Sonova Holding Ag · SIX:SOON
Sonova — Investor Presentation (March 2022)
46 slides from Sonova's investor presentation, March 2022
Slide 1: Investor Presentation
Investor Presentation March 2022
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: Agenda
Sonova Group & hearing care market Page 4 Sonova’s strategy Page 12 Financial information Page 26 Outlook Page 35 Appendix Page 39 3
Slide 4: Sonova Group & hearing care market
Sonova Group & hearing care market 4
Slide 5: Key highlights – 1H 2021/22
Sonova Group results Key highlights – 1H 2021/22 Sales EPS (adj.) Sales outlook CHF 1,604m CHF 4.86 per share +24-28% +48.5% in LC +146.5% in CHF growth in LC (2y CAGR: : +8.5% in LC) (2y CAGR: +28.5% in LC) in FY 2021/22 EBITA (adj.) Innovation EBITA outlook CHF 406.4m Phonak Paradise +34-42%* +129
Slide 6: Summary 1H 2021/22
Sonova Group Summary 1H 2021/22 − Sales of CHF 1,603.8 million up +48.5% in LC (organic: +46.6%, 2y CAGR: +8.5%), +49.9% in CHF Group − EBITA (adj.) of CHF 406.4 million, up +129.3% in LC – benefiting from higher sales and structural optimization − EBITA margin (adj.) of 25.3%, up +890bps in LC − EP
Slide 7: Reasons to invest in Sonova
Sonova Group Reasons to invest in Sonova Attractive market Leading market position ‒ Attractive secular growth drivers ‒ Leading positions in key market segments ‒ Resilience to economic cycles ‒ Advanced vertically integrated business model ‒ Good penetration potential in both HI & CI ‒ Broadest an
Slide 8: Broadest and most advanced hearing care product offering
Sonova Group Broadest and most advanced hearing care product offering Hearing Instruments Receiver-In-Canal In-The-Ear (ITE) Consumer Hearing (RIC) hearing instruments hearing instruments Premium & Enhanced True Wireless hearing headphones Behind-The-Ear Roger wireless (BTE) hearing systems instrume
Slide 9: Market trends
Market trends Technological advances and expansion of consumer benefits Lore Continuous m Evolving Ipsu innovation m expectations ► Sonova’s opportunity: Innovation leadership to address megatrends and to elevate consumer journey 9
Slide 10: The hearing care market – Attractive size and growth potential
Market The hearing care market – Attractive size and growth potential HI manufacturers HI retailers CI manufacterers Hearing care market ~ CHF 6.5 bn (~ 16.5m units) ~ CHF 11 bn value added ~ CHF 1.5 bn (~ 65k units) ~ CHF 19 bn Market CAGR: ~3-5% Market CAGR: ~3-5% Market CAGR: ~5-10% Market CAGR:
Slide 11: Performance history
Sonova Group Performance history ◼ 1H ◼ 2H ◼ 1H ◼ 2H (percentages represent LC growth rate) Sales EBITA (adj.) (percentages represent adj. EBITA margin) in CHF million in CHF million +24% to +28% 3,500 +25.0%-25.7%* +4.1% +8.7% 3,000 +9.0% -6.8% 800 800 2,500 21.5% 21.2% 23.2% +6.5% 600 20.8% 2,000
Slide 12: Sonova’s strategy
sonova Sonova’s strategy Modi 12
Slide 13: Strategic pillars
Sonova’s strategy Strategic pillars Lead innovation in audiological performance & consumer experience Leverage M&A Expand and optimize to accelerate growth omni-channel audiological care strategically network Continuous process Extend reach through multi-channel, improvement & structural value-addin
Slide 14: Lead innovation: platform approach for HI & CI
Lead innovation Implement consistent platform approach for HI & CI – Example Phonak 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 PALIO 3 PRISM 65 nm 65 nm DSP First dual-core Latest generation DSP platform DSP platform TECHNOLOGIES ROGER™ WIRELESS 180 nm PALIO 3 Proprietary MFA chip 40 nm First
Slide 15: Advancing innovation in HI and CI
Lead innovation Advancing innovation in HI and CI Phonak Paradise 2.0 Naída CI processor PRISM chip and new speech processing algorithms, ActiveVent™ Combines established Phonak Marvel platform and Tap Control, proven AB sound processing multiple Bluetooth® connections, Features unique ergonomic hou
Slide 16: Expand and optimize omni-channel AC network
Expand and optimize omni-channel AC network Network expansion – The combination of bolt-on M&A greenfield expansion Systematic approach to: Increase store density Optimize the store footprint Enter new growth markets Balance sheet investments: M&A Greenfield P&L investments: Higher spending fo
Slide 17: Expand and optimize omni-channel AC network
Expand and optimize omni-channel AC network Proactive approach to serve changing consumer needs and digitalization Omnichannel strategic pillars Ecosystem Evolution of the channel mix Store ◼ In-store only ◼ Blended ◼ Digital only Personalized experience Website Call center 360° Lead generation cust
Slide 18: Extend reach through commercial excellence
Extend reach through commercial excellence Driving growth beyond product innovation (example HI business, also deployed in CI business) Enabling sustainable market Three workstreams Rollout plan share gains ‒ Elevating commercial execution to drive Sales excellence: Improving sales ‒ Continuous impr
Slide 19: Invest in high growth developing markets
Invest in high growth developing markets Consumer journey innovation – Omni-channel model in China Lead generation Engagement Conversion ‒ Lead generation factory for Audionova ‒ Platform apps as portal for screening, Online stores & wholesale partners appointment, eCommerce, etc. ‒ Leading follower
Slide 20: Continuous process improvement & structural optimization
Continuous process improvement & structural optimization Audiological Care – Examples of continuous improvement of same-store base Marketing excellence Geo-optimized In-store excellence store portfolio management ‒ Increase referrals from physicians and ‒ Systematic and data-driven process ‒ Improve
Slide 21: Leverage M&A to accelerate growth strategically
Leverage M&A to accelerate growth strategically Strategic rationale of the Sennheiser Consumer Division acquisition − Joining forces in rapidly developing segment of hearables with amplification, jump-starting Sonova’s own efforts − Adding an additional growth vector by entering the fast-growing mar
Slide 22: Sonova’s commitment to sustainable success
Sonova’s commitment to sustainable success IntACT – Sonova’s ESG Strategy Serving society Advancing our people We constantly innovate in hearing health care, We foster our employees’ development, well- improve access for people in under-served areas being and engagement in an inclusive work and enga
Slide 23: Elevated ESG commitments for Sonova
Sonova’s commitment to sustainable success Elevated ESG commitments for Sonova We increase our support for children through We strive for 40% women in key the Hear the World Foundation by 10% YOY positions by 2025 We train and certify 250 HCPs in low- and We aim for >95% of employees* to have a midd
Slide 24: Sonova’s ESG ratings and performance
Sonova’s ESG ratings and performance Commitment to sustainability is integrated in our business and culture Sonova ESG ratings B AA Low ESG risk DJSI member Status: Prime (C+ or better) In 2021, Sonova received an Member of indices: Industry position: Top 10% MSCI ESG Rating of AA. DJSI World & DJSI
Slide 25: Financial information
sonova Financial information “Atti be 25
Slide 26: Highlights
Financial information Highlights − Sales of CHF 1,603.8 million Sales − Growth of +48.5% in LC (organic +46.6%), +49.9% in CHF (favorable FX impact: CHF +15.7 million) − Supported by low comparison figures and ongoing recovery, despite residual challenges from the pandemic − Gross profit margin (adj
Slide 27: Sonova Group – Key financials – As reported and adjusted
Half-Year 2021/22 Sonova Group – Key financials – As reported and adjusted 1H 2021/22 ∆ margin 2y CAGR CHF m Margin ∆ % in LC in LC in LC Comments Sales (reported) 1,603.8 +48.5% +8.5% Gross profit (adj.) 1,183.1 73.8% +57.6% +430bps +11.0% ‒ Driven by ongoing cost optimization and higher volume – p
Slide 28: Key financials
Half-Year 2021/22 Key financials 1H2021/22 Δ % in LC Δ % in LC 2y CAGR CHF m vs. 1H 2020/21 vs. 1H 2019/20 in LC Sales HI segment 1,465.6 +46.9% +18.4% +8.8% Sales HI business 890.2 +46.2% +22.1% +10.5% Sales AC business 575.4 +48.0% +12.9% +6.3% Sales CI segment 138.3 +67.3% +10.9% +5.3% Total sale
Slide 29: Sonova Group – Sales components
Half-Year 2021/22 Sonova Group – Sales components in CHF million OPERATIONAL FX +48.5% 1,588.1 1,603.8 19.6 15.7 498.9 1,069.6 1H 20/21 Organic M&A 1H 21/22 FX 1H 21/22 Reported net of divestments LC impact Reported YoY growth components +46.6% +1.8% +48.5% +1.5% +49.9% 2-year CAGR +7.6% +0.9% +8.5%
Slide 30: Sonova Group – EBITA Components
Half-Year 2021/22 Sonova Group – EBITA Components in CHF million OPERATIONAL ADJUSTMENTS FX +129.3% 399.7 393.9 0.1 -12.5 387.3 6.6 225.3 174.3 1H 20/21 Organic M&A 1H 21/22 Adjustments 1H 21/22 FX 1H 21/22 adjusted net of divestments adj. in LC in LC reported in LC reported Margin 16.3% +9.2% -0.3%
Slide 31: Operating expenses excluding acquisition-related amortization
Half-Year 2021/22 Sonova Group – Operating expenses excluding acquisition-related amortization 1H 2021/22 1H 2020/21 2y CAGR CHF m Δ % in LC in LC CHF m Comments Research & Development (adj.) -114.8 +47.0% +20.4% -78.1 ‒ Continued step up in new technology investments in % of sales 7.2% 7.3% ‒ Step-
Slide 32: HI Segment – Key financials
Half-Year 2021/22 HI Segment – Key financials Sales EBITA (adj.) Segment sales − Strong organic growth further supported by M&A CHF 1,466m CHF 388m − YOY performance driven by ongoing market +46.9% vs. PY in LC +107.9% vs. PY in LC recovery and easy comparison base +8.8% 2y CAGR in LC +25.6% 2y CAGR
Slide 33: CI Segment – Key financials
Half-Year 2021/22 CI Segment – Key financials Sales EBITA (adj.) Cochlear implant systems − Further recovery of surgery volumes in North CHF 138.3m CHF 18.0m America, CN and most Western European countries +67.3% vs. PY in LC Margin 13.0% − Recapturing market share after the voluntary field Up from
Slide 34: Outlook
sonova Outlook “Atti be 34
Slide 35: Factors impacting 1H performance and considerations for 2H
Outlook Factors impacting 1H performance and considerations for outlook into 2H 1H 2021/22 2H 2021/22 − Ongoing market recovery and easy comparison base − Further market recovery but more challenging comparison base − Strong competitive position of Phonak Paradise − Ongoing risk of regional restrict
Slide 36: Re-iterating guidance and mid-term target
Outlook Re-iterating guidance and mid-term target Guidance Mid-term In LC FY 2021/22 Target Sales growth +24% to +28% +6% to +9% p.a. adj. EBITA growth +34% to +42% +7% to +11% p.a. Assumptions for 2H 2021/22 − Guidance includes further market normalization absent any additional headwinds from suppl
Slide 37: Total shareholder return – Cash deployment strategy
Outlook Total shareholder return (TSR) – Cash deployment strategy − Acceleration of bolt-on acquisitions – CHF 70-100 million p.a. 1. Acquisitions − Strategic and technology acquisitions − Restarting cash dividends worth more than CHF 200 million 2. Attractive dividend − Maintain payout ratio of aro
Slide 38: Appendix
sonova Appendix “Atti be 38
Slide 39: Non-GAAP adjustments
Appendix Non-GAAP adjustments Adjustments for (in CHF m): 1H 2021/22 1H 2020/21 Restructuring +7.4 +21.9 thereof HI segment +6.5 +20.8 thereof CI segment +0.9 +1.1 Patent infringement lawsuit -99.0 Transaction costs related to the acquisition f the Sennheiser Consumer Division +5.0 - Total adjustmen
Slide 40: Sales by regions and key markets
Appendix Sonova Group results – Sales by regions and key markets 1H 2021/22 1H 2020/21 CHF m Δ % in LC 2y CAGR in LC % Group sales CHF m % Group sales EMEA 830.6 +41.3% +7.0% 52% 572.8 54% USA 499.8 +70.3% +12.2% 31% 302.3 28% Americas (excl. USA) 116.9 +56.9% +7.7% 7% 71.7 7% Asia / Pacific 156.6 +
Slide 41: Sonova Group – EBITA Components
Appendix Sonova Group – EBITA Components in CHF million OPERATIONAL ADJUSTMENTS FX +129.3% 399.7 393.9 0.1 -12.5 387.3 6.6 225.3 174.3 1H 20/21 Organic M&A 1H 21/22 Adjustments 1H 21/22 FX 1H 21/22 adjusted net of divestments adj. in LC in LC reported in LC reported Margin 16.3% +9.2% -0.3% 25.2% -0
Slide 42: Sonova Group – Key financials – As reported and adjusted
Appendix Sonova Group – Key financials – As reported and adjusted 1H 2021/22 ∆ margin 2y CAGR CHF m Margin ∆ % in LC in LC in LC Comments Sales (reported) 1,603.8 +48.5% +8.5% Gross profit (adj.) 1,183.1 73.8% +57.6% +430bps +11.0% ‒ Driven by ongoing cost optimization and higher volume – partly off
Slide 43: Sonova Group – Operating Free Cash Flow
Appendix Sonova Group – Operating Free Cash Flow in CHF million +37.2% 7.1 -28.0 -23.8 337.3 2.9 133.2 245.8 1H 20/21 Profit before tax Depreciation & Amortization Income ∆ NWC & CAPEX 1H 21/22 OpFCF taxes paid Other items OpFCF Growth components +54.2% +2.9% -11.4% -9.7% +1.2% +37.2% ► Driven by pr
Slide 44: Sonova Group – Balance sheet
Appendix Sonova Group – Balance sheet CHF m 30 Sep 2021 30 Sep 2020 Comments Days sales outstanding (DSO) 54 58 ‒ Continued strong collection management Days inventory outstanding (DIO) 149 137 ‒ Targeted stock increases to counter supply chain risks Capital employed 2,917.2 2,673.9 ‒ Rise in receiv
Slide 45: 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 51 million +/- CHF 19 million EUR/CHF +/- 5% +/- CHF 60 million +/- CHF 27 million 45
Slide 46: Sonova Group – Sales by currency and FX rates
Appendix Sonova Group – Sales by currency and FX rates Effect Spot Other 1H-20/21 1H-21/22 1H-21/22 2H-20/21 FY-20/21 Nov-2021 USD USD 0.94 0.91 - 0.90 0.92 0.92 GBP, CAD, BRL, AUD EUR 1.07 1.09 + 1.08 1.08 1.05 and JPY GBP 1.19 1.27 + 1.22 1.21 1.23 CAD 0.69 0.74 + 0.70 0.70 0.73 EUR AUD 0.65 0.69