Interim Report Q2 2017 Conference call August 17, 2017
2 Safe Harbor Statement The forward-looking statements in this interim report reflect the management's current expectations of certain future events and financial results. Statements regarding the future are, naturally, subject to risks and uncertainties, which may result in considerable deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events, which may prove incorrect. Factors that may cause actual results to deviate materially from expectations include – but are not limited to – general economic developments and developments in the financial markets, technological developments, changes and amendments to legislation and regulations governing GN’s markets, changes in the demand for GN's products, competition, fluctuations in sub-contractor supplies and developments in ongoing litigation (including but not limited to class action and patent infringement litigation in the United States). This presentation should not be considered an offer to sell or buy securities in GN Store Nord.
3 Agenda Group highlights Q2 2017 GN Hearing update GN Audio update Financial outlook
4 Group financial highlights Q2 2017 • GN delivered 15% revenue growth in Q2 2017 driven by Q2 Q2 Growth strong performance across GN Hearing and GN Audio 2017 2016 DKK million • Gross profit increase and margin expansion Revenue 2,393 2,089 +15% • GN Hearing development driven by Audigy and product mix Organic growth 7% 9% Gross profit 1,494 1,275 +17% • GN Audio development driven by product mix Gross margin 62.4% 61.0% +1.4%p • EBITA grew 15% reflecting solid operational execution as well EBITA 386 336 +15% as product launch costs and previously communicated EBITA margin 16.1% 16.1% 0.0%p investments in growth as part of the 2017 – 2019 strategy Profit before tax 346 303 +14% • Very strong EPS growth of 25% Net profit 268 228 +18% EPS 1.92 1.53 +25% • Continued strong FCF generation ROIC* 21% 20% +1%p Free cash flow excl. M&A 345 414 (17)% NIBD/EBITDA 1.7 1.6 * Reported EBITA (rolling four quarters) / avg. invested capital
5 Continued strong cash generation Free cash flow excl. M&A (DKK million) • GN’s focus on cash conversion continues GN Hearing GN Audio GN Store Nord • In H1 2017, cash conversion was 69%, in line with the (4)%p (18)%p (17)%p 414 high level of 70% in H1 2016 345 279 267 • In Q2 2017, cash conversion was 89%, compared to 160 131 123% in Q2 2016 • Focused and prudent management of net working Q2 16 Q2 17 Q2 16 Q2 17 Q2 16 Q2 17 capital continues Cash conversion (FCF ex. M&A / reported EBITA) GN Hearing GN Audio GN Store Nord (12)%p (61)%p (34)%p 139% 123% 117% 105% 89% 78% Q2 16 Q2 17 Q2 16 Q2 17 Q2 2016 Q2 2017 Q2 16 Q2 17
6 Successful issue of convertible bond • De-risking company profile Diversification of • Free up banking debt funding sources • The CB further diversifies GN’s funding profile • 6x oversubscription : Total orders of EUR 1.5bn Strong investor • Book covered within 60 minutes appetite • Final loan amount of EUR 225 million , above initially targeted level • Zero coupon locked in for 5 years Attractive terms • Positive impact on group cash interest payments • Conversion premium of 40% achieved , at the top of the marketed 27.5%- Conversion premium 40.0% range • Strike price of DKK 269.46 of 40% • If the CB is exercised, GN will settle with already issued Treasury shares
7 Agenda Group highlights Q2 2017 GN Hearing update GN Audio update Financial outlook
8 GN Hearing key highlights Q2 2017 Solid revenue growth 12% revenue growth, 5% organically Strong gross profit increase 16% increase in gross profit Strong growth in EBITA 7% increase in EBITA Strong global launch of 5 th generation ReSound LiNX 3D launched 2.4 GHz , full family hearing aids
9 GN Hearing financial highlights Q2 2017 • Strong revenue development in Q2 2017 • GN Hearing’s revenue increased 12% in Q2 2017 Q2 2017 Q2 2016 Growth DKK million • Organic growth of 5% on a comparison base, with 10% organic growth in Q2 2016 Revenue 1,415 1,265 +12% Organic growth 5% 10% • The newly launched ReSound LiNX 3D generating strong momentum. Double digit organic growth since launch Gross profit 975 840 +16% • Strong gross profit increase driven by Audigy and Gross margin 68.9% 66.4% +2.5%p product mix EBITA 255 239 +7% • 7% increase in EBITA reflecting solid revenue growth EBITA margin 18.0% 18.9% (0.9)%p ROIC* 19% 17% +2%p • EBITA margin decrease in the quarter reflecting product launch costs and investments in growth as part of the Free cash flow excl. M&A 267 279 (12) 2017 – 2019 strategy * Reported EBITA (rolling four quarters) / avg. invested capital Note: continued operations
10 Well-balanced growth in Q2 2017 Leading technology and commercial excellence driving growth North America Europe Rest of World • Strong performance especially • GN Hearing continued to gain • Strong growth driven by, e.g., in the US commercial market market share in several important driven by ReSound LiNX 3D and markets, including Southern China and Distributor Sales Beltone Trust Europe Great market presence and momentum to take advantage of the newly launched ReSound LiNX 3D
11 ReSound LiNX 3D - The future of Smart Hearing • Strong and documented audiological benefits: Hear more than you ever - Superior Sound Quality thought - Most advanced surround sound possible - Best speech recognition in noise Enhanced • Fast, easy to use hearing and • On-the-go personalization fitting • Available on Android and iOS incl. Apple Watch experience • New cloud based technology Hearing care • Remote care comparable to that offered in clinic wherever you • Flexibility, ease and convenience for both user are and hearing care professional
12 Strong launch of ReSound LiNX 3D • Global launch • First launched in US on April 29. Since then launched in all major countries, including Austria, Canada, Denmark, France, Germany, Italy, Korea, Netherlands, Norway, Spain, Sweden, Switzerland and UK • First shipments made ahead of plan to accommodate extraordinarily high interest from customers • Launched as a full product family • Launched in Top and Plus performance levels • Launched at a price premium to ReSound LiNX 2 • Best initial media coverage • 50% more original stories reached 1 • 2x markets reached by media coverage 1 1: First eight weeks following launch. Compared to ReSound LiNX 2
13 Feedback focuses on improved Sound Quality “ Even the subtlest sounds in the office were audible and the tiring sound of the water feature did not distract me from what I was doing. It was then that I knew I was experiencing the very best hearing correction I have ever worn … In all situations I heard very well and my conclusion was I was hearing like I remembered the way I heard 15 years ago … this is the best there has ever been ... yet . You know we all are expecting closer to perfection but in the meantime you are almost there – Hearing care professional, Colorado, US “ I had to take a moment to write this email to you … the new 3D technology has been most impressive …the patients that I upgraded from LiNX 2 to 3D have sung its praises. The positive - more accurately - glowing responses from my patients have been almost immediate! ... I have even received emails after they went home and wore it for a few days reiterating their first impressions. It was evident that ReSound 3D technology had unearthed what many have asked for - more clarity, better speech in noise and spatial sense – Hearing care professional, Georgia, US
14 Strong launch KPIs – exceeding those of ReSound LiNX 2 • In the first 9 weeks of the launch, ReSound Unit sales 1 LiNX 3D has performed stronger than ReSound LiNX 2 globally Strong sales uptake • Launch plans facilitating strong uptake of ReSound LiNX 3D (see next slide) ReSound LiNX2 ReSound LiNX2 - adjusted • Feedback focuses on improved sound quality ReSound LiNX 3D ASP increase • Global ASP increase like-for-like like-for-like Positive ASP • Price point upselling compared to ReSound development LiNX 2 App downloads (accumulated) • Very positive response from dispensers Remote fine-tuning very • Strong increase of end-user registrations well-received by dispensers and end- • Double up number of downloads of ReSound users SMART 3D app vs ReSound SMART app 1 2 3 4 5 6 7 8 9 Weeks ReSound LiNX 3D ReSound LiNX2 1: Global unit sales per day following launch, including Beltone Trust and Beltone Legend. ReSound LiNX 2 number upwards adjusted due to larger market in general as well as stronger market share for GN Hearing
15 Launch planning facilitates a strong unit uptake Unit sales development 1 Units • Launch execution planning, in line with traditional product cycle in hearing aid industry • Limited time between announcement and launch, in order to minimize traditionally lower sales in intermediary period • Double digit organic growth since launch Time Announcement, Launch, April 3 April 29 Average unit sales before announcement Average unit sales after launch Average unit sales between announcement and launch 1: Combined sale of ReSound LiNX 2 and ReSound LiNX 3D (and corresponding Beltone products). From 4 months before announcement and until end of June
Recommend
More recommend
