• Softer-than-expected trading conditions in developed markets
• Heightened uncertainty in Middle East due to conflict
• Accelerating plans to reshape cost base to invest in growth

Cochlear Limited (ASX: COH) has provided an update on trading conditions and earnings guidance since the release of its HY26 financial results in February 2026. The company noted that since January, trading conditions for cochlear implants in developed markets have been softer than expected, with revenue flat for the quarter in constant currency. This has been driven by a combination of hospital capacity constraints, reduced referral activity from the hearing aid channel, and declining consumer sentiment in key markets. In the emerging markets, Cochlear continues to see solid growth in demand, but uncertainty has increased in the Middle East due to the current conflict, leading to expected order cancellations and delivery delays. Cochlear is also facing a reduction in reimbursement in the special access zones in China, which will lower premium tier sales in the second half. Despite the current uncertainty, Cochlear remains confident in the long-term opportunity to help more people hear and in its growth strategies, particularly in the fast-growing adult and seniors segment. To better position the business for growth, the company is accelerating the process of reshaping its organization to deliver a more flexible and lower cost-to-serve cost base. This will involve strengthening referral pathways and commercial execution in the adults and seniors segment, continuing investment in new products, digital capability and long-term market development, while driving scale across its support activities. As a result of the lower-than-expected sales, potential provisions for receivables in the Middle East, lower gross margin, and expenses from reshaping the cost base, Cochlear is reducing its published underlying net profit guidance for FY26 to $290-330 million.

Cochlear is reducing its FY26 underlying net profit guidance to $290-330 million, incorporating current exchange rates of 71 cents AUD/USD and 61 cents AUD/EUR.

Cochlear remains confident in the opportunity to help more people hear and in its long-term growth strategies, despite the current uncertainty. The company is accelerating the process of reshaping its organization to deliver a more flexible and lower cost-to-serve cost base to support its growth plans.