Sonova Holding Ag · SIX:SOON
Sonova — Investor Presentation (September 2021)
52 slides from Sonova's investor presentation, September 2021
Slide 1: Investor Presentation September 2021
Investor Presentation September 2021
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 28 Outlook Page 39 Appendix Page 42 3
Slide 4: Sonova Group & hearing care market
Sonova Group & hearing care market 4
Slide 5: Key highlights
Sonova Group Key highlights Sales EPS (adj.) Sales outlook CHF 2,602m CHF 7.71 per share +24-28% -6.8% in LC +4.3% in CHF growth in LC (2H: +6.6% in LC) in FY 2021/22 EBITA (adj.) Innovation EBITA outlook CHF 603m Phonak Paradise +34-42%* +5.6% in LC successful launch & growth in LC (2H: +33.6% in L
Slide 6: Summary FY 2020/21
Sonova Group Summary FY 2020/21 − Sales of CHF 2,601.9 million down -6.8% in LC (organic -7.1%), -10.8% in CHF – growth of +6.6% in LC in 2H Group − EBITA (adj.) of CHF 603.0 million, up +5.6% in LC, +33.6% in LC in 2H – structural optimization fully delivering to plan − EBITA margin (adj.) of 23.2%
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 Cochlear Implants ▪ Behind-The-Ear hearing instruments (BTE) ▪ Wireless systems ▪ Cochlear implants ▪ Custom In-The-Ear hearing instruments (ITE) ▪ Hearing protection ▪ Wireless communication systems ▪ Invisibl
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
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 MANUFACTURERS 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 3,000 +4.1% +8.7% 21.5% 21.2% 23.2% +9.0% -6.8% 600 20.8% 600 +15.3% 20.1% +6.5% 22.7% 2,000 +2.7% +5.9% 23.5% +24.5%
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: Implement consistent 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: Lead innovation – Innovation framework
Lead innovation Innovation framework • Effortless communication in daily life powered by AI • Natural and authentic sound quality • Seamless adaptation to environment • Multi-media streaming • … Healthy • Wearing comfort living • Size, aesthetics, handling companion • Rechargeability • Reliability •
Slide 16: Our most recent product launches
Lead innovation Our most recent product launches Phonak Unitron Audéo™ Paradise BLU platform 2Q 20/21 1Q 21/22 Advanced Bionics Hansaton Naída™ CI Marvel and STRATOS platform Sky CI™ Marvel sound 1Q 21/22 processors 3Q 20/21 Lorem ipsum 16
Slide 17: Phonak Audéo Paradise launched in August 2020
Lead innovation Example: Phonak Audéo™ Paradise launched in August 2020 Personalized digital solutions • New Hearing Screener 2.0 • New myPhonak 4.0 app • Hearing Diary 2.0 Unrivaled sound quality • AudiogramDirect (Remote Support) • New sound processing chip - PRISM™ • Remote Control • New motion s
Slide 18: More than 3,200 points of sales and 6,500 employees
Expand and optimize omni-channel AC network More than 3,200 points of sales and 6,500 employees ‒ A leading global platform of around 3,200 points of sales ‒ More than 6,500 employees in Sonova Audiological Care across 20 markets ‒ High concentration of networks in Europe with over 2,600 stores in 1
Slide 19: Touchpoints offered pre- and post-sale through multiple channels
Expand and optimize omni-channel AC network Touchpoints offered pre- and post-sale through a multitude of channels Benefits to consumers Benefits to AC and Sonova ‒ 24/7 service, 365 days/year even during lockdown ‒ Increase demand and customer satisfaction (loyalty) ‒ Increased choice and comprehen
Slide 20: Example World of Hearing flagship stores
Expand and optimize omni-channel AC network Example World of Hearing: Flagship stores as regional centers of expertise, leveraging satellite stores’ referrals 2018 Present 2020+ Concept Several builds Scale launch in progress globally Reduced lead time Younger customers Increased average sales price
Slide 21: 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 Three workstreams Rollout plan market share gains ‒ Elevating commercial execution to drive Sales excellence: Improving sales ‒ Continuous impr
Slide 22: Entering the Chinese market with omni-channel proposition
Invest in high growth developing markets Example: Entering the Chinese market with omni-channel proposition Multi-purpose More than 1 bn messaging, social daily commercial WeChat app as THE portal to an omni- media and mobile channel journey: screening, appointment transactions payment app booking,
Slide 23: Continuous process improvement & structural optimization
Continuous process improvement & structural optimization Harvest cost savings opportunities by driving structural optimization 2018/19 2019/20 2020/21 Satellite support & warehouses, Reduction of rooftops ✓ ✓✓ ✓ consolidation of sites Footprint Streamlining of AC POS ✓✓ 200-300 POS, largely sales ne
Slide 24: Strategic rationale of the Sennheiser Consumer Division acquisition
Leverage M&A to accelerate growth strategically Strategic rationale of the Sennheiser Consumer Division acquisition Consumer Division − Joining forces in rapidly developing segment of hearables with amplification, jump-starting High CI market Sonova’s own efforts Need for amplification − Adding an a
Slide 25: IntACT – Sonova's ESG Strategy
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 26: 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 27: 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 Risk Member Status: Prime (C+ or better) As of 08/2020, Sonova Status: Member DJSI received an MSCI ESG world (72 or better) and Rating of AA. DJSI Europe (64 or be
Slide 28: Sonova's strategy development
Sonova’s strategy development Omni-channel business model Ensure best to expand consumer access consumer experience Value Offer broadest Vertically integrated channel presence Provide Developer & manufacturer best products Time ► Transforming our business strategy by expanding of our access to consu
Slide 29: Financial information
Sonova Financial information “Atti be 29
Slide 30: Highlights
Financial information Highlights − Sales of CHF 2,601.9 million Sales − Growth of -6.8% in LC (organic -7.1%), -10.8% in CHF (FX headwind: CHF 115.7 million) − Return to growth in 2H with sales up +6.6% in LC − Gross profit margin (adj.) of 72.3%, margin up +60bps in LC Profitability − EBITA (adj.)
Slide 31: Sonova Group – Key financials – As reported and adjusted
Full-Year 2020/21 Sonova Group – Key financials – As reported and adjusted FY 2019/20 FY 2020/21 CHF m Margin CHF m Margin ∆ % in CHF ∆ % in LC Sales (reported) 2,916.9 2,601.9 -10.8% -6.8% Gross profit (adj.) 2,106.9 72.0% 1,880.2 72.3% -10.8% -6.4% OPEX (adj.) 1,486.2 1,277.1 -14.1% -11.4% EBITA (
Slide 32: Key financials – As reported and adjusted
Full-Year 2020/21 Sonova Group – Key financials – As reported and adjusted FY 2020/21 Adjustments FY 2020/21 in CHF million Reported 1 HI segment 2 CI segment 3 Other Total Adjusted Sales 2,601.9 - - - - 2,601.9 Cost of sales -728.3 5.5 1.1 - 6.6 -721.7 Gross profit 1,873.5 5.5 1.1 - 6.6 1,880.2 Res
Slide 33: Sonova Group – Sales Components
Full-Year 2020/21 Sonova Group – Sales Components OPERATIONAL FX in CHF million -6.8% 3,000 2,916.9 2,900 2,800 -207.5 2,717.6 2,700 8.2 -115.7 2,601.9 2,600 2,500 2,400 200 100 0 FY 19/20 Organic M&A FY 20/21 FX FY 20/21 Reported LC impact Reported Growth -4.0% -7.1% +0.3% -6.8% -10.8% components ►
Slide 34: Sonova Group – EBITA components
Full-Year 2020/21 Sonova Group – EBITA components OPERATIONAL ADJUSTMENTS FX in CHF million AB patent award, restructuring & impairment of CI development costs 740 723.2 720 700 67.4 -59.9 680 +5.6% 663.3 660 -15.4 655.8 50.4 640 620.8 620 0 FY 19/20 Organic M&A FY20/21 Adjustments FY 20/21 FX FY 20
Slide 35: Operating expenses excluding acquisition-related amortization
Full-Year 2020/21 Sonova Group – Operating expenses excluding acquisition-related amortization FY 2019/20 FY 2020/21 CHF m CHF m Δ % in CHF Δ % in LC Comments Research & Development (adj.) -163.2 -177.9 +9.0% +10.3% ‒ Increased level of investment in innovation despite COVID - in % of sales (adj.) 5
Slide 36: HI Segment – Key financials – Half-year view
Full-Year 2020/21 HI Segment – Key financials – Half-year view 1H 2020/21 2H 2020/21 FY 2020/21 CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC Sales 986.5 -23.8% -19.6% 1,430.8 +2.8% +6.5% 2,417.3 -10.0% -6.1% Δ organic -256.9 -19.9% 86.0 +6.2% -170.9 -6.4% Δ acquis
Slide 37: HI Segment – Hearing Instruments business
Full-Year 2020/21 HI Segment – Hearing Instruments business 1H 2020/21 2H 2020/21 FY 2020/21 CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC Sales 607.8 -21.1% -16.7% 856.0 +1.6% +6.2% 1,463.9 -9.2% -4.7% Δ organic -129.6 -16.8% 51.7 +6.1% -77.8 -4.8% Δ acquisitions
Slide 38: HI Segment – Audiological Care business
Full-Year 2020/21 HI Segment – Audiological Care business 1H 2020/21 2H 2020/21 FY 2020/21 CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC Sales 378.7 -27.7% -23.8% 574.8 +4.6% +6.9% 953.5 -11.2% -8.1% Δ organic -127.3 -24.3% 34.2 +6.2% -93.1 -8.7% Δ acquisitions 2.9
Slide 39: CI Segment – Key financials – half-year view
Full-Year 2020/21 CI Segment – Key financials – half-year view 1H 2020/21 2H 2020/21 FY 2020/21 CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC CHF m Δ % in CHF Δ % in LC Sales 83.1 -37.2% -33.8% 101.4 +3.0% +8.2% 184.5 -20.0% -15.9% Δ organic -44.7 -33.8% +8.1 +8.2% --36.6 -15.9% Δ FX -4.4 -3
Slide 40: Outlook
Sonova Outlook “Atti be 40
Slide 41: Guidance and mid-term target
Outlook Guidance and mid-term target Actual Guidance Mid-term FY 2020/21 FY 2021/22 Target Sales growth in LC -6.8% +24% to +28% +6% to +9% p.a. adj. EBITA growth in LC +5.6% +34% to +42% +7% to +11% p.a. Considerations for FY 2021/22 ‒ Guidance assumes further market normalization, supported by pro
Slide 42: Total shareholder return (TSR) – 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 43: Appendix
Sonova Appendix “Atti be 43
Slide 44: Non-GAAP adjustments
Appendix Non-GAAP adjustments 2019/20 2020/21 Adjustments for (in CHF m): 1H 2H FY 1H 2H FY Restructuring 15.5 3.1 18.6 21.9 16.9 38.8 thereof HI segment 15.5 3.1 18.6 20.8 15.7 36.5 thereof CI segment - - - 1.1 1.2 2.3 Patent infringement lawsuit - - - -99.0 -25.4 -124.4 Impairment of capitalized d
Slide 45: Reported sales by regions and key markets – Half-year view
Appendix Sonova Group – Reported sales by regions and key markets – Half-year view 1H 2020/21 2H 2020/21 FY 2020/21 CHF m Δ % in LC CHF m Δ % in LC CHF m Δ % in LC EMEA 572.9 -19.1% 843.7 +5.9% 1'416.6 -6.0% USA 302.3 -26.0% 429.9 +3.8% 732.2 -10.8% Americas (excl. USA) 71.7 -26.7% 106.4 +7.4% 178.2
Slide 46: Key financials – Half-year view
Appendix Sonova Group – Key financials – Half-year view CHF m 1H 2020/21 Δ % in LC 2H 2020/21 Δ % in LC FY 2020/21 Δ % in LC Sales 1,069.6 -20.9% 1,532.2 +6.6% 2,601.9 -6.8% Gross profit (adj.) 740.3 -22.0% 1,139.8 +8.0% 1,880.2 -6.4% - Gross profit margin (adj.) 69.2% 74.4% 72.3% OPEX (adj.) 566.0
Slide 47: Reported results and income taxes
Appendix Sonova Group – Reported results and income taxes in CHF million In line with PY 700 Increase from 663.3 CHF 7.6m in PY due to Underlying 650 debt increase tax rate: 12.5% 60.3 -43.8 619.5 (prior year: 15.3%) 603.0 -19.1 600.4 600 585.3 -74.8 59.7 550 500 450 100 50 0 FY 20/21 Adjustment FY
Slide 48: CI Segment – Sales by product groups
Appendix CI Segment – Sales by product groups 1H 2020/21 2H 2020/21 FY 2020/21 CHF m Δ % in LC CHF m Δ % in LC CHF m Δ % in LC Cochlear implant systems 60.6 -35.4% 68.7 +10.5% 129.3 -17.1% Upgrades and accessories 22.5 -29.1% 32.7 +3.7% 55.2 -12.8% Total CI segment 83.1 -33.8% 101.4 +8.2% 184.5 -15.
Slide 49: Operating free cash flow (OpFCF)
Appendix Sonova Group – Operating free cash flow (OpFCF) in CHF million 760 22.6 -16.2 720 680 98.0 638.5 -180.1 Reflecting liquidity 640 protection measures 602.4 600 39.6 560 Affected by COVID 520 related sales phasing & safety stock 40 0 FY 19/20 Profit before tax Depreciation & Amortization Inco
Slide 50: Balance sheet
Appendix Sonova Group – Balance sheet CHF m 31 Mar 2020 31 Mar 2021 Comments ‒ Strong collection management throughout the pandemic Days sales outstanding (DSO) 56 56 ‒ Targeted stock increases to mitigate supply chain risks Days inventory outstanding (DIO) 133 154 ‒ Higher receivables due to strong
Slide 51: 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 49 million +/- CHF 19 million EUR/CHF +/- 5% +/- CHF 63 million +/- CHF 30 million ► USD and EUR account for roughly two thirds of the overall FX exposure 51
Slide 52: Sales by currency and FX rates
Appendix Sonova Group – Sales by currency and FX rates Effect Spot Other FY-19/20 1H-20/21 2H-20/21 FY-20/21 FY-20/21 May-2021 USD USD 0.99 0.94 0.90 0.92 - 0.90 GBP, CAD, BRL, AUD EUR 1.10 1.07 1.08 1.08 - 1.10 and JPY GBP 1.25 1.19 1.22 1.21 - 1.27 CAD 0.74 0.69 0.70 0.70 - 0.75 EUR AUD 0.67 0.65
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