Cochlear Limited · ASX:COH
Cochlear — H1 FY2014 Earnings Presentation
16 slides from Cochlear's earnings presentation, February 2014
Slide 1: Cochlear Limited Results for the half year ended 31 December 2013
Cochlear Limited Results for the half year ended 31 December 2013 (H1 F14) Chris Roberts CEO Neville Mitchell CFO Cochlear Overview • Cochlear Limited (ASX:COH) is the global leader in implantable hearing devices: • Cochlear/Hybrid implants • Bone conduction implants • Acoustic implants • Large unme
Slide 2: Financial Results for H1 F14 and Summary
Cochlear: Financial Results for H1 F14 H1F14 H1F13 % $m $m Change Cochlear implant sales 331.1 329.7 0% Bone Conduction/Acoustic sales 45.9 38.5 Ç19 % Sales Revenue 377.0 368.2 Ç2 % FX Contracts Gains (5.9) 23.5 È125 % Total Revenue 371.1 391.7 È5 % EBIT* 26.9 108.3 È75 % Net profit after tax* 21.0
Slide 3: Sales in Constant Currency and Cochlear Implant Unit Sales
Cochlear: Sales in Constant Currency (CC) • Sales revenue ↑2% to $377 million (↓8% in CC compared to H1 F13, but ≈ H2 F13) • CI sound processor upgrade sales ↓$11.5 million (in CC) ahead of Nucleus 6 release • Deferred revenue (31 Dec) H2 of $6.8 million relating to Future Technology Exchange H1 Pro
Slide 4: Bone Conduction/Acoustic Implant Sales and Americas Sales
Cochlear: Sales of Bone Conduction/Acoustic Implants in Constant Currency (CC) • Bone conduction/acoustic implant sales of $45.9 million, up 6% in CC • Regulatory approval and launch of Baha 4 sound processor in Europe/USA H2 • Regulatory approval and H1 launch of Baha Attract (transcutaneous Baha s
Slide 5: EMEA and Asia Pacific Sales in Constant Currency
Cochlear EMEA: Sales in Constant Currency (CC) • EMEA (Europe, Middle East and Africa) sales of $169.1 million, ↑ 4% in CC • CI sound processor upgrade sales ↓ $1.6 million CC H2 • Nucleus 6 launched • Baha 4 and Baha Attract launched • Regulatory approval and H1 first implants of Codacs, Carina and
Slide 6: H1 F14 Regional Split of Sales and Operating Margin
Cochlear: H1 F14 Regional Split of Sales EMEA1 Americas 45% 40% CC2 growth Ç4% CC growth È10% Asia Pacific 15% CC growth È28% 1 EMEA is Europe, Middle East and Africa 2 CC is constant currency H1 F14 operating margin declined R&D investment ($millions) EBIT to sales of 7.1% v 29.4% • Lower manufactu
Slide 7: Nucleus 6 and Nucleus Hybrid
Cochlear Nucleus 6 • SmartSound® iQ • Smallest processor • Integrated Hybrid • Wireless connectivity • Water resistant BTE • Data logging Nucleus Hybrid • On 8 Nov 13 FDA Advisory Panel voted for approval of Hybrid cochlear implant PMA • Combines electrical stimulation for higher frequencies (speech
Slide 8: Bone Conduction & Acoustic Implants; Summary/Outlook
Bone Conduction & Acoustic Implants • Baha 4 Sound Processor and Baha Attract available in key markets (Europe/USA) • Acoustic implants received CE mark Summary/Outlook: Ongoing Sales Momentum • Sales increased following product • Summary launches • Nucleus 6, Baha 4 and Baha Attract sales in major
Slide 9: H1 F14 Financial Results
Cochlear Limited H1 F14 Financial Results Neville Mitchell, CFO Cochlear H1 F14 Financial Performance H1 F14 H1 F13 % $m $m Change Sales Revenue 377.0 368.2 Ç 2% FX Contracts (5.9) 23.5 È 125% Total Revenue 371.1 391.7 È 5% EBIT * 49.4 108.3 È 54% Net Profit after Tax * 36.8 77.7 È 53% Patent disput
Slide 10: H1 F13 – H1 F14 NPAT Reconciliation and FX Impact
Cochlear H1 F13 – H1 F14 NPAT Reconciliation AUD Millions Impact of Changing FX Rates on H1 F14 NPAT A$m F/(U) Income Statement Translation Impact Sales Revenue 39.0 Difference H1 F14 Total Expenses including tax (20.8) actual vs H1 F14 at H1 F13 rates 18.2 Transaction Impact Net difference - Decrea
Slide 11: H1 F14 Working Capital and (Debt)/Cash
Cochlear H1 F14 Working Capital Inventory (Days Stock Held) / Trade Receivable (Debtors Days) • H1 F14 Inventory days decreased to 208 (231 days in June F13) • Debtor days 75 (80 days in June F13 ) • Trade receivables at $182.1 million ($187.6 million in June F13) Cochlear H1 F14 (Debt) / Cash 31 De
Slide 12: Summary/Outlook and Thank you
Summary/Outlook: Ongoing Sales Momentum • Sales increased following product • Summary launches • Nucleus 6, Baha 4 and Baha Attract sales in major markets from Q2 • Q2 sales up 30+% over Q1 • Outlook • Sales momentum continues through H2 F14 and into F15 • Operating margin improves in H2 F14 with in
Slide 13: FX Contract Cover and Rates as at 31 December 2013
FX Contract Cover and Rates as at 31 December 2013 Total FX hedges at USD EUR JPY 31 Dec 2013 expressed in Foreign Currency (millions) 201.5 162.8 1,577.0 FX Hedges at 31 December 2013 Expressed in AUD millions 213.5 232.2 18.5 Total % of total cover (in AUD) 46% 50% 4% 100% 3 yr weighted average ra
Slide 14: Foreign Exchange; Property, Plant & Equipment
Foreign Exchange Period end rates applied F14 vs F13 31 Dec 30 June % change 2013 2013 Period end rates (used for translating Bal Sheet) USD 0.89 0.93 È 4% Euro 0.65 0.71 È 8% JPY 93.3 90.7 Ç 3% Property, Plant & Equipment & Leasehold Improvements 31 Dec 2013 $m Gross value 31 December 2013 191.1 Ac
Slide 15: Corporate & Other Net Expenses; Deferred Revenue Release
Corporate & Other Net Expenses H1 F14 H1 F13 $m $m FX Contracts 5.9 (23.5) Research and Development 64.1 59.3 Corporate Administration & Marketing 30.5 30.7 Corporate Other Income (1.4) (1.0) FX (gains) / losses (0.9) 0.7 Corporate and other net expense (note 7) 98.2 66.2 Journal Entries for Deferre
Slide 16: Non-IFRS Financial Measures
Non-IFRS Financial Measures Non-IFRS financial measures Given the significance of the patent dispute and FX movements the directors believe the presentation of non-IFRS financial measures is useful for the users of this document as they reflect the underlying financial performance of the business. T