Slide 1: HY21 Result Presentation
Hear now. And always HY21 Result Presentation 19 February 2021 Dig Howitt CEO & President Stu Sayers CFO © Cochlear Limited 2021 1
Slide 2: Cochlear at a glance
Cochlear at a glance Key products Global sales Market leader Cochlear ~ implants1 % Cochlear™ Nucleus® Profile™ Plus with Slim Modiolar $1.4b $180m + 61 Electrode (CI632) in sales revenue1 in annual R&D ~ 60 % % % % global market 49 35 16 + share2 Services 1 Americas EMEA Asia Pacific 600,000 % impl
Slide 3: 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. 3
Slide 4: Hear now. And always
Hear now. And always
Slide 5: HY21 – Result review
HY21 – Result review Underlying net profit 4% in CC with improving momentum across the half 1 2 • Cochlear implant (CI) units 8% – developed markets recovering more quickly than emerging markets • Sales revenue 1% in CC – Q1 8% and Q2 7% • Opex tracking below historic run rates – material
Slide 6: HY21 – Operational review
HY21 – Operational review Stronger Q2 with the pace of recovery differing across countries • CI units 8% – Q1 14% and Q2 1% • US, Korea, Japan and China delivered strong CI unit growth • Western Europe experienced improving run rates with some slowing again from November as a result of new COV
Slide 7: Cochlear implants – 61% of revenue
Cochlear implants – 61% of revenue Cochlear implant Improving momentum across the half with the sales revenue pace of recovery varying across countries $m in CC* Developed markets • Units 5% ( 9% in Q2) with surgery mix back to pre‐COVID levels as patients progress to surgery across all age group
Slide 8: Services – 29% of revenue
Services – 29% of revenue Services Stronger Q2 as clinic capacity improves and sales revenue Cochlear™ Nucleus® Kanso® 2 Sound Processor is $m in CC* launched • Q1 impacted by lower clinical capacity for sound processor upgrades • Q2 revenue 11% in CC, with improved clinical capacity and benefits
Slide 9: Acoustics – 10% of revenue
Acoustics – 10% of revenue Acoustics Improving momentum and a rapid shift to the sales revenue Cochlear™ Osia® 2 System in the US $m in CC* • The majority of Acoustics revenue is generated from the US and UK • Surgery volumes have been recovering in the US since May with strong demand for the Cochle
Slide 10: HY21 Result Presentation – Stu Sayers CFO
Hear now. And always HY21 Result Presentation 19 February 2021 Stu Sayers CFO © Cochlear Limited 2021 10
Slide 11: Profit & loss
Profit & loss Change Change $m HY21 HY20 (reported) (CC) Key points: Sales revenue 742.8 777.6 (4%) (1%) Stronger Q2 with sales revenue up 7% in CC Decline driven by one‐off launch‐related production costs associated Gross margin % 72% 75% (3) pts (3) pts with new products, write‐down in obsolet
Slide 12: Cash flow
Cash flow $m HY21 HY20 $ change Key points: EBIT (underlying) 175.6 183.7 (8.1) Depreciation and amortisation 37.2 34.2 3.0 Changes in working capital and other 1.9 (28.0) 29.9 Final AMF‐related payment of US$75 million in prejudgment Cash impact of final AMF‐related payments (pre‐tax) (104.4) ‐ (10
Slide 13: Net debt & financial position
Net debt & financial position $m HY21 FY20 $ change Key points: Loans & borrowings: Current 29.8 393.1 (363.3) Non‐current 81.0 79.9 1.1 Total loans and borrowings 110.8 473.0 (362.2) Less: Cash, cash equivalents and term deposits (612.7) (930.0) 317.3 Net debt / (cash) (501.9) (457.0) (44.9) Net
Slide 14: Capital employed
Capital employed $m HY21 FY20 $ change Key points: Trade receivables 218.0 211.4 6.6 Inventories 196.8 223.8 (27.0) Reflects improved trading and the write‐down of obsolete stock Less: Trade payables (143.5) (155.3) 11.8 Working capital 271.3 279.9 (8.6) Working capital / sales revenue 18% 21% Pro
Slide 15: Dividends
Dividends HY21 HY20 % change Key points: Dividend re‐introduced following improved trading conditions and Interim ordinary dividend (per share) $1.15 $1.60 (28%) cash flow generation 70% payout policy intact with a return to 70% expected as markets % payout ratio (based on underlying net profit) 6
Slide 16: HY21 Result Presentation – Dig Howitt CEO & President
Hear now. And always HY21 Result Presentation 19 February 2021 Dig Howitt CEO & President © Cochlear Limited 2021 16
Slide 17: Strategic priorities
Strategic priorities Retain market leadership Market‐leading technology I World‐class customer experience Grow the hearing implant market Awareness I Market access I Clinical evidence Deliver consistent revenue and earnings growth Invest to grow I Operational improvement I Strong financial position
Slide 18: Market-leading product and services portfolio
Market‐leading product and services portfolio Cochlear implants Sound processors Next generation bone Benchmark in size, Benchmark in size, smartphone conduction hearing solutions implant reliability and connectivity and hearing performance Benchmark in performance and neural interface Cochlear™ aes
Slide 19: FY21 outlook
FY21 outlook Increasingly confident of the resilience of our hearing implant business but risk remains • Developed markets expected to deliver H2 CI units in line with H1 • Current trading indicates recent lock down activity has affected a few Western European countries and in a few regions in the U
Slide 20: Appendix
Hear now. And always Appendix Cochlear’s history of innovation & Summary financials since listing 20
Slide 21: Cochlear hearing implants – a history of innovation
Cochlear™ hearing implants – a history of innovation Sound Processors 82 89 94 97 98 02 05 09 13 16 17 20 WSP MSP Spectra SPrint™ ESPrit™ ESPrit ™ 3G Freedom® Nucleus® 5 Nucleus® 6 Kanso® Nucleus® 7 Kanso® 2 Cochlear Implants 85 97 98 00 05 08 09 14 19 CI22M CI24M ABI CI24R CI24RE Hybrid™ L24 CI500
Slide 22: Financial history
Financial history Cochlear has a long track record of delivering growing sales revenue, profits* and dividends, disrupted in FY20 by the impact of COVID Sales revenue 1,352 A$m FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY2
Slide 23: Investing to grow
Investing to grow Cochlear takes a long term approach to investing and has invested in growing the market for implantable solutions since listing in 1995 Consistent investment in sales and marketing Selling, marketing & general expenses 33% 35% Our investment in sales and marketing activities is bui
Slide 24: Operational improvement
Operational improvement Disciplined capital investment and optimising cost of production strengthens our competitive position Gross margin 74% 75% Stable gross margin Cochlear’s gross margin has been relatively stable since listing. 1,008 We use our scale to generate efficiency gains to reinvest bac
Slide 25: Strong financial position
Strong financial position Strong free cash flow generation provides funding for market growth activities and R&D as well as the ability to reward shareholders with a growing dividend stream Quality operating cash flows One of the highlights of Cochlear’s financial history has been the conversion of
Slide 26: Strong financial position
Strong financial position Strong free cash flow generation provides funding for market growth activities and R&D as well as the ability to reward shareholders with a growing dividend stream Conservative gearing levels Cochlear has a strong balance sheet. It is a growth company that has been able to
Slide 27: 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 28: www.cochlear.com
www.cochlear.com © Cochlear Limited 2021