ZURICH (Reuters) - Swiss hearing aid maker Sonova’s (SOON.S) shares fell on Tuesday as first-half restructuring charges hit profitability, taking the shine off its higher forecast for the full-year.
Sonova Chief Executive Arnd Kaldowski told Reuters that the restructuring hit of 15.5 million Swiss francs (£12 million) resulted from several initiatives.
These included combining back office activities for U.S. retail and wholesale in Chicago; slimming down management and call centres in Germany and investing in “centres of excellence” in Canada and Poland.
“We allowed ourselves to use the half year to accelerate a couple of growth investments,” Kaldowski said in a telephone interview, adding: “One should assume over the next one to two years continued efforts like this”.
Kaldowski said the changes should eventually result in annual savings of about 10 million Swiss francs.
Sonova, the world’s largest producer of hearing aids, said in a statement that it expects its fiscal year 2019/20 sales to grow by 8-10%, up from the previous 6-8% forecast.
Adjusted earnings before interest, taxes and amortisation (EBITA) are now seen rising 12-15%, above its previous forecast of 9-13%, the company said in a statement.
Sonova’s first-half EBITA of 264 million francs was up from 255 million francs a year ago, but short of the forecast of Zuercher Kantonalbank analyst Sibylle Bischofberger.
“The operating profitability didn’t quite live up to expectations,” Bischofberger wrote in a note to investors. “The reason was the restructuring, which neither we nor other analysts had built into their numbers.”
Sonova’s shares fell 4.8% at 0830 GMT, trimming their 47% rise since the start of 2019.
First-half net income rose to 358 million francs from 193.4 million in the year-ago period primarily because the company booked gains from tax changes in Switzerland.
Sales rose 12% in local currencies to 1.43 billion francs, helped as Sonova sold more than a million of its newest hearing aids, called the Marvel, in its first 10 months on the market.
Kaldowski said this was Sonova’s “most successful launch ever” and had helped it gain market share against rivals including Danish hearing aid maker Demant (DEMANT.CO), which cut its outlook after a cyber attack in September.
Reporting by John Miller; editing by Brenna Hughes Neghaiwi and Alexander Smith