Sonova Holding Ag · SIX:SOON
Sonova — Investor Presentation (December 2023)
45 slides from Sonova's investor presentation, December 2023
Slide 1: Investor Presentation
Investor Presentation December 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 Page 4 ESG Strategy
Strategy and growth drivers Page 4 ESG Strategy Page 17 Financial Information Page 21 Outlook Page 35 Appendix Page 37 3
Slide 4: Strategy and growth drivers
Strategy and growth drivers 4
Slide 5: 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 6: Product and service offering
Product Hearing Instruments and service Receiver-In-Canal (RIC) In-The-Ear (ITE) offering hearing instruments hearing instruments Broadest and most Behind-The-Ear (BTE) hearing instruments Roger wireless systems advanced offering of hearing care solutions Consumer Hearing A brand licensed by Sonova
Slide 7: Our footprint
Our footprint Strong global presence Tullamore (IRL) Operation Center Valencia (US) Kitchener (CA) AB Support Center, Support Center Suzhou (CN) Operation Center Operation Center Mexicali (MEX) Operation Centers Ho Chi Minh City (VN) Operation Center Stäfa (CH) Sonova Group HQ Murten (CH) Sonova Wir
Slide 8: Market potential
Market potential Market penetration and access to hearing care Label HI users Hearing impaired w/ no HI Avg. adoption rate % Note. Bar width = Hearing impaired population Note. Indicative Consumer Accessibility (Hearing impaired population per POS) ~2-3K ~10-20K >33K (Developed) 32.4% 32% (Global) 9
Slide 9: Market trends
Market trends Technological advances and expansion of consumer benefits & technological adva nds ALIZATION & BIG DAT nce e T s Tr DIG I A ONOF COMP ONEN RIZATI TS & TU PS & CONNECTIVIT SE NIA AP NS I Y OR M S tomer sume Cus Con r Lore Continuous m Evolving Ipsu innovation m expectations IM AN PR NCE
Slide 10: 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 11: 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 12: 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 audiological performance consumer value Pioneer technology & Deliver consumer- Pr
Slide 13: Advance hearing innovation & expand consumer value
Advance hearing innovation & expand consumer value Building on core strength in hearing aids and driving market expansion Innovation framework Our R&D focus investments • Effortless communication in daily life Continued expansion of processing power • Natural and authentic sound quality ‒ Propriet
Slide 14: Advance hearing innovation – The Lumity platform
Advance hearing innovation– The Lumity platform The Lumity platform roll-out Key benefits Improved speech understanding Universal connectivity to a multitude Easy to use & rechargeable in challenging hearing situations1,2 of Bluetooth enabled devices August 2022 August 2022 April 2023 August 2023 Ph
Slide 15: Enhance consumer journey
Enhance consumer journey Creation of digital omni-channel ecosystem to address existing consumer needs and pain points From… …To One-size-fits-all experience, Customers flexibly choosing when, where and all interactions required visit in clinic how they get served, 24/7/365 BEFORE SALES DURING SALES
Slide 16: The relationship of hearing solutions and cognitive health
The relationship of hearing solutions and cognitive health Phonak’s ECHHO Program – Enhancing Cognitive Health via Hearing Optimization What we have learned Our belief Hearing well is vital to living well and linked to social-emotional, cognitive 89% and physical dimensions of well-being of HCPs rat
Slide 17: ESG Strategy
ESG Strategy 17
Slide 18: 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 19: 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 20: ESG ratings
ESG ratings Overview of Sonova’s rating results for environmental, social, and governance (ESG) factors Sonova ESG ratings B AAA Low ESG risk DJSI member Status: Prime (C+ or better) MSCI ESG Rating of AAA in Member of indices Industry position: Top 2% 2023, up from AA in 2022 DJSI World & DJSI Euro
Slide 21: Financial information
Sonova Financial information
Slide 22: 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 23: Sonova Group results
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 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: Sonova Group results
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 26: Hearing Instruments segment
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 27: Cochlear Implants segment
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 28: 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 29: 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 30: Development of operating expenses
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 31: 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 32: 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 33: 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 34: 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 35: Outlook
Outlook 35
Slide 36: 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 37: Appendix
Sonova Appendix
Slide 38: Performance history
Appendix 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 4,000 +14.6% 4,000 1,000 1,000 +29.0% 25.1% 22.5% 3,200 +8.7% 3,200 800 800 +4.1% -6.8% +11.6% 21.5% 21.2% 23.2% 2,400 +1
Slide 39: Sales by regions and key markets
Appendix Sonova Group – 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
Slide 40: Operating Free Cash Flow
Appendix 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 items 151 − Chang
Slide 41: 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 42: Key financials – As reported and adjusted
Appendix 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 & Development
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: 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
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