Cochlear Slashes FY26 Profit Guidance Amid Weakening Demand

Cochlear (COH.AX) has issued a substantial downward revision to its underlying net profit guidance for fiscal year 2026, now projecting a range of A$290 million to A$330 million. This represents a steep decline from the previous guidance range of A$435 million to A$460 million, a target the company had already suggested it would likely hit the lower end of. The adjustment reflects a combination of current exchange rate pressures and a noticeable softening in demand. This decline in demand has forced the company to scale back its production plans, which is expected to compress gross margins by approximately one percentage point as a result of lower overhead recoveries. Looking ahead to the second half of the fiscal year, the company now anticipates sales growth between 2% and 6% on a constant currency basis. Despite the profit warning, management maintains confidence in its long-term growth strategy, specifically targeting the adult and seniors market segment for increased investment. The market reacted aggressively to the guidance cut, with shares plummeting 40.44% to trade at A$100.02. To mitigate the downturn and support future expansion, Cochlear is accelerating plans to restructure its cost base, aiming to increase the capacity for strategic growth investments.