Sonova Earnings Call Highlights Growth Amid CI Drag

Sonova Holding ((CH:SOON)) has held its Q4 earnings call. Read on for the main highlights of the call.

Sonova’s latest earnings call painted a largely upbeat picture, with management emphasizing above-market growth, strong wholesale momentum and notable margin expansion despite currency headwinds and issues in Cochlear Implants. Investors heard a confident tone on cash generation, capital discipline and the product pipeline, suggesting the positives outweigh current headwinds.

Above-market growth and steady guidance

Sonova reported that sales grew faster than the overall hearing-care market across all regions and that momentum improved sequentially into the fourth quarter. Management reaffirmed guidance for FY26/27, targeting consolidated sales growth of 5% to 8% and core EBIT expansion of 7% to 10% at constant exchange rates.

Hearing Instruments: revenue strength and margin gains

The Hearing Instruments segment delivered 7.5% sales growth to CHF 3.4 billion, confirming its role as the group’s main earnings engine. Normalized EBITDA climbed 17.3% to CHF 794 million, lifting the margin to 23.7% and adding roughly 280 basis points in local currencies thanks to operating leverage and efficiency gains.

Wholesale: double-digit H2 and share gains

Wholesale revenues rose 9.5% to CHF 1.9 billion, with second-half growth accelerating to 10.9% as new products fueled demand. Management highlighted the strongest market-share gain since the Marvel platform debut, driven by the Virto R rechargeable device, now at roughly CHF 120 million annual run rate, and the Infinio Ultra line.

Retail: steady organic growth and network expansion

Retail operations generated CHF 1.5 billion in revenue, up 5.1% year on year, combining solid organic growth with targeted deal-making. Small acquisitions added about 1.3 percentage points to growth and expanded the store footprint in Germany, Austria and Canada, while sales momentum improved sequentially in the fourth quarter.

Profitability, leverage and returns improving

Normalized EBITA increased 17.3%, growing nearly three times as fast as revenue and adding about 240 basis points of margin in local currencies, underscoring strong operating leverage. Earnings per share advanced roughly 16%, return on capital employed held at 19% and net debt to EBITDA dropped to 1.1 times, giving the group balance-sheet flexibility.

Innovation pipeline supports future growth

Sonova showcased a broad innovation slate, including AI-powered Sphere and Sphere Ultra devices, the Virto R rechargeable in-the-ear model and the EasyGuard wax management system. Looking ahead, management plans to introduce a new AI-enabled hearing-aid platform in FY26/27 and a new cochlear-implant sound processor, aiming to sustain growth and refresh the installed base.

Cash generation and capital allocation discipline

Operating free cash flow remained robust, with cash conversion consistently above 90%, underpinning the dividend and investment capacity. Capital spending was lower than the prior year, while about CHF 46 million went into bolt-on retail acquisitions and working capital stayed well controlled.

Sustainability recognition builds credibility

The company reported continued recognition from prominent ESG rating agencies and inclusion in key sustainability indices, signaling progress on its environmental and social targets. Management framed this as both a reputational asset and a factor that helps attract talent and long-term investors.

Cochlear Implants: sales decline and margin drag

Cochlear Implants remained a weak spot, with sales falling 11% to CHF 252 million, or about 3.8% lower excluding China, and both system and upgrade revenues under pressure. Volume-based procurement in China, softer upgrade demand and intense competition from a rival product weighed on growth and profitability in this segment.

Non-recurring charges cloud reported results

The company booked around CHF 90 million in normalization items, including CHF 28 million of legal expenses tied to a patent settlement and roughly CHF 24 million from reassessing legacy product liabilities. A further CHF 35 million software impairment added to the burden, though management signaled non-core items should fall to CHF 35 to 40 million in FY26/27.

Foreign-exchange headwinds hit margins

Currency movements reduced normalized EBITDA by CHF 103 million and shaved about 1.5 percentage points off the reported margin in Swiss francs, masking underlying performance. Management warned that, at early May rates, FX could cut reported sales growth by 1 to 2 percentage points and core EBIT growth by 2 to 3 points in the coming year.

Consumer Hearing divestment sharpens focus

The Consumer Hearing business is now classified as discontinued, and restated figures show pro-forma sales up 5.5% with normalized EBITDA up 14.5%, albeit with one-off items and a pro-forma EBIT loss. Management stressed that exiting this unit lifts the normalized EBITA margin of continuing operations by about 230 basis points, sharpening strategic focus on core segments.

CI competition and regulatory timing risk

In Cochlear Implants, competitive pressure intensified after a rival launched a new product, eroding volumes and highlighting Sonova’s product gap. Management expects a rebound once its new sound processor launches in the second half, but the timetable depends on regulatory approvals, creating execution risk around the recovery.

Product-cycle drag on upgrade revenues

Upgrade revenues in Cochlear Implants declined 13%, reflecting a maturing product cycle and higher saturation of existing processors among eligible users. This dynamic creates near-term pressure on recurring revenues until the next generation of processors stimulates a new replacement wave.

Guidance underscores confidence despite headwinds

For FY26/27, Sonova reiterated guidance for 5% to 8% sales growth and 7% to 10% core EBIT growth at constant currencies, assuming market growth of about 2% to 4% trending toward 3% to 5% mid-term. Management expects retail M&A to add 1% to 2% to sales, sees H1 EBIT growth still within the 7% to 10% band despite CI headwinds and anticipates a meaningful second-half CI recovery and further upside from a new Hearing Instruments platform.

Sonova’s call balanced strong execution in Hearing Instruments and retail with transparent discussion of Cochlear Implant challenges and FX pressure, leaving investors with a cautiously optimistic outlook. With robust margins, healthy cash flow and a promising product pipeline, the company appears well positioned, provided it navigates CI competition and regulatory milestones successfully.