Ladies and gentlemen, welcome to the Sonova Half-Year Results 2025-2026 Conference Call and Live Webcast. I am Matilde, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Bernhardsgrütter, Senior Director, Investor Relations. Please go ahead, sir. Yes, welcome everyone to our Half-Year 2025-2026 Results Presentation. The slides for this call are available on our website. With me in the room are Eric Bernard, CEO, and Elodie Carr, CFO of Sonova. During the call, Eric will take you through the performance across our four businesses and give you a quick recap of all the new innovations we recently presented at the EUHA Congress in Germany. He will then hand over to Elodie, who will take you through the financials in more detail and present the outlook for the current financial year. We will then move to Q&A, where those of you who have dialed in over the phone have an opportunity to ask questions. Before we dive into the presentation, please take note of the disclaimer. In short, this presentation contains forward-looking statements and serves for marketing purposes. It constitutes neither an offer to sell nor a solicitation to buy any securities. With this, I pass the word on to Eric for now. Thank you very much, Thomas, and a warm welcome also from my side. Let's start the business review with the key highlights of the first half. A strong performance in our two larger businesses, hearing instruments and audiological care, resulted in a combined sales growth of 7% in local currencies in the first half. This is around twice the estimated market growth and resulted in significant market share gains. Growth in the HI business was driven by the success of the Phonak Infinio and Infinio Seer platforms that we launched in August 2024. The AC business benefited from continued investments in targeted lead generation, resulting in above-market growth. On the other hand, our two smaller businesses, consumer hearing and cochlear implants, both faced headwinds. The consumer hearing business struggled with weak markets and the lack of significant product launches. In the cochlear implants business, robust growth in system sales outside of China was offset by disruptions stemming from the introduction of volume-based procurement in China, so-called VBP, and lower upgrade sales. In terms of profitability, we have made significant progress. The strong growth resulted in substantial operating leverage and margin expansion in local currencies. Unfortunately, the strength of the Swiss franc continues to be a major headwind. Looking ahead, we are excited about our latest recent launches, and we are confident that they will contribute to a continued positive momentum in the second half. I will talk more about the new products a bit later. In summary, we remain confident for the remainder of the year and maintain our outlook for the full year 2025-2026. Before we move to the group highlights, I'd like to address the changes to the organizational structure we announced in conjunction with our half-year results. As outlined in the release, we will retire the current business unit structure for hearing instruments and audiological care, shifting to a four-region model to strengthen customer proximity and regional responsiveness. It's all about customer centricity. The heads of the four regions will report directly to me. Cochlear implants and consumer hearing will remain distinct entities. Now, looking at the highlights for the group, sales reached CHF 1.8 billion, up 4.9% in local currencies. Normalized EBITDA reached a solid CHF 316 million, up 16% in local currencies, which translates into a strong margin expansion of 180 basis points, again in local currencies. We confirm our outlook for the 2025-2026 financial year, targeting 5%-9% growth in sales and 14%-18% growth in normalized EBITDA, both measured at constant exchange rates. Last but not least, we further built on our innovation and AI leadership with the recent launch of Ultra and entered the growing segments of in-the-ear rechargeable hearings with VirtoR, which so far is receiving a very strong market response. I will provide more details on this later. Let's take a closer look at the hearing instruments segment now. Total segment sales were up 5.7% in local currencies to CHF 1.7 billion. This was largely driven by organic growth, while acquisitions contributed around 40 basis points. The key driver was the impressive growth of 7% in combined sales in our HI and AC business. Based on market statistics and recent competitor results, we estimate that this represents around twice the market growth. This strong development clearly demonstrates that our innovative portfolio helps to drive growth, not just in our HI business, but also supports the momentum in AC or retail. On the other hand, growth in the segments was dampened somewhat by lower sales in the consumer hearing business. Normalized EBITDA rose by 16.9% in local currencies to CHF 305 million. This corresponds to a margin of 18.1%, representing a strong margin increase of 190 basis points in local currency. You will hear more details about the drivers for margin development later from Elodie, our Group CFO. Let's move on to the individual businesses, starting with hearing instruments. Building on the momentum from the second half of last year, sales increased 7.9% in local currencies to CHF 880 million, with positive contributions from both volume and ASP. Growth was driven by the ongoing success of the Phonak Infinio and Infinio Seer platforms. Our innovation leadership can clearly be seen in the VA channel, where Infinio Seer sales alone are about 35% higher than the hearing instrument sales of our largest competitors across their entire portfolio. VirtoR now, although this rechargeable in-the-ear had only a limited initial impact as it was launched towards the end of the first half, it contributed to growth in the period's final weeks, reflecting a very positive market reception. Growth was further supported by expanding commercial relationships with large U.S. customers. I am truly convinced that VirtoR, together with the recently launched Infinio Ultra and Infinio Ultra Seer, will contribute to continued momentum in the second half. Let's have a look a bit more in detail at these latest innovations. What you see here is an overview of our latest innovations launched in the past months and presented during the UHA Congress in Germany. In August, Phonak introduced VirtoR Infinio, the company's first rechargeable in-the-ear device. By combining Infinio's speech performance with a compact, custom-made design and universal connectivity, it no longer requires trade-offs from consumers in terms of performance, size, or connectivity. It blends the look and feel of a traditional hearing aid with the styling of a modern consumer earbud, and it has received a very strong initial market response. This device positions Sonova to capitalize on rising demand in this CHF 400 million market segment, where we previously had no presence. A detail: more than 20% of our sales are in black. People choose the black color. It means that this product is tackling the stigma. People are proud to show it. That is a shift from what we have seen before. Just over a year after the launch of Infinio and Infinio Seer, we introduced Infinio Ultra, expanding our innovation and AI leadership. In a benchmark study, Infinio Ultra outperformed competitors in the most challenging listening environment, speech in loud noise. This is even without taking advantage of the unique spheric speech clarity functionality of Seer, which uses the power of our proprietary DEEPSONIC chip that mimics the human brain to extract and enhance voices instantly from all directions. Here, thanks to the continuous training of the deep neural network, we improved efficiency by 30%, which means that with Infinio Ultra Seer, now this powerful feature can be used all day and not just three hours. VirtoR, Infinio Ultra, and Infinio Ultra Seer all run the AI-trenched AutoSense OS 7.0 operating system for better automatic adaptation to different listening environments and offer a simplified one-step pairing process with phones and other Bluetooth devices. Our innovation extends beyond devices. We also introduced the patented EasyGuard Wax Management System, which helps protect the receiver with a sound-transmitting membrane, simplifying cleaning and reducing service visits by up to 38%. That may not sound as exciting as talking about AI, but this solution removes a very significant pain point from both the HCP and the user. As you can see, we continue to innovate with a high cadence, and we expect these launches to be a key contributor to growth in the second half. Moving on to our audiological care business, sales reached CHF 707 million, up 5.8% in local currencies, clearly outpacing the estimated market growth. This was largely driven by organic growth. The contribution from acquisitions, including the full-year effect of prior year acquisitions, was around 1% and somewhat lower than in past periods. The strongest contributions came from Bolt-On Acquisitions in Germany, France, Canada, and Australia. Our recent product launches, as mentioned before, were a major driver of healthy growth. In addition, the business benefited from consistent and targeted lead generation. You may remember that when we published our full-year results, we also discussed structural cost initiatives, including the streamlining of global and local headquarter functions and the optimization of our store network. The savings from this initiative clearly materialized, delivering strong operating leverage and providing flexibility to reinvest in growth. A brief word on our consumer hearing business. Sales were held back by continued weak consumer demand across key geographies and the lack of major product launches in the first half. As a reminder, last year, we introduced the MOMENTUM True Wireless 4 earbuds, which were a significant growth contributor. In summary, sales declined by about 12% in local currencies to CHF 97 million. To address the growth challenge, we are sharpening our focus, concentrating on categories where we have a natural right to play, which includes audiophile and premium headphones and soundbars. One good example of this is the October launch of the HDB 630, our first wireless audiophile headphones. Great reviews. You can find them online. They deliver high-resolution digital audio with or without cable and 60-hour battery life on a single charge. This means that consumers no longer have to compromise between high-fidelity sound and wireless convenience. While it's early days, consumer and expert reviews really have been positive. I strongly recommend you look online and you'll see it's really great. Sennheiser remains the market leader in audiophile headphones with an approximate 22% share, and this category accounts for around a quarter of our consumer hearing sales. Promising beginnings for the HDB 630. Moving on to the cochlear implant segment, sales totaled CHF 132 million, down 5% in local currencies. The development was hampered by tariffs and uncertainties around the introduction of volume-based procurement, so-called VBP, in China. However, excluding China, sales were up 3% in local currencies. We had solid momentum in system sales in developed markets, supported by very strong commercial execution and improved D2C lead generation through our HI and AC businesses. As a result, system sales were up 7% in local currencies, excluding China, but declined by 6% overall due to the previously mentioned headwinds in China. Aggregate sales modestly down by 1.5% in local currencies. Expected, as we have previously flagged, that during this financial year, we expect continued pressure ahead of the next processor launch, as many recipients have already adopted the Marvel technology, which was introduced in 2021. Normalized EBITDA reached CHF 11 million, representing a margin of 8.2%, and this was fairly stable versus the prior year period, supported by strict cost control and benefits from the weaker U.S. dollar, helping to offset the negative operating leverage in the segment. With that, let me hand over to our CFO, Elodie Carr, who will provide more details on the financials and the outlook. I will, of course, come back for the Q&A. Thank you very much, Elodie? Thank you, Eric. Also a warm welcome from my side to everyone on the call. Let's take a closer look at the financials, starting with the sales development. Eric has already discussed the growth dynamic by business, so I'm going to focus on regional performance. I'm pleased to report that all regions achieved solid positive growth in the first half. Sales in the EMEA region rose 4.5% in local currencies. This was driven by the success of new products and a limited contribution from bolt-on acquisitions in Germany and France. Growth in the hearing aid market was strong in France and the U.K. private market, while Germany and Italy experienced some weaknesses. The U.S. posted the strongest growth, up 7% in local currencies, driven by double-digit growth in our HI business, indicating substantial market share gains. Growth was further supported by expanded commercial relationships with major customers and positive growth in the VA. The Americas region, excluding the United States, rose 4.3% in local currencies, with solid growth across our hearing instrument segment. Standout countries were Canada and Brazil. Sales in the APAC region grew 0.5% in local currencies. As mentioned by Eric, CI sales in China were held back by the VBP introduction. However, our hearing instruments and audiological care business posted double-digit growth in China and solid gains in Australia and Japan. Excluding CI, APAC grew by 4.7% in local currencies. As you know, Sonova generates almost all of its revenue in currencies other than the Swiss franc. With a strong appreciation of the Swiss franc against all major currencies, and in particular the US dollar, reported sales were reduced by CHF 107 million, or 5.8%, due to FX translation. Now, let's look at our gross profit margin development. In local currencies, the gross profit margin fell by 80 basis points. Higher volume and ASPs in the HI and AC businesses had a positive impact on our gross profit margin. In H1, we incurred temporary costs related to regionalizing our manufacturing and logistic footprint, as we further ramped up activities in our plant in Mexico and in our distribution center in Germany. In addition, lower operating leverage in our consumer hearing business contributed negatively to the development. Here, the FX impact on gross margin was 40 basis points. We have a better balance between US dollar revenue and costs due to regionalized production and sourcing, moderating some of the impact of currency. Moving on to operating expenses. Normalized operating expenses declined by 0.2% in local currency, despite strong sales growth, and that resulted in significant operating leverage. R&D expenses were up 2.4%, as we continue to invest in innovation to advance our product portfolio. You heard from Eric about the results of these efforts with the launches in recent months. Sales and marketing expenses were effectively stable in local currencies. Launch investments were lower, as we had our big Infinio Sphere. Infinio launches in the prior year period. On the other hand, we continue to invest in growth through ongoing lead generation efforts in the audiological care business. G&A expenses declined by 2.7% in local currencies through disciplined cost control and also the benefit from last year's structural cost initiatives. Whilst FX reduced operating expenses in Swiss francs by 3.8%, the impact was less pronounced than on sales, as key functions such as R&D and headquarters are largely located in Switzerland. When we bring it all together, let's look now at EBITDA components, looking from left to right. In local currencies, normalized EBITDA rose by 180 basis points, or 16% year-over-year, driven by operational improvements in our two largest businesses, hearing instruments and audiological care. Acquisitions had no material impact. Normalization totaled CHF 29 million, mainly related to legal costs from patent litigation fees and settlement. As you may remember, we incurred significant legal costs in recent years related to a patent dispute in the cochlear implant business and were temporarily prevented from selling some products in Germany back in 2022. With this settlement, pending litigation in all jurisdictions worldwide is now resolved. Moving on to FX, I talked about the translation impact on sales, gross profit, and operating costs already. In sum, adverse currency developments reduced the reported EBITDA margin by 150 basis points. Let me now quickly summarize the key P&L figures. Sonova delivered strong profitability growth in local currencies across all metrics. All regions contributed to higher sales, and all in all, normalized EBITDA grew 16% in local currencies. Moving on to normalized EPS, we achieved a strong growth of 20% in local currencies, including FX movement. This resulted in a stable EPS versus the prior year period in Swiss francs. Now, a note on our cash flow. Cash flow from operating activities was 12%, primarily driven by lower cash outflows from changes in working capital, with positive effects from lower receivables and inventories, partly offset by lower payables. Moving on to operating free cash flow, the lower CapEx was more than offset by net investments in financial assets, which is related to financial equity investment. During the first six months of the year, Sonova spent CHF 31 million on M&A, reflecting continued Bolton acquisitions in our audiological care business, mainly in Germany, in Canada, and in the US. In summary, this resulted in a free cash flow of CHF 38 million. The cash outflow that you see from financing mainly reflects dividend payments, as well as repayments of lease liabilities, and that was partly offset by new financing arrangements. In October, after the balance sheet date, Sonova repaid a CHF 200 million bond and issued a new fixed-rate bond of CHF 150 million, with an attractive coupon of 0.92% and a maturity of eight years. Now, let's look at our balance sheet, which remains strong. Days of sales outstanding and days of inventory outstanding improved versus a year ago and versus March 2025. This is a good development, reflecting better receivable collection and was achieved despite some inventory build-up to mitigate impacts from trade disruptions. Days payables outstanding remains largely stable. Overall, we saw an improvement in the returns on capital employed, which rose to 17.5%, and this is entirely driven by the higher profitability over the past 12 months. The leverage measured net debt to EBITDA reached 1.5 times, down from 1.8 a year ago, but up from 1.2 at the end of the last fiscal year. With this, let me move to the outlook. Let's look at our outlook for the year, and I will start with our assumptions going into the second half. First of all, while markets remain volatile, we continue to expect overall market growth of 1-3%, in line with what we saw in the first half and reflecting weaker demand from macroeconomic uncertainties and tariffs. Please note that this outlook assumes no significant additional tariffs or other major disruptions beyond those already known at the time of this publication. Normalizations are expected to be in the range of CHF 30 million-CHF 35 million for the full year. Based on end October exchange rates and looking at a full year, 2025-2026, adverse currency developments are expected to reduce sales growth in Swiss francs by about 6 percentage points and normalize EBITDA growth in Swiss francs by 13-14 percentage points. Coming to the outlook for the year, with the launches outlined by Eric, including VirtoR Infinio, Infinio Ultra, and Infinio Ultra Seer, we expect to maintain good sales momentum in our hearing instrument business, building on the momentum we had in the first half. Coupled with continued growth in audiological care and an expected sequential improvement in consumer hearing and cochlear implants, we reiterate our outlook and continue to guide for sales growth of 5-9% and normalize EBITDA growth of 14-18%, both at constant exchange rates. With this, Eric and I are happy to answer your questions. Operator, can you please open the line for the Q&A? We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question or a comment may press star and one at this time. The first question comes from the line of Hassan Al-Wakeel from Barclays. Please go ahead. Good afternoon. Thank you for taking my questions. A couple, please. Firstly, if I can ask on the guidance and your confidence around the acceleration in the second half, particularly on the top line amidst broader market uncertainty. Do you view the lower end of the range more likely, and what are your key assumptions for the top end? Secondly, on Costco, can you talk about your share here, given you had expected to get to 25% pretty quickly and had recently mentioned that you did not think you were quite there? Is that still the base case despite a trial of a potential new entrant into the channel? Thank you. Thank you, Hassan. Eric, I will take the second question first. As a general principle, we do not comment on specific customers, but if we talk about a very large account in the US, we have reached a reasonable share, stable, and we believe we have solid plans that we are designing together with this customer. I think what you may see is that now five players are invited at the table. I won't comment any further about what will happen next. I'd say that it was great for Sonova to be back at the table of this large account in the U.S., and things are progressing nicely. I will take the question on the guidance. Hello, Hassan. As you will have seen, in the first half, we grew 4.9% in terms of revenue growth, and in hearing instruments and audiological care combined was a growth of 7%. We do expect to benefit from the recent launches of Infinio Ultra, Infinio Ultra Seer, and as well, the entry into a growing new market segment with VirtoR, successfully introduced in the month of August. Building on this innovation leadership, we have reiterated our guidance for year 2025-2026, which remains at 5-9%. I could add to give more colors about the potential impact of VirtoR over time, is that it's a segment value that's roughly CHF 400 million. If we reach our natural share of 25%, to do the math, it could be an additional CHF 100 million of revenue over time. It's starting very well. We've launched in the VA a few weeks back. The numbers are very promising, as an example, but great numbers as well in general in all other markets where we've launched it. I won't give the specifics, but wherever we've launched it, it's extremely well received. That's really helpful. If I could just follow up on the North America strength, 7.4% constant currency growth, how much of that was down to Costco and the VA price uplift, please? We will not be as granular as you would love us to be, but they had a significant share or contribution to this growth. In general, we have done well in the US, also in other large accounts, but our innovations launched a year ago were very well received. The U.S. market has been very favorable for us, also beyond these large accounts. I thought I would try. Thank you very much. The next question comes from the line of Andjela Bozinovic from BNP Paribas. Please go ahead. Hi, good afternoon, and thank you for taking my question. The first one may be on the VA. Eric, last month at the EHA conference, you mentioned that you have had some difficulties in the channel up until November. Can you please elaborate what these difficulties were and if it was just specific for the VA and how confident are you that these are behind us? Yeah. Yeah. The second one, just on the market share and the products, and maybe it's also a follow-up on Hassan's question earlier, but your outlook assumes significant market share gains in H2. Can you comment if you're seeing any kind of slowdown in the market share gains in the last two or three months? When we look at Ultra, because it's just a platform upgrade, it's not a new product, can you walk us through your assumptions of market share gains versus Sphere? Thank you so much. I'll start by trying to answer the second question, which is rather complex. No, we haven't seen a slowdown in market share gains. We have kept getting share quite across the globe. If you look at the last three to six months, we gained share in the US. We covered that just a minute ago. In Germany, in France, we have less precise data in China, but we know that in HI as well, our development in China has been very strong. I think there's very, very good momentum. I'm a bit sorry to hear you describing Ultra as just a small improvement, and let me reflect on that. When Sphere was launched, and it will, by the way, be a good segue to the question you asked about the VA. When Infinio and Sphere were launched back in August 2024, and by the way, I was not in charge of the company, so I'm reflecting on this as an observer, the choice was made to bring to market a product that was not perfect, but it was a product ahead. Ahead because the only one with a dedicated AI chip leading to a much better sound performance, especially when you want to listen to conversation in noise. Even with a product for Sphere that is 20-25% bigger than others, it's been selling very well. This is almost a proof in the pudding, if I can be a bit simple here, that the sound is significantly better. When the product was launched, there were some imperfections. One of them was related to a component called the receiver. The problem is completely solved now, completely solved and for a while. In the VA, where intensity in a clinic is much higher than at an independent, speed is important. This generated some challenges, and this is what I was alluding to when we were together in Germany. All of this is behind us, and we are very confident that with all of this being addressed and with Ultra being what? It is a sphere that works all day long, not just three hours, that connects perfectly. It is a bit more than just a platform upgrade because it just keeps increasing the gap with all the other competitors. What we have seen is some resistance sometimes because of the size of the device, but what we see now is that the word of mouth, when people try it, we sell more and more of the sphere. Ultra is a significant improvement in many ways. I believe I have addressed both the question of the VA and why we are confident about why we will keep gaining share over the last few weeks and few months. Yes, that is very clear. Thank you. Thank you. I could add to this that really, really talking about AI is certainly more exciting than talking about wax. EasyGuard really addresses one of the worst pain points that both the HCP and the user have been facing historically. This is a door opener for our sales teams, and this is going to help us enter new accounts. I'm sure it's a great entry point, and it really addresses a significant pain point, which, by the way, we are able to monetize. We no w have a question from the line of Veronika Dubajova from Citi. Please go ahead. Hi, good afternoon, Eric and Elodie and Thomas. Thank you for taking my questions. I will keep it to two, please. One, I just want to understand sort of your, I know this question has been asked by Hassan, but I kind of want to decompose it maybe a little bit. I think if I look at the sort of 8% growth that you did in the first half of the year in wholesale, there's about two and a half points in there from the VA. You don't want to comment on the large customer, but let's assume for argument's sake that that's kind of 100-200 basis points, which is I think what your ambition was at the time of the guidance. What that leaves the wholesale business growing at excluding that is an above-market number, but not a meaningfully above-market number. It's sort of a 4% growth rate against a market growing at two. I guess, are you satisfied with that momentum when you think about it, excluding those two big tailwinds that you've had? As you fast forward to the back half of the year, what do you think that number could look like given the things that you're launching with Virto and the Ultra upgrade? That would be my first question. The second question is a little bit of a financial one around the gross margin. Pretty meaningful compression there. Obviously, I appreciate that. Ethics played a role there. Elodie, I don't know if you have any guidance for the back half of the year and whether there's anything you can do to improve the profitability in the short term, or is this kind of the new normal given the changes you have made to the manufacturing footprint more fundamentally? Thank you so much. Veronika, thank you. I will take the first question. Yes, we're happy because I've got numbers that I cannot share in detail in front of me, but it's clear that beyond the VA, beyond the large accounts in the US, we have gained share very nicely in France, in Germany, in Canada, and in U.S. commercial in general. It's been a very, very solid past quarter and first half as far as getting shares are concerned. Again, we are confident that VirtoR, Ultra, and no longer any issues around the receiver like the ones we experienced after the launch back in 2024 of Infinio, this is gone. We are confident that in the HI space, we're going to keep growing very, very nicely. Good. I will take the question on the financials. Hi, Veronika. You were asking on the gross profit side and generally on the margin side regarding the second half outlook and what the expectations are there. From this perspective, I would say three different impacts. One is obviously operating leverage that really comes from the revenue growth, and that should, as you have seen in the first half, was also a positive element there. We expect that also to continue in the second half. Second is the cost improvements that we have seen in the first half coming from the initiatives that were taken, structural initiatives that were taken in previous year. Obviously, these will also continue in the second half. Last but not least, as I explained, we talk about some temporary costs relating to some regionalization of some of our manufacturing footprints with the ramp-up in Mexico and the ramp-up of the distribution center in Airport. The expectation there is that this should also drive further improvements in the second half. The next question comes from the line of Oliver Metzger from ODDO BHF. Please go ahead. Good afternoon. Thanks a lot for taking my questions. The first one is a little bit more general about the hearing aid market, and this has obviously also some impact on your guidance. You assumed the continuation of a 1-3% market growth, which is still compared to what we have seen, a more muted continuation of a more muted development. History has shown, and Eric, you are for multiple years in the hearing aid industry, that normally weaknesses are more of a temporary nature, and I completely understand why your guidance is that and your market assumptions are where they are. What do you think about, we're talking about six months for the second half. When do you think that we might see also growth risk in the hearing aid market back to the north of 3% towards the 4% level? That would be great to hear. The second question is about your cochlear implant business. Even excluding China, it's not doing well. It would be great to have your view. What has changed over the years? We saw it was growing steadily over multiple years. Have there been any changes in reimbursements, less willingness of co-payments, or what do you see behind this structural slowdown we see now for quite a while? Thank you. All right. Thank you, Oliver. I will start with the second question, cochlear implants. As you know, you have two types of revenues: systems and upgrades. If we are fully transparent, our latest innovation was brought to market in 2021. We are slow to innovate versus our competition. In 2026, we will come to market with a great innovation that will allow us to sell not only systems, but also upgrades that will be very relevant. By the way, a change that we have put in place in our organization is to have one head of R&D supervising both what was called HI and what is called CI. The speed at which what is developed for hearing aids gets into our implants is not satisfactory for me discovering Sonova from the inside. This explains most of the weakness behind the numbers, but I would repeat that if you put aside China, not having anything new to offer, to still grow at 3% is the testimony that from a commercial standpoint, the team are doing a great job, and this is something that we will keep in the future. Expect us sometime in 2026 to come up with a brand new solution that will allow us to get back into growing both systems and upgrades. By the way, by then, we will have absorbed the bumps and the challenges coming from the VBP deployments in China. I am positive about what we will see from the cochlear implants business units sometime later in 2026. About the market, and I'm sure you've heard that from other players, we cannot neglect the impact of in-Europe inflation on retirees and the impact of the volatility of financial markets for retirees in the U.S., where it's 401(k) plans and so on and so forth. What we think is that people have waited, and that at some point, we're going to see the market bouncing back. The question is when. Is this going to be towards the end of 2026 or second half of 2026? I'm talking calendar year. Is this going to be early 2027? That I honestly don't know. We are working with the assumption that the market, at least for the next six months, will keep growing at around 3%. By the way, one has to be careful behind the 3% because France was a very large contributor of the global growth, and it is a bit of an outlier, growing at a much faster pace. We are conservative as far as the market growth is concerned. I will repeat what we've described. Leveraging our innovations, we expect to grow at a faster pace in the HI segments. Okay, great. Thank you. We now have a question from the line of Urs Kunz from Research Partners. Please go ahead. Good afternoon. I have one question again about cochlear implants business there. Where do you take your positive expectations of having a better age tool there? You were hinting at new products in 2026. I guess that's a new processor. Is there more than a new processor that we can expect? Even then, this would have no impact, I guess, in the current fiscal year yet. As a general? Correct. It will have no impact in the current fiscal year. That is going to come next fiscal year. Absolutely. Where do you take then the positive expectations of having a better age tool in the cochlear implants business? I do not think I mentioned that. Maybe I was not clear. That is not what I suggested. What I explained is that when we come to market with a new processor, then we will see a different pattern in our growth. That will come sometime in the next fiscal year. Sorry if I was not clear. The problems in China, you think that should be something that we can expect to be better in the age too, or is that also something that we have to keep in consideration? Yeah. I'm hopeful that towards the end of H2, we will see a normalization of our business in China, but there's still a bit of work to be done in that space. My second question would be on share buybacks. I see that net debt to EBITDA level is at 1.5 now, which would allow at some point relatively soon to come back on that question. Is there anything to mention from your side? We are in fact at 1.5, net debt will be there, as you mentioned. Our capital allocation strategy, as discussed in May, is still relevant, and we are not considering a share buyback at this point in time. Next question, short question about acquisitions that were on a really low level in H1. Do we have to expect that there will not be a lot more in H2, or did you already do something that you can say H2 should be a bigger impact? In line with the capital allocation strategy, we do expect an envelope for what we call bolt-on acquisitions, so basically in the audiological care business. There was about CHF 31 million in the first half. We do expect to ramp that up in the second half, but to come in line with the overall envelope that we have previously talked about for the year. Okay. My last question on this new organization structure that you start to implement now. I guess there is no significant restructuring cost involved, is that? Because otherwise, I guess you could not stick to your normalized EBITDA guidance. Absolutely no restructuring cost. It's about creating regions reporting to me directly with region heads supervising both wholesale and retail. It's about making sure that we meet the specific needs of customers, which are very different from China to the US, from Europe to the US, etc. It's all about customer centricity and being very close to the market needs. It follows something that we did not comment about, but I can share that for already a few weeks, both the head of R&D, and I explained he's supervising now both hearing instruments and cochlear implants, and the head of quality reported to me. If I summarize this very briefly, to win in this industry, you have to keep innovating, and you have to be on quality on time. This is why both R&D and quality report to me directly. The second step is to create four regions so that we are clear on what needs to be delivered for the specific needs of customers, which are very different region by region. Coming into Sonova, I see, for instance, real significant opportunities in Asia-Pacific. The next question comes from the line of Martin Coughlan from Jefferies. Please go ahead. Hi, good afternoon, everyone. I hope that you can hear me okay, so I would have two questions if that's okay for you. The first one is that I just wanted to circle back on the UHA-related discussions that we had. It's my impression that patients equipped with the Infinio and Sphere products can get the Ultra software upgrade for free. I was wondering if you could comment on the commercial strategy for the Ultra versions. Will these be priced in line with the classic versions? Will these be priced higher than the classic versions? And/or will clients have access to both the classic and Ultra version at different price points? These are kind of the questions I'm asking myself at the moment. And I'm asking that because if I understood correctly, your comments during UHA, so your new Hero Wax Management System, is something that is only available on the Ultra version so far, and that is something that you intend to monetize. This was the first question, so maybe I can give you some time to answer this one before asking the second one. Okay. All right. Thank you for the question. Yes, indeed, for existing wearers, the upgrade to Ultra is available for free. Assuming that the HCP is offering it for free. However, for new wearers, Ultra is priced at a higher level from us, so wholesale price. Again, I've addressed that question already at UHA, so there's nothing new there. For the EasyGuard, first point, we can monetize it, and it's going to be available beyond Ultra over time. Okay. That's perfect. Thank you. For the second question, it was about the momentum in consumer hearing and cochlear implants. I would appreciate any comments that could help us do the modeling stuff for these two divisions as the momentum has been pretty bumpy and that combined differences makes it even harder to get a proper view on what could look like when it comes to the second half of this year. I will pick up that question. Looking at consumer hearing, we do expect a stronger sales in the second half than what we saw in the first half. I think a part is really driven by the introduction of our new product, the HDB 630. I do not know if you have seen, but it is a very exciting product. It is the first wireless audiophile product, and the reaction in the market has been very positive. We do see better growth on the consumer hearing compared to the first half. I think there was something on the cochlear implants as well. Cochlear implants, as Eric has mentioned, I mean, you have two sides. One side is the VBP situation in China, which he has already mentioned. The other side is the weakness that we have seen in upgrades versus systems. While systems have been strong in all areas except China, upgrades have been lagging behind because of the fact that the product there is starting to be quite aging, and the new products will come in the year 2020 or in the fiscal year 2026. That is currently the underlying business assumptions that we are taking. Okay. That is perfect. Just a quick follow-up still on the consumer hearing business. I got it that you should grow the sales on a sequential basis. What about sales growth for consumer hearing on a year-on-year basis? As I said, our assumption is to be on a stronger sequential basis, and that should come, as I said, from the new products and stronger momentum there. I will not give specific numbers year-over-year. Okay. That is perfect. Thank you very much. We now have a question from the line of Susannah Ludwig from Bernstein. Please go ahead. Great. Good afternoon, and thanks for taking my questions. I have two, please. I guess first, I just wanted to follow up about your comments on the opportunity in APAC for Sonova. Maybe if you could just comment a little bit more on what it is that Sonova needs to do differently in that region to take advantage of the opportunity. Does this require sort of different products, different brands, or a different go-to-market strategy? Second, just following up on the question on gross margins into H2, I guess, could you maybe quantify of the sort of 80 basis point headwinds this half? What percentage of that comes from the temporary costs from the ramp in the regionalization of manufacturing? Is that expected to fully abate in the second half? Thank you for the question about Asia-Pacific. I spent more than 20 years of my life across Japan, China, Singapore, etc. Your question is, what does it take to win bigger than currently for Sonova in Asia-Pacific? You have seen that we are creating a new role of head of Asia-Pacific excluding China, knowing that China already reports to me directly. This head of Asia-Pacific excluding China will be based in Asia, in Singapore. That is the first change. Managing Asia-Pacific from Switzerland is probably very challenging, irrespective of the quality of the leader. Awareness, access, affordability, consumer journey. This is what you need to tackle if you want to grow in this category. In Asia, it is particularly acute. You need to be able to bring products at different prices and yet keep profitability at the same level. Here you are talking about more simple products, maybe defeatured products, and not just selling in Asia what you have designed for Europe or the US. There is a lack of qualified professionals. You also have to think in terms of more simple solutions for dispensing. Products, price points, and certainly, as you have touched on, brands, presence on the ground. China for China, if I speak about China in particular, this is what we need to get our fair share of Asia-Pacific, which I believe we do not have today. This will take time, and it is giving you some insights about one of the dimensions of the strategy we will be talking about when we go into next year. But certainly, very good opportunities for the group in this part of the world. Great. Thanks for the comprehensive answer. I guess just on the gross margins. Yes, I will gladly answer this one. You were asking about the gross margin and specifically the impact of the ramp-up costs for the regionalization of some of our manufacturing footprint. As I mentioned, we ramped up activities on the manufacturing side in Mexico and also with our distribution center in Germany. We did absorb some ramp-up costs in the first half. Those transfers are now in the completion stage. We do expect a sequential benefit, half over half, to come from cost improvements in these areas. I will not give a specific number. Okay. Great. Thank you. The next question comes from the line of David Adlington from JPMorgan. Please go ahead. Hey, guys. Thanks for taking the questions. Most of them have been answered, but maybe just to pull you up a little bit further on the second half implied guidance for the top line. Obviously, that implies at the top end, sort of 13-14% growth in the second half. I just wondered, maybe put it another way, why not narrow the top of the range down a little bit just to make it seem still very, very wide range? And then secondly, just on the Section 232 probe and scope of tariffs, I just wanted to get your thoughts on the tariffs and what mitigations you might be able to put in place if they do come in. Thank you. I will, hi David. I will pick up the first question on the guidance. We stick to our range and 5-9%. I mentioned we go for. May we ask you to go on mute because there's noise in your background? Thank you very much. Go ahead. Yeah. As I mentioned, we achieved 4.9% in the first half. We said 7% in HI and AC. We do expect some growth in the HI side based on the new products. Infinio, Ultra, Sphere Ultra, and Virto R. That allows us to basically keep to our range in the second half. About the tariffs, as you know, we are currently exempt from U.S. tariffs based on the Nairobi Protocol. If you were referring to the Section 232, if my recollection is correct, investigation, as a matter of principle, we do not comment on ongoing investigations. It would take time anyway. If we were really in a difficult situation, we have facilities in Mexico, in the US, in Canada, and we would be advised about adjusting the way and the location where we manufacture. Understood. Thank you. We now have a question from the line of Michelle Büchler from Zürcher Kantonalbank. Please go ahead. Yeah. Hi. Do you hear me? Very well. It's actually not Michelle, it's me, Daniel. How are you here? So just a question on the ASP uplift. I'm not sure if it was already answered, but when I look at the great 7% local currency growth in the hearing instrument segment total, can you talk about the unit growth there or the other way around, the ASP uplift must have been quite an impact, right? First question. Yep. Okay. Of course, without being too granular because this becomes competitive information, if you look at HI versus AC, so wholesale versus retail, a rather good balance in the wholesale business with both growth in units and some ASP increase, more skewed towards volume than prices. If you look at our retail business, it's the opposite. We had both positive impacts, but more skewed towards price increases than on volume. This is a reflection of the fact that our own retail stores are able to drive, create value growth out of the innovations that we brought to market. A good balance if you look at the combination of both. Okay. Good to hear. The second and last question, I mean, with your background at Essilor, you already had a try on this, we all tried this great eyeglass with hearing aids. Is that an idea for the future as well for you, or is it too far away? Just a question. First, what's great when you see such initiatives with large organizations, with marketing power, is that they help us increase the awareness of the importance of good hearing. I would not comment about whether we're going to go there or not. I won't make any comments about it. Okay. Fair enough. Thanks. We now have a question from the line of Niels Granholm Leth from DNB Carnegie. Please go ahead. Thank you for taking my questions. First one on the launch of VirtoR. So wouldn't you expect any cannibalization from this CIC form factor on your other form factors? And perhaps you could elaborate on the amount of sales that would come from your CIC category now. So where could this category actually go as a percentage of sales? We know that it's about 10% of the market. Then secondly, we have had this discussion throughout this year about these five-year reimbursement cycles and to what extent it has affected the overall hearing aid market this year. Do you prescribe to the idea of market growth being under pressure this year because of fewer people renewing hearing aids now five years after the shutdown since 2020? Thank you. Yeah. I'll start with the last question. Yeah. We believe there's a longer repurchase cycle for the last few months. Yes, I think it did increase. First question. Second question, Virto R. Again, we estimate that this segment is about CHF 400 million per annum. Take a fair share of that segment. At some point, we hope to reach a closing altitude of CHF 100 million, which we see as incremental. We do not see a risk of cannibalization. What we see is that we are entering new accounts and that we are reaching to new types of consumers. We do not see a risk of cannibalization, maybe marginal, but for us, we really see it as incremental. I would repeat what I said in my introduction. What is very interesting is to see that black as a color is more than 20% of the sales. That is really something new. We have never seen that otherwise. When I am wearing it, when I see people wearing it, the reflections you get, it is really cool. It is really different. I think this product is helping us not only within the industry to get into a segment where we had no right to play because we had no rechargeable solution. By the way, we were not best in class for custom products. There we have significantly improved. We are also tackling the stigma in a new way. That is very, very exciting. By the way, what I mean by we were not that great in the custom segment is now with the new way we tailor the product with this process called the right fit, which is using AI. You get really to an optimal fit and acoustic performance in the smallest possible size. It is really the smallest of all. The returns are much, much lower than what they were before. We mentioned that at UHA, but now we have a bit more, we have three, four more weeks on top of when we met at UHA. It is a very promising category for us. Great. You would expect your CICs to close the gap to the market, which is currently at around 10%. We believe so. Thank you. Very promising. The last question comes from the line of Sibylle Bischofberger from Vontobel. Please go ahead. Thank you very much. Good afternoon, everyone. First question. In the past, on the outlook slide, you always mentioned the midterm outlook. Now it was not mentioned anymore. Is the goal still valid? This is my first question. Right. Yes, indeed, we are not sharing the midterm targets anymore. Why? I'll be very candid and straightforward here. You have a new management team. You have a new chair, and we are currently working on updating our strategy and our strategic ambition. Sometime in the first half of 2026, we will be very specific about these updated, upgraded midterm targets. Anything you'd like to add to this? I'd just like to add that we have strong fundamentals in the industry. You have an aging population in the world. In that sense, the industry is an industry that will grow because more and more people are getting older and more and more people will need some hearing aids. In the scope of that, I will say, and now with the focus on the regions and growing in those markets, these are strong fundamentals we can talk about. Yeah. Don't expect our ambition to go down. The market growth has slowed down over the past few quarters, but demography doesn't change. The world is aging, aging very fast. Demand for hearing solutions will increase. Again, we have now started the process to refresh in depth our strategy and our strategic ambition. Expect us in the first half of 2026 to come back with probably a capital day to be organized to present this to all of you. Thank you. My second question, you several times mentioned your market share has gone up. Could you give us a hint how large is your market share now? Do we share that, Thomas? I'm not sure. No, we do not generally share that. I think historically, we have always talked that we had more than a quarter. You can imagine that it has gone up from there. I would not go beyond that. Thank you anyway. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Eric Bernard, CEO, for any closing remarks. Thank you very much for all these questions. We will talk not too long down the road and looking forward to further calls and meetings in person over the next few weeks and few months. Thank you very much. Bye-bye. Ladies and gentlemen, the conference is now over. 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