Sonova Holding Ag · SIX:SOON

Sonova — FY2010/11 Earnings Presentation

48 slides from Sonova's earnings presentation, May 24, 2011

  1. Slide 1: Full-Year 2010/11 Results – Analyst Conference

    THE HEARING CARE COMPANY FULL-YEAR 2010/11 RESULTS –Analyst Conference Zurich, 24 May 2011

  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: Agenda

    Agenda  Highlights 2010/11 Alexander Zschokke  Business Review Alexander Zschokke  Financial Review Paul Thompson  Positioning / Strategy Alexander Zschokke  Outlook Paul Thompson May 24, 2011 3

  4. Slide 4: Highlights

    01. HIGHLIGHTS

  5. Slide 5: Highlights 2010/11

    Highlights 2010/11 – Sales record of CHF 1,617 million  Total sales growth of +13.3% in lc  Negative currency effect of 5.6% – All regions contributing to sales growth – Solid core business hearing instruments  Growth of 10.1% in lc  EBITA margin of 24.0% – Lower Group EBITA margin of 20.2% – Un

  6. Slide 6: Business Review

    02. BUSINESS REVIEW

  7. Slide 7: The hearing solutions market

    The hearing solutions market May 24, 2011 7

  8. Slide 8: Market trends

    Market trends Market fundamentals – Aging population and ongoing population growth – More people with hearing impairment due to noise pollution – Increasingly young age for hearing damage – Sustained margins Market growth – Low penetration rates – 16% of population is hearing impaired – Rising dispo

  9. Slide 9: Sonova offers comprehensive product portfolio

    Sonova offers comprehensive product portfolio  All grades of hearing loss targeted - organized into two complementary segments  Phonak is the strongest brand in the industry Sonova-Portfolio Sonova-Solutions May 24, 2011 9

  10. Slide 10: Hearing Instruments Segment

    Hearing Instruments Segment Sonova’s market position – Market leader in hearing instruments – Record turnover of CHF 1,546 million, contributing 96% to Group turnover – Above market growth at an organic growth rate of 5.8% in lc Achievements 2010/11 – Successful introduction of Spice technology plat

  11. Slide 11: Hearing Instruments Segment: Transition to Spice completed

    Hearing Instruments Segment: Transition to Spice completed Spice technology platform – Conversion  Full-portfolio transitioned to Spice in 7 months  Excellent conversion rates in US after slow start and delay of 2 months  Swift conversion in France  Launch in Germany with insufficient support 

  12. Slide 12: Hearing Instruments Segment: Leveraging the Sonova Platform

    Hearing Instruments Segment: Leveraging the Sonova Platform Sonova Platform Chipset Phonak Spice Unitron Era Chipset Segment Power Standard CRT Segment Power Standard CRT Premium   Premium Products Products Advanced  Advanced Standard  Standard Software Target Truefit Software May 24, 2011 12

  13. Slide 13: Hearing Implants: Market overview

    Hearing Implants: Market overview Substantial growth expected – 240,000 cochlear devices implanted worldwide to date – Cost of a cochlear implant treatment USD 100,000 – 125,000 – Global market growth estimated at 10-15% p.a. in units Challenges – Cochlear implant centers and capacities to perform t

  14. Slide 14: Hearing Implants: New segment

    Hearing Implants: New segment Performance 2010/11 – Turnover of CHF 71 million or 4% of Group sales – Substantially below expectations – Voluntary, temporary recall of Adavanced Bionics implants in November 2010 – Operating loss (EBITA) of CHF 45 million – Impairment of goodwill and capitalized R&D

  15. Slide 15: Hearing Implants: The launch of Neptune

    Hearing Implants: The launch of Neptune (pending regulatory submission) Neptune – a new Advanced bionic product – The World’s first swimmable processor  Waterproof: certified IP68  Bath, swim, shower – Discreet, freestyle, design  Nothing worn on the ear  Great retention for process & HP – Easy

  16. Slide 16: Financial Review

    03. FINANCIAL REVIEW

  17. Slide 17: Full Year 2010/11: Financial Highlights

    Full Year 2010/11: Financial Highlights – Restatement of 2009/10 figures due to finalization of the acquisition accounting of AB – New sales record on both Group level and in hearing instrument segment – Negative FX impact of CHF 84 million on sales and CHF 35 million on EBITA – Record gross profit

  18. Slide 18: Full Year 2010/11: Solid financial performance

    Full Year 2010/11: Solid financial performance In CHF million 2010/11 Change 2009/10 Sales 1,616.7 +7.8% 1,500.3 Gross profit 1,118.7 1,058.6 +5.7% Gross profit margin 69.2% 70.6% EBITA 326.6 -22.3% 420.3 EBITA margin 20.2% 28.0% Operating free cash flow 221.5 -31.8% 324.8 Cash-based basic EPS (in C

  19. Slide 19: Solid growth in key markets in local currencies

    Full Year 2010/11: Solid growth in key markets in local currencies in CHF million 2010/11 2009/10 Sales in % Growth in lc Sales in % EMEA (excl. Switzerland) 597 37% 12.8% 583 39% Switzerland 41 3% (9.1%) 45 3% USA 596 37% 14.3% 547 36% Americas (excl. USA) 247 15% 24.3% 196 13% Asia/Pacific 136 8%

  20. Slide 20: Sales growth across hearing instrument product groups

    Full Year 2010/11: Sales growth across hearing instrument product groups in CHF million 2010/11 2009/10 Sales in % Growth in lc Sales in % First class 398 25% 10.8% 378 25% Business class 379 23% 12.4% 353 24% Economy class 481 30% 7.2% 460 31% Wireless comm. 75 5% 5.0% 75 5% Miscellaneous 213 13% 7

  21. Slide 21: Growth of 10.1% in lc in hearing instruments segment

    Full Year 2010/11: Growth of 10.1% in lc in hearing instruments segment Sales development in millions of CHF +63 1’624 -78 +86 +4.3% -5.3% +5.8% 1’546 1’475 +149 +71 +10.1% +4.8% Sales Internal External Sales FX effect Sales 09/10 growth growth 10/11 10/11 const. FX Sound performance of core busines

  22. Slide 22: Gross profit at record level

    Full Year 2010/11: Gross profit at record level Gross profit development in millions of CHF +85 -37 1,182 -63 +2 +75 1,119 1,059 +123 +11.7% +60 +5.7% Margin: Margin: 70.6% 69.2% Gross Volume, Economies of External AB impact Gross profit FX Gross profit price, mix scale & growth HY10/11 effect profi

  23. Slide 23: Cost increase anticipates next growth steps

    Full Year 2010/11: Cost increase anticipates next growth steps Change Acquisition in CHF million FY 10/11 FY09/10 Change in CHF in lc related in lc R&D 108 87 +23.8 % +25.0% +20.0% in % of sales 6.7% 5.8% Sales & Marketing 499 403 +23.8% +29.3% +16.5% in % of sales 30.8% 26.8% General & Admin 185 14

  24. Slide 24: Reduced EBITA

    Full Year 2010/11: Reduced EBITA EBITA development in millions of CHF +99 -79 598 420 -39 -39 362 -35 59 -14.0% 327 -94 -22.3% Margin: Margin: 28.0% 20.2% EBITA Variance Increase of OPEX from AB impact Gross profit FX EBITA 09/10 in gross OPEX acquisitions HY10/11 effect 10/11 profit const. FX EBITA

  25. Slide 25: Financial result and income taxes

    Full Year 2010/11: Financial result and income taxes in CHF million 2010/11 2009/10 Comments EBITA 327 420 CHF 8.1m one-time costs Goodwill impairment AB Amortization/Impairment -56 -169 R&D costs PAI Operating profit (EBIT) 271 251 Financial result, net -14 -4 Share of gain/loss in associates/JVs +

  26. Slide 26: Sustainable investments for future growth

    Full Year 2010/11: Sustainable investments for future growth in CHF million 2010/11 2009/10 Cash flow before changes in 398 488 net working capital Changes in net working capital -53 -601) Operating cash flow 345 428 in % of sales 21.3% 28.5% Cash flow from investing activities (excl. acquisitions)

  27. Slide 27: Sound financial position

    Full Year 2010/11: Sound financial position in CHF million 31.3.2011 31.3.20101) Net working capital 158 144 Days sales outstanding (DSO) 78 75 Days inventory outstanding (DIO) 154 153 Operating capital employed 441 427 (excluding acquisition-related intangible assets) Capital employed 1,456 1,389 N

  28. Slide 28: Comparison H1/H2 in hearing instruments

    Full Year 2010/11: Comparison H1/H2 in hearing instruments H2 2010/11 H1 2010/11 Sales in million CHF 780 766 Sales growth in CHF 1.8% 8.0% Organic growth in l.c. 4.1% 7.7% External growth in l.c. 5.8% 2.6% FX impact -8.1% -2.3% Gross profit margin 68.9% 70.8% EBITA margin 20.8% 27.3% OPEX 48.3% 43.

  29. Slide 29: Acceleration of negative FX impact

    Full Year 2010/11: Acceleration of negative FX impact Development of USD and EUR against CHF April 1, 2009– March 31, 2011 Ø 2010/11: 1.014 Ø 2010/11: 1.339 Negative impact in H2 of 2010/11 above 8% of reported sales! May 24, 2011 29

  30. Slide 30: Unchanged distribution

    Full Year 2010/11: Unchanged distribution  Proposed distribution of CHF 1.20 per share, without witholding tax  Pay-out ratio at approx. 25% (excluding one-off items) Dividend development in CHF per share 1.20 1.20 1.00 1.00 0.75 0.50 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 May 24, 2011 30

  31. Slide 31: Positioning / Strategy

    04. POSITIONING / STRATEGY

  32. Slide 32: Creating the global hearing care company

    Positioning and Strategy: Creating the global hearing care company HI CS HI CS HI CS RB KMUB HI DP DP Impl.  Hearing Instruments  Hearing Instruments  Hearing Instruments  Hearing Instruments  Communication Systems  Communication Systems  Communication Systems  Distribution Partners  Distri

  33. Slide 33: Our business

    Positioning and Strategy: Our business Serving an attractive market Hearing Hearing Instruments Implants Advanced Bionics Communication Phonak systems & PAI Unitron The global hearing care company May 24, 2011 33

  34. Slide 34: Serving an attractive market

    Positioning and Strategy: Serving an attractive market Penetration rate segmented by hearings loss*: Market growth*: Profound: 70% Hearing implants: 10-15% p.a. Moderate: 50% Hearing instruments: 4-5% p.a. Mild: Significant growth potential 10% With hearing system Without hearing system * Source: Se

  35. Slide 35: Consolidating the market leading position

    Positioning and Strategy: Consolidating the market leading position Global Sonova‘s key strenghts: Sonova Market leader Broadest product portfolio Footprint Global network High innovation rate Regional Basic Products Comprehensive Portfolio Product Offering Source: market data, Sonova estimates

  36. Slide 36: Our strategy

    Positioning and Strategy: Our strategy Two segments Core: Hearing Instruments Build-up: Hearing Implants Innovation 2 Market expansion High R&D investments 1 Improving existing categories Creating new categories Platform concept Global footprint World-wide coverage 3 Access to patients and hearing c

  37. Slide 37: Addressing key topics in 2011/12

    Positioning and Strategy: Adressing key topics in 2011/12 Topic Initiatives AB temporary recall Complete submission and receive FDA approval; resume selling in U.S.A. AB Neptune product launch Complete launch of new off-the-ear, water-proof power supply AB next generation product Continue developmen

  38. Slide 38: Outlook

    06. Outlook

  39. Slide 39: Outlook: FX impact on sales and margins likely to continue

    Outlook: FX impact on sales and margins likely to continue Ø 2010/11: 1.339 Ø 2010/11: 1.014 Rate Sales EBITA USD/CHF +/- 5% +/- CHF 30 million +/- CHF 9 million EUR/CHF +/- 5%impact on sales Negative +/- CHF 25 million expected on margins +/- CHF 15 million May 24, 2011 39

  40. Slide 40: Outlook: Guidance 2011/12

    Outlook: Guidance 2011/12  Group level: growth of 8-10% in lc  Hearing instruments: growth of 8-10% in lc  Negative currency effect on sales: estimate 10% based on current exchange rates  Negative currency effect on EBITA: estimate CHF 60 million on current exchange rates  Reported EBITA margin

  41. Slide 41: Questions & Answers

    05. QUESTIONS & ANSWERS

  42. Slide 42: Thank you

    THANK YOU.

  43. Slide 43: Appendix

    APPENDIX

  44. Slide 44: Sonova keeps up at close to 60% VA market share

    Sonova keeps up at close to 60% VA market share Monthly Market Share Development By Revenue - All Products 70% Sonova 60% Competitors 50% 40% 30% 20% 10% 0%

  45. Slide 45: Phonak - The most comprehensive offering in the industry

    Phonak - The most comprehensive offering in the industry CROS/ Power Standard CRT BiCROS Segment Premium Ambra Advanced Audéo S Audéo S Audéo S Naída Cassia YES SMART MINI CROS Standard Solana Portfolio transitioned within 7 months May 24, 2011 45

  46. Slide 46: Unitron – new Era platform with 2 product lines

    Unitron – new Era platform with 2 product lines Super Power Traditional BTEs CRT ITEs (custom) Segment Premium Passport Passport Passport new Quantum Moxi Quantum 20, 12, 6 20, 12, 6 20, 12, 6 Advanced 360 Latitude 4 Latitude 4 Latitude 4 Standard Shine Shine Shine Basic Ziel May 24, 2011 46

  47. Slide 47: Sonova continues to be the innovation leader

    Sonova continues to be the innovation leader  Innovation rate at a high level due to substantial R&D investments  Successful platform concept upgraded every 3-4 years  Low time-to-market for new products Palio Core Spice 58% 65% 69% 69% 59% 62% 77% 74% 2003/04 2004/05 2005/06 2006/07 2007/08 2008

  48. Slide 48: Global footprint

    Global footprint Active in over 90 countries Group Companies: > 50 Stäfa (CH) Newark (USA) Kitchener (CAN) Suzhou (CN) Los Angeles (USA) Murten (CH) Ho Chi Minh City (VN) Sonova & Phonak Headquarters AB Headquarters Group Companies Unitron Headquarters InSound Headquarters Distributors Phonak Commun

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