Annual Report 2005/06 THE WORLD OF SOUND - Sonova

MARKETSGeneral market developmentThe estimated global hearing instrument market growth in2005/06 was 5%–7%, of which 1%–2% stemmed from increasesin average selling prices. Sales prices were increasing due to astrong high-end segment, which is driven by innovation, anda dynamic low-end segment, driven by the replacement of analogproducts by digital products. All key markets grew more or lessin line with the above mentioned average market growth rate.Group sales by product typeBoth brands of hearing instruments, Phonak and UnitronHearing, contributed to the expansion of sales. Behind-the-Ear(BTE) products remained very strong, supported by the newmicro hearing systems for open fitting. In addition, wirelesscommunication systems again delivered consistently highgrowth, demonstrating their solid market position.OutlookThe Phonak Group expects to outgrow the hearing instrumentmarket once again, due to:- having a comprehensive product range, which is continuouslyrejuvenated- providing superior, innovative and easy-to-use products- extending its support and service offering- expanding its distribution channelsIn 2006/07, we intend to further strengthen our salesorganizations and expand our distribution network in EasternEurope, Latin America, India, and Asia especially.Group sales by geographic regionThe Phonak Group continued to increase its global marketshare as sales developed favorably in all key markets. The UnitedStates and the biggest Western European markets made thelargest contribution to our growth. We also made progress inbuilding up our market positions in Japan and China, eventhough our operations in these countries have not been establishedfor very long and business volumes are still comparativelymodest.Latest developmentsThanks to our stronger sales organizations, intensifiedmarketing efforts and excellent product offerings, the PhonakGroup once again managed to attract many new clients andsignificantly expand its customer base. In 2005/06, sales to keyaccounts increased further as a result of closer cooperationwith these industry players. We continued to ramp up our retailpresence in China, a potentially huge market. Our purchase of acontrolling interest in CAS Produtos Médicos Ltda., the Brazilianmarket leader in hearing instrument distribution, as well asa number of smaller acquisitions, significantly extended thegeographic reach of our global sales network, as planned.Markets9