Sonova Hearing Aid Presentation_March_2013
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INVESTOR PRESENTATIONMarch 2013
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Page 2
DISCLAIMER
March 2013
This presentation may contain forward-looking statements including, but not limited to,projections of future performance of products, financial conditions, results of operations
and cash flows. The statements are made on the basis of managements views and
assumptions regarding future events and business performance as of the time the
statements are made. Sonova cautions you that a number of important risks and
uncertainties could cause actual results to differ materially from those discussed in the
forward-looking statements. Such differences may result from the ability of Sonova to
successfully develop and introduce new products and market existing products, changesin competitive conditions and regulatory developments as well as from changes in the
economic conditions that may affect the performance of the operations of Sonova.
Sonova undertakes no obligation to update any forward-looking statements, whether as
a result of new information, future events or otherwise. Therefore you should not place
undue reliance on them.
This presentation serves marketing purposes and constitutes neither an offer to sell nor
a solicitation to buy any securities. This presentation does not constitute an offering
prospectus within the meaning of Article 652a of the Swiss Code of Obligations nor a
listing prospectus within the meaning of the listing rules of SIX Swiss Exchange.
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Page 3
VISION
AT SONOVA, WE ENVISION
March 2013
A WORLD WHERE
EVERYONEENJOYS THE DELIGHT OF
HEARING AND
THEREFORE LIVES A LIFE
WITHOUT LIMITATIONS
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Page 4
SONOVA GROUP
BROADEST OFFERING: HEARING INSTRUMENTS, COCHLEAR IMPLANTS
AND PROFESSIONAL RETAIL SERVICES
March 2013
HI Hearing Instruments Behind-The-Ear hearing instruments (BTE) FM systems
Custom In-The-Ear hearing instruments (ITE)
Hearing protection
Wireless communication systems
Earphones
Invisible extended-wear hearing instruments
Cochlear implants
CI Cochlear Implants
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Page 5
BUSINESS CASE
CLEAR AND FOCUSED STRATEGY CUSTOMER DRIVEN INNOVATION
March 2013
SONOVA: HEAR THE WORLD
Key to our success - Our customers and our employees
Broadest product and service offering / portfolio - Hearing instruments (Phonak, Unitron)
- Cochlear implants (Advanced Bionics)
- Professional services (Connect Hearing Group)
Strong competitive positions - Leading position in hearing instruments
- Strong contender on cochlear implants
- Strong position in selected key retail markets
Significant market share gain potential - High R&D spend fast product introduction
- Differentiated multi-brand strategy
- Optimized multi-channel approach
Strong product pipelines - High innovation rate and rapid new product introduction
Productivity / efficiency gains - Leverage existing global infrastructure to expand margins
5-year financial targets (at constant FX rates) - EBITA margin: return to mid-twenties
- ROCE: expand to low-thirties
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Page 6
CONTENTS
1 MARKET PAGE 7
2 BUSINESS PAGE 11
3 CORPORATE STRATEGY PAGE 21
4 BUSINESS STRATEGIES PAGE 31
5 FINANCIAL INFORMATION PAGE 50
March 2013
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1. MARKET
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Page 8
MARKET
LOW PENETRATION RATE AROUND 20% IN DEVELOPED COUNTRIES
MILD
MODERATE
PROFOUND
With hearing system Without hearing system
END-USER MARKET PENETRATION*
- Profound loss- Moderate loss
- Mild loss
70%50%
10%
HI
HI
CI HI
15%
* Source: Several industry statistics, Sonova estimates
AROUND 15% OF PEOPLE HAVE SOME DEGREE OF HEARING IMPAIRMENT
March 2013
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Page 9
MARKET
HEARING SOLUTIONS: INSTRUMENTS, IMPLANTS AND SERVICES
TOTAL HEARING CARE MARKET- Market Size
- Market CAGR
- HI Size (units)
- CI Size (units)
~ CHF 15 billion
~ + 3-5%
~ 10 million
~ 35 thousand
COCHLEAR IMPLANTS CI
- Market Size
- Market CAGR
- CI Size (units)
~ CHF 800 million
~ +10-15%
~ 35 thousand
HEARING INSTRUMENTS HI
- Market Size
- Market CAGR
- HI Size (units)
~ CHF 4.2 billion
~ + 2-4%
~ 10 million
CI
HI
March 2013
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Page 10
MARKET
SERVICE CHANNELS: KEY TO ACCESS END-USERS
TOTAL HEARING CARE MARKET- Market Size
- Market CAGR
- HI Size (units)
- CI Size (units)
~ CHF 15 billion
~ + 3-5%
~ 10 million
~ 35 thousand
COCHLEAR IMPLANTS CI
- Market Size
- Market CAGR
- CI Size (units)
~ CHF 800 million
~ +10-15%
~ 35 thousand
HEARING INSTRUMENTS HI
- Market Size
- Market CAGR
- HI Size (units)
~ CHF 4.2 billion
~ + 2-4%
~ 10 millionINDEPENDENTS
GLOBAL
KEY
ACCOUNTS
LARGE
RETAIL
ACCOUNTS
MULTI-
SHOP
BUYING
GROUPS
HOSPITALS
GOVERNMENT
OTHERS
March 2013
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2. BUSINESS
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Page 12
SONOVA GROUP
STRONG FINANCIAL TRACK RECORD
March 2013
1H
SALESin CHF million
EBITAin CHF million
EBITAmargin in %
'0
'200
'400
'600'800
1'000
1'200
1'400
1'600
1'800
2'000
06/07 07/08 08/09 09/10 10/11 11/12 12/130%
5%
10%
15%
20%
25%
30%
35%
40%
45%
'0
'50
'100
'150
'200
'250
'300
'350
'400
'450
06/07 07/08 08/09 09/10 10/11 11/12 12/13
2007/08 2008/09 2009/10 2010/11 2011/12CAGR
5-year1H 2012/13
Sales growth reported +12.3% +3.7% +20.1% +7.8% +0.2% +8.6% +14.3%Sales growth in LC +12.8% +10.8% +23.8% +13.3% +11.6% +14.6% +7.9%
EBITA margin reported 28.2% 26.6% 28.0% 20.2% 19.5% +21.4%
Basic EPS 4.55 4.35 3.32 3.50 3.71 2.24
FY 2007/08 Excluding one-off costs for the prohibited acquisition of the GN ReSound Group
FY 2009/10 Restated based on finalization of the acquisition accounting of Advanced Bionics
2H
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Page 13
AB Center
Unitron Center
Sonova & Phonak HQ & Centers
DistributorsWHS Group Companies
Operation CentersPhonak Communications Center
InSound Center
Murten (CH)
Kitchener
(CAN)
Ho Chi Minh City
(VN)
Suzhou (CN)
Valencia (USA)
Newark
(USA)
Stfa (CH)
SONOVA GROUP
WELL ESTABLISHED GLOBAL INFRASTRUCTURE AND NETWORK
STRONG LOCAL PRESENCE SUPPORTING CUSTOMERS WORLDWIDE
March 2013
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Page 14
SONOVA GROUP
EUROPE AND AMERICAS MAIN CONTRIBUTORS TO GROUP SALES
March 2013
SALESin CHF million
SALESin CHF million
2007/08 2008/09 2009/10 2010/11 2011/12
CAGR
5-year
EU - Sales growth in LC +10.3% +6.4% +23.0% +11.3% +13.9% +13.3%
AM - Sales growth in LC +13.9% +12.9% +26.0% +16.9% +7.8% +15.2%
AP - Sales growth in LC +20.6% +22.3% +15.3% +2.7% +24.0% +17.2%
'0
'200
'400
'600
'800
1'000
1'200
1'400
1'600
1'800
2'000
06/07 07/08 08/09 09/10 10/11 11/12 12/13
EU AM AP
'0
'200
'400
'600
'800
1'000
1'200
1'400
1'600
1'800
2'000
06/07 07/08 08/09 09/10 10/11 11/12 12/13
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MARKET POSITION
EXPANDING STRONG HI POSITION INTO LARGER HEARING CARE MARKET
March 2013
TOTAL HEARING CARE MARKET
- Market Size
- Market CAGR
- HI Size (units)
- CI Size (units)
~ CHF 15 billion
~ + 3-5 %
~ 10 million
~ 35 thousand
COCHLEAR IMPLANTS CI
- Market Size
- Market CAGR
- CI Size (units)
~ CHF 800 million
~ +10-15 %
~ 35 thousand
HEARING INSTRUMENTS HI
- Market Size
- Market CAGR
- HI Size (units)
~ CHF 4.2 billion
~ + 2-4 %
~ 10 million
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MARKET POSITION
SOLID COMPETITIVE ADVANTAGES IN INSTRUMENTS, IMPLANTS AND SERVICES
March 2013
RETAIL SERVICE CHANNELS
- Leading retail services provider
- Strong local presence in 8 key markets
- Superior shop offering and productivity
- Direct access to end-users / patients
HI: LEADING BRANDS
- Largest manufacturer in HI industry
- Most extensive product portfolio
- Multi-brand strategy Phonak / Unitron
- Solid financial performance
CI: RESPECTED No 2 BRAND
- CI solution with strong performance
- CI solution with high reliability
- Technology synergy with HI business
- Distribution synergy with HI business
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MARKET POSITION
SERVICE CHANNELS: STRONG PARTNER TO IND, LRA, BG AND GOVT
TOTAL HEARING CARE MARKET
- Market Size
- Market CAGR
- HI Size (units)
- CI Size (units)
~ CHF 15 billion
~ + 3-5 %
~ 10 million
~ 35 thousand
COCHLEAR IMPLANTS CI
- Market Size
- Market CAGR
- CI Size (units)
~ CHF 800 million
~ +10-15 %
~ 35 thousand
HEARING INSTRUMENTS HI
- Market Size
- Market CAGR
- HI Size (units)
~ CHF 4.2 billion
~ + 2-4 %
~ 10 millionINDEPENDENTS
GLOBAL
KEY
ACCOUNTS
LARGE
RETAIL
ACCONTS
MULTI-
SHOP
BUYING
GROUPS
HOSPITALS
GOVERNMENT
OTHERS
SOON
Sales Split
March 2013
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BUSINESSES
BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES
March 2013
SONOVA
Group
HEARING INSTRUMENT (HI)
SegmentIMPLANT (CI)
Segment
CI
ADVANCED
BIONICS
Business
HI
PHONAK
Business
HI
UNITRON
Business
HI
RETAIL
Business
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HI SEGMENT
SOLID GROWTH IN BOTH HEARING INSTRUMENT BRANDS AND RETAIL
March 2013
SALESin CHF million
EBITAin CHF million
2007/08 2008/09 2009/10 2010/11 2011/12CAGR
5-year
Sales growth reported +12.3% +3.7% +18.1% +4.8% -1.4% +7.3%
Sales growth in LC +12.8% +10.8% +21.7% +10.1% +9.7% +13.1%
EBITA margin reported 28.2% 27.2% 29.0% 24.1% 22.2%
EBITAmargin in %
'0
'200
'400
'600
'800
1'000
1'200
1'400
1'600
1'800
2'000
06/07 07/08 08/09 09/10 10/11 11/12 12/13
1H
0%
5%
10%
15%20%
25%
30%
35%
40%
45%
'0
'50
'100
'150'200
'250
'300
'350
'400
'450
06/07 07/08 08/09 09/10 10/11 11/12 12/13
2H
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CI SEGMENT
STRONG AND RAPID EXPANSION OF IMPLANT BUSINESS
March 2013
SALESin CHF million
EBITAin CHF million
2007/08 2008/09 2009/10 2010/11 2011/12CAGR
5-yearSales growth reported -- -- -- +180.5% +36.0% >> +100%
Sales growth in LC -- -- -- +202.1% +53.5% >> +100%
EBITA margin reported -- -- -32.0% -63.4% -25.0%
EBITAmargin in %
'0
'25
'50
'75
'100
'125
'150
06/07 07/08 08/09 09/10 10/11 11/12 12/13-100%
-80%
-60%
-40%
-20%
0%
20%
-'50
-'40
-'30
-'20
-'10
'0
'10
06/07 07/08 08/09 09/10 10/11 11/12 12/13
1H 2H
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3. CORPORATE STRATEGY
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MISSION
March 2013
WE STRIVE TO BE RECOGNIZED AS THE INNOVATION LEADER
IN THE GLOBAL HEARING CARE MARKET
HI Hearing Instruments Behind-The-Ear hearing instruments (BTE) FM systems
Custom In-The-Ear hearing instruments (ITE)
Hearing protection
Wireless communication systems
Earphones
Invisible extended-wear hearing instruments
Cochlear implants
CI Cochlear Implants
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Page 23
FINANCIAL TARGETS
LEVERAGE EBITA: DRIVE SALES GROWTH >> OPEX GROWTH
LEVERAGE ROCE: DRIVE SALES GROWTH >> NET ASSET GROWTH
March 2013
10%
20%
30%
40%
0
1'000
2'000
3'000
06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17
EBITAMargin/ROCE(%)
Sales(CHFmillion)
Sales EBITA Margin (%) ROCE (%)
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STRATEGY
SIX KEY STRATEGIES DRIVING CORE SALES AND EARNINGS GROWTH
1 INNOVATION
2 MARKET
3 PRODUCT
4 PORTFOLIO
5 RESOURCE
6 ACQUISITION
CORPORATE STRATEGIES
1 HI PHONAK
2 HI UNITRON
3 HI RETAIL
4 CI ADVANCED BIONICS
BUSINESS STRATEGIES
March 2013
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INNOVATION STRATEGY
FOCUS ON CONTINUOUS INNOVATION TO GROW SALES AND EARNINGS
March 2013
Q1 14 Q2 14Q1 13 Q2 13 Q3 13 Q4 13Q1 12 Q2 12 Q3 12 Q4 12
MARKETING
SALES & DISTRIBUTION
PRODUCTIVITY & EFFICIENCY
RESOURCES & PROCESSES
NEW PRODUCTS
CORE: DRIVE STRONG NEW PRODUCT PIPELINE R&D 7-8% OF SALES
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MARKET STRATEGY
GROW MARKET POSITION ALONG 4 MAIN GROWTH VECTORS
March 2013
FOCUS ON KEY INITIATIVES TO SUPPORT GROWTH STRATEGY
1
2
3
4
Penetrate existing markets WHS account development
Dual-brand strategy
Continuous product innovation
Expand accessible markets
BRIC markets New product formats
Integrate service channels Retail network expansion
Integration & productivity
Develop consumer base Direct marketing Lead generation processes
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PRODUCT STRATEGY
PROVIDE COMPLETE CUSTOMER SOLUTIONS: HW, SW AND SERVICES
March 2013
PLATFORM CONCEPT APPROACH TO SOLUTION DEVELOPMENT
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PORTFOLIO STRATEGY
DEVELOP BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES
March 2013
LEAD INNOVATION IN HEARING INSTRUMENTS AND IMPLANTS
DOG
???
COW
STAR
MARKET SHARE
High
Lo
w
MARKETGROW
TH
LYRIC
HighLow
High
Low
HI
CI
FM
INVEST RETURN
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RESOURCE STRATEGY
LEVERAGE GLOBAL INFRASTRUCTURE TO EXPAND MARGINS
RE-BALANCE GLOBAL OPEX BASE TO CREATE NATURAL HEDGE
0
50
100
150
200
2012 2016
SALES
OPEX0
50
100
150
200
2012 2016
SALES
OPEX0
50
100
150
200
2012 2016
SALES
OPEX
AMERICAS EUROPE APAC
March 2013
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ACQUISITION STRATEGY
INVEST TO LEVERAGE EXISTING CHANNELS AND PRODUCTS
March 2013
TARGETS: STRICT CRITERIA FOR STRATEGIC AND FINANCIAL FIT
HI
CI
Channels
,0
3,000
06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16
ISM
AB
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4. BUSINESS STRATEGIES
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PHONAK
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES
March 2013
SONOVA
Group
HEARING INSTRUMENT (HI)
SegmentIMPLANT (CI)
Segment
CI
ADVANCED
BIONICS
Business
HI
PHONAK
Business
HI
UNITRON
Business
HI
RETAIL
Business
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PHONAK
BUSINESS STRATEGY
March 2013
PHONAK: LIFE IS ON
Mission / value proposition - Drive innovation leadership to expand market position
Markets - Cover broadest global (whole)sale, distribution & support network
Products - Offer complete range across all form factors and performance levels
Product pipeline - Drive high innovation rate and rapid new product introduction
Productivity / efficiency - Leverage global sales & production infrastructure to expand margins
Selected initiatives 2012/13 - B2B/B2C marketing campaign: Phonak engaging voices
- New product launch Fall 2012
- New product launch Spring 2013
- Lyric 2
- DM (2.4 GHz) communication / connectivity
- China market growth and expansion (lead)
- etc.
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PHONAK
MARKETS: COVER BROADEST GLOBAL SALES & SUPPORT NETWORK
March 2013
FURTHER PENETRATE AM AND EU EXPAND POSITIONS IN AP (CHINA)
AM EU
AP
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PHONAK
PRODUCT PIPELINE: DRIVE HIGH INNOVATION & PRODUCT LAUNCH RATE
March 2013
COMPLETE RANGE ACROSS ALL FORMATS AND PERFORMANCE LEVELS
SPICE (new HW / new DSP / 65nm) QUEST (new HW / new core SW / 65nm) NEXT PLATFORM
BTEBolero
ITEVirto
F
3
F
4
F
5
F
1
F
2
F
3
F
4
F
5
Lyric2 Lyric3
T 2.1 T 3.3T 3.0 T 4.0T 3.1 T 3.2 T 4.1 T 4.2T 2.0T 1.1
FM System (analog) DM System (digital / 2.4 GHz)
F1 / 4
HI - Premium
HI - Advanced
HI - Standard
HI - Essential/Basic
HI - Platform
HI - New EW Format
Fitting Software
(TARGET)
Communication
F1
F3
F1
F1
F2
F2
F4
F5
F5
1H 15 2H 151H 13 2H 131H 11 2H 11 1H 14 2H 141H 12 2H 12TIMELINE / CY
Note: Subject to change
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PHONAK PRODUCT PORTFOLIO
March 2013
* based on previous generation platforms
BTE product line Custom product line RIC Power Pediatric
Premium Phonak Bolero Q90 Phonak Virto Q90 Audo S IX* Nada S IX*
Advanced Phonak Bolero Q70 Phonak Virto Q70 Audo S V* Nada S V* Nios S V* / Nada S VII*
Standard Phonak Bolero Q50 Phonak Virto Q50 Audo S III* Nada S III* Nios S III* / Nada S III*
Essential Phonak Dalia* Phonak Dalia* Audo S I* Nada S I*
Basic Milo* Milo*
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UNITRON
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES
March 2013
SONOVA
Group
HEARING INSTRUMENT (HI)
SegmentIMPLANT (CI)
Segment
CI
ADVANCED
BIONICS
Business
HI
PHONAK
Business
HI
UNITRON
Business
HI
RETAIL
Business
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UNITRON
BUSINESS STRATEGY
March 2013
UNITRON: HEARING MATTERS
Mission / value proposition - Drive leadership in customer experience
Markets - Deeper penetration in core markets in Europe and NA
Products - Offer flexible range across many form factors and all performance levels
Product pipeline - Drive focused innovation and rapid new product introduction
Productivity / efficiency - Leverage Sonova technology & production platform to expand margins
Selected initiatives 2012/13 - B2B Marketing campaign favorite sound
- UT customer experience initiatives
- New product launch Fall 2012
- New product launch Spring 2013
- China market growth and expansion (complement Phonak initiative)
- etc.
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UNITRON
MARKETS: EXPAND GLOBAL NETWORK FROM STRONG BASE IN NA
March 2013
DEVELOP POSITIONS IN EU SUPPORT SONOVA EXPANSION IN AP (CHINA)
AM EU
AP
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Page 40
UNITRON
PRODUCT PIPELINE: DRIVE FOCUSED PRODUCT INNOVATION
March 2013
FLEXIBLE RANGE ACROSS 3 FORMATS AND ALL PERFORMANCE LEVELS
ERA (new HW / new DSP / 65nm) NEXT PLATFORM
Q
FLEX
1
M
FLEX
1
Q
FLEX
2
M
FLEX
2
Q2
F
1
F
2
F
3
TF 1.1 TF 2.3TF 2.0 TF 2.3TF 2.1 TF 2.2 TF 4.0 TF 4.1TF 1.0
HI - Premium
HI - Advanced
HI - Standard
HI - Essential/Basic
HI - Platform
Fitting Software(TRUEFIT)
QP
RO
M
PRO
M2
QP
RO
M
PRO
Q1
M1
1H 15 2H 151H 13 2H 131H 11 2H 11 1H 14 2H 141H 12 2H 12TIMELINE / CY
Note: Subject to change
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UNITRON PRODUCT PORTFOLIO
March 2013
* based on previous generation platforms
BTE product line Custom product line RIC Power Flex Trial
Premium Quantum Pro Quantum Pro Moxi Pro
Quantum 20 Quantum 20 Moxi 20 Max 20
Quantum 12 Quantum 12 Moxi 12
Standard Quantum 6 Quantum 6 Moxi 6 Max 6
Essential Quantum E Quantum E Moxi E Max E
Basic Shine* Shine*
Advanced
AnyPerformance
Level
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RETAIL
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES
March 2013
SONOVA
Group
HEARING INSTRUMENT (HI)
SegmentIMPLANT (CI)
Segment
CI
ADVANCED
BIONICS
Business
HI
PHONAK
Business
HI
UNITRON
Business
HI
RETAIL
Business
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RETAIL
BUSINESS STRATEGY
March 2013
RETAIL: YOUR HEARING CARE PROFESSIONAL
Mission / value proposition - Secure market access and grow professional hearing care services
Markets - Build strong service positions / networks in key focus markets
Business models / products - Support new business concepts to increase store traffic and service
Profitability / productivity - Standardize business systems and processes
Brand equity - Apply consistent store branding within key markets
Selected initiatives 2012/13 - Selected acquisitions and store openings
- New store concepts
- CHG Retail Business Solution (RBT)
- Strategic branding approach
- etc.
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Page 44
RETAIL
MARKETS: BUILD STRONG SERVICE POSITIONS IN KEY MARKETS
March 2013
FOCUS ON: US, CA, BR, UK, FR, BE, AT, AUS/NZ
AMEU
AP
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ADVANCED BIONICS
SONOVA: BALANCED PORTFOLIO OF PROFITABLE GROWTH BUSINESSES
March 2013
SONOVA
Group
HEARING INSTRUMENT (HI)
SegmentIMPLANT (CI)
Segment
CI
ADVANCED
BIONICS
Business
HI
PHONAK
Business
HI
UNITRON
Business
HI
RETAIL
Business
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ADVANCED BIONICS
BUSINESS STRATEGY
March 2013
ADVANCED BIONICS: PATIENTS ALWAYS FIRST
Mission / value proposition - Strive for performance leadership leverage AB and PH combination
Markets - Build global direct sales & support network - grow from strong US base
Products - Expand innovative range of processors, implants and electrodes
Product pipeline - Accelerate innovation rate synchronize with PH pipeline and platforms
Productivity / efficiency - Leverage PH technology & process platform to expand margins
Selected initiatives 2012/13 - AB Partner Program for retail: Think beyond Hearing Aids
- AB / PH system & product pipeline
- New product launches 2012/13
- China market entry
- etc.
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ADVANCED BIONICS
MARKETS: EXPAND GLOBAL NETWORK FROM STRONG BASE IN US
March 2013
GROW POSITIONS IN EU, BR, JP BUILD PLATFORM IN CHINA
AM EU
AP
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ADVANCED BIONICS
PRODUCT PIPELINE: ACCELERATE INNOVATION RATE LEVERAGE PH
March 2013
EXPAND RANGE OF INNOVATIVE PROCESSORS, IMPLANTS, ELECTRODES
FDA
CE
FDA
CE
FDA
CE
WOLVERINE / QUEST (new HW / new DSP / 65nm) NEXT PLATFORM
CI - Electrodes
CI - Implants
CI - Processors
CI - Platform
Fitting Software(SOUNDWAVE)
N Pro 1 N Pro 2N Pro 2
N Pro 3
N Imp 2 N Imp 3
N El 2 N El 3N El 1
1H 15 2H 151H 13 2H 131H 11 2H 11 1H 14 2H 141H 12 2H 12TIMELINE / CY
SW 2.0 SW 3.0 SW 4.0
NeptuneNeptune N Pro 1
N Imp 2N Imp2 N Imp 2
N Pro 3
N Imp 3
N El 3N El 1 N El 2
Note: Subject to change, timing dependent upon regulatory approvals
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ADVANCED BIONICS PRODUCT PORTFOLIO
March 2013
Implant HiRes 90K
Electrodes HiFocus 1j, HiFocus Helix
Sound Processors Harmony BTE, Neptune Sound Processor
Software SoundWave 2.1
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5. FINANCIAL INFORMATION
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HALF-YEAR 2012/13
Solid growth in both sales and earnings both segments meeting expectations
Gross profit margin of 68.9% up 0.5% pts., driven by positive currency effects
OPEX growth of 3.4% in lc compared to 7.9% sales growth in lc
EBITA margin increased to 21.4%; excluding FX impact: 20.1%
R&D spend at CHF 56.5 million or 6.5% of sales (excluding capitalized development cost ofCHF 15.4 million or 1.7%)
Basic EPS of CHF 2.24, up by 43.6%
Operating free cash flow up by 51.6% to CHF 127.1 million
Equity ratio of 67.1%, up from 64.5% as of March 2012
ROCE last twelve months 21.8% (up from 14.0% in prior year)
FINANCIAL HIGHLIGHTS
March 2013
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HALF-YEAR 2012/13
SOLID FINANCIAL PERFORMANCE
In CHF million 1H 2011/12 1H 2012/13 Change Change in lc
Sales 763.0 872.4 14.3% 7.9%
Gross profit
Gross profit margin
522.1
68.4%
600.7
68.9%
15.1% 7.6%
OPEX 383.7 413.7 7.8% 3.4%
EBITA
EBITA margin
138.4
18.1%
187.0
21.4%
35.1% 19.3%
Operating free cash flow 83.8 127.1 51.6%
EPS (in CHF) 1.56 2.24 +43.6%
ROCE last 12 months 14.0% 21.8%
March 2013
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HALF-YEAR 2012/13
SOLID GROWTH IN KEY MARKETS IN LOCAL CURRENCIES
in CHF million 1H 2011/12 1H 2012/13
Sales in % Sales in % Growth in lc
EMEA (excl. Switzerland) 289 38% 317 36% +8.6%
Switzerland 21 3% 14 2% -32.9%
USA 277 36% 339 39% +9.2%
Americas (excl. USA) 102 13% 114 13% +9.7%
Asia/Pacific 74 10% 88 10% +9.7%
Total sales 763 100% 872 100% 7.9%
March 2013
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HALF-YEAR 2012/13
SALES GROWTH ACROSS PRODUCT GROUPS
in CHF million 1H 2011/12 1H 2012/13
Sales in % Sales in % Growth in lc
Premium HI 173 23% 192 22% +2.2%
Advanced HI 174 23% 212 24% +9.8%
Standard HI 233 31% 240 28% +0.9%
Wireless comm. 34 4% 31 4% -14.4%
Miscellaneous 110 14% 126 14% +12.9%
Hearing Instruments 724 95% 801 92% +4.5%
CI and accessories 39 5% 71 8% +70.5%
Total sales 763 100% 872 100% +7.9%
March 2013
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HALF-YEAR 2012/13
HI MARGINS INFLUENCED BY MIX CHALLENGES
Category Mix Effect
Impact Sonova 1H
Sales GrowthGross
Margin
Country Switzerland: Reimbursement change effective in July 2011 Germany: Slowdown/product mix shift (upcoming reimbursement changes) France and Italy: High growth in prior year, market negative in 1H
Product Highest growth in the Advanced segment Adverse intra-segment mix shift in the Standard category
Sonovas broad product & country portfolio mitigates mix challenges
Strong performance in the UK, Brazil, and Spain
March 2013
HALF YEAR 2012/13
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HALF-YEAR 2012/13
STRONG LEVERAGE OPEX +3.4 % LC VS. TOP-LINE GROWTH OF 7.9% LC
in CHF million 1H 2011/12 1H 2012/13 Change in CHFChange
in lc
Sales 763.0 872.4 +14.3% +7.9%
Research & Development*
in % of sales
58.6
7.7%
56.5
6.5%-3.6% -6.0%
Sales & Marketing
in % of sales
237.1
31.1%
266.5
30.5%+12.4% +7.1%
General & Administration
in % of sales
83.9
11.0%
88.2
10.1%+5.1% +1.5%
Other expenses, net 4.1 2.6
Total OPEX383.7
50.3%
413.7
47.4%+7.8% +3.4%
* excluding capitalized development cost of 15.4m /1.7% of sales (prior year 6.5m / 0.9% of sales)
March 2013
HALF YEAR 2012/13
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HALF-YEAR 2012/13
GROUP EBITDA DEVELOPMENT
EBITA IMPROVEMENT DRIVEN BY ORGANIC GROWTH AND FX
EBITA
YTD SEPT.
2011/12
Organic
Growth
EBITA
YTD SEPT.
2012/13
FX
effect
EBITA
YTD SEPT.
2012/13const. FX
187.0
+21.9
138.4 +26.4
+26.7+19.3%
+48.6+35.1%Margin:
18.1%
Margin:
21.4%
+0.3
Acquisitions
165.1
Margin:
20.1%
Avg. FX Rates1H 2012/13 1H 2011/12
USD/CHF 0.95 0.85
EUR/CHF 1.20 1.21
March 2013
HALF YEAR 2012/13
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HALF-YEAR 2012/13
DETAILS BY BUSINESS SEGMENTS
In CHF million 1H 2011/12 1H 2012/13Growth
in lcOrganicGrowth
ExternalGrowth
FX impact
Sales
HI 723.8 801.2 +4.5% +2.4% +2.1% +44.6 (+ 6.2%)
CI 39.2 71.2 +70.5% +70.5% - +4.4 (+11.3%)
Group 763.0 872.4 +7.9% +5.9% +2.0% + 49.0 (+6.4%)
EBITA
HI 158.9 187.6 +4.8% +4.6% +0.2% +21.0 (+13.2%)
CI -20.6 2.0 n/a n/a n/a +0.9
Corporate - -2.6* n/a n/a n/a n/a
Group 138.4 187.0 +19.3% +19.1% +0.2% +21.9 (+15.8%)
* Out-of-court settlement with Deminor
March 2013
HALF YEAR 2012/13
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HALF-YEAR 2012/13
FINANCIAL RESULTS AND INCOME TAXES
in CHF million 1H 2011/12 1H 2012/13 Comments
EBITA 138.4 187.0
Amortization/Impairment -15.3 -12.6
No impairment in 1H 2012/13
vs. impairment of CHF 4.9m in
1H 2011/12
Operating profit (EBIT)in % of sales 123.116.1% 174.420.0%
Financial result -3.5 -2.1Lower net debt level, higher
income from associates/JVs
Income before taxes 119.6 172.3
Income taxes -15.9 -23.1 Tax rate 13.3% (PY 13.4%)
Income after taxesin % of sales
103.7
13.6%
149.2
17.1%
Growth of + 43.9%
March 2013
HALF YEAR 2012/13
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HALF-YEAR 2012/13
SIGNIFICANT INCREASE IN FREE CASH FLOW
in CHF million 1H 2011/12 1H 2012/13
Cash flow before changes in
net working capital169.7 218.5
Changes in net working capital -57.4 -51.4
Operating cash flow
in % of sales112.314.7%
167.119.2%
Cash flow from investing activities (excl. acquisitions) -28.5 -40.0
Operating free cash flow
in % of sales
83.8
11.0%
127.1
14.6%
Free cash flow 47.3 86.3
Cash flow from financing activities -105.8 -79.2
Changes in cash -61.4 8.5
March 2013
HALF YEAR 2012/13
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HALF-YEAR 2012/13
BALANCE SHEET: SOUND FINANCIAL POSITION
in CHF million31 Mar2012
30 Sep2012
Comments
Net working capital 163.4 207.4Higher inventory, lower payables and
FX effect
Days sales outstanding (DSO) 72 73
Days inventory outstanding (DIO) 122 140 New HI platform launch and timing oflarger government tender delivery in CI
Capital employed 1,540 1,647FX effect
Higher net working capital
Net debt 64.5 51.4Considers dividend payment of
CHF 79.9 m
Equity 1,476 1,596
Equity in % of total assets 64.5% 67.1%
March 2013
OUTLOOK
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OUTLOOK
GUIDANCE IN LOCAL CURRENCIES CONFIRMED
If todays currency situation remains unchanged, positive FX
impact will continue to add to the y-o-y growth
Currency benefit likely to be less significant in 2H
GuidanceFY 2012/13*
Half-Year (actuals)2012/13
Sales
Sales growth in lc
thereof acquisition related growth
FX-impact
Total sales growth in CHF
7%-9%
approx. 1%-2%
n/a
n/a
7.9%
2.0%
6.4%
14.3%
EBITA
EBITA growth in lc
FX-impact
Total EBITA growth in CHF
15%-20%
n/a
n/a
19.3%
15.8%
35.1%
* Unchanged compared to guidance issued in May 2012
March 2013
OUTLOOK
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0.70
0.75
0.80
0.85
0.90
0.95
1.00
Apr
Ma
Jun
Jul-
Au
Se
Oct
Oct
No
De
JanFe
Ma
Apr
Ma
Jun
Jul-
Au
OUTLOOK
FX IMPACT ON SALES AND MARGINS
Rate Sales EBITA
USD/CHF +/- 5% +/- CHF 34 million +/- CHF 11 million
EUR/CHF +/- 5% +/- CHF 25 million +/- CHF 15 million
USD/CHF EUR/CHF
0.70
0.75
0.80
0.85
0.90
0.95
1.00
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
USD Avg FY 11/12 Avg 1H 12/13
1.001.05
1.10
1.15
1.20
1.25
1.30
1.35
Apr-11
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
EUR Avg FY 11/12 Avg 1H 12/13
March 2013
BUSINESS CASE
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BUSINESS CASE
CLEAR AND FOCUSED STRATEGY CUSTOMER DRIVEN INNOVATION
March 2013
SONOVA: HEAR THE WORLD
Key to our success - Our customers and our employees
Broadest product and service offering / portfolio - Hearing instruments (Phonak, Unitron)
- Cochlear implants (Advanced Bionics)
- Professional services (Connect Hearing Group)
Strong competitive positions - Leading position in hearing instruments- Strong contender on cochlear implants
- Strong position in selected key retail markets
Significant market share gain potential - High R&D spend fast product introduction
- Differentiated multi-brand strategy
- Optimized multi-channel approach
Strong product pipelines - High innovation rate and rapid new product introduction
Productivity / efficiency gains - Leverage existing global infrastructure to expand margins
5-year financial targets (at constant FX rates) - EBITA margin: return to mid-twenties
- ROCE: expand to low-thirties
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THANK YOU VERY MUCH