Sonova Holding AG announced its first-half results for the 2024/25 financial year, showcasing robust sales growth amidst challenging market conditions. The company achieved sales of CHF 1,833.2 million (~USD $2,033.5 million), marking a 5.9% increase in local currencies, driven by strong performances in its Hearing Instruments and Cochlear Implants segments.
Performance Highlights
The Hearing Instruments segment reported sales of CHF 1,685.7 million (USD $1,87 billion), a 5.4% increase in local currencies. Key to this growth was the launch of the Phonak Audéo Infinio and Sphere Infinio platforms, which introduced groundbreaking real-time AI speech enhancement technology. Despite limited early sales impact from these products, the company hopes their strong market reception promises significant growth in the second half.
The Cochlear Implants segment experienced a robust 12.5% growth in local currencies, with sales reaching CHF 147.6 million (USD $163.7 million). Advanced Bionics’ Remote Programming solution and commercial excellence bolstered this growth, alongside market share gains in system sales.
Regional Analysis
Sonova recorded growth across all regions, despite mixed market conditions:
- EMEA (Europe, Middle East, and Africa): Sales increased by 4.5% in local currencies, driven by bolt-on acquisitions in Germany and positive reception of new platforms, although growth was tempered by weaker demand in key European markets.
- Americas: The U.S. saw a 7.1% sales growth in local currencies, supported by share gains and a strong response to new product launches. The rest of the Americas achieved an 11.5% rise, fueled by expansions in Canada and Brazil.
- APAC (Asia-Pacific): Sales rose by 5.5% in local currencies, with strong contributions from Australia and double-digit growth in Cochlear Implants and Consumer Hearing businesses. However, a sluggish Chinese market weighed on overall performance.
Financial Metrics
Adjusted EBITA stood at CHF 325.2 million (USD $360.6 million), reflecting a 3.7% decline in local currencies. This decrease was attributed to higher launch-related costs, elevated lead-generation expenses, and lower organic growth in the Audiological Care business. The adjusted EBITA margin fell to 17.7%, down from 20.0% in the previous year.
Net earnings per share (EPS) declined by 13.9% to CHF 3.74 (USD 4.15), impacted by lower profitability and adverse currency movements.
Operating free cash flow decreased by 30.7% to CHF 104.2 million (USD 115.5 million), primarily due to lower pre-tax income and inventory buildup ahead of product launches. The company maintained a healthy balance sheet with an equity ratio of 42.3% and net debt/EBITDA ratio of 1.8x.
Strategic Outlook
Looking ahead, Sonova remains optimistic about accelerating growth in the second half of the fiscal year. CEO Arnd Kaldowski emphasized the company’s commitment to innovation, stating:
“We achieved solid sales growth in the first half of the year, despite weaker than expected market conditions. With our successful launch of the Phonak Infinio and Phonak Sphere™ Infinio platforms, Sonova brings new hearing solutions to the market that enable substantial advancement in benefits for and care of people with hearing loss. We are proud to introduce this groundbreaking innovation, utilizing the power of real-time Artificial Intelligence for real time speech enhancement in our hearing aids for the first time. Thanks to our proprietary AI and chip technology, we can now significantly and further improve speech understanding, especially in noisy environments. An overwhelmingly positive customer response to these new platforms indicates a positive trajectory and increasing momentum, which provides the foundation for substantial sales growth in the second half of the year. We also expect a significant increase in profitability, driven by stronger sales momentum, higher average selling prices, and launch costs winding down. We are therefore confirming our outlook for the full year.”
The company expects a year-over-year consolidated sales increase of 6-9% and adjusted EBITA growth of 7-11% at constant exchange rates for the full year. Strategic cost initiatives and higher average selling prices are anticipated to further enhance profitability.
Key Initiatives and Challenges
Sonova continues to expand its footprint through strategic acquisitions, particularly in the Audiological Care network. However, the company faces challenges including competitive pressures, a high prior-year sales baseline, and subdued market growth in key regions.
Despite these hurdles, the strong reception of its latest platforms, coupled with its diversified product portfolio and global presence, Sonova believes it is positioned well for long-term success.
Source: Sonova
