Annual Report - Sonova Holding AG

CEO’S COMMENTS
In 2005/06, we made major progress towards our goal of
transforming the Phonak Group into the most successful company
in the hearing instrument industry. Once again, we managed
to significantly expand our market share and set new standards
with our innovative hearing systems. Our excellent business
performance is to a large extent due to the consistent execution
of our strategy to promote product innovation and to expand
our global distribution network. In addition, we have delivered
much stronger financial results, so that we are already close
to achieving the mid-term targets we set out in 2005.
Starting from the record level of last year, we again increased
sales by another 31.2% to CHF 866.7 million. Internal
growth – measured in local currencies and without taking
into account acquisitions – came to 23.8%. As a result of improved
product mix and operational efficiencies, our gross
profit margin climbed by 3.3 percentage points to reach 66.6%.
In addition, the operating profit (EBIT) increased by 68.3%.
The EBIT margin was increased to 24.4% compared to 19.0% in
the previous financial year, underlining the overproportional
profit growth. Assisted by a positive financial result and
a lower tax rate, earnings per share (on a diluted basis)
climbed 79.1% to a record level of CHF 2.57.
The importance of product innovation for our commercial
success was once again demonstrated by the overwhelming
market acceptance of our new Savia product line, which was
complemented by the launch of microSavia in January 2006.
This success had a positive impact on two other product launches:
eXtra, the new digital economy product line, and Eleva in the
mid price segment. These two lines will generate further growth
in the coming financial year. In 2006/07, three very promising
hearing instruments have been introduced into the market:
Verve, microPower, and Indigo.
During 2005/06, we continued to expand our existing sales
organizations and develop new markets. Our purchase of a
controlling interest in CAS Produtos Médicos Ltda., the Brazilian
market leader in hearing instrument distribution, significantly
boosted our market presence in Latin America. In Eastern Europe
we acquired our previously independent distribution partner in
Poland. In 2006/07, the Phonak Group has further strengthened
its market position by acquiring Canada’s leading distributor of
hearing devices, Island Hearing Services.
In the future, we expect further sales growth, increased
market share, improved financial strength, and attractive
returns on investments. The Phonak Group is in excellent shape:
we have the strongest product portfolio of the hearing instrument
industry and can rely on a full product pipeline. In addition,
we will continue to work hard to further develop the Group in
the areas of human resources, organization and processes, thereby
building a strong base for sustained growth. To accomplish
these objectives, we will focus on the continuous improvement
of product functionality and increased customer benefits. Other
priorities include further strengthening of our distribution
channels.
The great success of the Phonak Group is mainly the result
of the dedication, commitment, and great team spirit of our
employees. We have a unique corporate culture that has enabled
us to smoothly complete the fast transformation process of
recent years. Our clear, sustainable strategy is supported by highly
skilled and motivated staff and creates the foundation for a
very promising future. I would like to thank each one of our employees
for their hard work, commitment, and loyalty to the
company. Without them, such excellent results would have been
impossible.
I also want to express my thanks to all our customers,
suppliers, partners, and shareholders for their important contribution
to the success of the Phonak Group.
Dr. Valentin Chapero Rueda
CEO
CEO’s Comments
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