Sonova Holding Ag · SIX:SOON
Sonova — H1 2023/24 Earnings Presentation
46 slides from Sonova's earnings presentation, Nov 21, 2023
Slide 1: Half-Year Results 2023/24
Half-Year Results 2023/24 Arnd Kaldowski, CEO Birgit Conix, CFO Stäfa, November 21, 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: Strategy and growth drivers
Strategy and growth drivers 3
Slide 4: Sustainable market leader in an attractive industry
Sustainable market leader in an attractive industry Attractive market Leading market position ‒ Attractive secular growth drivers ‒ Leading position in the Hearing Industry ‒ Significant penetration potential in mild and moderate ‒ Advanced vertically integrated business model hearing loss populatio
Slide 5: Our strategy
Our 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 thro
Slide 6: Our growth ambition
Our growth ambition Ambition to gain market share through customer-focused growth strategy and strong execution capability Mid-term targets Sonova growth strategy Key focus areas Sales CAGR Executing on our strategic pillars to Targeted growth initiatives in 5 focus areas 6-9% p.a. in LC drive above
Slide 7: Key growth drivers
Key growth drivers Customer centricity and growth initiatives driving sustainable, above-market growth Lead innovation Broaden Deliver Accelerate consumer access commercial excellence high growth markets Advance Expand hearing innovation consumer value Pioneer technology & Deliver consumer- Provide
Slide 8: Shaping a sustainable business
Shaping a sustainable business Continued investment across all ESG pillars – Industry leading rating with major rating agencies Strong progress of internal leadership development − In 1H 2023/24, ~72% of Sonova’s leadership positions were filled by internal candidates – rate at a high level and furt
Slide 9: 1H 2023/24 review
sonova 1H 2023/24 review
Slide 10: Sonova Group
Sonova Group 10
Slide 11: Summary 1H 2023/24
Summary ıH 2023/24 − Market environment remained volatile with sequential slowdown in 2Q 2023 – re-acceleration in 3Q 2023 − Good market growth in North America, additional contribution from higher growth in developing markets while Europe remaining subdued − Value growth supported by ASP lift from
Slide 12: Sonova Group results: Key highlights
Sonova Group results Key highlights – 1H 2023/24 Sales EPS (adj.) Sales outlook CHF 1,753 m CHF 4.34 per share +3-7% +1.6% in LC +8.1% in LC growth in LC -5.1% in CHF -11.3% in CHF in FY 2023/24 EBITA (adj.) Consumer access EBITA (adj.) outlook & innovation CHF 350.0 m Continued AC network +4-8% +2.
Slide 13: Sonova Group results: Summary 1H 2023/24
Sonova Group results Summary 1H 2023/24 − Sales of CHF 1,753.0 million up +1.6% in LC – material FX headwinds reducing topline growth by -6.7% − Organic sales growth of -0.4% or +3.0% if excluding non-renewal of contract with large customer in the HI business Group − EBITA (adj.) of CHF 350.0 millio
Slide 14: Sales components
Sonova Group results Sales components in CHF million OPERATIONAL FX +1.6% 1,876.7 1,846.6 37.1 -7.0 -123.7 1,753.0 1H 22/23 Organic M&A 1H 23/24 FX 1H 23/24 Reported net of divestments LC impact Reported YOY growth components -0.4% +2.0% +1.6% -6.7% -5.1% excl. non-renewal of large US contract +3.0%
Slide 15: Sales by regions and key markets
Sonova Group results Sales by regions and key markets ıH2023/24 ıH 2022/23 CHF m Δ % in LC % Group sales CHF m % Group sales EMEA 881.6 +4.8% 51% 879.8 47% USA 530.7 -4.6% 30% 602.7 33% Americas (excl. USA) 126.5 -1.2% 7% 140.1 8% Asia / Pacific 214.2 +7.8% 12% 224.0 12% Total Sonova 1,753.0 +1.6% 1
Slide 16: Hearing Instruments segment
Hearing Instruments segment 16
Slide 17: Hearing Instruments segment: Highlights
Hearing Instruments segment Highlights Sales EBITA (adj.) Segment sales − Soft start into the year with momentum improving CHF 1,620m CHF 338m over the course of the reporting period +1.8% vs. PY in LC +4.2% vs. PY in LC − Strong execution in AC in both Europe and China -0.3% organic growth Margin:
Slide 18: Hearing Instruments business: Sales dynamics
Hearing Instruments business Sales dynamics HI business sales: CHF 825m -4.3% vs. PY in LC* * +2.4% excl. non-renewal of contract with large US customer − Business starting to regain momentum through product launches, resolving temporary operational challenges and proactive communication with HCPs −
Slide 19: Consumer Hearing business: Sales dynamics
Consumer Hearing business Sales dynamics CH business sales: CHF 120m -1.9% vs. PY in LC − High comparison base driven by numerous launches in previous year – performing in line with its peers in a challenging consumer electronics market − Launched our new self-fitting OTC hearing aid – positive init
Slide 20: Audiological Care business: Sales dynamics
Audiological Care business Sales dynamics AC business sales: CHF 675m +11.5% vs. PY in LC +5.7% organic growth − Strong performance driven by solid growth in most European markets, added to by M&A incl. HYSOUND in China performing ahead of plan − Continuing to drive value creation through optimizati
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.) − Solid system sales in light of new processor launch CHF 132.6m CHF 12.7m of largest competitor -0.9% vs. PY in LC -30.5% vs. PY in LC − Held back by residual supply chain challenges, which are solved by now Margin: 9.
Slide 23: Financial information
sonova Financial information ‘ il nh i Pi ne Bm 23 :
Slide 24: Financial highlights
Financial highlights Sonova Group − Sales of CHF 1,753.0 million +1.6% in LC and -5.1% in CHF Sales − Significant FX headwinds of CHF -123.7 million (-6.7%) − Organic sales growth of -0.4% in LC for the Group – +3.0% in LC adjusted for non-renewal of large US contract − Gross profit margin (adj.) of
Slide 25: Gross margin development
Gross margin development Sonova Group OPERATIONAL FX +280bps − Gross margin (adj.) increased by +200bps in CHF to 71.6% 72.4% or operationally by +280bps in LC 0.0% -0.8% 71.6% − Margin increase mainly driven organically by: − Prior year price increases +2.8% − Continued progress from continuous imp
Slide 26: Development of operating expenses
Development of operating expenses Sonova Group OPERATIONAL FX +7.2% − Organic OPEX development driven by business mix shift in CHF million 950.3 due to faster growth in the AC business and continued investments in sales & marketing to drive future sales +3.0% in LC -5.1% − Additional increase relate
Slide 27: Development of operating expenses by category
Development of operating expenses Sonova Group – Expense by category excluding acquisition-related amortization ıH 2023/24 ıH 2022/23 CHF m ∆ % in LC CHF m Comments Research & development (adj.) -115.6 -0.6% -119.2 − Stable investments in innovation in % of sales 6.6% 6.5% − Phasing of certain large
Slide 28: EBITA Components
EBITA Components Sonova Group in CHF million OPERATIONAL ADJUSTMENTS FX +2.5% 408.0 398.1 0.8 9.1 -17.6 390.4 -57.1 333.3 1H 22/23 Organic M&A 1H 23/24 Adjustments 1H 23/24 FX 1H 23/24 adjusted net of divestments adj. in LC in LC reported in LC reported Margin 21.6% +0.6% -0.4% 21.7% -0.9% 20.8% -1.
Slide 29: Key financials
Key financials Sonova Group ıH 2023/24 ∆ margin CHF m Margin ∆ % in LC in LC Comments Sales (reported) 1,753.0 +1.6% Gross profit (adj.) 1,255.2 71.6% +5.8% +280bps OPEX (adj.) 905.2 +7.2% EBITA (adj.) 350.0 20.0% +2.5% +20bps Adjustments -16.7 − Restructuring, transaction and integration costs EBIT
Slide 30: Overview of adjustments
Overview of adjustments Key financials – As reported and adjusted ıH 2023/24 Adjustments ıH 2023/24 Transaction in CHF million Reported 1 Restructuring 2 & integration Total Adjusted Sales 1,753.0 - - - 1,753.0 Cost of sales -501.3 +3.6 - +3.6 -497.8 Gross profit 1,251.6 +3.6 - +3.6 1,255.2 Research
Slide 31: Cash flow development
Cash flow development Sonova Group – Operating Free Cash Flow FX impact: CHF -61m − OpFCF before changes in NWC: Driven by lower income 341 345 before tax due to CHF 61 million adverse FX impact 280 as well as CHF 8 million higher tax payments and a 185 positive impact of CHF 4 million on other item
Slide 32: Balance sheet
Balance sheet Sonova Group CHF m 30 Sep 2023 30 Sep 2022 Comments Days sales outstanding (DSO) 57 52 ‒ Increase largely driven by improved sales momentum towards the end of 1H 2023/24 Days inventory outstanding (DIO) 165 162 ‒ Affected by elevated safety stock levels and transition effects during gl
Slide 33: Total shareholder return & cash deployment strategy
Total shareholder return & cash deployment strategy Sonova Group Sonova TSR strategy ıH 2023/24 − Bolt-ons: CHF 70-100 million p.a. − Total M&A cash-out: CHF 60 million investment into 1. Acquisitions further AC network expansion − Strategic and technology acquisitions − CHF 274 million distributed,
Slide 34: Outlook
Outlook 34
Slide 35: Outlook
Outlook Recap of 1H 2023/24 and guidance for FY 2023/24 Recap 1H 2023/24 Considerations for 2H 2023/24 − Volatile market environment – slowdown in 2Q but reacceleration in 3Q 2023 − Re-acceleration of global hearing care markets in 3Q 2023 as foundation for − HI sales held back by the non-renewal of
Slide 36: Q&A
sonova O&A 36
Slide 37: Thank you!
sonova Thank you!
Slide 38: Appendix
Appendix 38
Slide 39: Sales by segment and sales components
Appendix Sales by segment and sales components ıH 2023/24 ıH 2022/23 CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC HI business 824.5 -11.3% -4.3% 930.0 +4.5% +5.3% CH business 120.3 -9.5% -1.9% 133.0 n/a n/a AC business 675.5 +5.5% +11.5% 640.1 +11.3% +17.3% HI segment 1,620.3 -4.9% +1.8% 1,
Slide 40: Sales performance by business
Appendix Sales performance by business Hearing Instruments business Audiological Care business ıH 2023/24 ıH 2022/23 ıH 2023/24 ıH 2022/23 Δ% Δ% Δ% Δ% Δ% Δ% Δ% Δ% CHF m in CHF in LC CHF m in CHF in LC CHF m in CHF in LC CHF m in CHF in LC Sales 824.5 -11.3% -4.3% 930.0 +4.5% +5.3% Sales 675.5 +5.5%
Slide 41: Non-GAAP adjustments
Appendix Non-GAAP adjustments in CHF m ıH 2023/24 ıH 2022/23 Restructuring +10.2 +2.8 thereof HI segment +7.2 +2.8 thereof CI segment +3.0 +0.0 Transaction and integration costs +6.5 +2.5 Patent / legal litigation - +1.0 thereof HI segment - - thereof CI segment - +1.0 Total adjustments to EBITA +16
Slide 42: Cash flow statement
Appendix Cash flow statement ıH 2023/24 ıH 2022/23 CHF m ∆ % in CHF CHF m Income before taxes 293.7 -16.2% 350.5 Depreciation & amortization 121.3 +1.9% 119.0 Working capital -127.0 -10.7% -142.1 Other cash effects 3.1 NM -2.1 Tax paid -45.6 +22.1% -37.3 Financial result 7.1 -52.3% 15.0 Operating ca
Slide 43: 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 59 million +/- CHF 17 million EUR/CHF +/- 5% +/- CHF 65 million +/- CHF 23 million 43
Slide 44: Sales by currency and FX rates
Appendix Sonova Group – Sales by currency and FX rates Spot Other ıH-22/23 ıH-23/24 ∆ YOY in % 2H-22/23 FY-22/23 Nov-2023 USD USD 0.97 0.89 -7.7% 0.94 0.96 0.90 GBP, CAD, EUR 1.00 0.97 -3.0% 0.99 0.99 0.96 BRL, AUD GBP 1.17 1.12 -4.5% 1.13 1.15 1.10 and JPY CAD 0.75 0.66 -11.2% 0.70 0.72 0.65 AUD 0.
Slide 45: Upcoming events
Upcoming events Date Event April 1 – May 13, 2024 Quiet period May 14, 2024 Publication of Full-Year Results 2023/24 June 11, 2024 AGM 2024 October 1 – November 18, 2024 Quiet period November 19, 2024 Publication of Half-Year Results 2024/25 Sonova Financial Calendar Please find the full financial c
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