Sonova Holding Ag · SIX:SOON
Sonova — Investor Presentation (September 2022)
49 slides from Sonova's investor presentation, September 2022
Slide 1: Investor Presentation
Investor Presentation September 2022
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: Agenda
Sonova Group & hearing care market Page 4 Sonova’s strategy Page 13 ESG Strategy Page 23 Financial Information Page 27 Outlook Page 36 06 Appendix Page 38 3
Slide 4: Sonova Group & hearing care market
Sonova Group & hearing care market 4
Slide 5: Key highlights – FY 2021/22
Sonova Group Key highlights – FY 2021/22 Sales EPS (adj.) Sales outlook CHF 3,364m CHF 10.76 per share +15-19% +29.0% in LC +39.6% in CHF growth in LC (2y CAGR: : +9.7% in LC) (2y CAGR: +27.4% in LC) in FY 2022/23 EBITA (adj.) Consumer access EBITA (adj.) outlook CHF 844.4m Significant expansion of
Slide 6: Reasons to invest in Sonova
Sonova Group Reasons to invest in Sonova Attractive market Leading market position ‒ Attractive secular growth drivers ‒ Leading positions in key market segments ‒ Resilience to economic cycles ‒ Advanced vertically integrated business model ‒ Good penetration potential in both HI & CI ‒ Broadest an
Slide 7: Our businesses
Our businesses Company structure and key brands Hearing Instruments segment Cochlear Implants segment Hearing Instruments Audiological Care Consumer Hearing Cochlear Implants Note: Use of Sennheiser brand under license from Sennheiser electronic GmbH & Co. KG 7
Slide 8: Product and service offering
Product and service offering Broadest and most advanced offering of hearing care solutions Hearing Instruments Receiver-In-Canal In-The-Ear (ITE) Consumer Hearing (RIC) hearing instruments hearing instruments Premium & Enhanced True Wireless hearing headphones Behind-The-Ear Roger wireless (BTE) hea
Slide 9: Our footprint
Our footprint Strong global presence Tullamore (IE) Wedemark (DE) Operations Center Consumer Hearing HQ Stäfa (CH) Sonova Group HQ, Murten (CH) Phonak Support Center & Suzhou (CN) Phonak Communications Operation Center Stäfa, Operation Center Support Center Zug (CH) Kitchener Operation Center Audiol
Slide 10: Market potential
Market potential Market penetration and access to hearing care Label HI users Hearing impaired w/ no HI Avg. adoption rate % Note. Bar width = Hearing impaired population Note. Indicative Consumer Accessibility (# Hearing impaired population / # POS) ~2K ~11K ~33K (Developed) 30.9% 31% (Global) 9.6%
Slide 11: Hearing care market
Hearing care market Attractive size and growth potential Hearing Instruments Audiological Cochlear Instruments Total hearing manufacturing Care manufacturing care market ~ CHF 6-7 bn ~ CHF 11-12 bn ~ CHF 1.5 bn ~ CHF 19-20 bn ~ 18-19 mln units ~65k units Market CAGR: ~3-5% Market CAGR: ~ 3-5% Market
Slide 12: Market trends
Market trends Technological advances and expansion of consumer benefits Lore Continuous m Evolving Ipsu innovation m expectations ► Sonova’s opportunity: Innovation leadership to address megatrends and to elevate consumer journey 12
Slide 13: Our strategy
Sonova Our strategy
Slide 14: Our strategy
Our strategy Six strategic pillars Lead innovation in audiological performance & consumer experience Leverage M&A Expand consumer access to accelerate growth through omni-channel strategically audiological care network and consumer device business Continuous process Extend reach through improvement
Slide 15: Lead innovation
Lead innovation Building up competence in Artificial Intelligence and sensor technology Innovation framework Our R&D focus investments • Effortless communication in daily life powered by AI Continued expansion of processing power • Natural and authentic sound quality • Seamless adaptation to envir
Slide 16: Leading innovation
Leading innovation Phonak Audéo Fit – launch announced in April 2022 Universal connectivity Unrivaled* sound quality1 Health Data Tracking − Heart rate − Steps Rechargeable − Activity levels − Distance walked/ran *Compared to Phonak Audéo Marvel Note: In order to access health data, it is necessary
Slide 17: Expand consumer access – Omni-channel AC network
Expand consumer access – Omni-channel AC network Proactive approach to serve changing consumer needs and driven by digitalization Omnichannel strategic pillars Ecosystem Evolution of the channel mix Store ◼ In-store only ◼ Blended ◼ Digital only Personalized experience Website Call center 360° Lead
Slide 18: Expand consumer access – AC network expansion
Expand consumer access – AC network expansion Continued bolt-on acquisitions and greenfield openings Systematic approach to: Increase store density Optimize the store footprint Enter new growth markets Balance sheet investments: M&A Greenfield P&L investments: Higher spending for bolt-ons Expa
Slide 19: Extend reach through commercial excellence
Extend reach through commercial excellence Driving growth beyond product innovation through sales, marketing and pricing excellence Enabling sustainable market Three workstreams Rollout plan share gains ‒ Elevating commercial execution to drive Sales excellence: Improving sales ‒ Continuous improvem
Slide 20: Invest in high growth markets
Invest in high growth markets Consumer journey innovation – Omni channel model in China Lead generation Engagement Conversion ‒ Lead generation factory for Audionova ‒ Platform apps as portal for screening, Online stores & wholesale partners appointment, eCommerce, etc. ‒ Leading followership ‒ Pers
Slide 21: Continuous process improvement & structural optimization
Continuous process improvement & structural optimization Audiological Care – Examples of continuous improvement of same-store base Marketing excellence Geo-optimized In-store excellence store portfolio management ‒ Increase referrals from physicians and ‒ Systematic and data-driven process ‒ Improve
Slide 22: Leverage M&A to accelerate growth strategically
Leverage M&A to accelerate growth strategically New Consumer Hearing business – Acquisition of Sennheiser Consumer Division Strategic rationale: − Joining forces in rapidly developing segment of hearables with amplification, jump-starting Sonova’s own efforts − Adding an additional growth vector by
Slide 23: ESG strategy
ESG strategy 23
Slide 24: Sonova’s commitment to sustainable success
Sonova’s commitment to sustainable success IntACT – Sonova’s ESG Strategy Serving society Advancing our people We constantly innovate in hearing health care, We foster our employees’ development, well- improve access for people in under-served areas being and engagement in an inclusive work and enga
Slide 25: ESG highlights
ESG highlights Select achievements highlighting progress towards our ESG commitments Environmental Social Governance ► Achieved carbon neutrality in our own ► Implemented global employee health & ► Conducted Sonova’s first pilot human operations (Scope 1 and 2 CO2e emissions) wellbeing measures, inc
Slide 26: ESG ratings
ESG ratings Commitment to sustainability is integrated in our business and culture Sonova ESG ratings B AA Low ESG risk DJSI member Status: Prime (C+ or better) Sonova received an MSCI ESG Member of indices: Industry position: Top 10% Rating of AA. DJSI World & DJSI Europe 78 ESG score /100 Industry
Slide 27: Financial Information
Financial Information 27
Slide 28: Full Year 2021/22 – Highlights
Full Year 2021/22 – Highlights Building on Sonova’s proven strategy – Delivering continued strong financial performance − Sales of CHF 3,363.9 million Sales − Growth of +29.0% in LC (organic +26.6%), +29.3% in CHF (favorable FX impact: CHF +8.2 million) − Supported by low comparison figures and ongo
Slide 29: Full Year 2021/22 – Key financials
Full Year 2021/22 – Key financials ∆ margin 2y CAGR CHF m Margin ∆ % in LC in LC in LC Comments Sales 3,363.9 +29.0% +9.7% Gross profit (adj.) 2,463.7 73.2% +30.6% +90bps +10.8% ‒ Continuous improvement, partly offset by sourcing & freight costs in H2 ‒ ASP headwind from further normalization of the
Slide 30: Hearing Instruments segment
Hearing Instruments segment Continued strong momentum and progress on profitability Sales EBITA (adj.) Segment sales − Strong organic growth further supported by CHF 3,084m CHF 807m accelerated M&A activity +27.2% vs. PY in LC +30.2% vs. PY in LC − Ongoing market recovery despite some residual headw
Slide 31: Cochlear Implants segment
Cochlear Implants segment Strong demand for the new Marvel sound processors Cochlear implant systems Sales EBITA (adj.) − Pick-up of elective surgeries at the start of the year CHF 279.9m CHF 36.8m − Held back by supply shortages and rising infection rates leading to hospital staffing shortages in 2
Slide 32: Sales components
Sales components in CHF million OPERATIONAL FX +29.0% 3,355.7 3,363.9 62.4 8.2 691.4 2,601.9 FY 20/21 Organic M&A FY 21/22 FX FY 21/22 Reported net of divestments LC impact Reported YoY growth components +26.6% +2.4% +29.0% +0.3% +29.3% 2-year CAGR +8.4% +1.3% +9.7% -2.3% +7.4% ► Strong sales moment
Slide 33: EBITA components
EBITA components in CHF million OPERATIONAL ADJUSTMENTS FX +39.3% 839.8 -6.5 -41.6 798.2 802.9 4.7 243.3 603.0 FY 20/21 Organic M&A FY 21/22 Adjustments FY 21/22 FX FY 21/22 adjusted net of divestments adj. in LC in LC reported in LC reported Margin 23.2% +2.5% -0.7% 25.0% -1.2% 23.8% +0.1% 23.9% No
Slide 34: Operating Expenses
Operating Expenses FY 2021/22 FY 2020/21 2y CAGR CHF m Δ % in LC in LC CHF m Comments Research & Development (adj.) -229.4 +28.7% +19.3% -177.9 ‒ Targeted step up in new technology investments in % of sales 6.8% 6.8% ‒ CI amortization of capitalized development costs significantly exceeding capitali
Slide 35: Capital allocation
Capital allocation Total shareholder return (TSR) strategy Sonova TSR strategy − Total M&A cash-out: around CHF 600 million − Bolt-ons: CHF 70-100 million p.a. 1. Acquisitions spent for AC network expansion and acquisition − Strategic and technology acquisitions of the Sennheiser Consumer Division −
Slide 36: Outlook
Outlook 36
Slide 37: Outlook
Outlook Guidance and mid-term target as of August 16, 2022 Guidance Mid-term In LC FY 2022/23 Target Sales growth +15% to +19% +6% to +9% p.a. adj. EBITA growth +6% to +10% +7% to +11% p.a. Note: adj. refers to adjusted figures; for details, please refer to Appendix – Non-GAAP adjustments 37
Slide 38: Appendix
Sonova Appendix
Slide 39: Performance history
Appendix Performance history ◼ 1H ◼ 2H ◼ 1H ◼ 2H (percentages represent LC growth rate) Sales EBITA (adj.) (percentages represent adj. EBITA margin) in CHF million in CHF million 3,600 +29.0% 3,500 1,000 +4.1% +8.7% +25.1% 800 3,000 +9.0% -6.8% 800 2,500 2,400 +15.4% 21.5% 21.2% 23.2% 600 +6.5% 600
Slide 40: Key financials
Appendix Key financials FY2021/22 Δ % in LC Δ % in LC 2y CAGR CHF m vs. FY 2020/21 vs. FY2019/20 in LC Sales HI segment 3,084.0 +27.2% +19.8% +9.4% Sales HI business 1,838.4 +25.4% +19.8% +9.5% Sales AC business 1,236.8 +29.1% +18.9% +9.0% Sales CH business 8.8 n/a n/a n/a Sales CI segment 279.9 +51
Slide 41: Sales by regions and key markets
Appendix Sales by regions and key markets FY 2021/22 2H 2021/22 1H 2021/22 CHF m Δ % in LC CHF m Δ % in LC CHF m Δ % in LC EMEA 1,775.9 +25.4% 945.3 +14.6% 830.6 +41.3% USA 1,009.8 +38.6% 510.0 +16.3% 499.8 +70.3% Americas (excl. USA) 244.6 +32.7% 127.7 +16.4% 116.9 +56.9% Asia / Pacific 333.6 +19.4
Slide 42: Operating Free Cash Flow
Appendix Sonova Group – Operating Free Cash Flow in CHF million +26.8% 763.7 32.9 -17.4 -11.6 29.7 127.7 Improvement 602.4 despite higher safety Affected by timing stock of tax payments FY 20/21 Profit before tax Depreciation & Amortization Income ∆ NWC & CAPEX FY 21/22 OpFCF taxes paid Other items
Slide 43: Cash flow statement
Appendix Cash flow statement FY 2021/22 FY 2020/21 CHF m ∆ % in CHF CHF m Income before taxes 728.2 +21.3% 600.4 Depreciation & amortization 211.1 -5.2% 222.7 Working Capital -18.9 -54.2% -41.3 Other cash effects 32.6 -14.0% 37.9 Tax paid -46.7 -38.9% -76.3 Financial result 34.9 +66.1% 21.0 Operatin
Slide 44: Balance sheet
Appendix Balance sheet CHF m 31 Mar 2022 31 Mar 2021 Comments Days sales outstanding (DSO) 52 56 ‒ Continued strong receivable collection Days inventory outstanding (DIO) 171 154 ‒ Targeted stock increases to counter supply chain risks Capital employed 3,439.1 2,855.7 ‒ Higher intangibles from acqui
Slide 45: Non-GAAP adjustments
Appendix Non-GAAP adjustments FY 2021/22 Adjustments FY 2021/22 in CHF million Reported 1 Restructuring 2 Strategic M&A 3 Legal 4 Other Total Adjusted Sales 3,363.9 - - - - - 3.363.9 Cost of sales -903.3 3.0 - - - 3.0 -900.3 Gross profit 2,460.7 3.0 - - - 3.0 2,463.7 Research & Development -230.0 0.
Slide 46: FX impact on sales and margins
Appendix Sonova Group – FX impact on sales and margins USD/CHF EUR/CHF Rate Sales EBITA USD/CHF +/- 5% +/- CHF 64 million +/- CHF 20 million EUR/CHF +/- 5% +/- CHF 70 million +/- CHF 29 million 46
Slide 47: Sales by currency and FX rates
Appendix Sonova Group – Sales by currency and FX rates Effect Spot Other FY-20/21 1H-21/22 2H-21/22 FY-21/22 FY-21/22 Jun-2022 USD USD 0.92 0.91 0.92 0.92 = 0.95 GBP, CAD, BRL, AUD EUR 1.08 1.09 1.05 1.07 - 1.01 and JPY GBP 1.21 1.27 1.24 1.26 + 1.17 CAD 0.70 0.74 0.73 0.73 + 0.74 EUR AUD 0.66 0.69
Slide 48: Investor relations contacts
Investor relations contacts Thomas Bernhardsgruetter Jessica Grassi Nicole Jenni Senior Director Investor Relations Director Investor Relations Investor Relations Associate +41 58 928 33 44 +41 58 928 33 22 +41 58 928 33 21 +41 79 618 28 07 +41 79 416 28 76 [email protected] Thomas.Bernhardsgr
Slide 49: Thank you
Thank you Sonova Investor Relations
Sonova Holding — Investor Presentation (September 2022) on 6ix