When Amplifon S.p.A., the leading global hearing-aid distribution company, yesterday announced that its revenues in the first half of 2010 increased 8.9 percent to 314.4 million Euros, it may have sounded the opening bell on a rebound for the hearing industry generally.
Amplifon, based in Italy, is the leading distributor of hearing aids in Europe, through its company-branded stores, and in the U.S., where it sells through its well-known Miracle Ear and Sonus subsidiaries. Because it distributes in most major markets and sells multiple brands of hearing aids, Amplifon is a good company to watch for indications of the relative health of the hearing solutions industry generally.
While the company’s growth is real, with 5.9 percent organic growth and the rest through acquisitions, it is not yet booming, and Amplifon CEO Franco Moscetti went out of his way in the earnings announcement to reference the “uncertain and volatile economic scenario” that all companies will have to contend with through the end of the year and beyond. And while the company also enjoyed an increase in profitability, it pointed to its ongoing cost-containment measures combined with the revenue growth.
The most gratifying news was the rebound in the European market, where Amplifon sales grew 12.6 percent, which raises the question whether Europe is enjoying a stronger than expected recovery from the deep recession. In the U.S. market, where Amplifon does considerably less business, sales were down 4.3 percent, in line with a slow-growth-to-no-growth first half that most hearing-aid sellers endured. The performance may indicate that the U.S. market will continue its snail’s pace recovery in all sectors except for the federally supported Veterans Administration channel, where sales growth of hearing aids has been in the double digits.
Amplifon is less well known in the U.S. than in Europe, where it has spent the last several years actively investing in promoting the Amplifon brand name and opening Amplifon retail outlets. But it’s a good example of a macro-trend in the hearing industry toward consolidation of the sales channel. Independently owned audiology practices are still a major channel in developed markets, but increasingly the leading manufacturers are buying up audiology practices and conglomerating them into point-of-sale chains that will compete against the largest independent distributors such as Amplifon, that are also consolidating their ownership and branding at the point of sale.
Whether this trend will result in better service and better value (i.e. lower prices) for consumers, is an open question. Volume sales through conglomeration can help drive prices down, but at the same time it can lead to less personal service in a business where success or failure is determined one ear at a time.
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