Sonova well on track: Significant sales and earnings growth
Staefa (Switzerland), 13.11.2012 - In the first half of the fiscal year
2012/13, Sonova generated sales of CHF 872.4 million, an increase of 14.3% in
reported Swiss francs or 7.9% in local currencies. All businesses contributed
to the top-line growth. Group EBITA rose by 35.1% to CHF 187.0 million.
Excluding the positive impact from the currency development, the EBITA rose by
19.3%. Income after taxes rose by 43.8% to CHF 149.2 million. In the reporting
period, basic earnings per share were CHF 2.24 compared to CHF 1.56 last year.
*Group sales: up 14.3% to CHF 872.4 million
*Group EBITA: increase of 35.1% to CHF 187.0 million (margin of 21.4%)
*Hearing instruments segment: sales of CHF 801.2 million (+10.7%), EBITA of
CHF 187.6 million (+18.0 %) and an EBITA margin of 23.4%
*Cochlear implants segment: sales of CHF 71.3 million (+81.8%), reaching
break-even on an EBITA level
*Outlook confirmed. Full-year sales growth of 7%â??-â??9% and EBITA growth
of 15%â??-â??20% both measured at constant currencies
Lukas Braunschweiler, CEO of Sonova said:
"We are pleased to report strong financial results. All our businesses and
major regions contributed to the top-line growth in the first half of 2012/13.
Our broad and very competitive portfolio of hearing instruments and cochlear
implants reflects our commitment to offer a complete range of innovative
hearing solutions to all our customers. With our global footprint and our
integrated strategy, we are well-positioned for future growth, both in
established as well as in emerging markets."
Solid growth in sales
Sales for the Sonova Group reached CHF 872.4 million during the first six
months of fiscal year 2012/13, representing an increase of 14.3 % compared to
the same period last year. For the first time in four years, currencies
contributed positively adding CHF 49.0 million or 6.4 % to the reported sales
growth. In local currencies, sales thus increased by 7.9 %. Organic growth
contributed strongly by 5.9 % and growth from acquisitions accounted for 2.0
%. The cochlear implants segment performed very well and accounted for almost
half of the growth in local currencies on a group level.
All major regions contributing
The growth reported during the first half was broadly based across the globe.
All major regions achieved strong increases in local currencies. In Europe,
the hearing instruments segment achieved particularly solid growth in the UK
and Spain. In both countries the increases are related to the successful
execution of sales initiatives in all channels. On the other hand, the
business in Switzerland was still affected by the reimbursement change in July
2011, which had led to a strong demand in the first half of 2011/12. We expect
the market in Switzerland to normalize during the second half of this fiscal
year. In addition, the hearing instrument markets in Italy and France were
challenging, negatively affecting the growth and product mix in those two
countries. Encouraging was the performance in Germany where we saw a
stabilization in recent months, albeit driven predominantly by our advanced
and standard hearing instruments.
Sales in the US were driven by the return of Advanced Bionics to the market in
September 2011 as well as by a strong performance of the Unitron business.
They were further helped by an encouraging uptake of the new generation Lyric
following the launch in spring. Monthly trials of the new Lyric now exceed the
levels achieved previously by the first generation product. Sonova also
managed to successfully defend its high market share within the "Department of
Veterans Affairs" (VA) during the period. In the Americas (excl. USA), we saw
a strong performance in all key markets. In the Asia/Pacific region, sales
rose by 9.7 % in local currencies, driven by solid growth in Australia, New
Zealand and Japan.
Strong margin improvement
The reported gross profit margin for the period under review reached 68.9 %,
50 basis points over prior year, driven by positive currency effects. The
solid gross profit margin improvement in the cochlear implants segment was
offset by gradual adverse effects of mix changes in the hearing instruments
segment relating to country, product and channel.
Research and development (R&D) expenses in the first half of 2012/13 amounted
to CHF 56.5 million, or 6.5 % of sales. While it was slightly below last
year's level as well as the medium-term target range of 7 % - 8 %, this was
mainly the result of the timing of certain external costs.
Sales and marketing costs reached CHF 266.5 million for the period. Though
rising by 12.4 % in Swiss francs or 7.1 % in local currencies, they increased
slower than sales. More than half of the rise in local currencies was
attributable to acquisitions. As a percentage of sales, the reported costs
dropped from 31.1 % to 30.5 %, contributing to the operating margin
improvements in the first half of 2012/13. Despite the strong sales growth,
general and administrative expenses rose by only 1.5 % in local currencies or
5.1 % in Swiss francs. Other expenses of CHF 2.6 million reflect the amount
paid in connection with the announced out-of-court settlement with a group of
investors represented by Deminor related to the delayed profit warning in
March 2011. Last year, other expenses included one-time restructuring charges
of CHF 3.9 million in connection with the closure of Phonak Acoustic Implants.
Total operating expenses rose by 3.4 % in local currencies or 7.8 % in Swiss
francs, clearly below the sales growth. In summary, this resulted in an
operating profit before acquisition-related amortization and impairments
(EBITA) of CHF 187.0 million, or a margin of 21.4 %. This represents an
increase of 35.1 % in Swiss francs or 19.3 % in local currencies. The
favorable currency development thus contributed CHF 21.9 million to the
reported EBITA or 130 basis points of the reported operating margin
improvement of 330 basis points.
The operating profit (EBIT) rose by 41.6 % to CHF 174.4 million, reflecting
the growth in EBITA but also an increase in acquisition-related amortization
of CHF 2.2 million and considering that in the previous year, the company had
taken a one-time impairment charge of CHF 4.9 million for previously
capitalized development costs of Phonak Acoustic Implants. Net financial
expenses dropped slightly, mostly due to the lower net debt level. For the
Sonova Group, this resulted in income after taxes of CHF 149.2 million, up
43.8 % compared to the previous year. In the reporting period, basic earnings
per share were CHF 2.24 compared to CHF 1.56 last year.
Hearing instruments segment: Consolidating our market-leading position
Sales in the hearing instruments segment reached CHF 801.2 million in the
first half of 2012/13, which represents a growth rate of 4.5 % in local
currencies. With an organic growth rate of 2.4 % the Group consolidated its
market-leading position. On top of this, acquisitions made during the previous
year as well as in the reporting period contributed 2.1 % to sales. The
positive currency development added 6.2 % to the reported growth rate.
Growth within the hearing instruments segment was driven by both our wholesale
and our retail businesses. Strong contributors to the positive development in
the first half were the Phonak Essential range of products as well as the
Unitron Quantum Pro and Moxi Pro products launched at the AudiologyNOW!
congress in April 2012. Sonova generated 80 % of hearing instruments revenues
with products that have been on the market for less than two years. Launched
in October 2012, the broad range of products based on our new Phonak Quest
platform as well as the Unitron Flex product and service concept will continue
to fuel Sonova's fast pace of innovation.
While all three performance categories contributed to the growth within the
hearing instruments segment, the advanced product category showed the
strongest growth rate in the period under review. Sales of wireless
communication systems continued to be under pressure as government austerity
measures continue to affect school budgets. Sales of the miscellaneous product
category grew by 12.9 % in local currencies, driven by higher service
The hearing instruments segment achieved an EBITA of CHF 187.6 million
equivalent to an EBITA margin of 23.4 %. EBITA was up 18.0 % in Swiss francs
strongly helped by the favorable currency development. At constant currency
the EBITA margin would have reached 22.0 %. A positive operating leverage from
strict control of the operating costs was partly offset by the effects of the
aforementioned effect of the change in the country, product and channel mix on
the gross profit margin.
Cochlear implants segment: Strong rebound
Benefitting from a full six months of sales of its HiRes 90K implant following
the approval from the US Food and Drug Administration (FDA) in September 2011,
the cochlear implants segment showed strong growth in the period under review.
Neptune, the world's first sound processor suitable for swimming, also
contributed to the performance of the business. Sales rose by 81.8 % or 70.5 %
in local currencies to CHF 71.3 million. Sales in both the United States and
the EMEA region showed strong growth thus achieving a sequential increase in
the absolute sales level compared to the second half of financial year
Helped by the higher sales level and despite the sustained high level of
investment, the cochlear implants segment achieved break-even in the first
half of 2012/13, posting an EBITA of CHF 2.0 million versus an EBITA loss CHF
20.6 million in the same period a year ago, which had also included one-time
restructuring charges of CHF 3.9 million related to the closing of the Phonak
Acoustic Implants activities.
Significant increase in cash flow despite high investments for growth
Helped by the strong growth in the income before taxes, the cash flow from
operating activities rose by 48.9 % to CHF 167.1 million in the period under
review. Net working capital increased from CHF 163.4 million in March 2012 to
CHF 207.4 million in September 2012 due to higher inventory, partly related to
the cochlear implants business preparing for delivery on a large government
contract but also due to lower payables and an adverse currency impact.
Investments in tangible and intangible assets reached CHF 43.3 million and
rose by CHF 6.5 million, caused by higher capitalized development costs in the
cochlear implants business. Thus the operating free cash flow increased by
solid 51.6 % to CHF 127.1 million. The cash consideration for acquisitions was
CHF 40.8 million, including earn-out payments for prior period acquisitions,
and was up CHF 4.3 million over prior year. In summary, this resulted in a
free cash flow of CHF 86.3 million up 82.4 % from last year.
Capital employed reached CHF 1,647 million after CHF 1,540 million in March
2012. The increase was due to the higher net working capital as well as
currency impacts. The net debt position was at CHF 51.4 million, slightly down
sequentially from the CHF 64.4 million in March 2012, despite the fact that
Sonova paid out CHF 79.9 million to its shareholders, in the form of a
distribution from the capital contribution reserve. The Group's equity
amounted to CHF 1,596 million with the equity ratio rising from 64.5 % in
March 2012 to 67.1 % in September 2012.
Sonova continues to expect solid growth in sales and earnings in FY 2012/13,
both in the hearing instruments and cochlear implants segment, reflecting the
success of its current product and solution portfolio as well as its continued
commitment to innovation. Sonova still sees overall full-year sales to grow in
the range of 7 % - 9 % and EBITA in the range of 15 % - 20 % both measured at
Based on the current exchange rate environment the beneficial currency effects
observed in the first half year can be expected to continue in the second half
year, however likely on a more moderate level. A strengthening of the US
dollar by 5% impacts sales of the fiscal year by approximately CHF +34 million
and EBITA by approximately CHF +11 million. The corresponding effect of a
stronger euro is CHF +25 million on sales and CHF +15 million on EBITA.
While actual reported results may vary based on currency fluctuations, Sonova
continues to mitigate the impact of the strong Swiss franc on earnings growth
through its long-term global resource allocation strategy.
The PDF file of the complete Semi-Annual Report 2012/13 is available on our
- End -
Phone +41 58 928 33 24
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Contacts Investor Relations
Phone +41 58 928 33 44
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Phone +41 58 928 33 22
This Media Release may contain forward-looking statements which offer no
guarantee with regard to future performance. These statements are made on the
basis of management's views and assumptions regarding future events and
business performance at the time the statements are made. They are subject to
risks and uncertainties including, but not confined to, future global economic
conditions, exchange rates, legal provisions, market conditions, activities by
competitors and other factors outside the company's control.
Sonova Holding AG, headquartered in Staefa, Switzerland, is the leading
manufacturer of innovative hearing care solutions. The group operates through
its three core business brands Phonak, Unitron, Advanced Bionics. Sonova
develops and distributes advanced hearing care solutions such as hearing
instruments, cochlear implants, wireless communication systems for
audiological applications as well as professional solutions for hearing
protection. With the most extensive product portfolio and the highest R&D
investment in the industry, Sonova aims to be the recognized innovation leader
in the global hearing care market. Present across the globe in over 90
countries, and with a workforce of over 8,000 dedicated employees, Sonova
generated sales of CHF 1,62 billion in the financial year 2011/12 and a net
profit of CHF 246 million. A focused corporate strategy drives Sonova
sustainably further in a growing and still significantly under-penetrated
market. Founded in 1947, the company has been devoted to promoting better
understanding and communication for over 65 years, thus considerably improving
people's hearing ability and speech intelligibility and thereby their quality
For more information please visit www.sonova.com.
Sonova shares (ticker symbol:SOON) have been listed on the SIX Swiss Exchange
since 1994. The securities of Sonova have not been and will not be registered
under the U.S. Securities Act and may not be offered or sold in the United
States of America except pursuant to an exemption from the registration
requirements under the U.S. Securities Act, or outside the United States of
America in reliance on Regulation S under the U.S. Securities Act.
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