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UPDATE 1-Sonova cuts forecasts as cochlear implant sales disappoint
November 16, 2015 / 9:12 AM / 2 years ago

UPDATE 1-Sonova cuts forecasts as cochlear implant sales disappoint

* Sees FY sales growing 6-8 percent vs 7-9 percent

* EBITA seen up 3-7 percent vs previous forecast of 9-13 pct

* Shares down 8 percent (Adds share fall, detail about Veterans Affairs sales and analyst comment)

By John Miller

ZURICH, Nov 16 (Reuters) - Hearing aid maker Sonova has cut its sales and profit forecasts after weak cochlear implant sales, sluggish business with U.S. veterans and a squeeze on overseas earnings from the strong Swiss franc, sending its shares sharply lower.

It now expects sales to grow by between 6 and 8 percent in the full-year 2015/2016, down from 7 to 9 percent, and growth of earnings before interest, taxes and amortisation of 3 to 7 percent, from a previous forecast of 9 to 13 percent.

Chief Executive Officer Lukas Braunschweiler said the last decade’s explosive growth in paediatric cochlear implants had “normalized”, while sales to adults hadn’t accelerated as Sonova and its largest competitors including Cochlear and Med-el had anticipated.

“That transition takes some time,” Braunschweiler said. “We think it’s a year, or two, where we see the market more in the mid-single-digit growth, then we should get again acceleration toward the high single digits.”

The shares were down 8 percent at 123.2 francs by 0839 GMT, hitting their lowest in nearly two months.

Analysts noted lower hearing-aid sales to the Department of Veterans Affairs (VA), the biggest U.S. hearing aid buyer.

“The cochlear implants business ... performed even worse than expected,” wrote J. Safra Sarasin analysts. “We are also concerned by the weakness in the VA business.”

Sales in the first half of Sonova’s reporting period rose 1.3 percent to 1 billion francs ($995 million), while EBITA slipped 9.3 percent to 195.5 million.

Income after tax was 157.3 million francs, down from 173.6 million and well off the 173 million francs expected by analysts in a poll. Sonova set aside nearly 8 million francs for increased warranty provisions.

Braunschweiler said results were also dented by a significant decline in currencies in which it does a third of business, including the Brazilian real, Turkish lira and the Canadian dollar, versus the Swiss franc.

“We didn’t hedge enough on these currencies,” he said. “Usually, they haven’t been a big factor. But now, they’ve become a big factor.” ($1 = 1.0051 Swiss francs) (Editing by David Holmes)

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