May 21, 2019 / 6:59 AM / a month ago

UPDATE 1-Sonova beats expectations in H2 as Europe offsets U.S. slump

(Rewerites, adding comment from CEO, details from second-half)

By John Miller

ZURICH, May 21 (Reuters) - Sonova posted rising second-half profit on Tuesday as strong European business offset lagging U.S. sales where the world’s biggest hearing aid maker has been restructuring and awaiting new government deals.

Second-half net profit rose about 16% to 264 million Swiss francs ($261.28 million), beating the 254 million francs average in an Infront Data poll. Sales rose 4.8% to 1.46 billion francs, versus the poll average of 1.45 billion francs.

European sales, in particular in Germany and France, were boosted by the November introduction of Sonova’s newest hearing aid, called the Marvel, the company said. That helped offset a U.S. slump, where Sonova has been forced to revamp its store network and where sales to Department of Veterans Affairs (VA) fell.

Chief Executive Arnd Kaldowski said he now expects a turnaround after deliveries of new Marvel hearing aids to VA customers began about three weeks ago.

“It’s probably not going to go to a level we have seen one-and-a-half years ago, because we were the only one in the rechargeable segment, which is important there, and now there are competitors,” Kaldowski said. “But clearly, I’m expecting us to bounce-back on the VA market share.”

For the current 2019/20 year, Kaldowski sees sales growing at 6-8%, faster than the estimated 3-5% growth of the hearing aid market and reflecting optimism he’ll take market share from rivals including industry No. 2 William Demant. Sonova proposed a dividend of 2.90 francs per share, up 11.5 percent from last year’s payout.

Kaldowski said he expects U.S. competition from so-called over-the-counter (OTC) products from potential rivals including Bose Corp. only in 2020, at the earliest, as the industry awaits new rules to govern sales outside of licensed hearing aid dealers. Swiss-based Sonova is still mulling its response to the OTC market, he added. (Reporting by John Miller, editing by John Revill)

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