* CEO says sales stabilise in Germany
* AudioNova acquisition boosted sales
* VA demand driven by rechargeable technology (Recasts to focus on German reaction to AudioNova acquisition, adds CEO, analyst comment)
ZURICH, May 16 (Reuters) - Swiss hearing aid maker Sonova on Tuesday reported a 3 percent rise in full-year profit and said a hit to sales in Germany related to its near-$1 billion purchase of retailer AudioNova last year had eased in the second half.
Sonova bought AudioNova last year to expand its network of company-owned retail outlets, but the acquisition prompted a backlash among hearing aid retailers in Germany upset by the addition of a strong manufacturer-owned competitor. The hit to revenue was most pronounced in the first half, but has eased since then.
“We definitely had a stabilisation in Germany,” Chief Executive Lukas Braunschweiler said in a telephone interview, adding the company has been helped by new products including hearings aids with rechargeable lithium-ion batteries.
Income for the 2016/17 year rose to 356.2 million Swiss francs ($358 million), the company said, up from 345.8 million francs in the previous year.
Sales rose 15.3 percent to 2.4 billion francs, it said, largely in line with analyst expectations.
For the full year, Europe accounted for 48 percent of Sonova sales, with Germany a key target market for the company’s retail expansion strategy. The United States made up 33 percent of sales, with Asia-Pacific at 10 percent.
Sonova, which sells its hearing aids under brand names such as Phonak, now plans to boost its dividend to 2.30 francs per share, up 9.5 percent.
The shares rose 1.3 percent at 0720 GMT. They have gained 24 percent this year.
“Sonova’s organic growth rate clearly accelerated in the second half,” analysts from Vontobel wrote in a note. “This acceleration was driven by the launch of the rechargeable hearing aids and the launch of the new cochlear implant.”
Cochlear implant sales rose nearly 10 percent to 205 million francs.
In the United States, Braunschweiler said Sonova expanded its 45 percent market share with the U.S. Veterans Administration (VA), the U.S. agency that oversees medical care for former members of the armed services. A driver for VA demand was the new rechargeable hearing aids, he said.
“Over 10 percent of total purchases per month of Veterans Affairs are already related to our rechargeable technology,” Braunschweiler said. “They love it.”
Sonova competes for VA business with rivals including Denmark’s William Demant, which also said this month that it gained market share with the VA.
For the current year, Sonova expects consolidated sales to grow by 10 percent to 12 percent and normalised earnings before interest and taxes (EBITA) to rise by 10 percent to 14 percent, both measured in local currencies.
The company also stuck by its mid-term target to grow EBITA between 7 percent and 11 percent in local currencies.
$1 = 0.9951 Swiss francs Reporting by John Miller; Editing by Michael Shields and Jane Merriman