission The passion that drives the organisation and focuses the strategy e Empower e Transform e Innovate Our strategy Where we focus our time and resources to create value e Growth opportunity e Strategic priorities e A stronger organisation Value creation How the outcomes of our activities im
Slide 24: Growth opportunity
Our strategy Growth opportunity The factors driving industry growth Growth opportunity Hearing loss is prevalent and under‐treated Cochlear implants are a cost‐effective solution for all age groups Strategic priorities Product indications are broadening and funding is expanding A stronger orga
Slide 25: Hearing loss is prevalent and under-treated
Our Growth opportunity strategy Hearing loss is prevalent and under‐treated >60m people with severe or higher hearing loss Growth The WHO estimates that there are more opportunity than 60 million people worldwide who experience severe or higher hearing loss.4 Strategic priorities A challenge for hea
Slide 26: Cochlear implants are a cost-effective solution for all age groups
Our Growth opportunity strategy Cochlear implants are a cost‐effective solution for all age groups Growth Cochlear implants provide life changing The estimated lifetime societal opportunity outcomes for recipients, empowering them costs for a pre‐lingual deaf child in developed markets exceeds to co
Slide 27: Product indications are broadening and funding is expanding
Our Growth opportunity strategy Product indications are broadening and funding is expanding Growth Product indications and funding US: lowered the age of cochlear Cochlear™ Osia® 2 System: opportunity are expanding as payers implantation from 12 to 9 months reimbursement achieved across a and includ
Slide 28: Cochlear implants can deliver superior outcomes to hearing aids
Our Growth opportunity strategy Cochlear implants can deliver superior outcomes to hearing aids for indicated patients We are the market But a small player in the severe Growth Cochlear implants can provide leader in cochlear or higher hearing loss segment opportunity implants…. where hearing aids d
Slide 29: Good hearing is essential for healthy ageing
Our Growth opportunity strategy Good hearing is essential for healthy ageing Hearing loss is particularly prevalent in people over the age of 60, with one in four suffering moderate or higher hearing loss. There is a growing understanding of the importance of properly treating hearing loss Growth in
Slide 30: Strategic priorities
Our strategy Strategic priorities How we focus our time and resources to create value Growth opportunity Retain market leadership We are committed to retaining our market leadership position in the industry by continuing to make substantial investments in R&D that enable us to bring to market implan
Slide 31: Retain market leadership: product and services portfolio
Our Retain market leadership strategy Our market‐leading product and services portfolio Cochlear implants Acoustic implants Convenience & confidence Telehealth solutions Growth opportunity Cochlear™ Nucleus® Profile™ Plus implant Strategic priorities Cochlear™ Osia® 2 Nucleus, Baha & Osia Smart Apps
Slide 32: Retain market leadership: what we are doing
Our Retain market leadership strategy What we are doing Growth We create value through innovation, bringing to market new products and services that opportunity deliver a lifetime of hearing outcomes. Key focus areas: Strategic Market‐leading technology World‐class customer experience priorities • M
Slide 33: Grow the hearing implant market
Our Grow the hearing implant market strategy We grow the market by transforming the way people understand and treat hearing loss Our efforts are targeted at improving awareness, expanding access and building on the clinical Growth opportunity evidence that demonstrates the effectiveness of our produ
Slide 34: Grow the hearing implant market: what we are doing
Our Grow the hearing implant market strategy What we are doing Our biggest opportunities to create value will be from building a sustainable adult referral Growth opportunity pipeline for cochlear implants and by broadening the acoustics market. Key focus areas: Strategic • Improve the awareness of
Slide 35: Deliver consistent revenue and earnings growth
Our Deliver consistent revenue and earnings growth strategy What we are doing We create value by maintaining discipline around our long‐term investment model and Growth opportunity continuing to refine our capital allocation processes to ensure we optimise investment. We balance maximising spending
Slide 36: Revenue drivers
Our Deliver consistent revenue and earnings growth strategy Revenue drivers Growth Sales revenue opportunity Cochlear implants $m in CC • Growing awareness and uptake by adults and seniors • Emerging market expansion Strategic • New products driving market growth and market share priorities Services
Slide 37: Invest to grow
Our Deliver consistent revenue and earnings growth strategy Invest to grow We take a long term approach to investing and have invested in growing the market for implantable Growth solutions since listing in 1995. opportunity Consistent investment in Growing R&D capability Delivering stable net sales
Slide 38: Operational improvement
Our Deliver consistent revenue and earnings growth strategy Operational improvement Disciplined capital investment and optimising cost of production strengthens our competitive position. Growth opportunity Disciplined use of capital Stable gross margin Capital employed Strategic priorities A stronge
Slide 39: Strong financial position
Our Deliver consistent revenue and earnings growth strategy Strong financial position Strong free cash flow generation provides funding for market growth activities and R&D as well as the Growth ability to reward shareholders with a growing dividend stream. opportunity High return on capital Quality
Slide 40: A stronger organisation
AOur stronger organisation strategy A stronger organisation The pillars that set the foundation for success Growth opportunity Shaping our culture Our people are our most valuable asset and are an engaged, capable, high‐performing and diverse Strategic team. The way our people work together is a cri
Slide 41: A stronger organisation: what we are doing
Our A stronger organisation strategy What we are doing To be successful over the long term, our organisation needs to be strong, agile and sustainable to Growth enable us to execute our strategy, support our customers and deliver on our growth ambitions opportunity Key focus areas: Strategic priorit
Slide 42: The value we create for all stakeholders
Value The value we create for all stakeholders, driving success now and creation into the future Success means achieving the following outcomes for our stakeholders: A healthier & Empowered A lifetime of more productive Thriving people Sustained value customers hearing solutions society Payers and s
Slide 43: Notes
Notes Hear now. And always Forward looking statements Cochlear advises that this document contains forward‐looking statements which may be subject to significant uncertainties outside of Cochlear’s control. No representation is made as to the accuracy or reliability of forward‐looking statements or
Slide 44: References
References Hear now. And always 1. Cochlear estimates based on the published economic model findings of Neve et al 2021. Dollar amount relates to all recipients implanted with one or more cochlear implants in FY22 across the developed markets. 2. Hearing Screening: considerations for implementation.
Slide 45: www.cochlear.com
www.cochlear.com © Cochlear Limited 2022