Sonova Holding Ag · SIX:SOON

Sonova — FY2012/13 Earnings Presentation

58 slides from Sonova's earnings presentation, May 21, 2013

  1. Slide 1: FY 2012/13 Results

    FY 2012/13 RESULTS Staefa | 21 May 2013 | Lukas Braunschweiler, CEO & Hartwig Grevener CFO

  2. Slide 2: Disclaimer

    DISCLAIMER This presentation may contain forward-looking statements including, but not limited to, projections of future performance of products, financial conditions, results of operations and cash flows. The statements are made on the basis of management’s views and assumptions regarding future ev

  3. Slide 3: Contents

    CONTENTS 01 BUSINESS – SONOVA GROUP 02 BUSINESS – HEARING INSTRUMENTS 03 BUSINESS – COCHLEAR IMPLANTS 04 FINANCIAL REVIEW 05 OUTLOOK 06 UPCOMING EVENTS May 21, 2013 Page 3

  4. Slide 4: Business Case

    BUSINESS CASE CLEAR AND FOCUSED STRATEGY – CUSTOMER DRIVEN INNOVATION SONOVA: «HEAR THE WORLD» Key to our success - Our customers and our employees Broadest product and service offering / portfolio - Hearing instruments (Phonak, Unitron) - Cochlear implants (Advanced Bionics) - Professional services

  5. Slide 5: Sonova Group

    SONOVA GROUP BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES SONOVA Group HEARING INSTRUMENT (HI) IMPLANT (CI) Segment Segment HI HI HI CI RETAIL UNITRON PHONAK ADVANCED BIONICS Business Business Business Business May 21, 2013 Page 5

  6. Slide 6: Business – Sonova Group

    sSonova 01 BUSINESS — SONOVA GROUP

  7. Slide 7: Highlights FY 2012/13

    SONOVA GROUP HIGHLIGHTS FY 2012/13 – Solid sales growth – Sales of CHF 1’795.3 million – up 10.8% in Swiss francs and 7.4% in LC – All major regions contributing to the increase – Strong EBITA growth and margin expansion – normalized for one-off charges – Normalized EBITA of CHF 386.4 million – up 2

  8. Slide 8: Performance History

    SONOVA GROUP PERFORMANCE HISTORY – STRONG FINANCIAL TRACK RECORD SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 2'000 450 45% 1'800 400 40% 1'600 350 35% 1'400 300 30% 1'200 250 25% 1'000 200 20% 800 600 150 15% 400 100 10% 200 50 5% 0 0 0% 07/08 08/09 09/10 10/11 11/12 12/13 07/0

  9. Slide 9: Key Financials – As Reported and Normalized

    SONOVA GROUP KEY FINANCIALS – AS REPORTED AND NORMALIZED – VARIANCES IN CHF FY 2011/12 FY 2012/13 ONE-OFF FY 2012/13 in CHF million Δ% Δ% REPORTED COST* NORMALIZED Sales 1’619.8 1’795.3 10.8% 1'795.3 10.8% Gross profit 1’105.9 1’240.1 12.1% 1'240.1 12.1% - Gross profit margin 68.3% 69.1% 69.1% OPEX

  10. Slide 10: Key Financials – Normalized, CHF

    SONOVA GROUP KEY FINANCIALS – NORMALIZED – VARIANCES IN CHF in CHF million 1H 2012/13 Δ% 2H 2012/13 Δ% FY 2012/13 Δ% Sales 872.4 14.3% 922.8 7.7% 1'795.3 10.8% Gross profit 600.7 15.1% 639.4 9.5% 1'240.1 12.1% - Gross profit margin 68.9% 69.3% 69.1% OPEX 411.1 7.1% 442.6 8.7% 853.7 8.0% EBITA 189.6

  11. Slide 11: Key Financials – Normalized, LC

    SONOVA GROUP KEY FINANCIALS – NORMALIZED – VARIANCES IN LC in CHF million 1H 2012/13 Δ % in LC 2H 2012/13 Δ % in LC FY 2012/13 Δ % in LC Sales 872.4 7.9% 922.8 6.9% 1'795.3 7.4% Gross profit 600.7 7.6% 639.4 8.8% 1'240.1 8.2% - Gross profit margin 68.9% 69.3% 69.1% OPEX 411.1 2.7% 442.6 7.9% 853.7 5

  12. Slide 12: Growth Components

    SONOVA GROUP GROWTH COMPONENTS Growth Growth Growth in CHF million 1H 2012/13 2H 2012/13 FY 2012/13 Contribution Contribution Contribution Growth in LC 60.4 7.9% 59.0 6.9% 119.5 7.4% - Thereof organic 45.4 5.9% 38.8 4.5% 84.1 5.2% - Thereof acquisitions 15.1 2.0% 20.3 2.4% 35.3 2.2% Currency effect

  13. Slide 13: Sales – Business Segments

    SONOVA GROUP SALES – BUSINESS SEGMENTS in CHF million 1H 2012/13 Δ % in LC 2H 2012/13 Δ % in LC FY 2012/13 Δ % in LC HI Hearing Instruments 801.2 4.5% 847.4 5.2% 1’648.5 4.9% CI Hearing Implants 71.3 70.5% 75.5 31.0% 146.7 47.1% Total SONOVA 872.4 7.9% 922.8 6.9% 1’795.3 7.4% HI BUSINESS ACCELERATIN

  14. Slide 14: Sales – Regions and Key Markets

    SONOVA GROUP SALES – REGIONS AND KEY MARKETS in CHF million 1H 2012/13 Δ % in LC 2H 2012/13 Δ % in LC FY 2012/13 Δ % in LC EMEA 331.6 5.8% 373.9 4.8% 705.5 5.3% USA 338.9 9.2% 332.5 4.7% 671.4 6.8% Americas (excl. USA) 114.2 9.7% 108.1 5.9% 222.3 7.8% Asia / Pacific 87.7 9.7% 108.3 24.6% 196.0 17.7%

  15. Slide 15: Financial Targets

    FINANCIAL TARGETS ON COURSE FOR MID TERM FINANCIAL TARGETS 3'000 40% EBITA Margin / ROCE (%) 2'000 30% Sales (in CHF million) 1'000 20% 0 10% 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Sales EBITA Margin (%) ROCE (%) Notes: FY 2007/08 Excluding one-off cost for the prohibited

  16. Slide 16: Business – Hearing Instruments

    02 BUSINESS – HEARING INSTRUMENTS

  17. Slide 17: Hearing Instruments Business Summary FY 2012/13

    HEARING INSTRUMENTS BUSINESS SUMMARY FY 2012/13 – Solid growth despite difficult markets – Growth accelerated in 2H driven by US and AP markets – Significantly higher growth of Premium products in 2H – Continuing challenges in some EU markets: reimbursement changes, added to by public tenders – Conn

  18. Slide 18: Hearing Instruments Performance History

    HEARING INSTRUMENTS PERFORMANCE HISTORY – STRONG FINANCIAL TRACK RECORD SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 2'000 450 45% 1'800 400 40% 1'600 350 35% 1'400 300 30% 1'200 250 25% 1'000 200 20% 800 600 150 15% 400 100 10% 200 50 5% 0 0 0% 07/08 08/09 09/10 10/11 11/12 12/

  19. Slide 19: Hearing Instruments Financial Performance

    HEARING INSTRUMENTS FINANCIAL PERFORMANCE in CHF million 1H 2012/13 Δ % in CHF 2H 2012/13 Δ % in CHF FY 2012/13 Δ % in CHF Δ % in LC Sales 801.2 10.7% 847.4 6.0% 1'648.5 8.2% 4.9% EBITA 187.6 18.0% 197.1 9.3% 384.7 13.4% 6.7% - EBITA margin 23.4% 23.3% 23.3% EBITA MARGIN EXPANDING BY 100 BPS – 2H EB

  20. Slide 20: Sales – Growth Components

    HEARING INSTRUMENTS SALES – GROWTH COMPONENTS in CHF million 1H 2012/13 Δ % COMP’ 2H 2012/13 Δ % COMP’ FY 2012/13 Δ % COMP’ Growth in LC 32.8 4.5% 41.4 5.2% 74.1 4.9% - Thereof organic 17.7 2.4% 21.1 2.7% 38.8 2.6% - Thereof acquisitions 15.1 2.1% 20.3 2.5% 35.3 2.3% Currency effect 44.6 6.2% 6.3 0.

  21. Slide 21: Sales – Product Groups

    HEARING INSTRUMENTS SALES – PRODUCT GROUPS in CHF million 1H 2012/13 Δ % in LC 2H 2012/13 Δ % in LC FY 2012/13 Δ % in LC HI Premium 192.1 2.2% 201.2 8.0% 393.3 4.8% HI Advanced 211.5 9.8% 223.0 1.3% 434.5 5.4% HI Standard 239.8 0.9% 256.1 6.7% 495.9 3.6% Wireless communication 31.3 -14.4% 32.9 4.2%

  22. Slide 22: Phonak Product Pipeline

    PHONAK PRODUCT PIPELINE: DRIVE HIGH INNOVATION & PRODUCT LAUNCH RATE TIMELINE / CY 1H 11 2H 11 1H 12 2H 12 1H 13 2H 13 1H 14 2H 14 1H 15 2H 15 POWER – Naída Q F1 F3 F4 F2 HI - Premium BTE – Bolero Q RIC – Audéo Q ITE – Virto Q F 5 F 1 F 2 F 3 F 4 F 5 F1 F2 F5 HI - Advanced F1 F5 HI - Standard F1 / 4

  23. Slide 23: Phonak Quest

    PHONAK QUEST THE MOST COMPREHENSIVE PRODUCT PORTFOLIO Bolero Q Virto Q Audéo Q Naída Q BTE ITE RIC POWER PROFOUND MODERATE MILD With hearing system Without hearing system 20%* 15%* 40%* 25%* EUHA 2012 EUHA 2012 AAA 2013 AAA 2013 * % of the overall market BINAURAL VOICESTREAM TECHNOLOGY FOR ALL PRODU

  24. Slide 24: Phonak Product Solutions

    PHONAK QUEST THE FULL CHOICE OF PHONAK PRODUCT SOLUTIONS Bolero Q Virto Q Audéo Q Naída Q BTE ITE RIC POWER Q90 Performance levels Q70 Q50 Q30 FOUR PERFORMANCE LEVELS – NEW FEATURES – NEW HOUSING May 21, 2013 Page 24

  25. Slide 25: Lyric: Trial and Conversion Data

    PHONAK LYRIC LYRIC: TRIAL AND CONVERSION DATA Number of Trials Achievements FY2012/13  Phonak-branded DTC drives lead generation  Active subscriptions up 75%  Trial Success Rate up by 33%  Renewal rate trending up SUCCESSFUL INTRODUCTION AND RAMP-UP OF NEW GENERATION OF LYRIC May 21, 2013 Page 2

  26. Slide 26: Phonak Roger

    PHONAK ROGER NEW DIGITAL WIRELESS COMMUNICATION TECHNOLOGY ON 2.4 GHZ Scope of ROGER technology:  Long range broadcast in noise  Operates on 2.4 GHz band (ISM)  Parallel audio and data transmission Outstanding performance:  Most demanding use case: schools !  Miniature low-power receivers  Low

  27. Slide 27: Unitron Product Pipeline

    UNITRON PRODUCT PIPELINE: DRIVE FOCUSED PRODUCT INNOVATION TIMELINE / CY 1H 11 2H 11 1H 12 2H 12 1H 13 2H 13 1H 14 2H 14 1H 15 2H 15 M PRO Q PRO M PRO Q PRO F 3 FLEX Trial&Upgrade HI - Premium Moxi Kiss – RIC Q – FLEX 1 M– FLEX 1 HI - Advanced M1 F 1 Q1 F 2 Q- M 2 HI - Standard HI - Essential/Basic

  28. Slide 28: Unitron Moxi Kiss

    UNITRON MOXI MOXI KISS – INSPIRED NEW RIC DESIGN Powered by the Era platform:  High-fidelity, natural sound  Fully wireless  New dual colour concept  Includes tinnitus masker  Proven Moxi features and technology Natural sound experience:  Automatic SmartFocus for easy, natural listening  Spee

  29. Slide 29: Unitron Flex:Trial and Flex:Upgrade

    UNITRON FLEX FLEX:TRIAL AND FLEX:UPGRADE – ONE INTO MANY Pro 20 12 6 E AVAILABLE ON ERA PLATFORM QUANTUM AND MOXI PRODUCTS May 21, 2013 Page 29

  30. Slide 30: Connect Hearing: Build Strong Service Positions

    CONNECT HEARING MARKETS: BUILD STRONG SERVICE POSITIONS IN KEY MARKETS AP AM EU FOCUS ON: US, CA, BR, UK, FR, BE, AT, AUS/NZ May 21, 2013 Page 30

  31. Slide 31: Market Leading Shop in Shop Concept

    CONNECT HEARING MARKET LEADING SHOP IN SHOP CONCEPT  Well-established partnership between David Ormerod Hearing Centres (DOHC) and Boots since 2003  Number of locations in the UK grew from 64 to more than 340 during that time  Boots hearingcare offers professional audiological services at attract

  32. Slide 32: Business – Cochlear Implants

    03 BUSINESS – COCHLEAR IMPLANTS

  33. Slide 33: Cochlear Implants Business Summary FY 2012/13

    COCHLEAR IMPLANTS BUSINESS SUMMARY FY 2012/13 – Record sales – surpassing break-even (normalized for one-off cost) – Sales of CHF 146.7 million – growth of 52.3% in Swiss francs and of 47.1% in LC – Strong 1H performance in NA – sequentially slowing in 2H in line with the market – Robust performance

  34. Slide 34: Cochlear Implants Performance History

    COCHLEAR IMPLANTS PERFORMANCE HISTORY SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 150 10 20% 125 0 0% 100 -10 -20% 75 -20 -40% 50 -30 -60% 25 -40 -80% 0 -50 -100% 07/08 08/09 09/10 10/11 11/12 12/13 07/08 08/09 09/10 10/11 11/12 12/13 FY 2008/09 FY 2009/10 FY 2010/11 FY 2011/12

  35. Slide 35: Cochlear Implants Key Financials

    COCHLEAR IMPLANTS KEY FINANCIALS – NORMALIZED in CHF million 1H 2012/13 Δ % in CHF 2H 2012/13 Δ % in CHF FY 2012/13 Δ % in CHF Δ % in LC Sales 71.3 81.8% 75.5 32.1% 146.7 52.3% 47.1% EBITA 2.0 n/a -0.3 n/a 1.8 n/a n/a - EBITA margin 2.8% -0.3% 1.2% RECORD SALES – REACHING EBITA BREAK-EVEN May 21, 20

  36. Slide 36: Sales – Growth Components

    COCHLEAR IMPLANTS SALES – GROWTH COMPONENTS in CHF million 1H 2012/13 Δ % COMP’ 2H 2012/13 Δ % COMP’ FY 2012/13 Δ % COMP’ Growth in LC 27.7 70.5% 17.7 31.0% 45.3 47.1% Currency effect 4.4 11.3% 0.7 1.1% 5.1 5.2% Growth as reported 32.1 81.8% 18.3 32.1% 50.4 52.3% STRONG GROWTH IN LC – NARROWING POSI

  37. Slide 37: Advanced Bionics Product Pipeline

    ADVANCED BIONICS PRODUCT PIPELINE: ACCELERATE INNOVATION RATE – LEVERAGE PHONAK TIMELINE / CY 1H 11 2H 11 1H 12 2H 12 1H 13 2H 13 1H 14 2H 14 1H 15 2H 15 FDA HiFocus N El 2 N El 3 CI - Electrodes CE N El 2 N El 3 Mid-Scala FDA HiRes 90k N Imp 2 N Imp 3 CI - Implants CE Advantage N Imp 2 N Imp 3 FDA

  38. Slide 38: HiRes 90K Advantage Implant

    ADVANCED BIONICS IMPLANTS HIRES 90K ADVANTAGE IMPLANT The world’s most advanced cochlear implant:  Industry’s highest case impact resistance; able to withstand 6 joules  Nearly unlimited ways to deliver stimulation  The only device with 16 independent current sources that facilitates current stee

  39. Slide 39: HiFocus Mid-Scala Electrode

    ADVANCED BIONICS ELECTRODES HIFOCUS MID-SCALA ELECTRODE Designed to protect delicate cochlea structures:  Mid-scala placement  Smallest pre-curved electrode  Designed for surgical flexibility and ease of use Note: Approved in Europe and Canada, pending regulatory approval in the United States. Ma

  40. Slide 40: Naída CI Q70 Processor

    ADVANCED BIONICS PROCESSORS NAÍDA CI Q70 PROCESSOR – INTEGRATED PHONAK TECHNOLOGY Small size – Big performance:  40% smaller than Harmony BTE  With Phonak Binaural VoiceStream Technology  DuoPhone  ZoomControl  QuickSync  Wireless connectivity  Using the AccessLine  Bimodal technology  Prov

  41. Slide 41: Financial Review

    sSonova 04 FINANCIAL REVIEW

  42. Slide 42: Financial Highlights

    FY 2012/13 FINANCIAL HIGHLIGHTS  Solid growth in both sales and earnings  Gross Profit of CHF 1’240.1 million – Gross Profit margin of 69.1%, up 80 basis points  Normalized OPEX growth of 5.4% in LC compared to 7.4% sales growth in LC  Significant net R&D cost of CHF 113.5 million or 6.3% of sal

  43. Slide 43: Solid Financial Performance – Normalized

    FY 2012/13 SOLID FINANCIAL PERFORMANCE – NORMALIZED in CHF million FY 2011/12 FY 2012/13 Δ % in CHF Δ % in LC Sales 1'619.8 1'795.3 10.8% 7.4% Gross profit 1'105.9 1'240.1 12.1% 8.2% - Gross profit margin 68.3% 69.1% OPEX 790.7 853.7 8.0% 5.4% EBITA 315.2 386.4 22.6% 15.4% - EBITA margin 19.5% 21.5%

  44. Slide 44: Group EBITA Development

    FY 2012/13 GROUP EBITA DEVELOPMENT 386.4 +5.1 363.7 +22.7 +43.4 -203.6 315.2 182.8 +48.5 +15.4% +71.2 Margin: Margin: +22.6% Margin: Margin: 19.5% 20.9% 21.5% 10.2% EBITA Organic Acquisitions EBITA FX EBITA One-off EBITA 2011/12 Growth 2012/13 effect 2012/13 cost (reported) const. FX normalized 2012

  45. Slide 45: Operating Expenses

    FY 2012/13 OPERATING EXPENSES in CHF million FY 2011/12 FY 2012/13 Δ % in CHF Δ % in LC Research & 116.2 113.5 -2.3% -3.7% Development in % of sales 7.2% 6.3% Sales & Marketing 503.4 558.9 11.0% 8.0% in % of sales 31.1% 31.1% General & Administration 168.7 181.3 7.5% 5.4% in % of sales 10.4% 10.1% S

  46. Slide 46: R&D Spending

    FY 2012/13 R&D SPENDING in CHF million / % of sales 140.0 132.7 7.8% 123.2 8.2% 7.6% 16.5 26.5 15.5 +9.5 +7.4 +7.7% 116.2 +5.5% 107.8 113.5 7.2% 6.3% 6.7% 2010/11 2011/12 2012/13 AB capitalized development costs (net of amortization) R&D costs charged to the P&L CONTINUING STRONG R&D INVESTMENTS DRI

  47. Slide 47: One-off Cost Considered in Reported Results

    SONOVA GROUP ONE-OFF COST CONSIDERED IN REPORTED RESULTS – Increase of Advanced Bionics product liability provisions (CHF 197.8 million) – Product liability provision increase by CHF 197.8 million related to the “Vendor B” recall – Voluntary recall issued by Advanced Bionics in March 2006 (prior to

  48. Slide 48: Reported Results and Income Taxes

    FY 2012/13 REPORTED RESULTS AND INCOME TAXES in CHF million FY 2011/12 FY 2012/13 Δ % in CHF EBITA 315.2 182.8 -42.0% Amortization / Impairment -27.5 -26.1 -5.0% Operating profit (EBIT) 287.7 156.7 -45.5% in % of sales 17.8% 8.7% Financial result -5.9 -6.9 15.9% Income before taxes 281.8 149.8 -46.8

  49. Slide 49: Significant Increase in Cash Flow

    FY 2012/13 SIGNIFICANT INCREASE IN CASH FLOW in CHF million FY 2011/12 FY 2012/13 Δ % in CHF Cash flow before changes in NWC 387.5 443.7 14.5% Changes in net working capital and taxes paid -82.7 -56.6 -31.5% Operating cash flow 304.8 387.1 27.0% in % of sales 18.8% 21.6% Cash flow from investing act

  50. Slide 50: Balance Sheet

    FY 2012/13 BALANCE SHEET in CHF million FY 2011/12 FY 2012/13 Δ % in CHF Net working capital 163.4 187.1 14.5% Days sales outstanding (DSO) 72 71 -1.4% Days inventory outstanding (DIO) 122 148 21.3% Capital employed 1'540.3 1'449.5 -5.9% Net cash -64.4 185.8 > 100% Equity 1'475.9 1'635.3 10.8% Equit

  51. Slide 51: Dividend – Proposed Increase by 33% to CHF 1.60

    FY 2012/13 DIVIDEND – PROPOSED INCREASE BY 33% TO CHF 1.60 Dividend / distribution development in CHF per share 1.60 1.20 1.20 1.20 1.00 1.00 0.75 0.50 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 PROPOSED DIVIDEND REPRESENTS 35% OF NORMALIZED INCOME AFTER TAXES May 21, 2013 Page

  52. Slide 52: Outlook

    sSonova 05 OUTLOOK

  53. Slide 53: FY 2013/14 Guidance – In Local Currencies

    SONOVA GROUP FY 2013/14 GUIDANCE – IN LOCAL CURRENCIES Guidance Actual - normalized FY 2013/14 FY 2012/13 Sales Sales growth in LC 6%-8% 7.4% thereof acquisition related growth approx. 1% 2.2% FX-impact n/a 3.4% Total sales growth in CHF n/a 10.8% EBITA EBITA growth in lc 9%-13% 15.4% FX-impact n/a

  54. Slide 54: FY 2013/14 Guidance – FX Impact on Sales and Margins

    SONOVA GROUP FY 2013/14 GUIDANCE – FX IMPACT ON SALES AND MARGINS USD/CHF EUR/CHF 1.00 0.95 0.90 0.85 0.80 0.75 0.70 Feb 12 Apr 11 Mai 11 Jun 11 Jul 11 Aug 11 Sep 11 Nov 11 Dez 11 Jan 12 Mrz 12 Apr 12 Mai 12 Jun 12 Jul 12 Aug 12 Okt 11 Okt 11 Rate Sales EBITA USD/CHF +/- 5% +/- CHF 38 million +/- CH

  55. Slide 55: Upcoming Events

    sSonova 06 UPCOMING EVENTS

  56. Slide 56: Important Upcoming Events

    SONOVA GROUP IMPORTANT UPCOMING EVENTS 18 June Annual General Meeting Zurich 17/18 September 2. Sonova Investor & Analyst Day Staefa 16-18 October EUHA Congress Nuremberg 18 November HY 2013/14 Results Staefa May 21, 2013 Page 56

  57. Slide 57: Corporate Investor Relations

    SONOVA GROUP CORPORATE INVESTOR RELATIONS Thomas Bernhardsgrütter Phone +41 58 928 33 44 Mobile +41 79 618 28 07 Email thomas.bernhardsgruetter@sonova.com Nicole Müller Phone +41 58 928 33 22 Email nicole.mueller@sonova.com May 21, 2013 Page 57

  58. Slide 58: Thank You Very Much

    THANK YOU VERY MUCH

Sonova Holding — FY2012/13 Earnings Presentation on 6ix