Sonova Holding Ag · SIX:SOON
Sonova — Investor Presentation (March 2015)
62 slides from Sonova's investor presentation, March 2015
Slide 1: Investor Presentation
Investor Presentation March 2015
Slide 2: Disclaimer
Disclaimer This presentation 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 su
Slide 3: Vision
Vision At Sonova, we envision … A WORLD WHERE EVERYONE ENJOYS THE DELIGHT OF HEARING AND THEREFORE LIVES A LIFE WITHOUT LIMITATIONS … “Hear the world” March 2015 Page 3
Slide 4: Sonova Group
Sonova Group Broadest offering – Hearing Instruments, Cochlear Implants … HI Hearing Instruments Behind-The-Ear hearing instruments (BTE) Wireless systems CI Cochlear Implants Cochlear implants Custom In-The-Ear hearing instruments (ITE) Hearing protection Wireless communication systems
Slide 5: Sonova Group
Sonova Group Clear and focused strategy – Customer driven innovation Broadest product and service offering - Phonak, Unitron: Leading position in hearing instruments - Advanced Bionics: Strong contender on cochlear implants Strong and expanding global sales & - Phonak, Unitron, Advanced Bionics: ove
Slide 6: Contents
Contents 1 Market Page 7 2 Business Page 10 3 Strategy Page 17 4 Marketing, Sales & Distribution Page 25 5 New Products Page 35 6 Financial Information Page 45 7 Outlook Page 58 March 2015 Page 6
Slide 7: 1. Market
sonova HEAR THE WORLD 1. Market
Slide 8: Market
Market Around 15% of adults have some degree of hearing impairment CI PROFOUND HI MODERATE HI 15% MILD HI With hearing system Without hearing system END-USER MARKET – PENETRATION* - Profound loss 70% - Moderate loss 50% - Mild loss 10% * Source: Several industry statistics, Sonova estimates
Slide 9: Market
Market Hearing solutions – Instruments, implants and services HEARING INSTRUMENTS HI - Market Size ~ CHF 4.5 billion Independents - Market CAGR ~ + 2-4% Governments & Hospitals - HI Size (units) ~ 12 million CI HI Buying Groups COCHLEAR IMPLANTS CI Large Retail - Market Size ~ CHF 1 billion - Market
Slide 10: 2. Business
sonova HEAR THE WORLD 2. Business
Slide 11: Sonova Group
Sonova Group Strong financial track record SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 2'400 500 45% 40% 2'000 400 35% 1'600 30% 300 25% 1'200 20% 200 800 15% 100 10% 400 5% 0 0 0% 09/10 10/11 11/12 12/13 13/14 14/15 09/10 10/11 11/12 12/13 13/14 14/15 FY 2009/10 FY 2010/11 FY
Slide 12: Hearing instruments
Hearing instruments Performance history SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 2'000 500 45% 40% 1'600 400 35% 30% 1'200 300 25% 20% 800 200 15% 400 100 10% 5% 0 0 0% 09/10 10/11 11/12 12/13 13/14 14/15 09/10 10/11 11/12 12/13 13/14 14/15 FY 2009/10 FY 2010/11 FY 2011/12 F
Slide 13: Cochlear implants
Cochlear implants Performance history SALES EBITA EBITA in CHF million in CHF million margin in % 1H 2H 250 20 20% 200 0 0% 150 -20 -20% 100 -40 -40% 50 -60 -60% 0 -80 -80% 09/10 10/11 11/12 12/13 13/14 14/15 09/10 10/11 11/12 12/13 13/14 14/15 FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14
Slide 14: Sonova Group
Sonova Group Well established global infrastructure and network AMERICAS EUROPE APAC 200 46% of sales 200 43% of sales 200 11% of sales 150 150 150 100 100 100 50 50 50 LC Sales CAGR +13.5% LC Sales CAGR +13.0% LC Sales CAGR +14.5% 0 0 0 2010 2014 2010 2014 2010 2014 - PH, UT, AB: over 50 wholesale
Slide 15: Market position
Market position Expanding strong HI position into larger hearing care market HEARING INSTRUMENTS HI - Market Size ~ CHF 4.5 billion - Market CAGR ~ + 2-4% - HI Size (units) ~ 12 million COCHLEAR IMPLANTS CI - Market Size ~ CHF 1 billion - Market CAGR ~ +10% Note: Unit split - CI Size (units) ~ 50 th
Slide 16: Market position
Market position Channel mix – Balanced approach to all service providers HEARING INSTRUMENTS HI - Market Size ~ CHF 4.5 billion Governments & Independents Hospitals - Market CAGR ~ + 2-4% - HI Size (units) ~ 12 million SOON Sales Split Buying Groups COCHLEAR IMPLANTS CI Large Retail - Market Size ~
Slide 17: 3. Strategy
sonova HEAR THE WORLD 3. Strategy
Slide 18: Strategic choice
Strategic choice Focus on developing and offering hearing care solutions and services Behind-The-Ear hearing instruments (BTE) Wireless systems 2 – LEVERAGE 1 – FOCUS ON Cochlear implants Custom In-The-Ear hearing instruments (ITE) CONNECTIVITY SOLUTIONS HEARING CARE SOLUTIONS CONSUMER
Slide 19: Financial targets
Financial targets Focus on continuous innovation to grow sales and earnings 3,000 40% EBITA Margin / ROCE (%) 2,000 30% Sales (in CHF million) 1,000 20% ,0 10% 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Sales EBITA Margin (%) ROCE (%) Notes: FY 2007/08 Excluding one-off cost for the prohibited
Slide 20: Market strategy
Market strategy Grow market position along 4 main growth vectors 4 1 Penetrate existing markets – WHS account development – Dual-brand strategy 3 – Continuous product innovation 2 Expand accessible markets – BRIC markets – New product formats 2 3 Integrate service channels – Retail network expansion
Slide 21: Product strategy
Product strategy Provide complete customer solutions – Hardware, software and services Core: Drive strong new product pipeline – Gross R&D 7-8% of sales March 2015 Page 21
Slide 22: Resource strategy
Resource strategy Leverage global infrastructure to expand margins AMERICAS EUROPE APAC 200 200 200 150 150 150 100 SALES 100 SALES 100 SALES 50 50 50 COST COST COST 0 0 0 2014 2018 2014 2018 2014 2018 OPEX OPEX OPEX Re-balance global cost base to further increase natural hedge March 2015 Page 22
Slide 23: Acquisition strategy
Acquisition strategy Invest to leverage existing channels and products 3,000 ,0 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 Channels HI ISM CA CI AB Targets – Strict criteria for strategic and financial fit March 2015 Page 23
Slide 24: Business strategies
Business strategies Develop balanced portfolio of profitable growth businesses SONOVA Group HEARING INSTRUMENTS (HI) IMPLANTS (CI) HI RETAIL HI WHS HI WHS CI Customer service Innovation Customer experience Performance excellence leadership leadership leadership – Build strong service – Cover broades
Slide 25: 4. Marketing, sales & distribution
4. Marketing, sales & distribution
Slide 26: Marketing
Marketing B2B & B2C marketing approach: Understanding our customer needs Retail Market customer Research interaction Web Wholesale based customer customer interaction interaction Sonova business model provides multi-dimensional customer insight March 2015 Page 26
Slide 27: Marketing
Marketing B2C – Consumer insights and needs: Drive Sonova product and services innovation Communication & Intelligibility Most relevant needs’ clusters Communication & intelligibility (incl. tinnitus) Natural sound experience Wearing comfort & esthetics Less relevant needs’ clusters Purchasi
Slide 28: Ranking 2014
Marketing B2B – HCP insights and needs: Phonak – Highest brand perception Category Products Services Pricing Marketing Brand Identity Question A B C D E F A B C D E A B A B A B C D 1 2 3 4 Ranking 2014 5 6 7 8 9 10 11 12 Phonak Unitron Averages per category Source: Phonak Brand Tracker, June – J
Slide 29: Index
Marketing B2B – HCP insights and needs: Successful dual-brand approach Loyalty Likelihood Favorite Overall index to recommend partnership satisfaction 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 100 90 80 70 60 Index 50 40 30 20 10 Range Unitro
Slide 30: Sales & distribution
Sales & distribution Retail: Strong expansion – Secure access to distribution and consumer 2000 … … 2015 CHG Stores RETAIL DE: 100* IT: 60 US: 300 CA: 100 AU/NZ: 150 BR: 150 FR: 200 BE: 250 AT: 80 CA: 100 Shop-in-shop JVs UK: 450 WHOLESALE Large Account Partners VA GCs in 20 countries GCs in 20 coun
Slide 31: Sales & distribution
Sales & distribution Connect Hearing: Build strong service positions and networks in key focus markets AP AM EU Strategic focus: US, CA, BR, UK, FR, BE, AT, DE, IT, AUS/NZ – Over 2’000 POS March 2015 Page 31
Slide 32: Wholesale: Large retail partner – Costco
Sales & distribution Wholesale: Large retail partner – Costco (shop-in-shop) Key initiatives Global Phonak contract as of April 2014 – maturing supplier relationship Channel-specific products Phonak Brio – Focus on premium and RIC products Transaction efficiency through EDI Streamlined and e
Slide 33: Retail: Connect Hearing – Own stores
Sales & distribution Retail: Connect Hearing – Own stores (example: US) Key initiatives Harmonized branding and positive customer experience Focus on lead generation and consumer evaluations Develop leading practices in sales training, business process and information systems Harmonization o
Slide 34: Retail: Connect Hearing – Shop-in-shop JV Boots
Sales & distribution Retail: Connect Hearing – Shop-in-shop JV Boots Hearingcare Key initiatives Expansion into Boots Pharmacy format – Beyond Boots Optical Developing efficient patient care processes using on-line tools Creating awareness of hearing loss and solutions: The Great Big Hearing C
Slide 35: 5. New Products
sonova HEAR THE WORLD 5. New Products
Slide 36: New products
New products Platform strategy: Consistent platform portfolio approach since 2005 TIMELINE / CY 1H 12 2H 12 1H 13 2H 13 1H 14 2H 14 1H 15 2H 15 1H 16 2H 16 Technology PF PALIO - 2 PALIO - 3 PH – Product PF PH-SPICE PH - QUEST PH - VENTURE NEXT PF UT – Product PF UT - ERA UT - XY AB – Product PF AB -
Slide 37: New products
New products Palio 3: 3rd generation technology platform – Sonova’s next big step • Technology Palio 1 Palio 2 Palio 3 • Products PALIO CORE SPICE QUEST VENTURE • Core Algorithm SW QUEST VENTURE on DSP- Platform CORE SPICE • DSP - Platform 130 nm 65 nm 65 nm • ASP - Platform 250 nm 250 nm 250 nm dua
Slide 38: New products
New products Leverage platform approach to offer complete range of products Product pipelines: Consistently meeting product development targets March 2015 Page 38
Slide 39: Phonak
Phonak Venture platform: Successfully launched – Early indications very promising BTE Custom RIC Power Pediatric Premium Bolero Q90 Virto Q90 Audéo V90 Naída Q90 Sky Q90 Advanced Bolero Q70 Virto Q70 Audéo V70 Naída Q70 Sky Q70 Standard Bolero Q50 Virto Q50 Audéo V50 Naída Q50 Sky Q50 Essential Bole
Slide 40: Phonak
Phonak Audéo V: Featuring AutoSense OS – Mastering the complexity of everyday sounds Combined with a full range of wireless solutions for every need March 2015 Page 40
Slide 41: Unitron
Unitron Next generation of products on the Era platform BTE Custom RIC Power Flex Trial & Upgrade Premium Quantum² Pro Quantum² Pro Moxi² Pro Quantum² 20 Quantum² 20 Moxi² 20 Max 20 Advanced Quantum² 16 Quantum² 16 Moxi² 16 Any Performance Level Standard Quantum² 10 Quantum² 10 Moxi² 10 Max 6 Essent
Slide 42: Advanced Bionics
Advanced Bionics Competitive portfolio of sound processors, implants, electrodes and accessories Implants Electrodes Sound Processors HiRes 90K Advantage HiFocus Mid-Scala Naída CI HiRes 90K HiFocus 1j Neptune HiFocus Helix Harmony BTE Building on the combined R&D strength of Advanced Bionics and Ph
Slide 43: Advanced Bionics
Advanced Bionics AquaCase – Leadership in waterproof hearing technology continues Featuring the AquaMic – Enabling uncompromised hearing in and out of the water March 2015 Page 43
Slide 44: Advanced Bionics
Advanced Bionics Naída CI sound processor – The best of both worlds T-Mic 2 UltraZoom Natural microphone Rechargeable Zinc-Air The adaptive placement beamformer ClearVoice ZoomControl Unique speech Dual-microphone enhancement with VoiceStream HiRes Fidelity 120 DuoPhone 120 spectral bands Phone call
Slide 45: 6. Financial Information
sonova HEAR THE WORLD 6. Financial Information
Slide 46: Half-Year 2014/15
Half-Year 2014/15 Summary of financial results – Strong sales increase, driven by both segments – Sales of CHF 990.2 million – up 4.5% in Swiss francs and 7.7% in LC – Organic sales growth of 6.9% – driving market share expansion in both segments – Solid underlying margin development – EBITA of CHF
Slide 47: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – Key financials in CHF million 1H 2013/14 1H 2014/15 Δ% Δ % in LC Sales 947.8 990.2 4.5% 7.7% Gross profit 649.2 680.9 4.9% 8.9% - Gross profit margin 68.5% 68.8% OPEX -443.0 -465.0 5.0% 7.4% EBITA 206.2 215.9 4.7% 12.1% - EBITA margin 21.8% 21.8% Operating free cash
Slide 48: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – Sales by regions 1H 2013/14 1H 2014/15 in CHF million Sales In % Sales in % Δ % in LC EMEA 361.7 38.1% 427.3 43.1% 19.3% USA 368.2 38.9% 348.7 35.2% -1.7% Americas (excl. USA) 116.9 12.3% 108.3 10.9% 0.3% Asia / Pacific 101.0 10.7% 105.9 10.7% 9.4% Total SONOVA 947.8
Slide 49: Half-Year 2014/15
Half-Year 2014/15 Hearing instruments – Sales by product groups in CHF million 1H 2013/14 % Group sales 1H 2014/15 % Group sales Δ % in LC HI Premium 220.6 23.3% 226.7 22.9% 5.6% HI Advanced 215.9 22.8% 204.4 20.6% -2.3% HI Standard 268.6 28.3% 286.8 29.1% 9.8% Wireless communication 30.9 3.3% 38.8
Slide 50: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – Growth components in CHF million 1H 2013/14 Growth contribution 1H 2014/15 FX impact 1H 2014/15 as reported @ const. FX as reported Organic Acquisitions Sales 947.8 64.9 7.7 1,020.4 -30.2 990.2 - Δ % to prior year n/a +6.9% +0.8% +7.7% -3.2% +4.5% EBITA 206.2 +24.9 2
Slide 51: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – EBITA development +9.7m +4.7% +24.9m +12.1% +0.8 231.1 -15.2 215.9 206.2 +24.1 Avg FX 1H 1H Rates 2013/14 2014/15 Margin: USD 0.94 0.90 22.7% EUR 1.23 1.22 Margin: Margin: 21.8% 21.8% GBP 1.45 1.51 JPY (100) 0.95 0.88 BRL 0.43 0.40 AUD 0.89 0.84 CAD 0.91 0.83 EBITA O
Slide 52: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – Operating expenses in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Δ % in LC Comments Reflects new Palio 3 Research & Development -59.4 -65.3 9.9% 11.2% platform launch in % of sales 6.3% 6.6% Growing slower than Sales & Marketing -290.0 -301.6 4.0% 6.7% sales–operat
Slide 53: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – R&D spending in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Δ % in LC Comments Increase driven by R&D charged to the P&L 59.4 65.3 9.9% 11.2% both segments in % of sales 6.3% 6.6% Fluctuation capitalized Capitalized development costs 14.0 11.3 -19.4% -19.2% vs. expe
Slide 54: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – Reported results and income taxes in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Comments Adverse FX impact of CHF15.2m, EBITA 206.2 215.9 4.7% LC variance +12.1% Acquisition related amortization -12.9 -12.7 -1.4% Operating profit (EBIT) 193.3 203.1 5.1% in % of sal
Slide 55: Half-Year 2014/15
Half-Year 2014/15 Significant free cash flow in CHF million 1H 2013/14 1H 2014/15 Δ % in CHF Comments Cash flow before changes in NWC 221.3 237.6 7.4% (incl. taxes paid) Driven by higher inventories Changes in net working capital -29.7 -52.9 78.6% for Venture Cash flow from operating activities 191.
Slide 56: Half-Year 2014/15
Half-Year 2014/15 Sonova Group – Balance sheet in CHF million 31 Mar 2014 30 Sep 2014 Δ % in CHF Comments Venture launch; includes CHF10m Net working capital 190.6 238.5 25.1% FX effect on inventory Days sales outstanding (DSO) 69 69 0.0% Days inventory outstanding (DIO) 140 162 15.6% Effect of Vent
Slide 57: Total shareholder return
Total shareholder return Cash deployment strategy 1. Acquisitions 2. Dividend Bolt-on Further gradually CHF 50- 70 increase million p.a. pay-out-ratio Total shareholder return strategy 4. Share buyback 3. Solid cash Introduce buy back position program CHF 500 million Maintain 2014-2017 c
Slide 58: 7. Outlook
sonova HEAR THE WORLD 7. Outlook
Slide 59: Outlook FY 2014/15
Outlook FY 2014/15 FY 2014/15 guidance Actual Guidance 1H 2014/15 FY 2014/15* Sales growth in local currencies 7.7% 7%-9% Sales thereof acquisition related growth 0.8% approx. 1% FX-impact -3.2% Total sales growth in CHF 4.5% EBITA growth in local currencies 12.1% 11%-15% EBITA FX-impact -7.4% Total
Slide 60: Outlook FY 2014/15
Outlook FY 2014/15 FX impact on sales and margins USD/CHF EUR/CHF Rate Sales EBITA USD/CHF +/- 5% +/- CHF 38 million +/- CHF 12 million EUR/CHF +/- 5% +/- CHF 26 million +/- CHF 14 million USD and EUR account for roughly two thirds of the overall FX exposure March 2015 Page 60
Slide 61: Outlook FY 2014/15
Outlook FY 2014/15 FX rates – Main currencies accounted for around 90% of Group sales Avg 1H 2013/14 Avg 1H 2014/15 Effect Avg FY 2013/14 Spot 13-Nov-14 USD 0.94 0.90 – 0.92 0.96 EUR 1.23 1.22 – 1.23 1.20 GBP 1.45 1.51 1.46 1.52 CAD 0.91 0.83 – 0.87 0.85 AUD 0.89 0.84 – 0.86 0.84 BRL 0.43 0.40 – 0
Slide 62: Thank you
Thank you