SYDNEY--Cochlear slashed its dividend after an 18% fall in annual profit, four months after a profit warning that sparked the biggest-ever drop in the hearing-implant maker's share price.

Cochlear, which developed the world's first hearing implant in the 1970s after its founder experimented with a blade of grass inside a shell found on an Australian beach, on Tuesday reported an underlying net profit for the 12 months through June of 322.4 million Australian dollars, or US$229.0 million.

That was in line with April's guidance for a profit of between A$290 million and A$330 million, and compared with an average analyst forecast of A$309.8 million, according to data compiled by Visible Alpha.

Cochlear had previously flagged a profit at the lower end of a A$435 million-A$460 million range, but slashed its outlook on softer demand in developed markets and uncertainty over Middle East sales.

The downgrade sparked a 41% one-day drop in the company's share price.

On Tuesday, Cochlear said it expects an underlying net profit for its current fiscal year, which started July 1, of between A$330 million and A$350 million. It said cost discipline and modest implant revenue growth in developed markets would support the bottom-line growth.

Consensus ahead of Tuesday's result had been for a fiscal 2027 underlying net profit of A$340.3 million, effectively at the midpoint of guidance.

Sales revenue for the last fiscal year was broadly flat at A$2.34 billion and in line with consensus, but rose by 2% once currency moves were stripped out. Net profit dropped 62% to A$147.3 million on a statutory basis, and the company cut its dividend 40% to A$1.30.

ASX-listed Cochlear said gross margin narrowed to 71%, from 74% a year earlier, amid lower-than-expected revenue growth in high-margin developed markets, and increased low-tier sales in China.

On top of this, its recovery of overheads was hindered by a production slowdown in response to consumer demand.

It expects fiscal 2027 revenue to rise by a percentage in the low single digits and for gross margin to remain at around the same level.

Cochlear warned that developed-market trading conditions remained mixed, and that many of its marketing initiatives need time to generate more consistent growth.