Hearing aids maker William Demant shifts production to Poland and Mexico to cut costs

COPENHAGEN, Aug 17 (Reuters) - Danish hearing aids maker William Demant plans to shift production from Denmark and the United States to Poland and Mexico to cut costs by around 200 million Danish crowns ($30 mln) a year, it said on Wednesday.

The world’s second-biggest hearing aids maker, behind Sonova , William Demant said it was also considering moving its research and development (R&D) operations from Switzerland to Poland and Denmark.

“We consider cost-efficient and strong operations and R&D setups to be among the key drivers of future profit growth,” the company said in a statement.

It will keep its headquarters on the outskirts of Copenhagen but will cut more than 200 jobs in Denmark by closing its factory there by the end of 2018. It closed its production site in Eagan, Minneapolis in the first half of 2016 and expanded production at its new site in Mexico.

The company reported a stronger-than-expected rise in six month revenue to 5.81 billion crowns, but operating profit fell short of expectations as restructuring costs weighed.

Operating profit before interest and tax (EBIT) fell to 840 million crowns from 880 million a year earlier and below a Reuters poll forecast of 914 million crowns.

The weaker-than-expected EBIT and restructuring costs pushed William Demant’s shares down 2 percent in early trade, underperforming Copenhagen’s main index, which was 0.87 percent lower.

The company said it would spend 500 million crowns on the restructuring programme between 2016 and 2018.

Sonova and William Demant are estimated to control more than 40 percent of the $6 billion global wholesale market for hearing aids.

“Competition in the global hearing aids wholesale market remains fierce, and we are seeing the largest players in the market behaving in a commercially aggressive way,” William Demant said in its results’ report.

It launched a new high-end hearing aid device in June.

“We have so far only received positive feedback from retailers and we are able to get the expected sales price,” Chief Executive Niels Jacobsen told Reuters.

In the first half of 2016, global sales of hearing aids grew by just above 5 percent, the company estimated. ($1 = 6.5995 Danish crowns) (Reporting by Ole Mikkelsen; Editing by Susan Fenton)