Financial year 2023/24: Sonova ends year on improving trajectory after
growth picks up in second half

Sonova Holding AG / Key word(s): Annual Results
Financial year 2023/24: Sonova ends year on improving trajectory after
growth picks up in second half

14-May-2024 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.

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Ad hoc announcement pursuant to Art. 53 LR

Stäfa (Switzerland), May 14, 2024 - Sonova Holding AG, a leading provider of
hearing care solutions, today reports its results for the 2023/24 financial
year. As expected, both sales and earnings growth picked up in the second
half. The Group achieved sales of CHF 3,626.9 million, up 3.2% in local
currencies. This was driven by a substantial acceleration in the Hearing
Instruments and Cochlear Implants businesses in the second half and a
continued good performance of the Audiological Care business. Adjusted Group
EBITA reached CHF 771.4 million, an increase of 4.4% in local currencies.
Unfavorable exchange rate movements significantly reduced the results in
Swiss francs. As a consequence, sales were down 3.0% and adjusted EBITA
declined by 8.2% as reported in Swiss francs. The Board of Directors will
propose a dividend of CHF 4.30 per share to the Annual General Shareholders'
Meeting. In the 2024/25 financial year, the Group expects consolidated sales
to increase by 6%-9% and adjusted EBITA to grow in the range of 7%-11%, both
measured at constant exchange rates, with stronger momentum in both during
the second half-year.

Arnd Kaldowski, CEO of Sonova, says: "We ended the year on a positive note,
driven by a stronger momentum in our Hearing Instruments and our Cochlear
Implant businesses in the second half. We continued to execute our proven
strategy, extending direct engagement with consumers, delivering continuous
improvement in our operational and commercial execution and advancing our
product portfolio. This included the expansion of the Phonak Lumity platform
with new solutions for children and for adults with severe-to-profound
hearing loss and the launch of a battery-powered Audéo Lumity hearing aid,
for those who prefer multi-day power to daily recharging. We laid the
foundation for a return to above-market growth and look forward to an
exciting year with groundbreaking product launches in the upcoming months."

Sonova Group key figures - Financial year 2023/24 in CHF million

                         FY       FY       Change in  Change in local
                         2023/24  2022/23  CHF        currencies
    Sales                3,626.9  3,738.4  -3.0%      +3.2%
    EBITA (adjusted)1)   771.4    840.4    -8.2%      +4.4%
    EBITA margin         21.3%    22.5%
    (adjusted)1)
    EPS (adjusted,       10.06    11.14    -9.6%      +6.4%
    CHF)1)
    Operating free cash  539.2    535.6    +0.7%
    flow

1) Non-GAAP financial measure adjusted for nonrecurring items; see financial
review and for details see the table "Reconciliation of non-GAAP financial
measures" in the Annual Report 2023/24.

Sales momentum picking up in the second half-year - Strong headwind from
currencies
Sonova Group sales reached CHF 3,626.9 million in the 2023/24 financial
year, up 3.2% in local currencies and down 3.0% in Swiss francs. Development
in the first half of the financial year was held back by temporary
operational challenges and effects of the non-renewal of a large contract
with a single US customer, but momentum picked up in the second half-year.
This was supported by a positive market response to the expansion of the
Phonak Lumity platform and a gradual improvement in the overall hearing care
market, despite regional differences. Groupwide organic growth was 1.6%, or
3.2% excluding the previously mentioned non-renewal of a large contract.
Acquisitions in the reporting period (including the full-year effect of
prior-year acquisitions) contributed 1.6% to sales growth. Exchange rate
developments had a significant negative impact, reducing reported sales by
CHF 232.9 million and the reported sales growth in Swiss francs by 6.2
percentage points.

Hearing care market improving over the course of the year
Sales in Europe, Middle East and Africa (EMEA) rose by 3.8% in local
currencies. Growth was supported by the continued expansion of the
audiological care network. A number of key markets achieved robust sales
growth, including Germany, the UK, Belgium, and the Netherlands. Regional
growth was dampened, however, by weaker development in France.

In the United States, sales increased by 0.7% in local currency, supported
by market growth and bolt-on acquisitions in the Audiological Care business.
The country returned to solid growth in the second half of the 2023/24
financial year, as year-on-year development was no longer impacted by the
previously mentioned non-renewal of a large contract.

Sales in the rest of the Americas (excluding the US) grew by 3.6% in local
currencies, helped by acquisitions but held back in Canada during the first
half of the financial year by the impact of the previously mentioned
non-renewal of a large contract.

Sales in the Asia Pacific (APAC) region increased by 7.1% in local
currencies, supported by the acquisition of HYSOUND in China (completed in
December 2022) and strong growth in Japan, but dampened by weak performance
in Korea, Australia, and New Zealand. In the second half of the financial
year, development was impacted by a high comparison base in China, which had
experienced strong growth in the prior year period after the lifting of
pandemic related lockdowns.

Modest underlying margin improvement - Strong currency headwinds weigh on
profitability
Additional structural optimization initiatives during the reporting period,
largely driven by the buildup of a new operations facility in Mexico,
resulted in restructuring costs of CHF 23.7 million (2022/23: CHF 15.6
million). Transaction and integration costs related to acquisitions,
including HYSOUND, the Sennheiser Consumer Division, and Alpaca Audiology,
amounted to CHF 10.5 million (2022/23: CHF 17.0 million). In addition, the
Group incurred legal costs of CHF 10.2 million (2022/23: CHF 6.2 million).
Income taxes were positively affected by CHF 39.1 million, as a result of
tax reforms (2022/23: CHF 9.2 million).

Adjusted figures and growth rates in this financial review exclude the items
in the foregoing paragraph. For more details, please refer to the
"Reconciliation of non-GAAP financial measures" table at the end of the
financial review of the Annual Report 2023/24.

Reported gross profit amounted to CHF 2,610.4 million. Adjusted gross profit
was up by 6.3% in local currencies but down 0.9% in Swiss francs to CHF
2,621.5 million. Gross profit was supported by prior year price increases
implemented to offset inflationary pressures, as well as by a business mix
shift reflecting strong growth in the Audiological Care business,
particularly in the first half-year. The development was further supported
by continued efficiency gains in operations, lower costs for repairs as a
result of improvements in product reliability as well as the gradual easing
of headwinds from transport and component costs. The adjusted gross profit
margin was up by 2.1 percentage points in local currencies and 1.5
percentage points in Swiss francs, to 72.3%.

Excluding acquisition-related amortization, reported operating expenses were
CHF 1,883.3 million (2022/23: CHF 1,835.8 million). The development was
impacted by the previously mentioned business mix shift, which was partly
driven by acquisitions in the Audiological Care business, and the moderate
sales development in the Hearing Instruments business in the first
half-year. As a result, adjusted operating expenses before
acquisition-related amortization increased by 7.2% in local currencies or
2.5% in Swiss francs to CHF 1,850.1 million (2022/23: CHF 1,804.7 million).
Adjusted research and development (R&D) expenses before acquisition-related
amortization reached CHF 236.0 million (2022/23: CHF 242.9 million),
representing a stable development in local currencies.

Adjusted sales and marketing costs before acquisition-related amortization
rose by 7.9% in local currencies to CHF 1,278.6 million or 35.3% of sales
(2022/23: 33.5%). This was largely driven by the previously mentioned
business mix shift to a greater share for the Audiological Care business,
which has a higher ratio of sales and marketing costs to sales than the rest
of the Group. Adjusted general and administration costs before
acquisition-related amortization rose by 11.3% in local currencies, reaching
CHF 334.9 million or 9.2% of sales (2022/23: 8.3%), driven in part by
ongoing investment in IT infrastructure. Adjusted other expenses totaled CHF
0.6 million (2022/23: CHF 0.6 million income).

Adjusted operating profit before acquisition-related amortization (EBITA)
reached CHF 771.4 million (2022/23: CHF 840.4 million), up by 4.4% in local
currencies but down 8.2% in Swiss francs. The adjusted EBITA margin reached
21.3%, down 1.2 percentage points compared to the prior year but up 0.3
percentage points in local currencies. The strong headwind from exchange
rate developments reduced adjusted EBITA by CHF 106.1 million and the margin
by 1.5 percentage points. Reported EBITA grew by 3.6% in local currencies
but declined by 9.3% in Swiss francs to CHF 727.0 million.
Acquisition-related amortization amounted to CHF 57.1 million (2022/23: CHF
54.9 million), reflecting recent acquisitions. Reported operating profit
(EBIT) reached CHF 669.9 million (2022/23: CHF 746.7 million), down 10.3% in
Swiss francs.

Earnings per share
Net financial expenses, including the result from associates, were CHF 22.6
million, down from CHF 31.0 million in the prior year. Income taxes amounted
to CHF 37.8 million (2022/23: CHF 57.4 million). Income taxes were reduced
by CHF 39.1 million due to effects related to tax reforms (2022/23: CHF 9.2
million). They were also impacted by the recognition of deferred tax assets
arising from losses incurred, as well as by an increase in tax provisions.
Basic earnings per share (EPS) reached CHF 10.08, up 10.0% in local
currencies but down 6.3% in Swiss francs. Adjusted EPS rose 6.4% in local
currencies but fell by 9.6% in Swiss francs to CHF 10.06, compared to CHF
11.14 in the prior year.

Hearing Instruments segment - Growth accelerating in the second half
The Hearing Instruments segment generated sales of CHF 3,347.9 million, an
increase of 3.2% in local currencies but down 3.0% in Swiss francs compared
to the prior year. After a flat development in the first half-year, organic
growth picked up, reaching 3.2% in the second half-year. The contribution
from acquisitions in the reporting period (including the full-year effect of
prior-year acquisitions) lifted sales by 1.8% or CHF 60.6 million. Exchange
rate fluctuations reduced reported sales by CHF 214.5 million and the
reported sales growth in Swiss francs by 6.2 percentage points.

Sales in the Hearing Instruments business reached CHF 1,697.7 million, up by
0.7% in local currencies. Excluding the impact from the previously mentioned
non-renewal of a large contract, which held back the development in the
first half, sales rose by 4.0% in local currencies and strongly accelerated
in the second half-year. The development was supported by the expansion of
the Phonak Lumity family of products throughout the year and by the
introduction of the Unitron Vivante(TM) platform, along with the residual
impact from prior-year price increases. The business also made further
strong progress on product reliability, with the Phonak Lumity platform
achieving a continued improvement compared to its already dependable
predecessor - a trend that was well received by customers.

The Audiological Care business generated sales of CHF 1,410.5 million, up
9.2% in local currencies. Organic growth reached 4.7%, supported by strong
growth in many European markets, including Belgium, the Netherlands, Poland,
and Austria, and reflecting both higher volume and increased ASP.
Acquisitions (including the full-year effect of prior-year acquisitions)
lifted sales by 4.5%. These included the acquisition of HYSOUND in China
(completed in December 2022), as well as further bolt-on acquisitions across
all regions. HYSOUND has performed ahead of plan during its first full year
with Sonova.

Sales in the Consumer Hearing business were down 9.3% in local currencies to
CHF 239.7 million. Development was impeded by generally weak demand in the
consumer electronics market. Moreover, an issue of inconsistent performance
from some batteries provided by a now deselected external supplier for one
of our key products resulted in a temporary gap in the product portfolio
until its successor was launched later in the year. In June 2023, the
business entered the over-the-counter hearing instrument market with the
launch of the Sennheiser All-Day Clear. A number of new audio products were
introduced, including ACCENTUM wireless headphones (launched in September
2023) and MOMENTUM True Wireless 4 earbuds (February 2024).

Reported EBITA for the Hearing Instruments segment amounted to CHF 701.7
million, up 4.2% in local currencies. Adjusted EBITA rose by 4.5% in local
currencies to CHF 736.3 million, corresponding to an EBITA margin of 22.0%
(2022/23: 23.3%). Excluding the adverse currency development, the adjusted
EBITA margin rose by 0.3 percentage points compared to the prior year.

Cochlear Implants segment - System sales accelerating in the second half
Sales in the Cochlear Implants business reached CHF 278.9 million, up 3.6%
in local currencies but down 2.8% in Swiss francs. System sales continued
their year-on-year growth, increasing by 6.8% in local currencies with
growth accelerating in the second half-year. Development was supported by
higher volumes due to an improving market environment and the launch of the
unique Remote Programming solution for the Marvel CI sound processor, but
partly held back by an adverse impact of the country mix on ASP. Sales of
upgrades and accessories were down by 2.1% in local currencies. With the
Marvel sound processors entering their third year after the launch in 2021,
the installed base of recipients waiting for an upgrade is tapering off.
Development in the first half-year was also impacted by residual supply
chain issues, which have since been resolved.

Reported EBITA for the Cochlear Implants segment was CHF 25.4 million. The
adjusted EBITA reached CHF 35.1 million (2022/23: CHF 35.9 million),
representing a margin of 12.6% (2022/23: 12.5%). A slow start to the year
with residual supply chain issues, coupled with adverse shifts in the
geographic and product mix, weighed on profitability. Development was also
impacted by continued investments in innovation and commercial excellence.

Cash flow
Cash flow from operating activities was CHF 753.3 million (2022/23: CHF
783.9 million). The reduction was entirely driven by lower income before
taxes as a result of adverse currency developments, partly offset by lower
cash outflow from changes in net working capital and lower tax payments.
Furthermore, the net purchase of tangible and intangible assets decreased to
CHF 127.4 million (2022/23: CHF 152.3 million), reflecting elevated
investments in infrastructure and IT projects in the prior year. This
resulted in an operating free cash flow of CHF 539.2 million (2022/23: CHF
535.6 million).

As a result of the continued expansion of the Groups audiological care
network, the cash consideration for acquisitions amounted to CHF 101.6
million. This is down from CHF 261.1 million in the prior year, which
included the acquisition of HYSOUND in China. In summary, this resulted in a
free cash flow of CHF 437.6 million (2022/23: CHF 274.4 million). The cash
outflow from financing activities of CHF 415.3 million mainly reflects the
dividend payment of CHF 274.1 million as well as repayment of lease
liabilities of CHF 75.1 million.

Balance sheet
Cash and cash equivalents stood at CHF 513.6 million compared to CHF 413.9
million at the end of the 2022/23 financial year. Net working capital was
CHF 93.2 million (end of 2022/23: CHF 89.5 million). Receivable collection
continued to be strong, while the Group maintained elevated safety stock
during the buildup of its new operations facility in Mexico as part of the
global supply chain optimization. Driven mainly by acquisitions, capital
employed increased to CHF 3,850.9 million compared to CHF 3,727.3 million at
the end of the 2022/23 financial year.

The Groups equity of CHF 2,491.3 million represents an equity ratio of
43.0%, up from 40.2% at end of the 2022/23 financial year. The net debt
position decreased to CHF 1,359.5 million compared to CHF 1,495.9 million at
the end of the 2022/23 financial year. The net debt/EBITDA ratio stood at
1.5x, stable compared to March 2023, and within Sonovas target range of 1.0
- 1.5x. The return on capital employed (ROCE) reached 17.7% compared to
20.8% in the prior year.

Returning cash to shareholders
At the Annual General Shareholders Meeting (AGM) in June 2024, the Board of
Directors will propose a dividend of CHF 4.30 per share. This represents a
stable payout ratio, in line with our total shareholder return strategy, of
around 40%. Over the past ten years, the dividend has risen by a compound
annual growth rate of 9.2%.

The Group intends to maintain a healthy balance sheet in line with our
moderate leverage target ratio of 1.0-1.5x net debt to EBITDA. In the
absence of any larger acquisitions and subject to the cashflow development
in Swiss francs, Sonova expects to resume share buybacks under its current
program during the second half of the 2024/25 financial year.

Outlook 2024/25
Sonovas solid and improving performance over this financial year confirms
the strong fundamentals of our business and the soundness of our strategy.
We are well positioned to accelerate growth and to engage with yet more
consumers at more points on their hearing journey. The coming financial year
will include further significant product launches that will elevate our
industry-leading performance and drive growth, particularly in the second
half-year. We therefore expect to see a year-on-year rise of 6-9% in
consolidated sales, and of 7-11% in adjusted EBITA measured at constant
exchange rates, with stronger momentum in both in the second half-year.

Reflecting exchange rates as of May 2024, Sonova anticipates reported sales
growth in Swiss francs to be lifted by 1-2 percentage points and adjusted
EBITA growth in Swiss francs to be positively affected by 2-3 percentage
points in FY 2024/25.

The online Annual Report 2023/24 is available at:
https://report.sonova.com/2024/en

The Annual Report 2023/24 is available on our website at:
https://www.sonova.com/en/financial-reports

The presentation of the Full-Year Results 2023/24 can be downloaded at:
https://www.sonova.com/en/presentations


- End -

Contacts:

Investor Relations

Thomas Bernhardsgrütter +41 58 928 33 44
Jessica Grassi +41 58 928 33 22

ir@sonova.com

Media Relations

Karl Hanks +41 76 367 72 56
Christiane Jelinek +41 76 358 80 36

mediarelations@sonova.com

Disclaimer
This Media Release 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 subject
to risks and uncertainties including, but not confined to, future global
economic conditions, exchange rates, legal provisions, market conditions,
activities by competitors and other factors outside Sonova's control. Should
one or more of these risks or un-certainties materialize or should
underlying assumptions prove incorrect, actual outcomes may vary materially
from those forecasted or expected. Each forward-looking statement speaks
only as of the date of the particular statement, and Sonova undertakes no
obligation to publicly update or revise any forward-looking statements,
except as required by law.

About Sonova
Sonova is a global leader in innovative hearing care solutions: from
personal audio devices and wireless communication systems to audiological
care services, hearing aids and cochlear implants. The Group was founded in
1947 and is headquartered in Stäfa, Switzerland.

Sonova operates through four businesses - Hearing Instruments, Audiological
Care, Consumer Hearing and Cochlear Implants - and the core brands Phonak,
Unitron, AudioNova, Sennheiser (under license) and Advanced Bionics as well
as recognized regional brands. The Group's globally diversified sales and
distribution channels serve an ever growing consumer base in more than 100
countries.

In the 2023/24 financial year, the Group generated sales of CHF 3.6 billion,
with a net profit of CHF 610 million. Over 18,000 employees are working on
achieving Sonova's vision of a world where everyone enjoys the delight of
hearing.

For more information please visit www.sonova.com.

Sonova shares (ticker symbol: SOON, Security no: 1254978, ISIN:
CH0012549785) have been listed on the SIX Swiss Exchange since 1994. The
securities of Sonova have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act"), or under the
applicable securities laws of any state of the United States of America, and
may not be offered or sold in the United States of America except pursuant
to an exemption from the registration requirements under the U.S. Securities
Act and in compliance with applicable state securities laws, or outside the
United States of America to non-U.S. Persons in reliance on Regulation S
under the U.S. Securities Act.


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End of Inside Information

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   Language:       English
   Company:        Sonova Holding AG
                   Laubisrütistrasse 28
                   8712 Stäfa
                   Switzerland
   Phone:          +41 58 928 33 33
   E-mail:         ir@sonova.com
   Internet:       www.sonova.com
   ISIN:           CH0012549785
   Valor:          12549785
   Listed:         SIX Swiss Exchange
   EQS News ID:    1902055

End of Announcement EQS News Service
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1902055 14-May-2024 CET/CEST