Despite the adverse economic climate, Sonova, Stäfa, Switzerland, has achieved record sales of 1,249 million Swiss francs (CHF) (as of May 21, one US dollar is roughly equivalent to 1.1004 CHF), and further expanded its market share on the back of organic growth of 7.8% in local currencies and 3% growth from acquisitions, according to the company.
In the financial year 2008/09 the Sonova Group generated 62% of sales with products less than 2 years old, the company says. They further note: Spending on research and development came to 6.2% of group sales, the same level as last year. Under its two core brands Phonak and Unitron, Sonova launched several new products on the market in 2008/09 and was able to establish Phonak’s entire portfolio on the new CORE platform within 12 months. Unitron managed to significantly improve its market position and strengthen its brand. New product releases such as the hearing systems Versáta, Certéna, Audéo YES, Next, and 360 have been accepted very well by the market and set new benchmarks in hearing system technology.
Profitability was maintained at a high level, with an EBITA (earnings before interest, tax and amortization) margin of 26.6%, and income after taxes amounted to CHF 284 million, according to the company, with details as follows, the company reports:
– New sales record of CHF 1,249 million: the Sonova Group has increased its market share to around 23%, making it the world’s biggest manufacturer of hearing systems according to sales
– Organic sales growth of 7.8% significantly exceeded hearing instrument market growth
– 3% growth by acquisitions: distribution network further strengthened through acquisitions and foundation of new group companies
– EBITA margin of 26.6% maintained at a high level despite negative currency effects
– 62% of sales achieved with products launched less than 2 years ago: most innovative and comprehensive product portfolio in the industry
– New product releases: the hearing systems Versáta, Certéna, Audéo YES, Next, and 360 set new benchmarks in hearing system technology
– Solid income after taxes of CHF 284 million achieved: proposal of unchanged dividend of CHF 1 to the annual general shareholders’ meeting
– Board of directors proposes the election of three new members to the annual general shareholders’ meeting
– Positive outlook for the financial year 2009/10: based on current market conditions, the
Sonova Group expects an organic growth of 6 to 8% in local currencies and an EBITA margin around the previous year’s level
According to the company: In the financial year 2008/09, the Sonova Group increased its sales from CHF 1,204.8 million to CHF 1,249.2 million, achieving solid overall growth of 3.7% in Swiss francs. The Group’s organic sales growth was 7.8% in local currencies. The Swiss franc appreciated against all major currencies in which Sonova generates sales, with the exception of the Chinese yuan and Japanese yen. Overall, this resulted in a negative currency impact of 7.1% on sales. Sonova also completed a series of acquisitions. which contributed a combined 3% to sales growth. The growth of the overall hearing instrument market for the financial year 2008/09 is estimated to be around 2% in terms of units sold.
“We significantly exceeded market growth and expanded our market share to around 23% in value terms,” says CEO Valentin Chapero, PhD. “This makes us the world’s biggest manufacturer of hearing systems according to sales.”
The company reports: The highest growth was achieved in the Asia/Pacific region, at 18.4% in local currencies, mainly as a result of increased sales in Japan and the continuing penetration of the Chinese market. Europe posted a very solid performance, achieving growth of 6.9% in local currencies. Key markets such as Germany, France, and Italy continued to benefit from robust demand. The Americas region reported growth of 12.9% in local currencies, with especially strong growth achieved in the United States, Canada, and Brazil. In 2008/09 the growth of the various product groups was disproportionately influenced by strong demand for business class and economy class hearing systems. Growth in these market segments came to 24.6% and 18.1% respectively in local currencies. First class hearing systems now account for a smaller proportion of group sales. During the financial year 2008/09, first class hearing systems accounted for 26% of Sonova’s Group sales, compared with 23% for business class and 30% for economy class systems. Wireless communication systems achieved growth of 13% in local currencies. Sonova’s sales from miscellaneous products and services increased by 11.5% in local currencies.
During the reporting period Sonova was able to increase its gross profit from CHF 841.6 million to CHF 867.2 million despite the challenging market conditions, the company says. Adding: The gross profit margin of
69.4% lowered somewhat from last year’s figure of 69.9%. During the financial year 2008/09, Sonova achieved an operating profit (EBITA) of CHF 331.8 million, compared with CHF 339.8 million in the previous year. The EBITA margin slipped from 28.2% to 26.6% mainly due to the negative currency effects mentioned above. The adverse effects were partly offset by savings in materials procurement, economies of scale in production and the early launch of a cost-saving program across the entire group. The proportion of added value from Asia increased, while production facilities in Vietnam and China were expanded further, thus improving the efficient cost structure of Sonova’s production network. During the reporting period spending on sales, marketing, and administration increased to 36.7% of total sales, compared with 35.2% in the prior year. Sales and marketing was expanded, mainly through a number of acquisitions to strengthen existing sales channels.
Because of the lower operating profit, the slight decline in the financial result and the modest increase in tax expenses, Sonova’s income after taxes for the financial year 2008/09 came to CHF 284.1 million compared with CHF 305.2 million in the previous financial year, according to the company. The add: In view of the group’s positive result, the board of directors will be submitting a proposal to the annual general shareholders’ meeting on June 10 to pay out a dividend of CHF 1 per share, the same as last year.
According to the company: Sonova’s free cash flow in the financial year 2008/09 was CHF 79.0 million compared with CHF 219.4 million in the previous year. During the reporting period the Sonova Group invested
heavily in the future of the business, including new production facilities in Stäfa, Switzerland and in Suzhou, China. Sonova invested cash funds of CHF 97.3 million in various smaller acquisitions, CHF 60.8 million more than last year. The free cash flow was mainly used for increasing dividend payments to shareholders and for the share buy-back program. Shares have been bought back until October 2008; to date Sonova has repurchased 3.2% of outstanding shares.
The company reports: The board of directors will propose the election of three new members to the annual general shareholder’s meeting on June 10. Anssi Vanjoki, Ronald van der Vis, and Valentin Chapero, PhD, are nominated for election to the board. Anssi Vanjoki (born in 1956, Finnish citizen) is executive VP and general manager of Nokia’s markets unit since 2008 and a member of the Nokia Group executive board since 1998. In addition, he is chairman of the board of directors of Amer Group Plc, a sports equipment company, headquartered in Finland. Ronald van der Vis (born in 1967, Dutch citizen) was CEO of Pearle Europe BV, an optical retail group, until May 2009. In June 2009, he will be appointed executive director of Esprit Holdings Limited, an international fashion group. Following a transition period, he will also be appointed Group CEO. In addition, he is a member of the supervisory board of Grand Vision SA, France, a European optical retail chain. Chapero (born in 1956, Spanish citizen) is CEO of the Sonova Group since October 2002. He is also chairman of the industry body European Hearing Instrument Manufacturers’ Association (EHIMA).
The Sonova Group says it does not expect any change in the key growth drivers of the hearing instrument market. In the medium to long term, demographic trends, higher market penetration, and the Group’s expanding market share will ensure that Sonova will grow faster than the long-term trend for the overall market of 4 to 7% pa measured by units sold, according to the company. For the financial year 2009/10 based on the current market conditions and barring unforeseen events, the Sonova Group expects organic sales growth of 6 to 8% in local currencies and an EBITA margin around the previous year’s level, the company says.
Click here to download Sonova’s annual report for 2008/09.