* Sonova’s shares drop most in two years
* H1 results miss analyst expectations
* H1 dented by U.S. overhaul of retail network (Adds analyst, CEO comments, detail, background, shares)
By John Miller
ZURICH, Nov 13 (Reuters) - Sonova’s shares dropped their most in two years on Monday after first-half results missed analysts’ expectations, with sales in the United States dented by an overhaul of the Swiss hearing aid maker’s retail network there.
Profit after minority interests rose 15.6 percent to 173.1 million Swiss francs ($173.8 million), missing the 180 million francs average forecast by analysts in a Reuters poll.
Sales rose 17 percent to 1.25 billion francs, also shy of the 1.29 billion forecast.
Staefa, Switzerland-based Sonova has bulked up in Europe with its nearly $1 billion acquisition of Netherlands-based hearing aid retailer AudioNova last year. Still, it is rebuilding in the United States, its second biggest market, as it streamlines retail outlets.
Chief Executive Lukas Braunschweiler sees the U.S. retail business strengthening in the second half, with a return to more robust numbers next fiscal year after spinning off non-core retail locations and focusing on specific markets.
“We are regrouping,” he said in an interview. “I think we’re going to see growth in (U.S.) retail starting in the next fiscal year.”
Sonova’s broader push into retail via its AudioNova acquisition in 2016 has also changed business patterns, he said, with fiscal first-half sales more sluggish and then growing more briskly during the winter months.
“The group, with the strong position in retail, has become much more seasonal,” said Braunschweiler, who steps down next April to be replaced by Arnd Kaldowski.
“It’s always been like that, but it’s even more pronounced now.”
Sonova confirmed its full-year outlook, with consolidated sales in local currencies seen growing by 10 percent to 12 percent and normalized earnings before interest, taxes and amortisation to rise by 10-14 percent, excluding one-time costs linked to the AudioNova purchase.
The shares fell 7.1 percent in early trade, trimming their gain this year to 26 percent.
Analysts blamed the market reaction on sluggish organic sales growth, more exposure to lower-margin retail, and a loss-making cochlear implants business that was hurt, among other things, by low prices on a Chinese tender offer it won.
“The miss was primarily driven by retail and implants,” said Maja Pataki, a Kepler Chevreux analyst. “The former hardly generated any organic growth, while the latter once again failed to deliver profits.”
Braunschweiler acknowledged scant Chinese margins, but said Sonova must participate in such tenders to strengthen its hospital presence and win exposure for its profitable private business.
“If you’re not bidding,” he said, “they are not happy with you.”
$1 = 0.9960 Swiss francs Reporting by John Miller; Editing by Louise Heavens and Mark Potter