Amplifon trims margin forecast as higher marketing costs weigh

(Reuters) -Italian hearing aid company Amplifon slightly lowered its annual margin guidance on Wednesday, after the metric was hit by higher marketing costs in Europe in the third quarter.

The company said it expected its recurring core profit margin to be broadly in line with 2023, when it posted a margin of 24%. It had previously forecast a margin of around 24.3% for this year.

Its 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 (EMEA) region.

Revenue grew 8% at constant exchange rates to 567.6 million euros ($613.75 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.

“We continued along our revenue growth path thanks to an above-market organic performance and the significant contribution of acquisitions,” CEO Enrico Vita said in the statement.

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 2.9% at 1300 GMT, little changed from before the report was published.

Tech-driven competition in the hearing aid sector is intensifying after Switzeland’s Sonova launched a first-in-market hearing device utilising real-time AI, and Apple received U.S. approval for software that it said could transform its headphones into a personalized hearing aid.

Analysts have however said that Apple’s move was not a concern for hearing aid players as over-the-counter devices target different population than prescription-based aids.

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)