$2.8 Billion

KEY EXECUTIVES:
Arnd Kaldowski, CEO
Hartwig Grevener, CFO
Claude Diversi, General VP, Hearing Instruments Wholesale
Hansjürg Emch, General VP, Cochlear Implants
Christophe Fond, General VP, Retail
Martin Grieder, General VP, Hearing Instruments Marketing
Hans Mehl, General VP, Operations
Andi Vonlanthen, General VP, Research & Development

NO. OF EMPLOYEES: 14,242

GLOBAL HEADQUARTERS: Stäfa, Switzerland

The symbolism is hard to ignore.

One of the most striking features of Sonova Group’s world headquarters building in Switzerland—besides its stunning views of Lake Geneva—is its open-air spiral staircase.
The design was intentional, but not for the obvious reasons. Indeed, the cochlea-shaped staircase was not intended as a subtle reminder of Sonova’s industrial dominance, but rather an inspiration for ingenuity. “Innovation flourishes where corporate culture makes room for creativity,” Sonova CEO Arnd Kaldowski notes.

With broad expanses of glass and light, and the cochlea (snail shell-like) staircase linking floors into a single open-office plan, Sonova’s corporate architecture aims to foster a dynamic professional atmosphere that inspires fresh ideas.

Ideas like the Audéo B-Direct, a “made for all” hearing aid released last summer that directly connects to any cell phone with Bluetooth 4.2 technology, including Android, iPhone, and other “classics” popular with older adults. The new hearing aid is the first to use Sonova’s latest chip and wireless radio technology, called SWORD.

Audéo B-Direct is designed to deliver excellent sound quality within the company’s Belong platform and AutoSense OS. The wireless chip reportedly has the lowest power consumption of any hearing aid using Bluetooth Classic. As it supports the classic Bluetooth protocol, it provides 2.4 GHz direct connectivity to cell phones with no extra body-worn streaming device required.
SWORD’s release should quell some of the criticism Sonova has received in recent years for missing an opportunity with tech-savvy Baby Boomers after rival GN Store Nord introduced direct-streaming hearing aids for Apple devices in 2014. Sonova executives, however, contend the SWORD has much broader market implications.

“Our vision has always been to provide the best possible hearing solutions. Everybody else went down this relatively narrow road called ‘Mad for iPhone,’ and we decided back in 2012 that we wouldn’t go that way, but instead go for the broader [applications],” Phonak U.S. President Jan Metzdorff said during a new product launch in Chicago last August. “This sort of chip is not available anywhere in the commercial market, and we’ve developed this ourselves over the last four years or so. The uniqueness of the SWORD chip is the ability to run with a number of parallel protocols and languages...So we can run Bluetooth and Bluetooth Low Energy, we can run our own proprietary protocols like Roger, we can run TV streaming solutions and AirStream, and more...SWORD will allow us to evolve the product and offer connectivity to other devices in the future with some very exciting possibilities going forward.”

Among those possibilities, of course, is the profits Sonova is likely to reap from its new innovation. SWORD already has contributed to Sonova’s bottom line, helping boost Premium hearing instrument franchise sales 11.8 percent in FY17-18 (year ended March 31, 2018) to 679 million francs. Expanded rechargeable solutions also supported franchise growth.

The surge in Premium hearing instrument sales, and a 20.4 percent increase in Miscellaneous revenue (accessories, batteries, services) were the main growth drivers for Sonova’s Hearing instruments business segment, which reported a 9 percent rise in FY17-18 revenue to 2.42 billion francs, according to the company’s latest annual report. Further deployment of the Phonak Belong and Unitron Tempus platforms also played prominent roles in the segment’s success.

Advanced hearing instruments, Standard hearing instruments, and Wireless communication systems turned in solid fiscal year performances, too, further fostering its parental unit’s prosperity. Advanced hearing sales climbed 5.4 percent to 497 million francs, while Standard hearing revenue rose 4.5 percent to 761 million francs and wireless communications proceeds rose 7.7 percent to 115. 8 million francs.

The Cochlear implants segment recorded across-the-board increases as well, with Cochlear implant systems sales rising 3.3 percent to 165.1 million francs and Upgrades and accessories revenue mushrooming 27.5 percent to 57.8 million francs. Segment revenue swelled 8.6 percent to 222.9 million francs, buoyed by the launch of the Phonak Naida Link CROS, a wireless audio transmitter that provides full access to sounds for unilateral cochlear implant candidates with no hearing in their opposite ear. The fiscal year also was marked by the introduction of the HiFocus SlimJ electrode, featuring a thin, straight design that helps preserve residual hearing.

Retail revenue jumped 17.2 percent to 981.5 million francs, driven by previous acquisitions and improving organic sales in the second half of the fiscal year. Solid growth in Belgian, Canadian, French, Polish, New Zealand, and British sales was partially offset by weaker demand in Australia and Germany. Business in the United States and The Netherlands, meanwhile, was affected by the streamlining and strategic repositioning of its stores.

Overall, Sonova charted a 10.4 percent increase in FY17-18 sales to 2.64 billion francs ($2.8 billion). Basic earnings per share jumped 14 percent to 6.36 francs and gross profit swelled 13.1 percent to 1.86 billion francs.

“The global hearing care market continues to grow and to demand ever-more innovative and comprehensive solutions,” Board Chairman Robert Spoerry, Former CEO Lukas Braunschweiler, and Kaldowski (who replaced Braunschweiler on April 1), said in the annual report.

“Our vertically integrated business model means that we benefit both from the innovation power of each business and the unique advantages of their collaboration and shared market insight. Continuous customer-driven innovation, multiple channels to market, and a versatile eSolutions platform connecting Sonova directly to consumers provide the solid foundation for continued growth.”