July 6, 2020 / 5:52 AM / a month ago

UPDATE 2-Sonova sees partial recovery in H1, announces job cuts

(Adds CEO comments from call)

By Zuzanna Szymanska

July 6 (Reuters) - Sonova, the world’s biggest hearing aid maker, said on Monday it would close some stores and cut jobs as it expects its first-half results to only partially recover from the effects from the COVID-19 pandemic.

The pandemic hit hearing aid makers worldwide as many of their customers are over 70 and have been isolating at home to avoid catching COVID-19, the flu-like infection caused by the virus.

Sonova will reduce 4-5% of the jobs it had at the end of March by the end of the fiscal year, CEO Arnd Kaldowski told Reuters.

“We are already part of the way done because in the first quarter, we did not back fill a lot of positions,” Kaldowski said.

In the first three months of 2020, Sonova cut working hours and froze hiring.

The restructuring will cost 40-60 million Swiss francs ($42-64 million) this financial year and lead to annual savings of 50-70 million Swiss francs once the reorganisation is finished, Sonova said in a statement.

The Swiss company said it expects first-half sales to fall by 25-35% at constant exchange rates, compared to a decline of 36% expected on average by analysts in a Vara Research poll.

Its earnings before interest, taxation and amortisation (EBITA) margin should be in the single digits, in line with the consensus.

Kaldowski added the guidance takes into account Sonova’s first-quarter revenue drop of between 25% in Asia-Pacific and 50% in the United States, where Sonova generates a third of its revenue.

Sonova said it remains cautious about a recovery in the second half of the year due to a rise in infections in several markets and the impact of recession on overall demand.

Research and development activities will continue according to plan, the company said.

$1 = 0.9426 Swiss francs Reporting by Zuzanna Szymanska in Gdansk; editing by Shri Navaratnam and Jason Neely

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