Sonova Holding Ag · SIX:SOON
Sonova — H1 2020/21 Earnings Presentation
36 slides from Sonova's earnings presentation, Nov 16, 2020
Slide 1: Half-Year Results 2020/21
Half-Year Results 2020/21 Arnd Kaldowski, CEO Hartwig Grevener, CFO Thomas Bernhardsgrütter, IR Stäfa, November 16, 2020
Slide 2: Disclaimer
Disclaimer This presentation contains 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 su
Slide 3: Successfully navigating in a challenging environment
Successfully navigating in a challenging environment ‒ Solid 1H performance reflecting strong execution and ongoing market recovery ‒ Faster than expected HI market recovery with solid rebound of new customers in 2Q ‒ CI market recovery lagging – good progress on mitigating impact of voluntary field
Slide 4: Sonova Group
sonova Sonova Group
Slide 5: Key highlights
Sonova Group Key highlights Sales EPS (adj.) Sales outlook CHF 1,070m CHF 1.97 +4-8% -20.9% in LC -29.1% in LC growth in LC in 2H 2020/21 EBITA (adj.) Innovation EBITA outlook CHF 174.3m Phonak Paradise +20-30%* margin of 16.3% A new paradigm in growth in LC hearing aid sound quality in 2H 2020/21 N
Slide 6: Strategic pillars
Sonova Group Strategic pillars Lead innovation in audiological & consumer experience Leverage M&A Expand and optimize to accelerate growth omni-channel audiological care strategically network Continuous process Extend reach through improvement & structural multi-channel partnerships optimization & c
Slide 7: Lead Innovation – Phonak Audéo Paradise launched in August 2020
Sonova Group Lead Innovation – Phonak Audéo™ Paradise launched in August 2020 Personalized digital solutions • New Hearing Screener 2.0 • New myPhonak 4.0 app • Hearing Diary 2.0 Unrivaled sound quality • AudiogramDirect (Remote Support) • New sound processing chip - PRISM™ • Remote Control • New mo
Slide 8: Market reception of Phonak Audéo Paradise – weeks after launch
Sonova Group Market reception of Phonak Audéo™ Paradise – 9 weeks after launch Commercial metrics Customer feedback Paradise accounts for three Vast majority of customers ~77% quarters of Phonak Audéo orders 92% would recommend Paradise in the local open market hearing aids to other HCPs Already two
Slide 9: Summary 1H 2020/21
Sonova Group Summary 1H 2020/21 ‒ Sales of CHF 1,069.6 million (-20.9% in LC) – close to PY in 2Q, HSD growth in September ‒ EBITA (adj.) of CHF 174.3 million – down -28.5% in LC, -37.6% in CHF (FX headwind: CHF 25.5 million) Group ‒ Good EBITA margin (adj.) of 16.3% (-190bps in LC) in light of lowe
Slide 10: Harvesting cost saving opportunities by driving structural optimization
Sonova Group Harvesting cost saving opportunities by driving structural optimization 2018/19 2019/20 2020/21 Satellite support & warehouses, Reduction of rooftops ✓ ✓✓ ✓ consolidation of sites Footprint Streamlining of AC POS ✓✓ 200-300 POS, largely sales neutral Supply chain consolidation, Operatio
Slide 11: Key financials – As reported and adjusted
Sonova Group Key financials – As reported and adjusted 1H 2019/20 1H 2020/21 CHF m Margin CHF m Margin ∆ % in CHF ∆ % in LC Sales 1,426.3 1,069.6 -25.0% -20.9% Gross profit (adj.) 1,011.1 70.9% 740.3 69.2% -26.8% -22.0% OPEX (adj.) 731.6 566.0 -22.6% -19.5% EBITA (adj.) 279.5 19.6% 174.3 16.3% -37.6
Slide 12: Overview of adjustments
Sonova Group Overview of adjustments 1H 2020/21 Adjustments 1H 2020/21 in CHF million Reported 1 HI segment 2 CI segment Total Adjusted Sales 1,069.6 - - - 1,069.6 Cost of sales -330.6 1.0 0.3 1.3 -329.3 Gross profit 739.0 1.0 0.3 1.3 740.3 Research & Development -78.3 0.0 0.2 0.2 -78.1 Sales & Mark
Slide 13: Sales components
Sonova Group Sales components OPERATIONAL FX in CHF million 1,500 -20.9% 1,426.3 1,400 1,300 -301.6 1,200 1,128.5 3.8 1,100 -58.9 1,069.6 1,000 0 1H 19/20 Organic M&A 1H 20/21 FX 1H 19/20 Reported LC impact Reported Growth -21.1% +0.3% -20.9% -4.1% -25.0% components ► Organic growth in 1Q heavily im
Slide 14: Sales by segment and sales components
Sonova Group Sales by segment and sales components 1H 2019/20 1H 2020/21 Δ% Δ% Δ% Δ% CHF m in CHF in LC CHF m in CHF in LC HI business 770.3 +10.6% +12.2% 607.8 -21.1% -16.7% AC business 523.8 +5.3% +9.4% 378.7 -27.7% -23.8% HI segment 1,294.1 +8.4% +11.0% 986.5 -23.8% -19.6% CI segment 132.2 +20.9%
Slide 15: Sales by regions and key markets
Sonova Group Sales by regions and key markets 1H 2019/20 1H 2020/21 CHF m Δ % in LC % Group sales CHF m Δ % in LC % Group sales EMEA 738.5 +9.7% 52% 572.9 -19.1% 54% USA 431.1 +20.3% 30% 302.3 -26.0% 28% Americas (excl. USA) 110.9 +0.5% 8% 71.7 -26.7% 7% Asia / Pacific 145.8 +11.5% 10% 122.8 -10.5%
Slide 16: EBITA components
Sonova Group EBITA components OPERATIONAL ADJUSTMENTS FX in CHF million Restructuring -28.5% & 300 AB damage award 279.5 281.4 -30.0 251.4 250 -76.9 81.6 199.8 200 -2.7 150 100 50 0 1H 19/20 adjusted Organic M&A 1H 20/21 Adjustments 1H 20/21 FX 1H 20/21 net of divestments adj. in LC in LC reported i
Slide 17: Hearing Instruments segment
Hearing Instruments segment 17
Slide 18: Key financials – Adjusted
Hearing Instruments segment Key financials – Adjusted 1H 2019/20 1H 2020/21 Δ% Δ% Δ% Δ% CHF m in CHF in LC CHF m in CHF in LC Sales 1,294.1 +8.4% +11.0% 986.5 -23.8% -19.6% Δ organic 119.0 +10.0% -256.9 -19.9% Δ acquisitions 15.9 +1.3% 3.8 0.3% Δ disposals -3.2 -0.3% - - Δ FX -31.5 -2.6% -54.5 -4.2%
Slide 19: Hearing Instruments business
Hearing Instruments segment Hearing Instruments business 1H 2019/20 1H 2020/21 Δ% Δ% Δ% Δ% CHF m in CHF in LC CHF m in CHF in LC Sales 770.3 +10.6% +12.2% 607.8 -21.1% -16.7% Δ organic 84.5 +12.1% -129.6 -16.8% Δ acquisitions 0.4 +0.1% 0.9 0.1% Δ FX -11.3 -1.6% -33.8 -4.4% ‒ Elevating commercial exe
Slide 20: Audiological Care business
Hearing Instruments segment Audiological Care business 1H 2019/20 1H 2020/21 Δ% Δ% Δ% Δ% CHF m in CHF in LC CHF m in CHF in LC Sales 523.8 +5.3% +9.4% 378.7 -27.7% -23.8% Δ organic 34.5 +6.9% -127.3 -24.3% Δ acquisitions 15.5 +3.1% 2.9 0.5% Δ disposals -3.2 -0.6% - - Δ FX -20.2 -4.1% -20.7 -3.9% ‒ E
Slide 21: Cochlear Implants segment
Cochlear Implants segment 21
Slide 22: Key financials
Cochlear Implants segment Key financials 1H 2019/20 1H 2020/21 Δ% Δ% Δ% Δ% CHF m in CHF in LC CHF m in CHF in LC Sales 132.2 +20.9% +22.3% 83.1 -37.2% -33.8% Δ organic 24.3 +22.3% -44.7 -33.8% Δ FX -1.4 -1.3% -4.4 -3.3% EBITA (adj.) 8.9 +15.3% +37.5% -10.1 NM NM EBITA margin 6.7% -40bps +90bps -12.2
Slide 23: Sales by product groups
Cochlear Implants segment Sales by product groups 1H 2019/20 1H 2020/21 CHF m Δ % in LC CHF m Δ % in LC Cochlear implant systems 98.6 +23.0% 60.6 -35.4% Upgrades and accessories 33.6 +20.1% 22.5 -29.1% Total CI segment 132.2 +22.3% 83.1 -33.8% System sales: ‒ Sharp decline due to field corrective ac
Slide 24: Financial information
sonova Financial information 24
Slide 25: Highlights
Financial information Highlights ‒ Sales of CHF 1,069.6 million Sales ‒ Growth of -20.9% in LC (organic -21.1%), -25.0% in CHF (FX headwind: CHF 58.9 million) ‒ Faster than expected recovery – close to PY in 2Q with return to HSD growth in September ‒ Gross profit margin (adj.) of 69.2%, margin down
Slide 26: Key financials – As reported and adjusted
Financial information Key financials – As reported and adjusted 1H 2019/20 1H 2020/21 CHF m Margin CHF m Margin ∆ % in CHF ∆ % in LC Sales 1,426.3 1,069.6 -25.0% -20.9% Gross profit (adj.) 1,011.1 70.9% 740.3 69.2% -26.8% -22.0% OPEX (adj.) 731.6 566.0 -22.6% -19.5% EBITA (adj.) 279.5 19.6% 174.3 16
Slide 27: Operating expenses excluding acquisition-related amortization
Financial information Operating expenses excluding acquisition-related amortization 1H 2019/20 1H 2020/21 CHF m CHF m Δ % in CHF Δ % in LC Comments Research & Development (adj.) -80.3 -78.1 -2.7% -1.4% ‒ Sustained commitment to invest in innovation - in % of sales 5.6% 7.3% ‒ Government support of C
Slide 28: Reported results and income taxes
Financial information Reported results and income taxes in CHF million In line with PY Increase from 270 CHF 5.2m in PY due 251.4 to debt increase Underlying tax rate: 13.5% 240 -21.4 230.0 (prior year: 13.5%) -10.2 219.8 210 77.1 203.2 -29.8 13.2 180 174.3 150 120 30 0 1H 20/21 Adjustment 1H 20/21
Slide 29: Operating free cash flow (OpFCF)
Financial information Operating free cash flow (OpFCF) in CHF million PY receivables 320 Use of tax payment collection catch-up term prolongations of CHF 86m 280 268.5 48.6 -65.6 -16.2 252.8 -2.5 240 20.0 0 1H 19/20 Profit before tax Depreciation & Amortization Income Δ NWC & CAPEX 1H 20/21 OpFCF ta
Slide 30: Balance sheet
Financial information Balance sheet CHF m 30 Sep 2019 30 Sep 2020 Comments Days sales outstanding (DSO) 58 58 ‒ Strong collection management throughout the pandemic Days inventory outstanding (DIO) 130 137 ‒ Increase driven by product lifecycle (Paradise launch) ‒ Targeted stock increases to mitigat
Slide 31: Outlook
sonova Outlook 31
Slide 32: Guidance for 2H & FY 2020/21
Outlook Guidance for 2H & FY 2020/21 Actual Guidance Implied guidance 1H 2020/21 2H 2020/21 FY 2020/21 Sales growth in LC -20.9% +4% to +8% -6% to -8% adj. EBITA growth* in LC -28.5% +20% to 30% ~0% * EBITA guidance excludes restructuring costs in both FY 2019/20 and FY 2020/21, damages awarded in p
Slide 33: Sonova Group – FX impact on sales and margins
Appendix Sonova Group – FX impact on sales and margins USD/CHF EUR/CHF Rate Sales EBITA USD/CHF +/- 5% +/- CHF 39 million +/- CHF 14 million EUR/CHF +/- 5% +/- CHF 49 million +/- CHF 22 million ► USD and EUR account for roughly two thirds of the overall FX exposure 33
Slide 34: Sonova Group – Sales by currency and FX rates
Appendix Sonova Group – Sales by currency and FX rates Effect Spot Other 1H-19/20 1H-20/21 1H-20/21 2H-19/20 FY-19/20 Nov-2020 USD USD 0.99 0.94 – 0.98 0.99 0.91 GBP, CAD, EUR 1.11 1.07 – 1.08 1.10 1.08 BRL, AUD GBP 1.25 1.19 – 1.26 1.25 1.20 and JPY CAD 0.75 0.69 – 0.74 0.74 0.70 AUD 0.69 0.65 – 0.
Slide 35: sonova
sonova 35
Slide 36: Thank you!
Thank you! sonova HEAR THE WORLD