Cochlear share price falls despite 29% dividend boost

The Cochlear Limited (ASX: COH) share price is falling this Monday morning, despite the company releasing its latest earnings covering the six months to 31 December before market open.

Cochlear shares closed at $334.54 last week. But the ASX 200 healthcare stock opened at $331.14 this morning before dropping down to $327.76 at the time of writing, a fall worth 2.03%.

What did the company report?

Here’s what Cochlear reported for the first half of the 2024 financial year this morning:

• Revenues of $1,113 million, up 20% in constant currency terms over the first half of FY2023
• Underlying net profit of $192 million, up 21% year on year in constant currency terms
• Statutory net profit of $191 million, also up 21% year on year
• Underlying net profit margin of 17%
• Interim dividend of $2 per share, partially franked at 70%, declared, a 29% increase over 2023
• Share buyback program paused

Although Cochlear announced a big rise in its interim dividend, the company has also suspended its share buyback program “given the current high interest rate environment”.

What else happened in 1H24?

Cochlear’s 20% rise in revenues was assisted by a 14% increase in Cochlear implant units shipped over the period, along with a 35% rise in services revenue. The latter was thanks in part to “strong upgrade demand for the recently released Cochlear Nucleus 8 Sound Processor”.

Cochlear first flagged the success of the Nucleus 8 back in October last year during the company’s annual general meeting. At the time, Cochlear’s management also guided investors to expect a rise of between 16% and 23% in underlying net profits for the 2024 financial year.

At the time, this didn’t have much of a positive impact on the Cochlear share price. But back on 8 February, Cochlear told shareholders that they can now expect an increase of between 26% and 31% in underlying net profits over FY2024.

That announcement saw a 4.4% rise in the value of Cochlear shares.

What did Cochlear management say?

Here’s some of what Cochlear’s management had to say about the numbers the company has revealed today:

Cochlear implant trading conditions continue to be strong across most markets, with an improving trend in adult referral rates in many developed countries. We have maintained the market share gains made in FY23, with strong market growth across the first half.

The key change to our expectations is that we now expect to achieve 10-15% growth in our cochlear implant units for FY24 compared to the high single-digit growth expected in August.

Cochlear 2024 half-year results

What’s next for Cochlear?

Looking forward, Cochlear has told investors that “we expect the positive momentum of the first half to continue into the second half”. The company reaffirmed its guidance earlier this month of a 21-34% rise in underlying net profits for the full 2024 financial year.

That’s partly thanks to ongoing favourable implant trading conditions, which reportedly “continue to be strong across most markets, with an improving trend in adult referral rates in many developed countries”.

As such, Cochlear now expects to achieve “10-15% growth in our cochlear implant units for FY24 compared to the high single-digit growth expected in August”.

Cochlear share price snapshot

The Cochlear share price has performed exceptionally well in recent months. The company is up 8.76% in 2024 to date at current pricing, as well as up 23.11% over the past six months. Over the past year, investors have enjoyed a share price gain of just over 46.7%.

At the current Cochlear share price, this ASX 200 healthcare stock has a market capitalisation of $19.96 billion, a price-to-earnings (P/E) ratio of 71.85 and a trailing dividend yield of 1.01%.

The post Cochlear share price falls despite 29% dividend boost appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear. The Motley Fool Australia has recommended Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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