Hearing implants pioneer Cochlear urged to cough up JobKeeper in full but stays firm

A medical pioneer company pressured over JobKeeper has pledged to pay some of it back but not all, saying it was used as intended.

Hearing implant pioneer Cochlear has been urged to pay back COVID-19 government assistance in full.

Hearing implant pioneer Cochlear has been urged to pay back COVID-19 government assistance in full after booking a big earnings recovery, with an MP saying “they can afford it”.

The company reported a 50 per cent surge in statutory net profit to $236.2m for the six months to December 31 on Friday.

On an underlying basis, however, which excludes one‐off items such as innovation funds and government assistance, net profit was down 6 per cent to $125.3m.

Cochlear pocketed $23.6m in government cash in 2019-20, but in April chief executive and president Dig Howitt slashed his base salary by 30 per cent, senior executives cut theirs by 20 per cent and non-executive directors reduced their board and committee fees by almost one-third.

Mr Howitt also did not receive any short-term incentive for the financial year.

And on Friday, Cochlear said it had decided to repay $24.6m in government help, largely JobKeeper, received during the first half in coming months.

“Cochlear met the eligibility requirements to participate in these programs, which were designed to support jobs during COVID, providing an important safety net at a time of great disruption and uncertainty,” the company said.

“Trading conditions since July have improved, and while there is still uncertainty ahead, we consider returning the COVID government assistance payments the appropriate thing to do.”

But opposition assistant Treasury spokesman Andrew Leigh took to social media to give Cochlear “1½ cheers” for repaying “half of its JobKeeper after enjoying a profit bonanza”.

Dr John Rice did South Australia’s first child Cochlear implant and has one himself. Here, he is holding an original prototype. Picture: Tricia Watkinson

“They can easily afford to repay the rest, and should do so now,” he tweeted.

Mr Leigh went on to say that while some companies had voluntarily done the right thing and repaid all of their JobKeeper, many firms had just decided to hang on to it.

“That’s in contradiction not only to the ethics and values of most Australians but also to the professed ethics of these companies themselves,” he told NCA NewsWire.

“They say they’re there for their customers and their broader community. But when push comes to shove, they’re hanging on to the money despite having extraordinary profits.

“They need to do the right thing, and the Morrison government needs to join Labor in calling for them to do so.”

A Cochlear spokeswoman said revenue fell by 60 per cent in April and May as the pandemic took hold and cochlear implant unit sales plunged by about 80 per cent across developed markets, with most elective surgeries postponed across the US and Western Europe.

“Cochlear was not profitable through this period,” she said.

“With this loss of revenue, JobKeeper helped us retain employees – being used as it was intended.

“As an example, our manufacturing staff shifted to 50 per cent production for three months due to the drop in demand; however, with JobKeeper we were able to keep them on full pay through this time.”

Gold Coast-based Alan Harmsworth lost his hearing during his service to the NZ Air Force and is one of countless people whose quality of life has dramatically improved thanks to his Cochlear implant. Picture: Jerad Williams

Earlier this month, high-end furniture retailer Nick Scali caved to pressure for hanging on to JobKeeper while enjoying huge first-half profit growth, handing the cash back.

Other companies that have come under pressure to refund the money after posting stellar financial results include retailer Premier Investments, which owns brands including Just Jeans and Smiggle, and Harvey Norman.

Detailing its profit surge, Cochlear said surgery volumes had recovered following COVID-19 shutdowns, strongly rebounding in the US, Japan, Korea and China, with improving momentum in Western Europe and a slower recovery across most emerging markets.

The company brought back its dividend, which was suspended in August after revenues plunged, due to the improved trading conditions and cash flow generation.

Cochlear declared an interim dividend of $1.15 per share, down from $1.60 for the previous first half.

Macquarie Research said the result beat expectations, noting surgeries were back to pre-COVID-19 levels in most countries.

“Further, the majority of clinics have reopened, and the new patient pipeline is quickly rebuilding,” the analysts said.

Shares in Cochlear were up almost 9 per cent at $219.47 at 3pm AEDT.