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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.
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 2023/24 FY 2022/23 Change Change
in CHF in local 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 (adjusted)1) 21.3%      22.5% 
EPS (adjusted, CHF)1)     10.06      11.14      -9.6%  +6.4% 
Operating free cash flow  539.2      535.6      +0.7% 

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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.

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