Amplifon trims margin forecast but rules out competition risk from Apple earbuds
Recasts with detail on competition, adds CEO quote in paragraphs 3,7-8, analyst comment in paragraph 5
By Alberto Chiumento
Oct 30 (Reuters) -Italian hearing aid company Amplifon AMPF.MI again trimmed its annual margin guidance on Wednesday, hit by higher marketing costs in Europe in the third quarter, but ruled out competition risks from new players such as Apple AAPL.O.
Tech-driven competition in the hearing aid sector is intensifying after Switzerland's Sonova SOON.S launched a first-in-market hearing device utilising real-time AI, and Apple AAPL.O received U.S. approval for software that it said could transform its headphones into a personalized hearing aid.
"I do not expect any meaningful impact on our industry from new functionality of Apple earbuds," Enrico Vita told analysts in a conference call, adding Apple aims to serve customers with only mild hearing difficulties.
The company now expects its recurring core profit margin to be broadly in line with 2023, when it posted a margin of 24%. Its initial margin forecast for 2024 was around 24.6%, which it trimmed to 24.3% in July.
"It translates into no margin expansion year-on-year," Jefferies analysts said in a note.
Amplifon's third-quarter core profit margin was 20.3% of revenue, down 40 basis points from last year due to lower operating leverage and higher marketing investments to overcome market softness in the Europe, Middle East and Africa region.
Despite the lower margin guidance, Vita said the company is poised to again outperform the market, which he expects to grow organically by 3% compared to last year.
"This is a significant achievement as we are more skewed to the European region, which was the market most affected by lower growth," Vita said, adding the contribution from acquisitions will boost revenue by 3% by year-end.
Revenue grew 8% at constant exchange rates in the third quarter to 567.6 million euros ($613.8 million), driven by a 15.3% rise in the Americas, Amplifon's second biggest market that generates about 22% of its total sales.
Its biggest market, EMEA, saw slower 3.8% revenue growth due to a "still soft European market", Amplifon said.
However, recurring net profit slumped 25.5% to 17.5 million euros due to increased financial expenses and higher depreciation and amortization following acquisitions.
Shares in Amplifon were down 3.0% at 1550 GMT, little changed from before the report was published.
The Milan-based company confirmed its full-year revenue guidance for high single-digit percentage growth at constant exchange rates.
($1 = 0.9248 euros)
Reporting by Alberto Chiumento in Gdansk; editing by Milla Nissi and Jan Harvey
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