Disappointing First-Half Result From Cochlear Confirms Profitable Growth Challenging to Come By

Wide-moat Cochlear’s flat first-half earnings reported proved disappointing. However, this does confirm our thesis that profitable growth is increasingly harder to achieve. While the topline remained buoyant, up 5% in constant currency on the previous corresponding period, or pcp, selling and marketing costs grew well ahead of this, up 9% in constant currency. Selling costs ran at over 30% of revenue, which we expect to persist over the long term as the company invests to drive the top line.