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Investor PresentationMay 2014
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 subject to risks and uncertainties including, but not
confined to, future global economic conditions, exchange rates, legal provisions, market
conditions, activities by competitors and other factors outside Sonova’s control. Should one
or more of these risks or uncertainties materialize or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those forecasted or expected. Each
forward-looking statement speaks only as of the date of the particular statement, and
Sonova undertakes no obligation to publicly update or revise any forward-looking
statements, except as required by law.
This presentation 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.
Page 2May 2014
At Sonova, we envision …
… “Hear the world”
Vision
A WORLD WHERE EVERYONE
ENJOYS THE DELIGHT OF HEARING AND
THEREFORE LIVES A LIFE WITHOUT LIMITATIONS
Page 3May 2014
Broadest offering: Hearing Instruments, Cochlear Implants …
… and professional audiological services
Sonova Group
HI Hearing Instruments Behind-The-Ear hearing instruments (BTE) Wireless systems
Custom In-The-Ear hearing instruments (ITE)
Hearing protection Wireless communication systems
Invisible extended-wear hearing instruments
Cochlear implants
CI Cochlear Implants
Page 4May 2014
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
Mid-term financial targets (excluding FX impact) - EBITA margin: return to mid-twenties
- ROCE: expand to low-thirties
Clear and focused strategy – Customer driven innovation
Sonova Group
Page 5May 2014
Contents
1 Market Page 7
2 Business Page 10
3 Corporate Strategy Page 19
4 Business Strategies Page 26
5 Financial Information Page 44
6 Outlook FY 2014/15 Page 68
Page 6May 2014
1. Market
Around 15% of adults have some degree of hearing impairment
Low penetration rate – Around 20% in developed countries
Market
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
Page 8May 2014
Hearing solutions: Instruments, implants and services
Service channels: Key to access end-users
Market
TOTAL HEARING CARE MARKET
- Market Size- Market CAGR- HI Size (units)- CI Size (units)
~ CHF 15-16 billion~ + 3-5%
~11 million~ 50 thousand
COCHLEAR IMPLANTS CI
- Market Size- Market CAGR- CI Size (units)
~ CHF 1 billion~ +10%
~ 50 thousand
HEARING INSTRUMENTS HI
- Market Size- Market CAGR- HI Size (units)
~ CHF 4.5 billion~ + 2-4%
~11 millionINDEPENDENTS
GLOBAL KEY
ACCOUNTSLARGE RETAIL
ACCOUNTS
BUYINGGROUPS
HOSPITALS GOVERNMENT
OTHERS
CI
HI
Page 9May 2014
2. Business
Performance history – Strong financial track record
Sonova Group
1H
SALESin CHF million
EBITAin CHF million
EBITAmargin in %
Notes: FY 2009/10 Restated based on finalization of the acquisition accounting of Advanced BionicsFY 2012/13 Excluding one-off cost for AB Vendor B provision increase, AB Rixheim restructuring and settlement with a group of investors
2H
FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 CAGR 5-y
Sales growth reported +20.1% +7.8% +0.2% +10.8% +8.7% +9.3%
Sales growth in LC +23.8% +13.3% +11.6% +7.4% +11.7% +13.4%
Organic sales growth in LC +18.4% +5.8% +6.7% +5.2% +11.0% +9.3%
EBITA margin +28.0% +20.2% +19.5% +21.5% +22.0% n/a
Basic EPS 3.32 3.50 3.71 4.60 5.08 +3.2%
0
200
400
600
800
1'000
1'200
1'400
1'6001'800
2'000
08/09 09/10 10/11 11/12 12/13 13/140%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
50
100
150
200
250
300
350
400
450
08/09 09/10 10/11 11/12 12/13 13/14
Page 11May 2014
Well established global infrastructure and network
Strong local presence – Supporting customers worldwide
Sonova Group
AB Center
Unitron Center
Sonova & Phonak HQ & Centers
DistributorsWHS Group Companies
Operation CentersPhonak Communications Center
Phonak Lyric Center
Murten (CH)
Kitchener (CAN)
Ho Chi Minh City (VN)
Suzhou (CN)
Valencia (USA)
Newark (USA)
Stäfa (CH)
Page 12May 2014
Europe and Americas – Main contributors to group sales
Sonova Group
SALESin CHF million
SALESin CHF million
2009/10 2010/11 2011/12 2012/13 2013/14CAGR5-year
EU - Sales growth in LC +23.0% +11.3% +13.9% +5.3% +12.4% +13.0%
AM - Sales growth in LC +26.0% +16.9% +7.8% +7.1% +10.7% +13.5%
AP - Sales growth in LC +15.3% +2.7% +24.0% +17.7% +14.0% +14.5%
0
200
400600
800
1'000
1'2001'400
1'600
1'800
2'000
08/09 09/10 10/11 11/12 12/13 13/14
EU AM AP
0
200
400
600
800
1'000
1'200
1'4001'600
1'800
2'000
08/09 09/10 10/11 11/12 12/13 13/14
Page 13May 2014
Expanding strong HI position into larger hearing care market
Market position
TOTAL HEARING CARE MARKET
- Market Size- Market CAGR- HI Size (units)- CI Size (units)
~ CHF 15-16 billion~ + 3-5%
~ 11 million~ 50 thousand
COCHLEAR IMPLANTS CI
- Market Size- Market CAGR- CI Size (units)
~ CHF 1 billion~ +10%
~ 50 thousand
HEARING INSTRUMENTS HI
- Market Size- Market CAGR- HI Size (units)
~ CHF 4.5 billion~ + 2-4%
~ 11 million
Page 14May 2014
Service channels: Strong partner to IND, LRA, BG and Govt
Market position
TOTAL HEARING CARE MARKET
- Market Size- Market CAGR- HI Size (units)- CI Size (units)
~ CHF 15-16 billion~ + 3-5%
~ 11 million~ 50 thousand
COCHLEAR IMPLANTS CI
- Market Size- Market CAGR- CI Size (units)
~ CHF 1 billion~ +10%
~ 50 thousand
HEARING INSTRUMENTS HI
- Market Size- Market CAGR- HI Size (units)
~ CHF 4.5 billion~ + 2-4%
~ 11 millionINDEPENDENTS
GLOBAL KEY
ACCOUNTSLARGE RETAIL
ACCOUNTS
BUYINGGROUPS
HOSPITALS GOVERNMENT
OTHERS
SOONSales Split
Page 15May 2014
Balanced portfolio of profitable growth businesses
Sonova Group
SONOVA Group
HEARING INSTRUMENT (HI)Segment
IMPLANT (CI)Segment
CIADVANCED
BIONICS
Business
HIPHONAK
Business
HIUNITRON
Business
HIRETAIL
Business
Page 16May 2014
Performance history
Hearing instruments
SALESin CHF million
EBITAin CHF million
EBITAmargin in %
1H 2H
FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 CAGR 5-y
Sales growth reported +18.1% +4.8% -1.4% +8.2% +6.5% +7.1%
Sales growth in LC +21.7% +10.1% +9.7% +4.9% +9.5% +11.0%
Organic sales growth in LC +18.4% +5.8% +4.5% +2.6% +8.8% +7.9%
EBITA margin +29.0% +24.1% +22.3% +23.3% +23.8% n/a
0
200
400
600
800
1'000
1'200
1'400
1'600
1'800
2'000
08/09 09/10 10/11 11/12 12/13 13/140%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
50
100
150
200
250
300
350
400
450
08/09 09/10 10/11 11/12 12/13 13/14
Page 17May 2014
Performance history
Cochlear implants
SALESin CHF million
EBITAin CHF million
EBITAmargin in %
1H 2H
* FY 2012/13 Excluding one-off cost for AB Vendor B provision increase, AB Rixheim restructuring
0
25
50
75
100
125
150
175
200
225
08/09 09/10 10/11 11/12 12/13 13/14-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
-70
-60
-50
-40
-30
-20
-10
0
10
20
08/09 09/10 10/11 11/12 12/13 13/14
FY 2009/10 FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 CAGR 4-y
Sales growth reported -- +180.5% +36.0% +52.3% +33.1% +66.8%
Sales growth in LC -- +202.1% +53.5% +47.1% +36.0% +74.5%
EBITA margin -31.0% -63.4% -25.0% +1.2% +6.6% n/a
Page 18May 2014
3. Corporate Strategy
On course for mid term financial targets
Financial targets
Notes: FY 2007/08 Excluding one-off cost for the prohibited acquisition of the GN ReSound GroupFY 2009/10 Restated based on finalization of the acquisition accounting of Advanced BionicsFY 2012/13 Excluding one-off cost for AB Vendor B provision at AB, AB Rixheim restructuring and settlement with a group of investors
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
EB
ITA
Ma
rgin
/ R
OC
E (
%)
Sa
les (
in C
HF
mill
ion
)
Sales EBITA Margin (%) ROCE (%)
Page 20May 2014
Focus on continuous innovation to grow sales and earnings
Core: Drive strong new product pipeline – Gross R&D 7-8% of sales
Innovation strategy
NEW PRODUCTS
SALES & DISTRIBUTION
Q1 15 Q2 15Q1 14 Q2 14 Q3 14 Q4 14Q1 13 Q2 13 Q3 13 Q4 13
MARKETING
PRODUCTIVITY & EFFICIENCY
RESOURCES & PROCESSES
Page 21May 2014
Grow market position along 4 main growth vectors
Focus on key initiatives to support growth strategy
Market 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– Demand generation processes
Page 22May 2014
Provide complete customer solutions: HW, SW and Services
Platform concept approach to solution development
Product strategy
Page 23May 2014
Leverage global infrastructure to expand margins
Re-balance global OPEX base to create natural hedge
Resource strategy
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
Page 24May 2014
Invest to leverage existing channels and products
Targets: Strict criteria for strategic and financial fit
Acquisition strategy
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
Page 25May 2014
4. Business Strategies
Balanced portfolio of profitable growth businesses
Sonova Group
SONOVA Group
HEARING INSTRUMENT (HI)Segment
IMPLANT (CI)Segment
CIADVANCED
BIONICS
Business
HIPHONAK
Business
HIUNITRON
Business
HIRETAIL
Business
Page 27May 2014
Business strategy
Phonak
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 2014/15 - Consumer base development: Web based marketing B2B and B2C
- Increased Web-Store penetration
- New product launch 2014/15
- Roll-out Lyric 3
- Wireless communication/connectivity standards based on 2.4 GHz: e.g. Roger
- Asia market growth and expansion (lead)
Page 28May 2014
Product pipeline – Drive high innovation & launch rate
Complete range across all formats and performance levels
Phonak
PH-SPICE PH-QUEST NEXT PLATFORM
BT
E –
Bo
lero
Q
ITE
–V
irto
Q
RIC
–A
ud
éo Q
PO
WE
R –
Naí
da
Q
PE
D –
Sky
Q
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 4.2
F1 / 4
HI – Premium
HI – Advanced
HI – Standard
HI – Essential/Basic
HI – Platform
HI – New EW Format
Fitting Software(TARGET)
1H 16 2H 161H 14 2H 141H 12 2H 12 1H 15 2H 151H 13 2H 13TIMELINE / CY
NEXT PF
F 1
T 4.3 T 5.0
Note: Subject to change
Page 29May 2014
Completing the range of solutions on Quest
Building on the success of the platform
Phonak
BTE Custom RIC Power Pediatric
Premium Bolero Q90 Virto Q90 Audéo Q90 Naída Q90 Sky Q90
Advanced Bolero Q70 Virto Q70 Audéo Q70 Naída Q70 Sky Q70
Standard Bolero Q50 Virto Q50 Audéo Q50 Naída Q50 Sky Q50
Essential Bolero Q30 Virto Q30 Audéo Q30 Naída Q30
Basic Baseo Q Tao Q
Page 30May 2014
Lyric3 – A new format shaping up
New product format to expand the accessible market
Phonak
<Invisible
24/7
Hassle-free
Page 31May 2014
Business strategy
Unitron
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 2014/15 - B2B Marketing campaign “favorite sound”
- B2B and B2C customer experience – Flex solution roll-out
- Roll-out of premium products on Era 2 platform
- UT customer experience initiatives – “The Unitron Way”
- New product launch 2014/15
- Europe and Asia market growth and expansion
Page 32May 2014
Product pipeline – Drive focused product innovation
Flexible range across 3 formats and all performance levels
Unitron
Fitting Software(TRUEFIT)
UT-ERA NEXT PLATFORM
FL
EX
Tri
al
PO
WE
R –
Max
RIC
–M
oxi
Kis
s
FL
EX
Tri
al &
Up
gra
de
F 1
F2
TF 1.1 TF 2.3TF 2.0 TF 2.3TF 2.1 TF 2.2 TF 3.0 TF 3.1
HI – Premium
HI – Advanced
HI – Standard
HI – Essential/Basic
HI – PlatformQ
PR
O
MP
RO
RIC
–M
oxi
2
Q P
RO
2
M P
RO
2
1H 16 2H 161H 14 2H 141H 12 2H 12 1H 15 2H 151H 13 2H 13TIMELINE / CY
Fitting Software(TRUEFIT)
BTE
–Q
uant
um2
F 1 F
2
TF 3.2 TF 3.3
Note: Subject to change
Page 33May 2014
Next generation of products on the Era platform
Building on the success of the Flex concept
Unitron
BTE Custom RIC Power Flex Trial & Upgrade
Premium Quantum² Pro Quantum² Pro Moxi² Pro
Any Performance LevelAdvanced
Quantum² 20 Quantum² 20 Moxi² 20 Max 20
Quantum² 16 Quantum² 16 Moxi² 16
Standard Quantum² 10 Quantum² 10 Moxi² 10 Max 6
Essential Quantum² E Quantum² E Moxi² E Max E
Basic Shine Shine
Page 34May 2014
Business strategy
Connect Hearing
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 2014/15 - Selected acquisitions and store openings
- Shop-in-shop concept (Boots/UK, Ohrtheke/Austria)
- Web based lead and demand generation
- Roll-out of customized proprietary IT retail application
- Integration of branding and operations in the US
Page 35May 2014
Boots Hearingcare shop-in-shop concept – Continued strong development
Premium market access by partnership with leading pharmacy chain
Connect Hearing
Based on a market-leading concept established ten
years ago
Number of locations in the UK: From 390 at the end of
2012/13 to 430 twelve months later
Value proposition: professional audiological services
at attractive locations
Tangible synergies for both sides from increased store
traffic
Solid long-term Sonova/Boots partnership: 51/49 joint
ownership
Page 36May 2014
US retail – Integration of branding and operations
Focused effort to realize economies of scale
Connect Hearing
Roll out of modern consistent store design and
branding approach
Centralization of administration
Harmonization of business systems
Broadening of lead generation services to support
own retail as well as wholesale customers
e-marketing/call center
Healthcare insurance contracting
Page 37May 2014
Business strategy
Advanced Bionics
Advanced Bionics: “Patients always first”
Mission / value proposition - Strive for performance leadership – leverage AB and Phonak 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 Phonak pipeline and platforms
Productivity / efficiency - Leverage PH technology & process platform to expand margins
Selected initiatives 2014/15 - AB/Phonak - continued joint product development
- New product launches 2014/15
- Focused emerging markets approach
- Expansion of waterproof technology
- AB Partner Program for retail: «Think beyond Hearing Aids»
Page 38May 2014
How a cochlear implant works
Advanced Bionics
SoundprocessorSound is captured and converted into detailed digital information
Magnetic headpieceTransmits digital signal wirelessly to the implant
ImplantConverts digital information into electrical signal
ElectrodeDelivers signal as electrical stimulation to the auditory nerve
Page 39May 2014
Product pipeline – Accelerate innovation rate, leverage Phonak technology
Expand range of innovative processors, implants, electrodes
Advanced Bionics
FDACE
FDACE
FDACE
CI – Electrodes
CI – Implants
CI – Processors
CI – Platform
Fitting Software(SOUNDWAVE)
.
1H 16 2H 161H 14 2H 141H 12 2H 12 1H 15 2H 151H 13 2H 13TIMELINE / CY
SW 2.0 SW 3.0
NeptuneNaída CI
Q70
HiFocusMid-Scala
HiRes 90kAdvantage
AB-WOLVERINE AB-QUEST
Note: Subject to change, timing dependent upon regulatory approvals
Page 40May 2014
Unprecedented number of new products in the last 12 months
Expanding range of innovative processors, implants and electrodes
Advanced Bionics
Implants Electrodes Sound Processors
HiRes 90K Advantage HiFocus Mid-Scala Naída CI
HiRes 90K HiFocus 1j Neptune
HiFocus Helix Harmony BTE
Page 41May 2014
Leadership in waterproof hearing technology continues with the new AquaCase* container for Naída CI Q70 sound processors
AquaMic enabling uncompromised hearing in and out of the water
Advanced Bionics
Page 42
*Pending regulatory approval in the United States
May 2014
Well established global infrastructure and network
Sonova Group
AM EU APAC
Page 43May 2014
5. Financial Information
– Strong sales increase, driven by double-digit organic growth
– Sales of CHF 1,951.3 million – up 8.7% in Swiss francs and 11.7% in LC
– Organic sales growth of 11.0% – driving market share expansion in both segments
– Further EBITA growth and margin expansion
– EBITA of CHF 430.1 million – up 11.6% in Swiss francs and 16.7% in LC
– EBITA margin of 22.0% – expanding by 50 bps as reported and by 90 bps in LC
– Both segments outpacing the market and expanding profitability
– Hearing instruments: solid growth of 9.5% in LC – EBITA margin expanding by 50 bps to 23.8%
– Cochlear implants: strong progress and growth of 36.0% in LC – EBITA margin reaching 6.6%
– High rate of innovation continues in both segments
– Hearing instruments: successful launch of Quest – most comprehensive introduction in history
– Cochlear implants: new implant, processor and electrode launched in FY 2013/14
– Solid balance sheet – increase in dividend proposed
– Net cash position of CHF 311.5 million – dividend increase of 19% to CHF 1.90 proposed
– ROCE of 27.7%, up from a 22.6% in FY 2012/13 (normalized for one-off costs)
Business highlights FY 2013/14
Sonova Group
Page 45May 2014
Key Financials – Variances in CHF
Sonova Group
in CHF million FY 2012/13REPORTED
ONE-OFFCOST*
FY 2012/13NORMALIZED
FY 2013/14 Δ % vs.REPORTED
Δ % vs.NORMALIZED
Sales 1,795.3 1,795.3 1,951.3 8.7% 8.7%
Gross profit 1,239.8 1,239.8 1,340.4 8.1% 8.1%
- Gross profit margin 69.1% 69.1% 68.7%
OPEX -1,058.1 203.6 -854.5 -910.3 -14.0% 6.5%
EBITA 181.7 203.6 385.3 430.1 136.7% 11.6%
- EBITA margin 10.1% 21.5% 22.0%
Operating free cash flow 318.6 318.6 318.4 0.0% 0.0%
EPS (in CHF) 1.65 2.95 4.60 5.08 208.0% 10.4%
ROCE 10.4% 22.6% 27.7%
* One-off cost for AB Vendor B provision increase, AB Rixheim restructuring and settlement with a group of investors
Page 46May 2014
Key Financials – Variances in CHF
Sonova Group
in CHF million 1H 2013/14 Δ % 2H 2013/14 Δ % FY 2013/14 Δ %
Sales 947.8 8.6% 1,003.5 8.7% 1,951.3 8.7%
Gross profit 649.2 8.1% 691.2 8.1% 1,340.4 8.1%
- Gross profit margin 68.5% 68.9% 68.7%
OPEX -443.0 7.0% -467.3 5.5% -910.3 6.5%
EBITA 206.2 10.6% 223.9 14.1% 430.1 11.6%
- EBITA margin 21.8% 22.3% 22.0%
Operating free cash flow 138.7 9.1% 179.7 -6.1% 318.4 0.0%
Note: 2H 2013/14 and FY 2013/14 variances consider normalizations for FY 2012/13 one-off costs
Page 47May 2014
Key Financials – Variances in LC
Sonova Group
in CHF million 1H 2013/14 Δ % in LC 2H 2013/14 Δ % in LC FY 2013/14 Δ % in LC
Sales 947.8 10.4% 1,003.5 12.9% 1,951.3 11.7%
Gross profit 649.2 9.8% 691.2 12.7% 1,340.4 11.3%
- Gross profit margin 68.5% 68.9% 68.7%
OPEX -443.0 8.4% -467.3 8.8% -910.3 8.9%
EBITA 206.2 13.0% 223.9 21.7% 430.1 16.7%
- EBITA margin 21.8% 22.3% 22.0%
Note: 2H 2013/14 and FY 2013/14 variances consider normalizations for FY 2012/13 one-off costs
Page 48May 2014
Growth components
Acceleration of sales driven by organic growth
Sonova Group
in CHF million 1H 2013/14Growth
Contribution2H 2013/14
Growth Contribution
FY 2013/14Growth
Contribution
Growth in LC 91.0 10.4% 119.3 12.9% 210.3 11.7%
- Thereof organic 84.0 9.6% 113.8 12.3% 197.7 11.0%
- Thereof acquisitions 7.0 0.8% 5.5 0.6% 12.5 0.7%
Currency effect -15.6 -1.8% -38.6 -4.2% -54.2 -3.0%
Growth in CHF 75.3 8.6% 80.7 8.7% 156.1 8.7%
Page 49May 2014
Sales – Regions and key markets
Growth broadly based across all regions
Sonova Group
1H 2013/14 2H 2013/14 FY 2013/14
in CHF million Sales Δ % in LC Sales Δ % in LC Sales Δ % in LC
EMEA 361.7 8.3% 433.3 16.2% 795.0 12.4%
USA 368.2 10.1% 358.5 11.8% 726.7 11.0%
Americas (excl. USA) 116.9 8.0% 107.2 11.4% 224.1 9.6%
Asia / Pacific 101.0 22.9% 104.5 6.9% 205.5 14.0%
Total SONOVA 947.8 10.4% 1,003.5 12.9% 1,951.3 11.7%
Page 50May 2014
– Outpacing estimated market growth
– Sales up by 9.5% in LC to CHF 1,756 million
– Growth driven by strong organic growth of 8.8%
– Both wholesale and retail businesses contributed to the increase
– Continued strong market response to the new Quest product line
– Premium and Standard segment post double digit sales increases
– Roger drives acceleration in wireless communication in 2H
– Solid margin improvement
– EBITA up by 13.9% in LC, representing a 90 bps margin expansion in LC
– Improvement is the result of strong sales growth and good cost discipline
– FX headwind reduces reported EBITA by CHF 19.5 million or EBITA margin by 40 bps
– Solid leverage achieved despite extra costs for deeper integration of the US retail business
Business summary FY 2013/14
Hearing Instruments
Page 51May 2014
Financial performance
Underlying margin improvement of 90bps reflects strict cost control
Hearing Instruments
in CHF million 1H 2013/14 Δ % in CHF 2H 2013/14 Δ % in CHF FY 2013/14 Δ % in CHF Δ % in LC
Sales 865.8 8.1% 890.2 5.1% 1,756.0 6.5% 9.5%
EBITA 206.2 10.2% 211.1 7.4% 417.3 8.8% 13.9%
- EBITA margin 23.8% 23.7% 23.8%
Page 52May 2014
Sales – Growth components
Underlying growth momentum maintained in 2H but FX weighs on reported numbers
Hearing Instruments
in CHF million 1H 2013/14Growth
Contribution2H 2013/14
Growth Contribution
FY 2013/14Growth
Contribution
Growth in LC 79.4 9.9% 78.0 9.2% 157.4 9.5%
- Thereof organic 72.4 9.0% 72.5 8.6% 144.9 8.8%
- Thereof acquisitions 7.0 0.9% 5.5 0.6% 12.5 0.8%
Currency effect -14.7 -1.8% -35.2 -4.1% -50.0 -3.0%
Growth as reported 64.7 8.1% 42.8 5.1% 107.5 6.5%
Page 53May 2014
Sales – Product groups
Premium and standard segment drive growth
Hearing Instruments
in CHF million 1H 2013/14 Δ % in LC 2H 2013/14 Δ % in LC FY 2013/14 Δ % in LC
HI Premium 220.6 16.2% 212.6 9.6% 433.2 12.8%
HI Advanced 215.9 3.8% 221.7 3.4% 437.6 3.6%
HI Standard 268.6 14.6% 287.4 16.0% 556.0 15.3%
Wireless communication 30.9 0.5% 37.4 18.9% 68.3 9.9%
Miscellaneous 129.9 3.8% 131.1 2.4% 261.0 3.1%
Total HI Segment 865.8 9.9% 890.2 9.2% 1,756.0 9.5%
Page 54May 2014
– Sales momentum accelerating over the course of the year
– Sales of CHF 195.3 million – growth of 33.1% in Swiss francs and of 36.0% in LC
– Supported in particular by the successful launch of the Naída CI Q70 sound processor
– First year allowing to fully leverage the combined R&D strength of AB and Phonak
– Growth exceeding 50% in the second half, driven by system sales and processor upgrades
– Limited year-over-year impact of the China tender on the reported growth rate in 2H
– Encouraging margin progression
– EBITA of CHF 12.8 million, representing an EBITA margin of 6.6%
– Development in line with our long-term business plan
Business summary FY 2013/14
Cochlear Implants
Page 55May 2014
Key financials
Jump in profitability – On track with our financial targets
Cochlear Implants
in CHF million 1H 2013/14 Δ % in CHF 2H 2013/14 Δ % in CHF FY 2013/14 Δ % in CHF Δ % in LC
Sales 82.0 15.0% 113.3 50.2% 195.3 33.1% 36.0%
EBITA 0.1 n/m 12.8 n/m 12.8 n/m n/m
- EBITA margin 0.1% 11.3% 6.6%
Note: 2H 2013/14 and FY 2013/14 variances consider normalizations for FY 2012/13 one-off costs
Page 56May 2014
Sales – Growth components
Strong growth – Drawing from a complete portfolio
Cochlear Implants
in CHF million 1H 2013/14Growth
Contribution2H 2013/14
Growth Contribution
FY 2013/14Growth
Contribution
Growth in LC 11.6 16.2% 41.3 54.6% 52.8 36.0%
Currency effect -0.9 -1.2% -3.4 -4.5% -4.3 -2.9%
Growth as reported 10.7 15.0% 37.9 50.2% 48.6 33.1%
Page 57May 2014
– Sales of CHF 1,951 million – mainly driven by double-digit organic sales growth
– Gross Profit of CHF 1,340 million or 68.7% of sales – Gross profit margin affected by CI/HI mix effect
– Reported EBITA margin of 22.0% – expanding by 50 bps as reported and by 90 bps in LC
– FX headwind – reduces reported EBITA margin by 40 bps
– Good OPEX control – growth of 8.9% in LC compared to 11.7% sales growth in LC
– Continued investment in R&D – R&D spending of CHF 142.9 million or 7.3% of sales
– ROCE of 27.7% – staying on track towards our mid-term financial targets
– Basic EPS of CHF 5.08, up by 10.4% – held back by increase in minority interests (Boots)
– Operating free cash flow flat at 318.4 million – reflecting higher product liability spend (Vendor B)
– Cash out of CHF 150 million debt repayment, CHF 39 million treasury shares (equity program)
– Net cash increased to CHF 311.5 million – up CHF 125.7 million from March 2013
Financial highlights FY 2013/14
Sonova Group
Page 58May 2014
Strong financial performance
Getting one step closer to our mid-term financial targets
Sonova Group
in CHF million FY 2012/13 FY 2013/14 Δ % in CHF Δ % in LC
Sales 1,795.3 1,951.3 8.7% 11.7%
Gross profit 1,239.8 1,340.4 8.1% 11.3%
- Gross profit margin 69.1% 68.7%
OPEX -854.5 -910.3 6.5% 8.9%
EBITA 385.3 430.1 11.6% 16.7%
- EBITA margin 21.5% 22.0%
Operating free cash flow 318.6 318.4
EPS (in CHF) 4.60 5.08 10.4%
ROCE 22.6% 27.7%
Note: FY 2012/13 numbers and variances consider normalizations for FY 2012/13 one-off costs
Page 59May 2014
Group EBITA development – Year-on-year
Solid margin improvement driven by both segments
Sonova Group
EBITA2012/13
normalized
Organic Growth
EBITA(reported)2013/14
FX effect
EBITA2013/14
const. FX
430.1-19.6
385.3+63.4
+64.4+16.7%
+44.8+11.6%
Margin:21.5%
Margin:22.0%
+1.0
Acquisitions
449.7
Margin:22.4%
EBITA (reported) 2012/13
One-offcost
2012/13
+203.6
181.7
Margin:10.1%
Page 60May 2014
Group EBITA margin development – Mid-term
Continuous margin improvement towards our mid-term target
Sonova Group
FY 2011/12 FY 2012/13Operating margin
increasein LC
FXEffect
FY 2013/14FXEffect
Margin:19.5%
+140bps
+60 bps
Margin:21.5%
+90bps
-40 bpsMargin:22.0%
Operating margin
increasein LC
Note: FY 2012/13 numbers and variances consider normalizations for FY 2012/13 one-off costs
Page 61May 2014
Operating expenses
Underlying OPEX growth lower than top-line increase – Solid operating leverage
Sonova Group
in CHF million FY 2012/13 FY 2013/14 Δ % in CHF Δ % in LC
Research & Development -113.9 -125.7 10.3% 11.3%
in % of sales 6.3% 6.4%
Sales & Marketing -559.1 -589.6 5.5% 8.3%
in % of sales 31.1% 30.2%
General & Administration -181.5 -195.2 7.6% 9.4%
in % of sales 10.1% 10.0%
Other income / (expenses), net 0.0 0.2
Total OPEX -854.5 -910.3 6.5% 8.9%
in % of sales 47.6% 46.7%
Note: FY 2012/13 numbers and variances consider normalizations for FY 2012/13 one-off costs
Page 62May 2014
R&D spending
Continuing strong R&D investments drive innovation
Sonova Group
in CHF million / % of sales
107.8116.2 113.9
125.7
15.5
16.5 26.517.3
123.2
132.7140.4 142.9
7.6%
8.2%
7.8% 7.3%
6.7%7.2% 6.3%
6.4%
2010/11 2011/12 2012/13 2013/14
AB capitalized development costs (net of amortization) R&D costs charged to the P&L
Page 63May 2014
Reported results and income taxes
Sonova Group
in CHF million FY 2012/13 FY 2013/14 Δ % in CHF
EBITA 385.3 430.1 11.6%
Amortization / Impairment -26.1 -26.1 -0.2%
Operating profit (EBIT)in % of sales
359.220.0%
404.020.7%
12.5%
Financial result -7.1 -9.5 33.2%
Income before taxes 352.1 394.6 12.1%
Income taxes -44.3 -47.2 6.5%
- Income tax rate 12.6% 12.0%
Income after taxesin % of sales
307.717.1%
347.417.8%
12.9%
Note: FY 2012/13 numbers and variances consider normalizations for FY 2012/13 one-off costs
Page 64May 2014
Significant free cash flow
Sonova Group
in CHF million FY 2012/13 FY 2013/14 Δ % in CHF
Cash flow before changes in NWC (incl. taxes paid) 401.5 452.1 12.6%
Changes in net working capital -14.4 -41.1
Cash flow from operating activitiesin % of sales
387.121.6%
411.021.1%
6.2%
Cash flow from investing activities (excl. acquisitions) -68.5 -92.6 35.2%
Operating free cash flowin % of sales
318.617.7%
318.416.3%
0.0%
Cash consideration for acquisitions -56.2 -29.8 -46.9%
Free cash flow 262.4 288.6 10.0%
Cash flow from financing activities -21.8 -309.1
Changes in cash and cash equivalents 242.8 -24.8
Cash outflow from provisions for product liability claims(included in Cash flow from operating activities)
-2.9 -43.4
Page 65May 2014
Maintaining a solid balance sheet
Sonova Group
in CHF million FY 2012/13 FY 2013/14 Δ % in CHF
Net working capital 187.1 190.6 1.8%
Days sales outstanding (DSO) 71 69 -2.8%
Days inventory outstanding (DIO) 148 140 -5.6%
Capital employed 1,455.5 1,462.9 0.5%
Net cash 185.8 311.5 67.7%
Equity 1,641.3 1,774.4 8.1%
Equity in % of total assets 61.2% 68.4%
Page 66May 2014
Dividend – Proposed increase by 19% to CHF 1.90
Proposed dividend represents a payout ratio of 37%
Sonova Group
0.50
0.75
1.00 1.00
1.20 1.20 1.20
1.60
1.90
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Dividend / distribution development in CHF per share
Page 67May 2014
6. Outlook FY 2014/15
On course for mid term financial targets
Outlook FY 2014/15
Notes: FY 2007/08 Excluding one-off cost for the prohibited acquisition of the GN ReSound GroupFY 2009/10 Restated based on finalization of the acquisition accounting of Advanced BionicsFY 2012/13 Excluding one-off cost for AB Vendor B provision at AB, AB Rixheim restructuring and settlement with a group of investors
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
EB
ITA
Ma
rgin
/ R
OC
E (
%)
Sa
les (
in C
HF
mill
ion
)
Sales EBITA Margin (%) ROCE (%)
Page 69May 2014
FY 2014/15 guidance
Outlook FY 2014/15
Page 70
Actual
FY 2013/14Guidance
FY 2014/15
Sales growth in LC
thereof acquisition related growth
FX-impact
Total sales growth in CHF
11.7%
0.7%
-3.0%
8.7%
7%-9%
approx. 1%
EBITA growth in LC
EBITA FX-impact
Total EBITA growth in CHF
16.7%
-5.1%
11.6%
11%-15%
Sales
May 2014
FX impact on sales and margins
USD and EUR account for roughly two thirds of the overall FX exposure
Outlook FY 2014/15
USD/CHF EUR/CHF
Rate Sales EBITA
USD/CHF +/- 5% +/- CHF 40 million +/- CHF 14 million
EUR/CHF +/- 5% +/- CHF 25 million +/- CHF 15 million
Page 71May 2014
FX rates – Main currencies accounted for around 90% of Group sales
EBITA growth in CHF 8 – 12% – At current FX conditions / including mitigation efforts
Outlook FY 2014/15
FY-12/13 1H-13/14 2H-13/14 FY-13/14 EffectSpot
May 2014
USD 0.94 0.94 0.90 0.92 - 0.89
EUR 1.21 1.23 1.23 1.23 - 1.22
GBP 1.48 1.45 1.47 1.46 + 1.50
CAD 0.94 0.91 0.84 0.87 - 0.82
AUD 0.97 0.89 0.82 0.86 - 0.83
BRL 0.47 0.43 0.39 0.41 - 0.40
JPY 100 1.14 0.95 0.88 0.92 - 0.88
USD
EUR
GBP, CAD, BRL, AUD and JPY
Other
Page 72May 2014
Thank you very much
