The February results season has done little to restore the spirits of beaten-up investors, with blue chips Boral and Cochlear being the latest corporates to trot out disappointing profits.
Cochlear — a pioneer and dominant player in the bionic ear market — reported a 1 per cent slip in half-year profit to $111 million despite stronger sales revenue.
While the result was dragged down by a loss of share in the Chinese Government tender for hearing implants and a one-off increase in US tax expenses, the company maintained it was on track to deliver a full-year profit of up to $250 million.
Cochlear chief executive Dig Howitt said the release of new products would strengthen the company’s position in the market.
“The positive momentum we have experienced across the developed markets over the past few years has continued into 2018 with a 12 per cent increase in Cochlear implant units delivered across these markets,” Mr Howitt said.
Despite the upbeat commentary, Cochlear shares fell 1 per cent in morning trade to $170 a share against a generally firmer market.
Mr Howitt said the company had generated solid cash flows which in turn helped fund an 8 per cent increase in the interim dividend.
He noted while the recently passed tax cuts in the US were positive for the company, they would deliver only a small annual benefit of about $4 million.
Boral boosted by US acquisition
Boral’s solid increase in first-half profit also failed to fire up investor interest despite the inclusion of its $3.5 billion Headwaters acquisition in the accounts for the first time.
Net profit was up 13 per cent to $173 million, while underlying profit — stripping out one-off significant items — was up almost 60 per cent.
Sales revenue rose 40 per cent to $2.9 billion, reflecting the initial contribution from Headwaters.
Boral chief executive Mike Kane said the Headquarters integration was on track to boost the company’s global reach.
“We are well on the way to exceed our targeted synergies for the full year, with $US18 million of synergy benefits banked in the first half, and to exceed $US100 million in four years,” he said.
Mr Kane said Boral would benefit from a multi-year increase in infrastructure spending both in its Australian and US markets.
“Higher revenues and earnings were delivered by increased spending on infrastructure, in line with our expectations that a large proportion of our work would gradually shift from residential to infrastructure projects,” he said.
“There is more work to be done in North America … but overall these results highlight significantly better growth prospects in North America.”
Boral shares fell 1 per cent to $7.35 in morning trade.
Overall the ASX 200 was up 0.6 per cent to 5,856 points at 1pm (AEST).