Sonova slowed down by exchange rates
Published: Tuesday, Nov 21st 2023, 11:31
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The loss of a major contract in the US and the strong franc: Swiss hearing aid manufacturer Sonova can look back on a difficult first half of the 2023/24 financial year. Nevertheless, the share price reacts with gains on the stock market.
As expected, Sonova grew only modestly in the half-year to the end of September - in local currencies. In Swiss francs, the result was significantly negative, as the appreciation of the local currency weighed heavily on the result.
Reported sales fell by around 5 percent to 1.75 billion Swiss francs, as the company known for the Phonak brand announced on Tuesday. Exchange rate developments reduced sales by just under 124 million.
Operating profit even fell by around 12 percent to 350.0 million. The bottom line was a significantly lower net profit of 249.6 million (previous year: 296.2 million).
In addition to exchange rates, the loss of a major US customer put a damper on business. The large retail chain Costco no longer sells hearing aids from the Swiss provider. It previously did so under its own brand, for which it relied on devices from the industry leader.
Lower operating profit expected
The weak first half-year now has consequences for the forecast for the year as a whole. Looking ahead and assuming constant exchange rates, Sonova aims to achieve consolidated sales growth of 3 to 7 percent as before. However, the forecast for operating profit has been lowered. Sonova is still aiming for an increase of 4 to 8 percent (previously: 6-10%).
For this forecast to be fulfilled, however, Sonova's business must accelerate significantly. According to the company's CEO Arnd Kaldowski, the signs are there. A clear recovery began at the end of the first half of the year, he told the news agency AWP.
Because it is difficult to anticipate exchange rate fluctuations, the forecast is made in local currencies, he emphasized. And at least in these currencies, Sonova clearly expects a further recovery in the global hearing aid market. "The recovery in North America is one step ahead of that in Europe," he said.
In addition, the basis for comparison in the second half of the year will no longer be affected by the loss of a major order from the USA, emphasized Kaldowski. Finally, he also expects momentum from the latest product launches based on the Lumity hearing aid platform. These products have led to a noticeable increase in customer satisfaction.
Share clearly up
The stock market seems to believe Kaldowski's promises. At 11 a.m., Sonova shares were trading 5.7 percent higher at CHF 247, with the high for the day well above CHF 250.
Analysts are somewhat more critical. It remains to be seen whether Sonova can really realize the improved momentum, wrote the analyst at Zürcher Kantonalbank. After all, the Danish competitor Demant is doing very well at the moment. And GN Store Nord and WS Audiology - also two important players in the industry - have just launched new products.
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