Annual Report 2010/11 - Sonova
Annual Report 2010/11 - Sonova Annual Report 2010/11 - Sonova
2 an eventFul year lieS beHind uS Dear shareholders The financial year 2010/11 was an eventful year for us – both in a positive and negative way. On the positive side, we achieved a number of successes. The highlight was undoubtedly the successful launch of our highest-performing generation of hearing instruments under the Phonak brand, based on the new Spice platform technology. We celebrated the opening of our new high-tech production facility in Stäfa, attended by Federal Councillor Doris Leuthard, marking the beginning of a new era in production. With the launch of the revolutionary Lyric product concept in key markets outside the USA, we have taken a major step forward in tapping new potential in the hearing instrument market. On the other side, we had to take set-backs for the Advanced Bionics hearing implants and saw ourselves confronted with insider trading allegations in the context of the profit warning in March 2011. Overall, the Sonova Group achieved record sales of CHF 1.617 billion in a solid market environment in the financial year 2010/11. This corresponds to a 13.3% growth in local currencies, or 7.8% in Swiss francs. Operating profit (EBITA) was CHF 326.6 million, 22% below the previousyear level. The EBITA margin fell to 20.2% (considering the one-off costs resulting from the March 2011 events), mainly a result of the strong Swiss franc as well as the recall of and temporary selling freeze on Advanced Bionics products. Growth in the hearing instruments core business Our core business, the hearing instruments segment, again performed well, with growth of 10.1% on a currencyadjusted basis. Sonova is in a strong position in this segment thanks to its latest innovations. The launch of the new Spice platform was a key milestone last year. The chip generation unveiled in fall 2010 sets new standards in terms of processing power and performance. Phonak launched a comprehensive product portfolio in late fall 2010, enabling improved understanding in all sound environments across all segments and degrees of hearing loss. Unitron also launched its product range based on the new platform technology in spring 2011, and will contribute to growth under new management. With investments in the market launch of Lyric, the only invisible hearing instrument that can be worn for up to four months at a time, under the Phonak brand in the financial year 2010/11, we have put in place a platform to better tap the potential of the mild to moderate hearing loss market in key markets outside the USA. Expansion of the hearing implants segment The market for implants offers considerable potential with anticipated annual growth of 10–15% and will become more important for the Sonova Group going forward. The appointment of a Group Vice President Medical reflects the growing importance of this business as we consolidate our medical competence at Group level. Through the next product generation and the expansion of the international presence of Advanced Bionics, we are creating the conditions to achieve above-average growth over the next few years, thereby returning this segment to profitability. Unexpected set-backs and turbulences Despite record sales Sonova faced some challenges last year. Advanced Bionics’ voluntary cochlear implant recall in November 2010 impacted sales and delayed the planned expansion of the hearing implant segment. The recall led to lost sales and profitability in the current financial year, and a one-time non-cash goodwill impairment posted in the 2009/10 financial year. The profit warning in March 2011, the preceding management transactions in shares and options, plus the allegation of insider trading not only triggered a major fall in share price, but also caused uncertainty and a loss of confidence among our investors, partners and employees. We would like to apologize unreservedly for this. The Board of Directors responded promptly to the turbulences. It launched an independent investigation and created a task force to establish and ensure compliance with internal processes, so as to avoid a repetition of these events. Sonova will give its full support to the ongoing investigations by the SIX Exchange Regulation and the District Attorney. Management changes As a consequence of the investigation CEO Valentin Chapero and CFO Oliver Walker tendered their resignations. The Chairman of the Board of Directors Andy Rihs also stepped down, as he felt that he shared responsibility given his position. The Board of Directors has appointed Alexander Zschokke and Paul Thompson as interim CEO and CFO, respectively. Both are longstanding members of management at Sonova: Alexander Zschokke as Head of Marketing and Channel Solutions since 2006, and Paul Thompson as CFO
from 2002 to 2004 and subsequently Head of Corporate Development. In terms of strategy, we will continue on our path to becoming the global hearing care company, with the aim of helping as many people as possible, wherever they are in the world, to hear better and thus improve their quality of life. Unaltered solid balance sheet With low net debt of CHF 111.3 million and an equity financing ratio of 61.9%, Sonova remains in a solid financial position. This position builds the basis for the next steps towards future growth and continued investments into research and development as well as our distribution channels. Recommended distribution of CHF 1.20 The Board of Directors will propose a distribution of CHF 1.20, without withholding taxes, per share from the capital contribution reserve. This equals a payout ratio of 25%, excluding one-off effects. Outlook 2011/12 We expect to achieve solid growth in the hearing instruments segment in the coming year. Even though the Advanced Bionics products will gradually return to the market following the recent TÜV certification, the forecast of the hearing implants segment is dependent upon the timing of reentry into the U.S. market. We expect overall sales in 2011/12 to be slower in the first half of the financial year because of reduced sales by Advanced Bionics. Furthermore, the strong Swiss franc will continue to adversely impact the sales and earnings growth of the full year. We would like to take this opportunity to express our gratitude to you, our shareholders, your interest in Sonova and your loyalty in a year that saw many successes, but also several difficult situations. We would also like to thank all our employees. They have made Sonova a global leader and their commitment allows us to continue our pursuit of our mission and goals, even in these eventful times. Robert Spoerry Chairman of the Board of Directors Alexander Zschokke Interim CEO
- Page 1 and 2: THE HEARING CARE COMPANY All the So
- Page 3 and 4: highLightS & Key figureS - New sale
- Page 5: 02 Foreword 06 Sonova Group 16 Hear
- Page 9 and 10: eaKinG barrierS - with talent and t
- Page 11 and 12: ON THE WAY TO BECOMING A GLOBAL HEA
- Page 13 and 14: and a global distribution network e
- Page 15 and 16: THE SONOVA GROUP No hearring loosss
- Page 17 and 18: Better hearing for people with norm
- Page 19 and 20: StraiGHt From real liFe - cowboy ha
- Page 21 and 22: THE HEARING INSTRUMENT MARKET - CON
- Page 23 and 24: THE PHONAK SPICE GENERATION - THE S
- Page 25 and 26: WIDE RANGE OF HEARING INSTRUMENTS T
- Page 27 and 28: LYRIC - THE “CONTACT LENS FOR THE
- Page 29 and 30: Sonova is investing heavily in the
- Page 31 and 32: Eight years later, Evelyn almost co
- Page 33 and 34: THE HEARING IMPLANTS SEGMENT In the
- Page 35 and 36: The considerable strategic importan
- Page 37 and 38: ABOUT ADVANCED BIONICS Advanced Bio
- Page 39 and 40: worKinG - and communicating safely
- Page 41 and 42: EMPLOYEES FOCUS ON PEOPLE One of th
- Page 43 and 44: ISO 9001:2000 and 13485:2003 certif
- Page 45 and 46: The key environmental data shown in
- Page 47 and 48: ENVIRONMENTAL MANAGEMENT AT THE ST
- Page 49 and 50: CAMBODIA - BETTER OPPORTUNITIES FOR
- Page 51 and 52: Better hearing - better success at
- Page 53 and 54: in critical moments. As a consequen
- Page 55 and 56: CrOSS-SHArEHOLDInGS Sonova Holding
from 2002 to 2004 and subsequently Head of Corporate<br />
Development. In terms of strategy, we will continue on<br />
our path to becoming the global hearing care company, with<br />
the aim of helping as many people as possible, wherever<br />
they are in the world, to hear better and thus improve their<br />
quality of life.<br />
Unaltered solid balance sheet<br />
With low net debt of CHF <strong>11</strong>1.3 million and an equity financing<br />
ratio of 61.9%, <strong>Sonova</strong> remains in a solid financial position.<br />
This position builds the basis for the next steps towards<br />
future growth and continued investments into research and<br />
development as well as our distribution channels.<br />
Recommended distribution of CHF 1.20<br />
The Board of Directors will propose a distribution of CHF 1.20,<br />
without withholding taxes, per share from the capital<br />
contribution reserve. This equals a payout ratio of 25%,<br />
excluding one-off effects.<br />
Outlook 20<strong>11</strong>/12<br />
We expect to achieve solid growth in the hearing instruments<br />
segment in the coming year. Even though the Advanced<br />
Bionics products will gradually return to the market following<br />
the recent TÜV certification, the forecast of the hearing<br />
implants segment is dependent upon the timing of reentry<br />
into the U.S. market. We expect overall sales in<br />
20<strong>11</strong>/12 to be slower in the first half of the financial year<br />
because of reduced sales by Advanced Bionics. Furthermore,<br />
the strong Swiss franc will continue to adversely<br />
impact the sales and earnings growth of the full year.<br />
We would like to take this opportunity to express our<br />
gratitude to you, our shareholders, your interest in <strong>Sonova</strong><br />
and your loyalty in a year that saw many successes, but<br />
also several difficult situations. We would also like to thank<br />
all our employees. They have made <strong>Sonova</strong> a global leader<br />
and their commitment allows us to continue our pursuit of<br />
our mission and goals, even in these eventful times.<br />
Robert Spoerry<br />
Chairman of the<br />
Board of Directors<br />
Alexander Zschokke<br />
Interim CEO
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