Sonova Holding AG announced that it has “raised its guidance for the first half of FY 2020/21.” Following the business update on July 6, 2020, Sonova’s business activities have picked up “faster than anticipated, supported by the ongoing recovery of the global hearing care market from the COVID-19 pandemic impacts,” according to the company’s announcement. As a result, Sonova now expects sales for the first half of FY 2020/21 to reach around 79% of the prior year level at constant exchange rates and to achieve an adjusted EBITA margin in Swiss francs of approximately 15% for the same period. For the second half of the financial year, the Group expects to return to growth, achieving a revenue increase of 4%-8% and a rise in the adjusted EBITA in the range of 20%-30% compared with the prior year period, both at constant exchange rates.
Arnd Kaldowski, CEO of Sonova, said: “During the past months, our business has performed above expectations, driven by a strong product portfolio, the successful execution on our growth and productivity initiatives, and supported by improved market conditions. This was only possible thanks to the dedication of our employees and swift action throughout our company to address the current market challenges. Supported by the successful launch of our new Phonak Paradise platform, we expect to return to positive growth in the second half of our business year. Coupled with the acceleration of our efforts to optimize our organizational structure, this is expected to drive a strong growth in profitability for the remainder of the financial year.”
The market recovery “continued to progress faster than anticipated,” positively impacting Sonova’s business activities, the company said. While the overall hearing instruments market remained modestly below prior year levels in recent weeks, some major markets have returned to growth. The cochlear implants market improved as well, albeit at a “considerably slower pace than the hearing instruments market” as many hospitals continue to operate at reduced surgical volumes. For the Sonova Group, the APAC region continued to lead the recovery in the second quarter of FY 2020/21 with sales growth at constant exchange rates estimated at around 4%, followed by the regions EMEA and Americas (excl. US) at approximately prior year levels. In the United States, sales were close to 10% lower than the prior year level.
As a result, and reflecting the year-to-date performance, Sonova therefore raised its guidance for the first half of the financial year 2020/21, expecting Group sales to reach around 79% (previous guidance: 65-75%) of prior year levels and the adjusted EBITA to decline by approximately 30%, both at constant exchange rates. This implies an adjusted EBITA margin in Swiss francs of around 15% (previous guidance: in the single digits at constant exchange rates), according to the company.
For the second half of the financial year 2020/21, the Group expects revenue growth of 4%-8% and an increase of the adjusted EBITA in the range of 20%-30% compared with the prior year period, both at constant exchange rates. The outlook assumes a continued gradual market recovery absent any significant re-tightening of lockdown restrictions. While the speed of the recovery so far has been “encouraging,” the current rise in infection rates in several markets illustrates the continued risk to the expected upward trend.
For FY 2020/21, this implies that sales are expected to reach 92%-94% of prior year levels and an adjusted EBITA at around prior year level, both at constant exchange rates. As a consequence of the strengthening of the Swiss franc and reflecting current exchange rates, Sonova anticipates reported sales growth in Swiss francs to be reduced by around 4 percentage points and the adjusted EBITA growth in Swiss francs to be negatively affected by around 10 percentage points in FY 2020/21.