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Sonova Holdings & Durr Ag

|Includes: Sonova Holding AG (SONVF)

Sonova Holdings AG is a Swiss based company, which builds hearing aids and other hearing healthcare solutions. The company has manufacturing base in Switzerland, Vietnam & China. The company took a big hit recently as its share price fell off a cliff.  With prices trading at CHF115 on the 15th March the company announced its sales and earnings outlook for 2010/11. Despite a sales increase, the company announced that the launch of its new Phonak hearing range had been delayed in the US due to an unclear regulatory situation. They were also affected by a recall of their Advanced Bionics, which is estimated at costing them CHF 65 million. The next day the price had dropped to CHF 89.15, a decrease of 25%.

Unfortunately due to the reporting practices of Swiss companies we cannot veify who carried out a transaction, but it certainly saw one member of the exec team get burned. They bought close to €50k shares at CHF122 three days prior to the announcement. However they were in the minority, as in the fortnight before the announcement, a total of €11.09 million was sold by directors. This was made of many selling shares straight after exercising options, but also included 5 straight sells. One trade that did come to light was that of Chairman Andy Rihs, who sold €28.9 million on the 8th March. But with accusations of insider trading, the director was forced to overturn the trade and also demote himself. Despite all concerned denying the allegations; Chief Exec, Valentin Chapero, & Chief Financial Officer, Oliver Walker, resigned from the company.

Despite the controversy the directors have not been put off trading, and in the last two months have been back in the market buying at between CHF78 – 89 per share.  The most recent of which saw an executive member add €81k as the price continued to head southwards.

Over the years the Chairman of Durr Ag has been a long term buyer, as is typical with European companies owned by families. Every now and again the chairman switches allegiance and dumps stock. Last week was such an occasion. The director sold 69k shares at €29.3 per share, taking home just over €2 million. The sale is fairly insignificant when compared to Heinz Durr’s family holdings, which currently owns 30% of the company, valuing the holding at around €162 million.  The director has been quiet so far this year, and the sale is only his third trade. His previous trades were buying €230k in January and then again in March. The sale is also the first for the director in over 12 months, when he sold €2 million in April ‘10.

The sale came just as the company’s price has returned to mid-2008 levels having suffered through the financial crisis where it dropped below €10 a share. Durr Ag is a world leader in car paint, equipping 50% of global assembly plants. The company’s future is therefore closely tied with the German car market, and has seen its recovery closely mirror that of fellow German industrialists BMW Ag, and others.