Slide 1: Full-Year Results 2022/23
Full-Year Results 2022/23 Arnd Kaldowski, CEO Birgit Conix, CFO Stäfa, May 16, 2023
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: Good strategic progress in a challenging environment
Good strategic progress in a challenging environment − Solid sales performance driven by acquisitions and organic growth but held back by macroeconomic headwinds and non-renewal of large contract with US customer – significant step-up in 4Q after softer than expected 3Q − Muted profitability develop
Slide 4: Sonova Group
Sonova PHONAK —unitron IZ) SENNHEISER @. :
Slide 5: Sonova Group results: Key highlights FY 2022/23
Sonova Group results Key highlights – FY 2022/23 Sales EPS (adj.) Sales outlook CHF 3,738 m CHF 11.14 per share +3-7% +14.6% in LC +11.5% in LC growth in LC +11.1% in CHF +3.5% in CHF in FY 2023/24 EBITA (adj.) Consumer access EBITA (adj.) outlook CHF 840.4 m Continued AC network + 6-10% expansion &
Slide 6: Sonova's strategy
Sonova’s strategy Strategic pillars Lead innovation in audiological performance & consumer experience Leverage M&A Expand consumer access to accelerate growth through omni-channel strategically audiological care network and consumer device business Continuous process Extend reach through improvement
Slide 7: Lead innovation: Hearing Instruments
Lead innovation Hearing Instruments business – Recent product introductions Phonak Audéo Lumity Phonak Slim Lumity Unitron Vivante Aug Apr Apr 22 23 23 ► Enhanced speech understanding with ► Stylish new form factor, building on proven ► New HyperFocus for conversations in SmartSpeech™ technology Lum
Slide 8: Lead innovation: Consumer Hearing
Lead innovation Consumer Hearing business – Speech-enhanced hearables ► Sonova is addressing the entire hearing continuum First speech-enhanced hearables launched in January 2023 with the Sennheiser Conversation Clear Plus earbuds Clarity boost & auto Self fitting scene detection Hybrid ANC Improved
Slide 9: Expand consumer access – AC network expansion
Expand consumer access – AC network expansion Continued high level of acquisitions and greenfield openings Over CHF 260 million invested in FY 22/23: − HYSOUND acquisition in China, closed in December 2022, adding over 200 POS − More than 140 additional POS through bolt-ons with focus on US, Canad
Slide 10: Structural optimization
Structural optimization New operations facility for the Americas − New operations facility in Mexico to serve the entire Americas region − Expanding Sonova’s global manufacturing capabilities for the Hearing Instruments and Cochlear Implants businesses − Built according to LEED* standards Key benefi
Slide 11: ESG highlights
ESG highlights Overview of selected tangible achievements highlighting progress towards our ESG commitments Environmental Social Governance ► On a comparable basis*, reduced greenhouse ► 270 hearing care professionals trained in the ► Launched a new tool to assess gas emissions across the whole valu
Slide 12: Sonova Group results: Summary FY 2022/23
Sonova Group results Summary FY 2022/23 − Sales of CHF 3,738.4 million up +14.6% in LC (organic: +2.3%), +11.1% in CHF − EBITA (adj.) of CHF 840.4 million, up +6.1% in LC Group − EBITA margin (adj.) of 22.5%, down -190bps in LC – held back by expected dilution from M&A − EPS (adj.) up +11.5% in LC t
Slide 13: Sales components
Sonova Group Sales components in CHF million OPERATIONAL FX +14.6% 3,854.7 -116.3 3,738.4 412.9 3,363.9 77.8 FY 21/22 Organic M&A FY 22/23 FX FY 22/23 Reported net of divestments LC impact Reported YOY growth components +2.3% +12.3% +14.6% -3.5% +11.1% excl. non-renewal of large US contract +4.5% ►
Slide 14: Sales by regions and key markets
Sonova Group results Sales by regions and key markets FY 2022/23 2H 2022/23 1H 2022/23 CHF m Δ % in LC CHF m Δ % in LC CHF m Δ % in LC EMEA 1,868.2 +13.1% 988.4 +11.5% 879.8 +14.9% USA 1,150.0 +9.5% 547.2 +5.0% 602.7 +14.2% Americas (excl. USA) 274.0 +11.2% 133.9 +6.6% 140.1 +16.1% Asia / Pacific 44
Slide 15: Key financials – Half-year view
Sonova Group results Key financials – Half-year view CHF m FY 2022/23 Δ % in LC 2H 2022/23 Δ % in LC 1H 2022/23 Δ % in LC Sales 3,738.4 +14.6% 1,891.7 +11.6% 1,846.6 +17.9% Gross profit (adj.) 2,645.1 +11.8% 1,360.7 +11.3% 1,284.4 +12.3% - Gross profit margin (adj.) 70.8% 71.9% 69.6% OPEX (adj.) 1,8
Slide 16: Hearing Instruments segment
Hearing Instruments segment 16
Slide 17: Hearing Instruments segment highlights
Hearing Instruments segment Highlights Sales EBITA (adj.) Segment sales − Growth strongly supported by acquisitions CHF 3,451m CHF 804m − Favorable customer response to product launches +15.7% vs. PY in LC +5.7% vs. PY in LC in both the HI and CH business +2.3% organic growth Margin: 23.3% − Organic
Slide 18: Hearing Instruments business sales dynamics
Hearing Instruments business Sales dynamics HI business sales: CHF 1,809m +0.2% vs. PY in LC +0.1% organic growth* * +4.1% excl. non-renewal of contract with large US customer − Slower than anticipated momentum in key hearing care markets affecting growth − Favorable market response to the new Phona
Slide 19: Consumer Hearing business sales dynamics
Consumer Hearing business Sales dynamics CH business sales: CHF 284m +16.6% vs. PY in LC* * pro forma − Acquired Sennheiser Consumer Division delivering on plan − Quick and smooth transition into a combined business − Gaining market share in challenging consumer devices sector, driven by successful
Slide 20: Audiological Care business sales dynamics
Audiological Care business Sales dynamics AC business sales: CHF 1,358m +15.7% vs. PY in LC +4.5% organic growth − Adding >400 clinics through M&A and greenfield openings − Successful integration of Alpaca Audiology in the US − Further expanding into the fast-growing China market through the acquisi
Slide 21: Cochlear Implants segment
Cochlear Implants segment 21
Slide 22: Cochlear Implants segment highlights
Cochlear Implants segment Highlights Cochlear implant systems Sales EBITA (adj.) − Held back by supply shortages, continued hospital CHF 286.9m CHF 35.9m staffing challenges and competitive pressure +2.8% vs. PY in LC +14.6% vs. PY in LC − Injunction in DE related to patent dispute – lifted in Octob
Slide 23: Financial Information
Sonova Financial Information 23
Slide 24: Financial highlights
Financial highlights Sonova Group − Sales of CHF 3,738.4 million Sales − Growth of +14.6% in LC (organic +2.3%), +11.1% in CHF – significant negative FX impact: CHF -116.3 million (-3.5%) − Good performance considering market challenges and loss of large US contract – strong contribution from acquis
Slide 25: Gross margin development
Gross margin development Sonova Group OPERATIONAL FX − Gross profit margin (adj.) decreased by -240bps in CHF -180bps or -180bps in LC to 70.8% 73.2% +0.4% − Expected dilutive effect from acquisition of the Sennheiser Consumer Division -2.2% − Adverse ASP impact from country mix, offset by price 71.
Slide 26: Development of operating expenses
Development of operating expenses Sonova Group OPERATIONAL FX − Disciplined cost management – low single-digit organic +14.7% OPEX growth, despite inflationary pressures, shift in in CHF million 1’858.0 business mix due to faster AC growth and lower than -3.3% 1’804.7 expected sales momentum +12.4%
Slide 27: Development of operating expenses by category
Development of operating expenses Sonova Group – Expense by category excluding acquisition-related amortization FY 2022/23 FY 2021/22 CHF m ∆ % in LC CHF m Comments Research & development (adj.) -242.9 +6.2% -229.4 − Continued investments in innovation in % of sales 6.5% 6.8% Sales & marketing (adj.
Slide 28: EBITA components
EBITA components Sonova Group in CHF million OPERATIONAL ADJUSTMENTS FX +6.1% 895.8 20.3 -38.8 31.2 857.1 844.4 -55.5 801.6 FY 21/22 Organic M&A FY 22/23 Adjustments FY 22/23 FX FY 22/23 adjusted net of divestments adj. in LC in LC reported in LC reported Margin 25.1% +0.3% -2.2% 23.2% -1.0% 22.2% -
Slide 29: Key financials
Key financials Sonova Group FY 2022/23 Δ margin CHF m Margin ∆ % in CHF ∆ % in LC in LC Comments Sales (reported) 3,738.4 +11.1% +14.6% Gross profit (adj.) 2,645.1 70.8% +7.4% +11.8% -180bps OPEX (adj.) 1,804.7 +11.5% +14.7% EBITA (adj.) 840.4 22.5% -0.5% +6.1% -190bps Adjustments -38.8 − Restructur
Slide 30: Overview of adjustments
Overview of adjustments Key financials – As reported and adjusted FY 2022/23 Adjustments FY 2022/23 Transaction & Patent / legal in CHF million Reported 1 Restructuring 2 3 4 Other Total Adjusted integration litigation Sales 3,738.4 - - - - - 3,738.4 Cost of sales -1,101.0 +7.6 +0.2 - - +7.7 -1,093.
Slide 31: Cash flow development
Cash flow development Sonova Group – Operating Free Cash Flow in CHF million 960 859 764 536 2 -29 -21 -16 -5 -44 -68 -105 -81 -152 OpFCF Consumer Hearing Δ NWC Net Capex Payments Other items OpFCF before build-up of trade (excl. M&A) for lease liabilities Δ NWC receivables and payables FY 2022/23 F
Slide 32: Balance sheet
Balance sheet Sonova Group CHF m 31 Mar 2023 31 Mar 2022 Comments Days sales outstanding (DSO) 54 54 ‒ Continued solid receivable collection Days inventory outstanding (DIO) 154 182 ‒ Improvement driven by reduction in safety stock and product launches in prior year Capital employed 3,727.3 3,439.1
Slide 33: Total shareholder return & cash deployment strategy
Total shareholder return & cash deployment strategy Sonova Group Sonova TSR strategy FY 2022/23 − Bolt-ons: CHF 70-100 million p.a. − Total M&A cash-out: more than CHF 260 million, 1. Acquisitions mainly spent for further AC network expansion − Strategic and technology acquisitions − CHF 268 million
Slide 34: Outlook
Outlook 34
Slide 35: Outlook: Guidance and mid-term target
Outlook Guidance and mid-term target FY 2023/24 hearing care market assumptions FY 2023/24 Sonova business assumptions − Attractive hearing care market fundamentals remain intact − High comparison base in 1H 22/23, easing in the second half − Short-term uncertainties in macroeconomic environment rem
Slide 36: Outlook: Upcoming events
Outlook Upcoming events Date Event May 17-30 FY 2022/23 results roadshow June 12 Sonova Annual General Shareholders’ Meeting (Zurich) October 18-20 International EUHA Congress (Nuremberg) November 21 Publication of Half-Year Results 2023/24 36
Slide 37: Sonova
Sonova
Slide 38: Thank you!
Sonova Thank you!
Slide 39: Appendix
Sonova Appendix
Slide 40: Sales by segment and sales components – Half-year view
Appendix Sales by segment and sales components – Half-year view FY 2022/23 2H 2022/23 1H 2022/23 CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC HI business 1,809.3 -1.6% +0.2% 879.3 -7.3% -4.6% 930.0 +4.5% +5.3% CH business* 284.3 +12.4% +16.6% 151.3 +28.0% +32.7% 1
Slide 41: Business performance – Hearing Instruments and Audiological Care
Appendix Business performance – Hearing Instruments and Audiological Care businesses Hearing Instruments business FY 2022/23 2H 2022/23 1H 2022/23 CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC Sales 1,809.3 -1.6% +0.2% 879.3 -7.3% -4.6% 930.0 +4.5% +5.3% Δ organic
Slide 42: Non-GAAP adjustments
Appendix Non-GAAP adjustments 2022/23 2021/22 in CHF m FY 2H 1H FY 2H 1H Restructuring +15.6 +12.8 +2.8 +13.5 +6.1 +7.4 thereof HI segment +14.6 +11.8 +2.8 +12.9 +6.4 +6.5 thereof CI segment +1.0 +1.0 +0.0 +0.6 -0.3 +0.9 Transaction and integration costs +17.0* +14.4 +2.5 +12.0 +7.0 +5.0 Patent / le
Slide 43: Cash flow statement
Appendix Cash flow statement FY 2022/23 FY 2021/22 CHF m ∆ % in CHF CHF m Income before taxes 715.6 -1.7% 728.2 Depreciation & amortization 239.7 +13.5% 211.1 Working capital -73.7 +289.9% -18.9 Other cash effects -25.5 n/m 32.6 Tax paid -86.8 +85.9% -46.7 Financial result 14.6 -58.2% 34.9 Operating
Slide 44: 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 61 million +/- CHF 19 million EUR/CHF +/- 5% +/- CHF 68 million +/- CHF 28 million 44
Slide 45: Sales by currency and FX rates
Appendix Sonova Group – Sales by currency and FX rates Effect Spot Other FY-21/22 1H-22/23 2H-22/23 FY-22/23 FY-22/23 May-2023 USD USD 0.92 0.97 0.94 0.96 + 0.89 GBP, CAD, EUR 1.07 1.00 0.99 0.99 - 0.98 BRL, AUD GBP 1.26 1.17 1.13 1.15 - 1.11 and JPY CAD 0.73 0.75 0.70 0.72 - 0.66 AUD 0.68 0.67 0.63
Slide 46: Investor relations contacts
Investor relations contacts Thomas Bernhardsgruetter Jessica Grassi Nicole Jenni Senior Director Investor Relations Director Investor Relations Investor Relations Associate +41 58 928 33 44 +41 58 928 33 22 +41 58 928 33 21 +41 79 618 28 07 +41 79 416 28 76 Nicole.Jenni@sonova.com Thomas.Bernhardsgr