The audiology market in Australia is predominantly privately funded, with some public funding from the Office of Hearing Services. The baby boomer population, better technology and the growing acceptance of the use of hearing devices are all pushing up demand.
Australia is a sophisticated market with a number of competitors and Bay Audio is positioned as a high end, customer focused retail business. Meanwhile, South East Asia is an emerging market, still very under-developed compared to other countries but with significant growth opportunities.
Abano’s joint venture audiology business, Bay International, the parent company for the Australian and Asian audiology businesses, provided 13% of gross revenue for FY15 and, after eight years of development losses, it achieved a positive EBITDA, with strong growth continuing into the current year.
Bay Audio Australia, which represents 85% of audiology’s revenues, delivered a maiden net profit after tax in FY15, with same store revenue growth of 22% in local currency in a market that we believe saw less than 6% growth. Three new greenfield stores were opened and are delivering above expectation. The very small Bay Audio Asia business is now achieving breakeven at EBITDA in a more challenging marketplace.
We expect to see continued improvements from our Australian audiology joint venture, with a further three new stores planned to open in the first half of FY16, continuing double digit revenue growth and a full year profit. Bay Audio’s Asian businesses, which are now under the oversight of the Australian management team, will focus on delivering a breakeven performance.
Read a detailed review of Bay Audio and FY15 performance.