Highlights

• Sales Revenue slipped 1% to A$2,343.4 million but grew 2% in constant currency, with second-half sales up 6%.

• Underlying net profit fell 22% to A$322.4 million, while statutory net profit dropped 62% to A$147.3 million.

• Free Cash Flow rose A$141.1 million to A$263.5 million, and net cash closed the year at A$187.7 million.

• The company guided FY27 underlying net profit to A$330 million to A$350 million on low single-digit constant currency sales growth.

A 22% fall in Underlying Profit has given Cochlear Limited (ASX:COH) a lower base to build from, and the hearing implant maker has put numbers on the rebuild: underlying net profit of A$330 million to A$350 million in FY27. For the year to 30 June 2026, underlying net profit was A$322.4 million, which the company said sat at the upper end of its revised guidance. Shares were trading at A$146.81 on 23 October 2026, up 4.42%.

Mix, Manufacturing and One-Off Costs Squeeze Margins

Sales revenue came to A$2,343.4 million, down 1% as reported and up 2% in constant currency. Second-half sales grew 6% in constant currency. Gross Margin fell to 71% from 74%, with sales mix costing 1.5 percentage points, manufacturing variances from lower production 1.2 points and currency 0.6 points.

Transitional costs of A$69 million, split between A$32 million of restructuring and A$37 million of short-term incentive replenishment, also weighed. Statutory net profit fell 62% to A$147.3 million after significant items, including A$109.1 million tied mainly to a decline in the share price of investee Epiminder.

Implants Hold, Services and Acoustics Diverge

Cochlear implant revenue was A$1,435.2 million, down 2% reported and flat in constant currency. Unit volumes rose 5% to 56,692, driven by lower-priced emerging market units. The Nexa System made up more than 95% of developed market implant sales by June, with an average price increase of 3%.

In the United States, implant sales rose 4% in constant currency, with direct-to-consumer surgeries up 10%. Western Europe fell 8%, and Asia Pacific rose 7%.

Services revenue rose 4% to A$634.9 million, or 6% in constant currency. Acoustics revenue of A$273.3 million fell 1% but rose 1% in constant currency, with the second half up 5% on expansion of the Osia System.

Cash Recovers, Dividend Resets

Operating cash flow reached A$368.0 million, and free cash flow rose to A$263.5 million. Net cash was A$187.7 million, down A$88.0 million, and the share buyback stayed inactive because net cash sat below the company's target of about A$200 million.

The final dividend was A$1.30 per share, down 40% and 85% franked. With an unchanged A$2.15 interim, the full-year dividend was A$3.45, down 20%, representing a 70% payout of underlying net profit.

FY27 Priorities and Guidance Detail

Management is cutting fixed costs to create capacity for A$25 million of additional growth Investment in FY27. It is also pursuing what it calls the medicalisation of hearing loss to strengthen adult referral pathways, and advancing the Nexa platform, including a drug-eluting electrode and a totally implantable cochlear implant.

For FY27, the company expects low single-digit constant currency sales growth, gross margin of about 70% to 71%, Research and Development of about 13% of sales and Capital Expenditure of A$100 million to A$110 million. Reported operating expenses are expected to decline slightly. Acoustics growth is expected to be supported by the Osia 3 launch in the first half.

A stronger Australian dollar is expected to reduce underlying net profit by about 10% compared with FY26 average rates. The company also expects to report about A$60 million after tax of cloud-related costs as a significant item. Over the medium term, it aims for net profit margin to return to 18%. Cochlear's Annual General Meeting is scheduled for 26 October 2026.