Slide 1: FY23 Result Presentation
Hear now. And always FY23 Result Presentation 15 August 2023 Dig Howitt CEO & President Stu Sayers CFO © Cochlear Limited 2023 1
Slide 2: Our mission
Our 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: FY23 Highlights
FY23 Highlights In FY23, we helped over 44,000 people hear with one – or two – of our cochlear or acoustic implants, providing an estimated net societal benefit of more than $7 billion over the lifetime of the recipients from improved health outcomes, educational cost savings and productivity gains.
Slide 4: FY23 Financial summary
FY23 Financial summary Sales revenue Sales revenue up 16% in CC* to $1,956m, up 24% in H2 2,000 $m in CC* • Strong growth across all business units 1,500 • Cochlear implant units up 16% driven by market growth, improved clinical capacity, market share 16% 1,000 in CC* gains and COVID catch-up surge
Slide 5: FY23 Operational review: Cochlear implants
FY23 Operational review Cochlear implants 58% of sales revenue Sales revenue increased 17% in CC with strong growth across both Cochlear implant sales revenue developed and emerging markets $m in CC* 1,200 $1,131m Developed markets 1,000 • Volumes grew ~15% (18% in H2) with strong demand for the Coc
Slide 6: FY23 Operational review: Services
FY23 Operational review Services 30% of sales revenue Services revenue up 14% in CC, up 27% in H2, with availability of Services sales revenue the Nucleus® 8 Sound Processor as an upgrade from late in H1 $m in CC* $584m 600 500 • H1 revenues slowed in anticipation of the launch of the Nucleus® 8 Sou
Slide 7: FY23 Operational review: Acoustics
FY23 Operational review Acoustics 12% of sales revenue Strong demand for all products across all regions Acoustics sales revenue $m in CC* 300 • Revenue up 15% in CC, the result of a strong product offering and a continued recovery in surgery volumes following COVID delays 250 $240m • The Cochlear™
Slide 8: Our strategy
Our strategy A healthier and more productive society Grow the hearing implant market Delivering societal benefit through improved health Help at least 8% more people to hear each outcomes, educational cost savings and productivity year with a cochlear or acoustic implant. At Cochlear, we are strongl
Slide 9: FY23 Key achievements
FY23 Key achievements A healthier and more productive society Strategic focus: Grow the hearing implant market Helping more people hear • We helped over 44,000 people hear with one – or two – of our cochlear or acoustic implants, providing an estimated net societal benefit of more than $7 billion ov
Slide 10: FY23 Key achievements
FY23 Key achievements A lifetime of hearing solutions Strategic focus: Retain market leadership Growing investment in research and development • Invested over $240m in R&D, 13% of sales revenue, with good progress made across our key projects • Launch of the Cochlear™ Nucleus® 8 Sound Processor • Bi
Slide 11: FY23 Key achievements
FY23 Key achievements Thriving people Strategic focus: A stronger organisation Shaping our culture • Continued focus on shaping our culture through training and leadership development programs with a focus on building enterprise leadership skills • 75% of all people leaders have completed our Cultur
Slide 12: FY23 Key achievements
FY23 Key achievements Environmental responsibility Strategic focus: Minimise environmental impact Pathway to net-zero emissions • Reached 96% renewable energy at our manufacturing facilities, using 100% renewable energy in five of our six facilities • Reduced Scope 1 and 2 emissions by 68% from our
Slide 13: FY23 Key achievements
FY23 Key achievements Sustained value Strategic focus: Consistent and sustainable growth • Delivered record sales revenue with underlying net profit* up 14% in CC** • Balance sheet remains strong with net cash of $556 million and strong cash flows supporting a 21% increase in the final dividend • Co
Slide 14: Profit and loss
Profit and loss Change Change $m FY23 FY22 (reported) (CC) Key points: Sales revenue 1,955.7 1,641.1 19% 16% Strong demand across all business units Gross margin % 75% 75% 0 pts 0 pts Gross margin maintained – in line with the longer-term target Continued investment in market growth initiatives,
Slide 15: Capital employed
Capital employed $m Jun23 Jun22 Change Key points: Trade receivables 388.4 308.4 80.0 Strong growth in sales revenue in H2 Stay-in-business inventory levels remain higher than pre-COVID levels reflecting the building of safety stocks over the past few Inventories 311.5 270.2 41.3 years in antici
Slide 16: Cash flow
Cash flow $m FY23 FY22 Change Key points: EBIT (underlying)* 396.1 382.7 13.4 Depreciation and amortisation 80.9 73.0 7.9 Changes in working capital and other (42.4) (46.9) 4.5 Investment in working capital as the business grows Net interest paid 7.1 (6.2) 13.3 Timing of tax payments and a larger
Slide 17: Dividends and on-market share buyback
Dividends FY23 FY22 % change Key points: Interim ordinary dividend (per share) $1.55 $1.55 0% Final ordinary dividend (per share) $1.75 $1.45 21% Full year dividends up 10%, in line with underlying net profit Total ordinary dividends (per share) $3.30 $3.00 10% growth % Payout ratio (based on unde
Slide 18: FY24 Outlook
FY24 Outlook FY24 underlying net profit guidance range of $355-375m, an increase of 16-23% Key assumptions: • Guidance anticipates growth in sales revenue and improved net profit margin • Cochlear implant trading conditions continue to be strong across most markets, with an improving trend in adult
Slide 19: Our company
Hear now. And always Supplementary information Our company 19
Slide 20: About Cochlear
About Cochlear Cochlear has been the global leader in implantable hearing solutions for over 40 years, providing a range of implants and sound processor upgrades that deliver a lifetime of hearing outcomes. Our story Our company Graeme Clark, an Australian ear surgeon, saw first-hand Cochlear commen
Slide 21: Cochlear at a glance
Cochlear at a glance Business segments Global presence $1.9b 4.8k 53 % 58 Cochlear Implants* % Cochlear implant systems > ~ female gender balanced in sales revenue* across employees across workforce 180+ 50+ 6 countries countries 30 Services* % Sound processor upgrades, accessories and other Market
Slide 22: Product and services portfolio
Product and services portfolio Cochlear’s market-leading portfolio aims to improve hearing outcomes for recipients and provide a lifetime of hearing solutions. Cochlear implant portfolio Acoustic solutions portfolio Recipient support tools Cochlear Baha® System Cochlear™ Cochlear Nucleus® System Osi
Slide 23: Financial history
Financial history Cochlear has a long track record of investing to grow, delivering growing sales revenue, profits* and dividends. Consistent investment in R&D Long-term growth Growing profits and market growth activities in sales revenue and dividends Research and development Cochlear implants Unde
Slide 24: Strategy and value creation
Hear now. And always Supplementary information Strategy and value creation 24
Slide 25: Our strategy
Our strategy A healthier and more productive society Grow the hearing implant market Delivering societal benefit through improved health Help at least 8% more people to hear each outcomes, educational cost savings and productivity year with a cochlear or acoustic implant. At Cochlear, we are strongl
Slide 26: Growth opportunity
Growth opportunity Growing awareness of the cost-effectiveness and quality of life benefits of our products has the potential to underpin long- term industry growth. Hearing loss is prevalent and under- Cochlear implants are a cost-effective Cochlear implants can deliver superior treated solution fo
Slide 27: Growth opportunity
Growth opportunity Product indications are broadening and funding is expanding Good hearing is essential to healthy ageing Product indications and funding are expanding as payers increasingly recognise Hearing loss is particularly prevalent in people over the age of 60, with one in four suffering th
Slide 28: Key market segments
Key market segments Our efforts are targeted at improving awareness, expanding access and building on the clinical evidence that demonstrates the effectiveness of our products across four key market segments. Cochlear implants: Cochlear implants: Adults and Children in developed markets seniors in d
Slide 29: Key market segments
Key market segments Cochlear implants: Acoustic implants: Next generation Children in emerging markets bone conduction hearing solutions Our emerging markets business has been The bone conduction market is under- growing rapidly as awareness of cochlear penetrated and currently has limited Addressab
Slide 30: Strategic priorities
Strategic priorities Our strategic priorities determine how we focus our time and resources to create value. Over the coming years we are focusing our efforts on delivering value across the following initiatives: Grow the hearing Retain market A stronger Minimise Consistent and implant market leader
Slide 31: Creating value for stakeholders
Creating value for stakeholders Value creation describes the impact we have on all our key stakeholders – our customers, our people, our shareholders as well as society more broadly. Successful execution means achieving the following outcomes for our stakeholders: Payers and society Our customers Ou
Slide 32: 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 33: References
References Hear now. And always FY23 Highlights (slide 8) 9. a. Hsu W, Hsu C, Wen M, Lin H, Tsai H, Hsu Y, et al. Increased risk of depression in patients with acquired sensory hearing loss: A 12-year follow-up study. Medicine [serial on the Internet]. (2016, Nov), 1. Cochlear estimates based on the
Slide 34: www.cochlear.com
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