Sonova Holding Ag · SIX:SOON
Sonova — Investor Presentation (January 2010)
36 slides from Sonova's investor presentation, January 2010
Slide 1: Investor Presentation
Investor Presentation Oliver Walker, CFO January 2010
Slide 2: Agenda
Agenda – Introduction to Sonova – Growth potential in the hearing industry – Business Report Half-Year Results 2009/10 – Acquisitions – Advanced Bionics Corporation – InSound Medical – Outlook January 2010 Slide 2
Slide 3: Sonova's position
Sonova’s position Sonova - the leading provider of hearing healthcare solutions – is the world’s number one manufacturer of hearing systems (25% market share in value) – is the market leader in wireless communication systems for audiology applications – develops and manufactures advanced cochlear im
Slide 4: Global presence
Global presence Active in over 90 countries Group Companies > 50 Stäfa (CH) Newark (USA) Kitchener (CA) Suzhou (CN) Murten (CH) Los Angeles (USA) Ho Chi Minh City (VN) Sonova & Phonak Headquarters AB Headquarters Group Companies Unitron Headquarters InSound Headquarters Distributors Phonak Communica
Slide 5: The new Sonova Group
The new Sonova Group Hearing systems Medical Distribution partners Global functions Manufacturing and supply chain, management and support functions January 2010 Slide 5
Slide 6: Our strategy – The way to success
Our strategy – The way to success Innovation – Platform concept ensures fast introduction of new products and R&D efficiency – Offer comprehensive and intuitive product portfolio – Improve hearing performance - better speech intelligibility Improve distribution and sales capabilities – Multi-brand s
Slide 7: Agenda
Agenda – Introduction to Sonova – Growth potential in the hearing industry – Business Report Half-Year Results 2009/10 – Acquisitions – Advanced Bionics – InSound Medical – Outlook January 2010 Slide 7
Slide 8: Sustainable long term growth potential
Sustainable long term growth potential Global market – Hearing system market: > 9 million units sold p.a.* – 16% of population is hearing impaired – Low penetration rate of approx. 20% North America: 30% Demographic trends Europe: 40% – Population growth 1-2% p.a. – More people with hearing impairme
Slide 9: Many markets still show a very low penetration rate
Many markets still show a very low penetration rate Especially in the mild to moderate hearing loss segment Hearing impaired population segmented by grades of hearing loss*: Profound hearing loss: 5% 70% 30% With hearing system Moderate hearing loss: 30% 50% 50% Without hearing system Mild hearing l
Slide 10: Agenda
Agenda – Introduction to Sonova – Growth potential in the hearing industry – Business Report Half-Year Results 2009/10 – Acquisitions – Advanced Bionics – InSound Medical – Outlook January 2010 Slide 10
Slide 11: Financial highlights HY 2009/10
Financial highlights HY 2009/10 Improvements across the board in millions of CHF HY 09/10 HY 08/09 Change Sales 709.2 600.0 +18.2% Gross profit 492.4 414.6 +18.8% Gross profit margin 69.4% 69.1% EBITA 193.7 158.9 +21.9% EBITA margin 27.3% 26.5% Free cash flow 112.5 40.9 +175.1% Economic profit 135.6
Slide 12: Strong global growth
Strong global growth Sales distribution by main markets Half-Year 09/10 (Half-Year 08/09) 8% Sales growth y-o-y (9%) in % and l.c. EMEA 18.2% 40% Americas 26.3% (42%) Asia/Pacific 14.7% 52% (49%) – Strongest growth rates within the Americas – Strong performance in Europe: – Sales in Germany, France
Slide 13: Healthy growth rates in all price segments
Healthy growth rates in all price segments Half-Year 09/10 (growth rates Half-Year 09/10) 14% First class (+22.9%) Business class Economy class 5% 26% Wireless communication (-12.1%) (+10.8%) Miscellaneous 31% 24% (+30.0%) (+37.3%) – Highest growth rates in business and economy class – First class w
Slide 14: Innovation drives growth
Innovation drives growth 14% Launched 1 year ago Eleva, Savia Art, Savia, eXtra, Element Launched 2 years ago 20% Launched more than Una, Naída III & V, 2 years ago Exélia, Audéo, Yuu, Next 66% Exélia Art Audéo YES Naída IX Nios micro Versáta Certéna 360 Passport 86% of sales generated with products
Slide 15: Continuous value creation
Continuous value creation Sales Gross profit margin FY figures HY figures in millions of CHF 71.0 in % of sales 1400 69.9 70.0 69.4 1200 1,205 1,249 69.0 68.2 69.4 1000 1,073 69.1 68.0 800 867 68.4 66.6 68.0 67.0 600 709 596 600 504 66.0 400 391 66.0 65.0 200 0 64.0 05/06 06/07 07/08 08/09 09/10 05/
Slide 16: Agenda
Agenda – Introduction to Sonova – Growth potential in the hearing industry – Business Report Half-Year Results 2009/10 – Acquisitions – Advanced Bionics – InSound Medical – Outlook January 2010 Slide 16
Slide 17: Sonova acquires Advanced Bionics
Sonova acquires Advanced Bionics – Logical next step to strengthen Sonova’s position as the leading provider of hearing healthcare solutions – Acquisition of Advanced Bionics for USD 489 million includes: – Fully integrated cochlear implant business with FY 2008 sales of USD 117 million and LTM* sal
Slide 18: Financial highlights of transaction
Financial highlights of transaction – All cash consideration of USD 489 million (USD 463.5 million up-front Consideration and cash consideration incl. USD 25.5 million escrow of consideration) Funding – CHF 470 million senior credit facility – Approx. CHF 40 million utilization of cash on hand1) – E
Slide 19: Cochlear implant (CI) market overview
Cochlear implant (CI) market overview – Global market size Market size in units* – USD 750 - 800 million p.a. Latin America – 180,000 cochlear devices implanted worldwide to date 11% Asia/Pacific – Cost of a cochlear implant USD 20,000 – 25,000 15% North – Global market significantly under-served Am
Slide 20: Competitive environment and key factors of success
Competitive environment and key factors of success – Cochlear: Australia, stock-exchange listed (COH), Market shares (in value)* first cochlear implants introduced in mid 1980’s, Others 1% product offering today: CI, BAHA, EAS Med-El 14% – Med-El: Austria, privately owned, founded in 1989 AB 18% – N
Slide 21: Overview of the hearing healthcare market
Overview of the hearing healthcare market Sensorineural Hearing Instruments CI Type of Hearing Loss >9 mio. units p.a.* ~25,000 units p.a.* DACS Mixed emerging application with long-term potential similar to cochlear implants ductive BAHA Con- ~40,000 units p.a.* Mild Moderate Severe Profound (40 to
Slide 22: Cochlear implant (CI) technology
Cochlear implant (CI) technology CI is an implanted device that enables profoundly hearing impaired to deaf persons to hear sounds and communicate through speech – The external component sits behind the ear and includes a microphone, a speech processor and a wireless inductive link – The implanted p
Slide 23: Overview of Advanced Bionics
Overview of Advanced Bionics Sales by geography FY 2008 Sales by segment FY 2008 Latin America Upgrades Services 6% 2% 1% Asia/Pacific Accessories 6% 8% Key Figures FY 2008 North America Units sold 4,816 43% EMEA Sales USD 117 mio. 45% Systems Employees 660 89% – Innovative manufacturer of CI device
Slide 24: Significant potential for accelerated growth and improved profit margins
Significant potential for accelerated growth and improved profit margins Highly innovative products – Benefiting from Sonova’s high performance hard- and software platform – Applying state-of-the-art acoustics and mechanical engineering know-how – Implementing advanced audiological algorithms Levera
Slide 25: Agenda
Agenda – Introduction to Sonova – Growth potential in the hearing industry – Business Report Half-Year Results 2009/10 – Product Innovation – Acquisitions – Advanced Bionics – InSound Medical – Outlook January 2010 Slide 25
Slide 26: Sonova acquires Lyric
Sonova acquires Lyric® Expanding the hearing system market and addressing unmet needs Sonova acquires – Lyric: A new form factor representing the first totally invisible extended wear hearing solution – 100% of InSound Medical Inc.: IP, know-how, technology and first product sales Attractive opportu
Slide 27: The Lyric hearing solution
The Lyric hearing solution 100% invisible – Placement deep in the ear canal makes it totally invisible – Neither surgery nor anesthesia is required Effortless hearing, 24/7 – Can be worn while showering, exercising, sleeping – Continuously resides in the ear canal for up to 120 days – No batteries t
Slide 28: Penetration rate in the United States
Penetration rate in the United States HI penetration rates: US* Owners vs. non-owners in the US** in % of hearing impaired Non-owners % of hearing impaired Penetration rate in % Owners 0% 20% 40% 60% 80% 100% Severe/ 76% Profound 49% (5%) Moderate 52% (30%) Largest potential of non-owners in age gro
Slide 29: Lyric addresses a huge market potential of non-owners
Lyric addresses a huge market potential of non-owners US market potential* US population: 298 million People with hearing loss: 48 million Non-owners with hearing loss = Untapped US market potential: 36 million Thereof Lyric 75% with indicated hearing loss suitable for Lyric potential 50% with suita
Slide 30: InSound Medical and Sonova: The perfect combination
InSound Medical and Sonova: The perfect combination Lyric – New form factor addressing untapped market potential – Expanding Sonova’s product offering as the leading provider of hearing healthcare solutions Conventional hearing systems – The contraindicated patients are likely to purchase a conventi
Slide 31: Overview of InSound Medical Inc.
Overview of InSound Medical Inc. Key facts Sales FY 2009 USD 5 million Employees 100 Intellectual property 27 patents, 2 design families Headquarters Newark, California Successful commercial launch of Lyric in early 2008 – Over 3,000 customers to date – Outstanding patient feedback – >90% would reco
Slide 32: Synergies of Sonova and InSound Medical Inc.
Synergies of Sonova and InSound Medical Inc. Sales & Marketing – Lyric will leverage Sonova’s global sales & distribution network – Co-operations and other marketing/advertising programs – Perfectly complementary product portfolios R&D – InSound Medical’s IP, know-how and technology will expand R&D
Slide 33: Agenda
Agenda – Introduction to Sonova – Growth potential in the hearing industry – Business Report Half-Year Results 2009/10 – Acquisitions – Advanced Bionics – InSound Medical Inc. – Outlook January 2010 Slide 33
Slide 34: Sales outlook FY 2009/10
Sales outlook FY 2009/10 – Expected market growth of approx. 3% in units – Sonova is in a strong competitive position exceeding market growth – Most competitive product portfolio in the industry – Audéo MINI and SMART will boost Phonak sales – The most comprehensive CRT portfolio in the industry – M
Slide 35: EBITA outlook FY 2009/10
EBITA outlook FY 2009/10 – Economies of scale through higher volumes – Stable pricing environment – Further efficiency gains and cost savings – Continuing investments in R&D and Sales & Marketing – Significant headwind from negative FX effects expected EBITA margin of 27-28% January 2010 Slide 35
Slide 36: Disclaimer
Disclaimer This presentation contains 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 management’s views and assumptions regarding future event
Sonova Holding — Investor Presentation (January 2010) on 6ix