Launch costs hit Sonova's profit, as it bets on new product with AI tech (updated)
19/11/2024 10:07
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Sonova confirms FY targets, sees higher profitability in
H2
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Bets on new hearing aid with AI to regain market share
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Initiates cost measures to prop profits as launch costs
weigh
(Adds graphic, cost measures in paragraph 3, shares in
paragraph 4, CEO comments in paragraphs 6, 11, context in
paragraph 12)
By Amir Orusov and Anastasiia Kozlova
Nov 19 (Reuters) - Sonova SOON.S reported half-year
core profit below market expectations on Tuesday, hit by costs
related to the launch of its new AI-boosted hearing device which
it is betting on to regain market share.
The world's largest maker of hearing aids reaffirmed its
targets for the year through March 2025 and projected
significantly higher profitability in the second half of it,
buoyed by stronger sales and easing launch costs.
However, it said it was initiating targeted cost measures to
improve its profitability, which Carnegie analyst Niels
Granholm-Leth said suggested cost savings were needed to meet
the annual targets.
Sonova's shares fell 2% by 0940 GMT.
The Swiss group gained an edge over its peers in August when
it introduced a first-in-market hearing aid utilising real-time
AI, as tech-driven competition intensifies in the sector.
The timeline of the launch also strengthens Sonova's
position, as its rivals are unlikely to come up with the same
technology soon, CEO Arnd Kaldowski told Reuters.
Vontobel analysts have said they expect peers to launch
improved AI devices by the end of 2025.
The launch of the new hearing aid family and its reported
return as a Costco supplier have helped Sonova's shares to
outperform peers like Amplifon AMPF.MI , GN Store Nord GN.CO
and Demant DEMANT.CO this year.
Since its launch, the new product has shown strong sales
momentum, making up more than 50% of units sold under the
Infinio brand, the company said.
Asked about Donald Trump's re-election, Kaldowski said
Sonova would stick to its "wait and see" strategy until the new
administration's plans became clearer. The U.S. market makes up
nearly a third of Sonova's sales.
Trump's victory should not affect Sonova's performance in
the U.S. as there are no home-grown hearing aid producers in the
United States, Research Partners analyst Urs Kunz said ahead of
the results publication.
($1 = 0.8834 Swiss francs)
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Sonova outperformed European peers in 2024 https://reut.rs/48WA00D
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(Reporting by Amir Orusov and Anastasiia Kozlova in Gdansk,
additional reporting by Paolo Laudani; editing by Milla Nissi)
((mailto:Amir.Orusov@thomsonreuters.com;
Anastasiia.Kozlova@thomsonreuters.com))