Sonova Holding AG · SIX:SOON
Sonova — H1 2014/15 Earnings Presentation
44 slides from Sonova's earnings presentation, Nov 17, 2014
Slide 1: Half-Year 2014/15 Results
Stäfa, 17 November 2014, Lukas Braunschweiler, CEO & Hartwig Grevener, CFO Half-Year 2014/15 Results
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
Agenda 1. Business Review 1H 2014/15 2. Financial Review 1H 2014/15 3. Total shareholder return strategy 4. Outlook FY 2014/15 5. Q&A 6. Upcoming Events 17 November 2014 Page 3
Slide 4: Sonova Group
Sonova Group Clear and focused strategy – Customer driven innovation 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 (Connect Hearing Group) S
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 PHONAK UNITRON RETAIL ADVANCED BIONICS Business Business Business Business 17 November 2014 Page 5
Slide 6: 1. Business Review 1H 2014/15
1. Business Review 1H 2014/15
Slide 7: Business highlights 1H 2014/15
Half-Year 2014/15 Business highlights 1H 2014/15 – Strong sales increase, driven by both segments – Sales of CHF 990.2 million – up 4.5% in Swiss francs and 7.7% in LC – Organic sales growth of 6.9% – driving market share expansion in both segments – Solid underlying margin development – EBITA of CH
Slide 8: Sonova Group – Key financials
Half-Year 2014/15 Sonova Group – Key financials in CHF million 1H 2013/14 1H 2014/15 Δ% Δ % in LC Sales 947.8 990.2 4.5% 7.7% Gross profit 649.2 680.9 4.9% 8.9% - Gross profit margin 68.5% 68.8% OPEX -443.0 -465.0 5.0% 7.4% EBITA 206.2 215.9 4.7% 12.1% - EBITA margin 21.8% 21.8% Operating free cash
Slide 9: Sonova Group – Growth components
Half-Year 2014/15 Sonova Group – Growth components in CHF million 1H 2013/14 Growth contribution 1H 2014/15 FX impact 1H 2014/15 as reported @ const. FX as reported Organic Acquisitions Sales 947.8 64.9 7.7 1,020.4 -30.2 990.2 - Δ % to prior year n/a +6.9% +0.8% +7.7% -3.2% +4.5% EBITA 206.2 +24.9 2
Slide 10: Sonova Group – Sales by regions
Half-Year 2014/15 Sonova Group – Sales by regions 1H 2013/14 1H 2014/15 in CHF million Sales In % Sales in % Δ % in LC EMEA 361.7 38.1% 427.3 43.1% 19.3% USA 368.2 38.9% 348.7 35.2% -1.7% Americas (excl. USA) 116.9 12.3% 108.3 10.9% 0.3% Asia / Pacific 101.0 10.7% 105.9 10.7% 9.4% Total SONOVA 947.8
Slide 11: Strong financial track record
Half-Year 2014/15 Strong financial track record SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 2'400 500 45% 40% 2'000 400 35% 1'600 30% 300 25% 1'200 20% 200 800 15% 100 10% 400 5% 0 0 0% 09/10 10/11 11/12 12/13 13/14 14/15 09/10 10/11 11/12 12/13 13/14 14/15 FY 2009/10 FY 2010/1
Slide 12: Hearing instruments – Sales by product groups
Half-Year 2014/15 Hearing instruments – Sales by product groups in CHF million 1H 2013/14 % Group sales 1H 2014/15 % Group sales Δ % in LC HI Premium 220.6 23.3% 226.7 22.9% 5.6% HI Advanced 215.9 22.8% 204.4 20.6% -2.3% HI Standard 268.6 28.3% 286.8 29.1% 9.8% Wireless communication 30.9 3.3% 38.8
Slide 13: Hearing instruments – Growth components
Half-Year 2014/15 Hearing instruments – Growth components in CHF million 1H 2013/14 Growth contribution 1H 2014/15 FX impact 1H 2014/15 as reported @ const. FX as reported Organic Acquisitions Sales 865.8 46.0 7.7 919.5 -27.3 892.2 - Δ % to prior year n/a +5.3% +0.9% +6.2% -3.2% +3.0% EBITA 206.2 +1
Slide 14: Hearing instruments – Performance history
Half-Year 2014/15 Hearing instruments – Performance history SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 2'000 500 45% 40% 1'600 400 35% 30% 1'200 300 25% 20% 800 200 15% 400 100 10% 5% 0 0 0% 09/10 10/11 11/12 12/13 13/14 14/15 09/10 10/11 11/12 12/13 13/14 14/15 FY 2009/10 FY
Slide 15: Product strategy
Product strategy Provide complete customer solutions: HW, SW and Services Platform concept approach to solution development for HI & CI 17 November 2014 Page 15
Slide 16: Phonak
Phonak Venture platform successfully launched – Early indications very promising BTE Custom RIC Power Pediatric Premium Bolero Q90 Virto Q90 Audéo V90 Naída Q90 Sky Q90 Advanced Bolero Q70 Virto Q70 Audéo V70 Naída Q70 Sky Q70 Standard Bolero Q50 Virto Q50 Audéo V50 Naída Q50 Sky Q50 Essential Boler
Slide 17: Unitron
Unitron Next generation of products on the Era platform BTE Custom RIC Power Flex Trial & Upgrade Premium Quantum² Pro Quantum² Pro Moxi² Pro Quantum² 20 Quantum² 20 Moxi² 20 Max 20 Advanced Quantum² 16 Quantum² 16 Moxi² 16 Any Performance Level Standard Quantum² 10 Quantum² 10 Moxi² 10 Max 6 Essent
Slide 18: Connect Hearing US
Connect Hearing Connect Hearing US Key initiatives Harmonized branding and positive customer experience Focus on lead generation and consumer evaluations Develop leading practices in sales training, business process and information systems Harmonization of processes and introduction of advan
Slide 19: Connect Hearing – Boots Hearingcare shop-in-shop
Connect Hearing Boots Hearingcare shop-in-shop concept – Continued strong development Key initiatives Expansion into Boots Pharmacy format – Beyond Boots Optical Developing efficient patient care processes using on-line tools Creating awareness of hearing loss and solutions: The Great Big Hear
Slide 20: Cochlear implants – Growth components
Half-Year 2014/15 Cochlear implants – Growth components in CHF million 1H 2013/14 Growth contribution 1H 2014/15 FX impact 1H 2014/15 as reported @ const. FX as reported Organic Acquisitions Sales 82.0 18.9 - 100.9 -2.9 98.0 - Δ % to prior year +23.0% +0.0% +23.0% -3.4% +19.6% EBITA 0.1 +7.9 8.0 -0.
Slide 21: Cochlear implants – Performance history
Half-Year 2014/15 Cochlear implants – Performance history SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 250 20 20% 200 0 0% 150 -20 -20% 100 -40 -40% 50 -60 -60% 0 -80 -80% 09/10 10/11 11/12 12/13 13/14 14/15 09/10 10/11 11/12 12/13 13/14 14/15 FY 2009/10 FY 2010/11 FY 2011/12 FY
Slide 22: Advanced Bionics
Advanced Bionics Competitive portfolio of sound processors, implants, electrodes and accessories Implants Electrodes Sound Processors HiRes 90K Advantage HiFocus Mid-Scala Naída CI HiRes 90K HiFocus 1j Neptune HiFocus Helix Harmony BTE Building on the combined R&D strength of Advanced Bionics and Ph
Slide 23: Advanced Bionics – AquaCase
Advanced Bionics AquaCase – Leadership in waterproof hearing technology continues Featuring the AquaMic – Enabling uncompromised hearing in and out of the water 17 November 2014 Page 23
Slide 24: 2. Financial Review
sonova HEAR THE WORLD 2. Financial Review
Slide 25: Financial highlights
Half-Year 2014/15 Financial highlights – Sales of CHF 990.2 million – mainly driven by double-digit sales growth in the EMEA region – Gross Profit of CHF 680.9 million or 68.8% of sales – 80 bps expansion in LC – Reported EBITA margin of 21.8% – up by 90 bps in LC – FX headwind – reduces reported EB
Slide 26: Sonova Group – Key financials
Half-Year 2014/15 Sonova Group – Key financials in CHF million 1H 2013/14 1H 2014/15 Δ% Δ % in LC Sales 947.8 990.2 4.5% 7.7% Gross profit 649.2 680.9 4.9% 8.9% - Gross profit margin 68.5% 68.8% OPEX -443.0 -465.0 5.0% 7.4% EBITA 206.2 215.9 4.7% 12.1% - EBITA margin 21.8% 21.8% Operating free cash
Slide 27: Sonova Group – EBITA development
Half-Year 2014/15 Sonova Group – EBITA development +9.7m +4.7% +24.9m +12.1% +0.8 231.1 -15.2 215.9 206.2 +24.1 Avg FX 1H 1H Rates 2013/14 2014/15 Margin: USD 0.94 0.90 22.7% EUR 1.23 1.22 Margin: Margin: 21.8% 21.8% GBP 1.45 1.51 JPY (100) 0.95 0.88 BRL 0.43 0.40 AUD 0.89 0.84 CAD 0.91 0.83 EBITA O
Slide 28: Sonova Group - Operating expenses
Half-Year 2014/15 Sonova Group - Operating expenses in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Δ % in LC Comments Reflects new Palio 3 Research & Development -59.4 -65.3 9.9% 11.2% platform launch in % of sales 6.3% 6.6% Growing slower than Sales & Marketing -290.0 -301.6 4.0% 6.7% sales–operat
Slide 29: Sonova Group – R&D spending
Half-Year 2014/15 Sonova Group – R&D spending in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Δ % in LC Comments Increase driven by R&D charged to the P&L 59.4 65.3 9.9% 11.2% both segments in % of sales 6.3% 6.6% Fluctuation capitalized Capitalized development costs 14.0 11.3 -19.4% -19.2% vs. expe
Slide 30: Reported results and income taxes
Half-Year 2014/15 Sonova Group – Reported results and income taxes in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Comments Adverse FX impact of CHF15.2m, EBITA 206.2 215.9 4.7% LC variance +12.1% Acquisition related amortization -12.9 -12.7 -1.4% Operating profit (EBIT) 193.3 203.1 5.1% in % of sal
Slide 31: Significant free cash flow
Half-Year 2014/15 Significant free cash flow in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Comments Cash flow before changes in NWC 221.3 237.6 7.4% (incl. taxes paid) Driven by higher inventories Changes in net working capital -29.7 -52.9 78.6% for Venture Cash flow from operating activities 191.
Slide 32: Sonova Group – Balance sheet
Half-Year 2014/15 Sonova Group – Balance sheet in CHF million 31 Mar 2014 30 Sep 2014 Δ % in CHF Comments Venture launch; includes CHF10m Net working capital 190.6 238.5 25.1% FX effect on inventory Days sales outstanding (DSO) 69 69 0.0% Days inventory outstanding (DIO) 140 162 15.6% Effect of Vent
Slide 33: 3. Total shareholder return strategy
3. Total shareholder return strategy
Slide 34: Total shareholder return – Cash deployment strategy
Total shareholder return Cash deployment strategy 1. Acquisitions 2. Dividend Bolt-on Further gradually CHF 50- 70 increase million p.a. pay-out-ratio Total shareholder return strategy 4. Share buyback 3. Solid cash Introduce buy back position program CHF 500 million Maintain 2014-2017 c
Slide 35: Total shareholder return – Dividend and buy-back
Total shareholder return Cash deployment strategy Dividend increase – Dividend paid for FY 2013/14 represented a payout ratio 2. Dividend of 37% – Dividend to further increase in steps – Target of a range around 40 % pay-out-ratio within 3 years Share buy-back program 4. Share buyback – Value of CHF
Slide 36: 4. Outlook
sonova HEAR THE WORLD 4. Outlook
Slide 37: Outlook FY 2014/15
Outlook FY 2014/15 FY 2014/15 guidance Actual Guidance 1H 2014/15 FY 2014/15* Sales growth in local currencies 7.7% 7%-9% Sales thereof acquisition related growth 0.8% approx. 1% FX-impact -3.2% Total sales growth in CHF 4.5% EBITA growth in local currencies 12.1% 11%-15% EBITA FX-impact -7.4% Total
Slide 38: FX impact on sales and margins
Outlook FY 2014/15 FX impact on sales and margins USD/CHF EUR/CHF Rate Sales EBITA USD/CHF +/- 5% +/- CHF 38 million +/- CHF 12 million EUR/CHF +/- 5% +/- CHF 26 million +/- CHF 14 million USD and EUR account for roughly two thirds of the overall FX exposure 17 November 2014 Page 38
Slide 39: FX rates – Main currencies
Outlook FY 2014/15 FX rates – Main currencies accounted for around 90% of Group sales Avg 1H 2013/14 Avg 1H 2014/15 Effect Avg FY 2013/14 Spot 13-Nov-14 USD 0.94 0.90 – 0.92 0.96 EUR 1.23 1.22 – 1.23 1.20 GBP 1.45 1.51 1.46 1.52 CAD 0.91 0.83 – 0.87 0.85 AUD 0.89 0.84 – 0.86 0.84 BRL 0.43 0.40 – 0
Slide 40: 5. Questions & Answers
sonova HEAR THE WORLD 5. Questions & Answers
Slide 41: 6. Upcoming Events
sonova HEAR THE WORLD 6. Upcoming Events
Slide 42: Important dates
Sonova Group Important dates 18-21 Nov 2014 Roadshow Half-Year Results 2014/15 19 May 2015 Publication Full-Year Results 2014/15 Stäfa 20-29 May 2015 Roadshow Full-Year Results 2014/15 16 Jun 2015 Annual General Meeting Zurich 13 Oct 2015 Sonova Investor & Analyst Day Stäfa 17 November 2014 Page 42
Slide 43: Contacts
Contacts Investor Relations Media Relations Thomas Bernhardsgrütter Michael Isaac Director Investor Relations Head of Media Relations Phone +41 58 928 33 44 Phone +41 58 928 33 24 Mobile +41 79 618 28 07 Mobile +41 79 420 29 56 Email thomas.bernhardsgruetter@sonova.com Email michael.isaac@sonova.com
Slide 44: Thank You
Thank You