Sonova suffers loss of major US contract Ramadan rejects rape – and presents herself as a victim

In the past fiscal year 2022/23, Sonova lost a major supply contract with one of the largest customers in the US. Although turnover increased in this context, net profit fell slightly. Shareholders should now receive a higher dividend.

Sales increased by about 11 percent to CHF 3.74 billion in the fiscal year ending March, the group announced on Tuesday. The momentum of the global hearing aid market had already slowed in the first half of the year due to the difficult macroeconomic environment. The Phonak producer from Stäfa in the canton of Zurich also noticed this in the second semester.

However, the result was significantly affected by the non-renewal of the contract with the major US customer, writes Sonova. The unnamed company is wholesale chain Costco, according to analysts.

The loss of the contract was only partially offset by positive growth in deliveries to the US Department of Veterans Affairs, where the Swiss hearing aid manufacturer continues to hold a leading position.

“Solid” result

Sonova itself speaks in the communiqué of a “solid result”, even if the original expectations for the year could not be met. The company continued its own growth strategy and launched a number of new products, including the Phonak Lumity hearing aid platform.

In the Consumer Hearing segment, Sonova has also launched the Sennheiser Conversation Clear Plus Earbud. Finally, price increases were successfully implemented “to offset inflationary pressures”.

In this context, however, adjusted operating profit EBITA fell slightly by 0.5 percent to 840.4 million. The result was a 0.8 percent lower net profit of 658.3 million. The expectations of the analysts polled by the AWP news agency were not entirely fulfilled.

With these values, Sonova just reached its own target range. As previously announced, the results achieved were at the lower end of the forecast band.

Despite the headwind Sonova has felt, shareholders should once again benefit from a slightly higher dividend. The payout should be CHF 4.60 per share certificate (last year CHF 4.40).

However, Sonova does not intend to buy back its own shares. Sonova cited the level of debt as the reason. At the end of last fiscal year, this was at the top end of our own target corridor.

The loss of a US customer continues to have an impact

Looking ahead, Sonova aims to grow 3 to 7 percent in consolidated sales and 6 to 10 percent in underlying EBITA in 2023/24, assuming constant exchange rates.

The development in the first half of the financial year was negatively impacted by a higher comparison base in the previous year and by the effects of the termination of the contract with the US customer. These factors would then disappear at the end of the first half of the financial year.

Therefore, significantly lower revenue and adjusted EBITA growth is expected in the first half of fiscal year 2023/24 than in the second half, measured at constant exchange rates. (oee/sda/awp)