History

History — The Compounder That Bought a Detour

Sonova entered this decade as the world's hearing-care leader at the top of its game — a post-COVID profitability peak, a 25.1% adjusted-EBITA margin, and enough confidence to buy its way into consumer audio. What followed was not a collapse but a slow give-back: reported earnings per share peaked at CHF 10.72 in the year to March 2023 and have fallen every year since, the diversification bet was quietly reversed, and by 2026 a new CEO was rebuilding the story around the core business the old one had drifted away from. The through-line is a genuinely good operator whose core never broke — market share kept rising, cash kept flowing — paired with a management team that increasingly leaned on the "local-currency" line and a shifting profitability metric to keep a peaking earnings story looking like a growth story. Credibility is neither pristine nor damaged; it is recovering, on the back of an honest — if belated — admission that the consumer detour did not work.

The arc at a glance

Source: derived from reported financials, FY2017–FY2026 (Sonova reports to end-March). The FY2026 EPS of CHF 7.22 is stated including the loss from discontinued operations; continuing-operations basic EPS was CHF 9.02 [29]. Peak adjusted-EBITA margin of 25.1% is reported in the FY2021/22 financial review [2].

The two charts tell the whole story before a word of narrative: profitability topped out in the year to March 2021–2022 and the earnings line has drifted down ever since. Everything below is the explanation — what management said as it happened, what they promised, what they delivered, and how the framing moved.

The clearest way to see the narrative drift is to track which themes management leaned on, report by report. Below, higher intensity means the theme was pushed harder that year.

Source: author's coding of management emphasis across the FY2021/22–FY2025/26 annual reports and results releases; representative anchors cited throughout this page, e.g. the Sennheiser push [4], the "strategy unchanged" line [13], and the divestiture pivot [22].

Read left to right, the map is the drift: the Sennheiser/Consumer push fades from front-and-center to nothing, "strategy unchanged" collapses the moment a new CEO arrives, and portfolio focus, AI innovation, and the local-currency framing all rise to take its place.

Chapter 1 — The peak, and the bet made from the top (FY2021/22)

Sonova came out of the pandemic stronger than it went in. In the year to March 2022, under CEO Arnd Kaldowski — who had joined as COO in October 2017 and become CEO on 1 April 2018 [1] — the adjusted EBITA margin reached 25.1%, up 1.9 points year on year and 3.9 points above pre-COVID [2]. This was the high-water mark the rest of the decade is measured against.

From that peak, management made its boldest capital-allocation move. In March 2022 Sonova closed the acquisition of the Sennheiser Consumer Division, framing it as getting "closer to the consumer" [3] and standing up a fourth core business, Consumer Hearing. The promises attached to it were unusually specific and unusually confident:

"Our ambition for the business is to deliver double-digit sales growth with the potential to expand EBITA margins."

The deal was, in management's words, a business "primed to grow profitably from day one," targeting an early-entry / speech-enhanced-hearables market it sized at greater than EUR 3 billion [4] [5]. Why it matters: this is the promise the whole credibility verdict turns on — a quantified, on-the-record ambition made at the top of the cycle. Hold it in mind; it is the one the company later walks away from.

The confidence extended to the outlook. For FY2022/23 Sonova guided to consolidated sales growth of 17%–21% at constant exchange rates alongside further profit growth [6] — the most aggressive guidance of the era.

Chapter 2 — The first crack, and the pivot to "local currency" (FY2022/23 → FY2023/24)

The cracks appeared quickly. In FY2022/23, the year reported EPS peaked at CHF 10.72, the second half was "significantly impacted by the non-renewal of a hearing instruments contract with one of our largest customers in the US," compounded by a strong Swiss franc [7]. The new Consumer Hearing business generated CHF 284.3 million of sales in its first full year [8], and guidance was cut hard: FY2023/24 was set at just 3%–7% sales growth and 6%–10% adjusted EBITA growth [9] — a third of the prior year's ambition.

Then, in FY2023/24, revenue actually fell. Here the framing tell becomes unmistakable. Management opened the year's letter by calling the setbacks "some temporary challenges," attributing the drop to currency and the single lost US contract rather than anything structural [10]. The mechanics: the Swiss franc cut reported sales by CHF 232.9 million, "resulting in a sales decrease of 3.0% in Swiss francs" — which management immediately recast as growth once currency was stripped out, and reported the adjusted-EBITA margin as 21.3% versus 22.5%, arguing it was actually up 0.3 points excluding FX [11].

Two things management would not say plainly are worth surfacing. First, the Sennheiser bet was already failing — but the admission is buried in the compensation report, not the letter: Consumer Hearing "fell significantly short of target mainly driven by weak demand in the consumer electronics market" and a defective-battery supplier issue, while every other business hit 97–98% of plan [12]. Why it matters: the honest number was disclosed, but placed where few readers look — honesty at arm's length. Second, even as the strategy visibly strained, the FY2023/24 report doubled down on continuity: "Our strategy is straightforward and unchanged, because it has proven to be effective." [13]

This chapter also opened the leadership transition quietly: the Board pre-announced that Gilbert Achermann would succeed long-serving Chair Robert Spoerry at the 2025 AGM, alongside a step-up in guidance to 6%–9% sales / 7%–11% adjusted EBITA for FY2024/25 [14].

Chapter 3 — The profit-quality unwind, and the metric that kept moving (FY2024/25)

FY2024/25 is the year the growth-vs-earnings gap became impossible to paper over. Revenue recovered — up 6.6% — yet basic EPS fell 10.0% in Swiss francs to CHF 9.07 [15]. The single largest driver was tax, not operations: income taxes jumped to CHF 105.0 million from CHF 37.8 million as the OECD global minimum tax hit Switzerland, reversing a prior-year benefit [15]. To management's credit, that is disclosed cleanly.

New risks migrated from footnote to headline. A late-year "significant slowdown in the private hearing aid market in the US, affecting both volume growth and ASP development" appeared for the first time [16], and the outlook explicitly flagged US tariffs and a decline in US consumer confidence — while framing an optically strong 14%–18% FY2025/26 EBITA guide that was inflated by a restructuring-heavy base [17].

Underneath, the profitability yardstick itself was moving. At the 2024 Investor and Analyst Day, management set mid-term targets of 6%–9% sales CAGR and 7%–11% adjusted-EBITA CAGR in local currency [31]. Then at the FY2024/25 results, Sonova quietly introduced a new profitability metric — "normalized EBITA" of CHF 763.6m (19.8% margin) replacing "adjusted EBITA" of CHF 807.8m (20.9%) [32].

Leadership churn accelerated: the Board shrank from 10 to 8, Achermann was confirmed as incoming Chair, and a new CFO, Elodie Carr-Cingari, was announced to join in July 2025 [18], while Spoerry closed a valedictory note marking "14 years as its Chair" [17].

Chapter 4 — The reset: a new CEO, the great reversal, and CHF 6 billion (2025–2026)

The break in the story is sharp and datable. On 9 May 2025, alongside FY2024/25 results, Sonova announced that Arnd Kaldowski would step down as CEO effective 30 September 2025 and that Eric Bernard, former CEO of WS Audiology, would join on 1 July 2025 and assume full CEO responsibilities by 1 October 2025 [19]. Kaldowski's exit — after nearly eight years — was attributed to "health-related matters affecting a family member," and Chair Spoerry framed the handover generously: "Sonova is in an even stronger position today than it was eight years ago." [20] Bernard arrived a hearing-industry insider: he ran WS Audiology from 2019 to 2024, integrating Widex and Sivantos, after 25 years at Essilor [21].

Then came the reversal. On 23 March 2026, "following a strategic portfolio review," Sonova announced it would divest the Consumer Hearing business — the Sennheiser division it had bought in 2022 — to concentrate on Hearing Instruments and Cochlear Implants, "the core of Sonova's innovation engine" [22] [23]. The new CEO said it plainly: "In 2022, Sonova acquired Sennheiser's Consumer Division to explore hearables and early entry consumer hearing solutions" — and it is now being sold [34].

The financial epitaph of the detour:

Source: acquisition and ambition [3] [4]; first-year sales [8]; shortfall [12]; divestiture loss and impairment [24] [26].

The Consumer Hearing loss after tax was CHF 106.5 million in FY2025/26 (versus CHF 17.9m the year before), reflecting the operating result and non-cash impairments tied to the planned sale [24]. The Sennheiser brand intangible — carried at CHF 98.2 million — was moved to assets held for sale [25], and the disposal group was written down to fair value less costs to sell, producing a pre-tax impairment of CHF 38.3 million, CHF 16.2 million of it goodwill; completion is expected in FY2026/27 [26]. A four-year round trip that ended in a write-down is the single hardest fact in the credibility case.

Alongside the exit, Bernard reset the whole framing. The old "strategy unchanged" mantra was replaced by a renewed strategy and an ambition to grow revenue to CHF 6 billion by FY2030/31 [27] [35]. New mid-term targets (excluding Consumer Hearing) were set at 5%–10% sales CAGR and 7%–12% Core EBIT CAGR in local currency [33], and the company moved to a regional operating model on 1 April 2026, renaming Hearing Instruments as "Wholesale" and Audiological Care as "Retail" [22] [23].

Source: 2024 Investor Day targets [31]; 2026 renewed targets [33].

Crucially, the early evidence on the core is good. FY2025/26 continuing-operations sales reached CHF 3,605.9 million, up 5.9% in local currencies, driven by 7.5% growth in the combined Wholesale and Retail businesses and continued market-share gains [28]; the normalized-EBITA margin rose about 240 basis points and management said it "fully delivered" on guidance [36]. Continuing-operations basic EPS was CHF 9.02 (normalized CHF 10.42), even as the all-in figure including the discontinued Consumer Hearing loss was dragged to CHF 7.23 [29]. Capital return stayed disciplined: a record dividend of CHF 4.70 (up 7%, ~45% payout) in line with the standing total-shareholder-return policy, alongside significant board renewal [30]. Guidance for FY2026/27 is 5%–8% sales / 7%–10% Core EBIT [28].

The promise scorecard

Source: promises and outcomes cited throughout — Consumer Hearing ambition [4] and divestiture [24]; guidance ranges [6] [9] [14]; delivery [28] [36]; dividend [30]; CHF 6bn ambition [27].

The pattern is legible: annual operating guidance was generally hit (especially in local currency), capital-return promises were honored, and the core innovation story delivered — but the strategic, multi-year, headline promises around diversification were broken, and reported-currency earnings quietly fell the whole time.

The verdict — what to believe, what to discount

Source: author's assessment from the cited guidance-and-delivery record above; pivot count spans the Sennheiser acquisition [3], the CEO change [19], the Consumer Hearing divestiture, and the regional reorganization / renewed strategy [22].

Credibility: 6/10 — solid operator, flawed capital allocator, story now improving. The case for trust: Sonova's core hearing-care franchise genuinely compounds — market share kept rising, cash conversion stayed high, dividends grew every year, and the Sphere Infinio AI platform is a real innovation win the outgoing Chair could point to without spin. Annual constant-currency guidance was mostly met, and the newest year was "fully delivered." The case against: the Sennheiser Consumer bet was a textbook top-of-cycle diversification that never came close to its quantified promises and was unwound at a write-down; management leaned progressively harder on the local-currency framing to obscure a reported-EPS decline from CHF 10.72 to CHF 7.22; and the profitability metric changed three times in three years, eroding the accountability of the numbers. What tips this above a 5 is honesty at the margin — the shortfall was disclosed (if buried), and the new team's divestiture is an honest correction rather than continued denial.

Leadership and chapter anchoring. The current CEO is Eric Bernard, effective 1 October 2025 (joined 1 July 2025) [19]; the current strategic chapter began in March 2026 with the renewed strategy and CHF 6 billion ambition [27]. Bernard inherited a high-quality core — a market-leading, cash-generative franchise the prior Chair rightly called "an even stronger position than eight years ago" [20] — but he also inherited a value-destroying consumer appendage and years of margin/metric drift to clean up. Call it partial: the compounder was built by the prior regime; the mess was theirs too, and fixing it is the new team's first job. Every downstream capital-allocation judgment should credit Bernard for the divestiture and the focus, not for the underlying franchise quality.

What the story is now. Simpler and more honest than it has been in five years. The portfolio is being narrowed to what Sonova does best, the reporting is being rebased (Wholesale/Retail, Core EBIT), and the early core numbers are outrunning the market again. The stretch is entirely forward: the CHF 6 billion / FY2030/31 ambition is a new headline promise from a new team with no track record yet — the same kind of confident, quantified, top-of-a-reset target that the last regime set with Sennheiser and did not hit. Believe: the core franchise, the cash returns, the discipline of the exit. Discount: the CHF 6bn ambition until two or three years of delivery back it, and any single-year "growth" headline that rests on a freshly changed metric or the local-currency line. Credibility is improving — but it is on probation, and the probation is the CHF 6 billion number.