Sonova lowers outlook for full year after profit decline
Published: Tuesday, Nov 21st 2023, 07:50
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Hearing aid manufacturer Sonova suffered a decline in both sales and net profit in the first half of its 2023/24 financial year. The development was negatively impacted by the loss of the contract with the US retail chain Costco and by exchange rates. The outlook for the year as a whole has now been lowered.
Specifically, sales fell by 5.1 percent to 1.75 billion Swiss francs in the first half of 2023/24 (as at September 30), as the Group known for the Phonak brand announced on Tuesday. Exchange rate developments had a significant negative impact, reducing reported sales by almost 7 percent. In local currencies, sales would have grown by 1.6 percent according to Sonova.
Operating profit (EBITA adjusted) fell by around 12% to 350.0 million. Here too, a slight increase of 2.5% was achieved in local currency terms.
At the bottom line, net profit was also significantly lower at 249.6 million (previous year: 296.2 million). Analysts' expectations (AWP consensus) were therefore just about met. They had anticipated the corresponding decline quite accurately.
Loss of major US customer
As is well known, the Swiss group's most important business is the manufacture and sale of hearing aids. As is already known, this suffered from the loss of a "major US customer", as Sonova itself wrote. Although the company does not name the customer, it is the Costco retail chain.
The company no longer sells hearing aids from Sonova. It does so under its own brand, for which it relies on devices from the Swiss industry leader. Costco also continues to sell branded products, but none from Sonova.
Nevertheless, the audiological care business has "developed strongly", Sonova wrote. This is how the Stäfa-based group describes its own retail network. Here, sales rose by almost 12 percent in local currencies. However, this growth only partially offset the non-renewal of the Costco contract and other operational challenges.
Forecast for 2023/24
Looking ahead, Sonova aims to achieve consolidated sales growth of 3 to 7 percent in the 2023/24 financial year as a whole, assuming constant exchange rates. This target was already known and has now been confirmed.
However, the forecast for operating profit has been lowered. Sonova is now aiming for an increase of 4 to 8 percent (previously: 6-10%). This implies a continued positive margin trend in the second half of the financial year, the company emphasized.
Sonova would then also like to grow more strongly again, with "the continued strong development in the audiological care business, the further recovery of the hearing aid market and the improved business performance in the hearing aid business providing a solid basis for a significant acceleration in sales growth".
"After an expectedly slow start, we were able to record a significant acceleration over the course of the first half of the financial year," CEO Arnd Kaldowski was quoted as saying in the press release. The strategy continues to focus on gaining market share and increasing profitability in the long term.
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