sonova logoSonova Holding AG, Staefa, Switzerland, the world’s largest manufacturer of hearing aids and parent company of Phonak, Unitron, and Advanced Bionics, has announced solid financial result for the first half of their 2013/14 fiscal year. Consolidated sales for the Group increased by 8.6% in reported Swiss francs or 10.4% in local currencies reaching CHF 947.8 million (US$1.04 billion). Both the company’s hearing aid and cochlear implant businesses contributed to the top-line growth, with group EBITA growing by 10.6% to 13.0% depending on currency to CHF 206.2 million ($226.1 million).

Based on this data and positive growth prospects for the second half of the fiscal year 2013/14, Sonova raised its investor guidance for the full year, and now expects sales to grow by 8% to 10%, with EBITA to rise between 11% and 14%.

“The strong organic growth in both our hearing instruments and cochlear implants business confirms the strength of Sonova’s state-of-the-art technology platforms and the full breadth of our cutting-edge hearing solutions portfolio,” said Lukas Braunschweiler, CEO of Sonova, in the press statement. “The growth was not just well balanced across our businesses and products but also across all regions, thereby reflecting Sonova’s global footprint. At the same time, we achieved a marked margin improvement, taking another solid step towards our mid-term financial targets.”

Growth across all regions, led by Asia and Pacific Rim. All major regions posted a solid sales increase in local currencies, and new Phonak products based on the Quest platform were an important driver of growth, according to Sonova. Sales in the United States increased by 10.1% in local currency, accounting for 39% of Group sales in the first 6 months of fiscal year 2013/14. The Group says it benefited from the strong demand in the commercial market and expanded its high market share with the US Department of Veterans Affairs (VA). Sales in the cochlear implants segment developed very satisfactorily in response to the US regulatory approval of the Naída CI Q70 obtained in late August 2013. In the months before, sales were negatively impacted by the deferral of revenues for processors and by lower processor upgrade sales. Sales in the rest of the Americas (excluding the US) grew by 8.0% in local currencies and accounted for 12% of Group sales.

Sales in the EMEA region (Europe, Middle East, and Africa), which accounted for 38% of Group sales, rose by 8.3% in local currencies. In the hearing instruments segment, a strong growth in key markets like Germany and the United Kingdom was partly offset by the negative impact of reimbursement changes in the Netherlands and Denmark. The cochlear implants segment also added to the growth in the region.

In the Asia/Pacific region, sales rose by a strong 22.9% in local currencies and contributed 11% to Group sales. Growth was driven by strong hearing instrument revenues in China, Australia, and Japan. The cochlear implants business benefited from a central government tender in China, where Advanced Bionics started to ship products in September.

R & D investment. The Group reports that it continued to invest in research and development (R&D) with net expenses rising by 5.3% in local currencies to CHF 59.4 million ($65.1 million) or 6.3% of sales for the first half of 2013/14. Gross R&D spending (including the increase in capitalized development costs) amounted to CHF 70.4 million ($77.2 million), a similar level as in the prior year period and corresponding to 7.4% of sales.

Group hearing aid sales outpacing industry. With an organic sales increase of 9.0% in the first half of 2013/14, Sonova says its hearing instruments segment outpaced estimated market growth rates and further expanded what it calls its leading market position. Sales reached CHF 865.8 million ($949 million), representing a growth of 8.1% in reported Swiss francs and 9.9% in local currencies. Acquisitions contributed 0.9% to the sales growth.

Both the Group’s wholesale and retail businesses contributed to the growth within the hearing instruments segment, says the company. The success of the Phonak Quest platform introduced in October 2012 and substantially expanded with the RIC form factor at the AudiologyNOW! in April 2013 continued through the first half of 2013/14, reports Sonova. Unitron managed to further expand its market share with the VA and posted strong growth in Germany, France, and China. Growth in the retail business continued to be driven by a strong performance of the partnership with Boots, the UK’s leading pharmacy-led health and beauty retailer.

Within the product categories, premium hearing instruments showed the strongest increase, reporting a growth in local currencies of 16.2%. Sonova says this further demonstrates the success of its launch strategy to provide new products simultaneously over a broad range of performance categories. The increase in premium hearing instruments is also supported by growth of the Lyric. Both standard and advanced hearing instruments contributed to the growth, reports Sonova, with a sales increase in local currencies of 14.6% and 3.8%, respectively. After declining for 2 years, sales of wireless communication systems started to turn around with the introduction of the all-new 2.4 GHz technology-based Roger system, reports the company.

Source: Sonova