Earnings Release • Oct 29, 2021
Earnings Release
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| GN Store Nord 2% organic growth |
• GN delivered 2% organic revenue growth in Q3 2021 – building off a very strong Q3 2020 • EBITA reached DKK 625 million in Q3 2021 compared to DKK 681 million in Q3 2020, excluding transaction related costs and gain from legal settlements and litigation, reflecting continuous investments into the business • Free cash flow excl. M&A was DKK 493 million in Q3 2021, equal to a cash conversion of 81% • Leverage of 1.5x net interest-bearing debt to EBITDA • Announcement of GN to acquire SteelSeries – an ideal strategic fit and access to the fast growing market for gaming gear. Share buyback program paused • As a consequence of the revised financial guidance for GN Audio organic revenue growth, GN Store Nord now expects a growth in EPS of more than 40% for 2021 excluding transaction related costs |
|---|---|
| GN Hearing 4% organic growth |
• GN Hearing delivered organic revenue growth of 4% in Q3 2021 (-6% compared to Q3 2019) in a hearing aid market, which is still impacted by significant regional differences due to COVID-19 • EBITA increased to DKK 173 million in Q3 2021 compared to DKK 169 million in Q3 2020 driven by the revenue growth and supported by prudent cost management • Free cash flow excl. M&A was DKK 340 million in Q3 2021 compared to DKK 47 million in Q3 2020, mainly driven by a gain from channel investments |
| GN Audio 1% organic growth |
• GN Audio continued to experience strong demand across enterprise and consumer and delivered 1% organic revenue growth in Q3 2021 on top of the 72% growth delivered in Q3 2020. This reflect a high absolute revenue level, but with sales being negatively impacted by the global supply situation. GN Audio continues to work closely with suppliers of components to address demand • EBITA decreased to DKK 488 million in Q3 2021 from DKK 550 million in Q3 2020, excluding transaction related costs and gain from legal settlements and litigation, driven by investments into future growth opportunities. The EBITA margin reached 20.0% in Q3 2021 compared to 22.7% in Q3 2020 • Free cash flow excl. M&A was DKK 281 million in Q3 2021 compared to DKK 592 million in Q3 2020 reflecting the lower EBITA as well as the gain from legal settlements and litigation GN Audio today revises its organic revenue growth guidance for 2021 from more than • 25% to 22-25% due to significantly increased volatility and accelerating amount of delays in component deliveries as well as contract de-commitments from certain GN Audio suppliers. The EBITA margin guidance of more than 21% excluding transaction related costs is confirmed |
| Financial overview Q3 | 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| GN Hearing | GN Audio | Group total* | |||||||
| DKK million | Q3 2021 | Q3 2020 | Growth | Q3 2021 | Q3 2020 | Growth | Q3 2021 | Q3 2020 | Growth |
| Revenue | 1,347 | 1,318 | 2% | 2,440 | 2,421 | 1% | 3,787 | 3,739 | 1% |
| Organic growth | 4% | -11% | 1% | 72% | 2% | 29% | |||
| Gross profit | 891 | 859 | 4% | 1,222 | 1,239 | -1% | 2,113 | 2,098 | 1% |
| Gross profit margin | 66.1% | 65.2% | +0.9%p | 50.1% | 51.2% | -1.1%p | 55.8% | 56.1% | -0.3%p |
| EBITA | 173 | 169 | 2% | 488*** | 550** | -11% | 625*** | 681** | -8% |
| EBITA margin | 12.8% | 12.8% | 0%p | 20.0%*** | 22.7%** | -2.7%p | 16.5%*** | 18.2%** | -1.7%p |
| Earnings per share (EPS) | 3.46*** | 4.09** | -15% | ||||||
| Free cash flow excl. M&A | 340 | 47 | 623% | 281 | 592 | -53% | 493 | 612 | -19% |
| Cash conversion | 197% | 28% | +169%p | 59% | 89% | -30%p | 81% | 77% | +4%p |
* Including "Other", ** Excluding gain of DKK 114 million from legal settlements and litigation *** Excluding transaction related costs of DKK 14 million associated with the acquisition of SteelSeries
| DKK million | Q3 | Q3 | YTD | YTD | Full year |
|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |
| (unaud.) | (unaud.) | (unaud.) | (unaud.) | (aud.) | |
| GN Hearing | |||||
| Revenue | 1,347 | 1,318 | 3,903 | 3,347 | 4,725 |
| Revenue growth | 2% | -14% | 17% | -28% | -26% |
| Organic growth | 4% | -11% | 22% | -27% | -24% |
| Gross profit margin | 66.1% | 65.2% | 63.8% | 60.7% | 61.5% |
| EBITA* | 173 | 169 | 424 | -112 | 41 |
| EBITA margin* | 12.8% | 12.8% | 10.9% | -3.3% | 0.9% |
| ROIC (EBITA*/Average invested capital) | 9% | 4% | 9% | 4% | 1% |
| Free cash flow excl. M&A | 340 | 47 | 259 | -136 | 127 |
| Cash conversion (Free cash flow excl. M&A/EBITA*) | 197% | 28% | 61% | NA | 310% |
| GN Audio | |||||
| Revenue | 2,440 | 2,421 | 7,772 | 6,018 | 8,724 |
| Revenue growth | 1% | 66% | 29% | 41% | 40% |
| Organic growth | 1% | 72% | 33% | 42% | 42% |
| Gross profit margin | 50.1% | 51.2% | 51.0% | 51.1% | 50.4% |
| EBITA* | 474 | 664 | 1,720 | 1,360 | 2,002 |
| EBITA margin* | 19.4% | 27.4% | 22.1% | 22.6% | 22.9% |
| ROIC (EBITA*/Average invested capital) | 82% | 69% | 82% | 69% | 81% |
| Free cash flow excl. M&A | 281 | 592 | 1,090 | 1,104 | 1,729 |
| Cash conversion (Free cash flow excl. M&A/EBITA*) | 59% | 89% | 63% | 81% | 86% |
| GN Store Nord | |||||
| Revenue | 3,787 | 3,739 | 11,675 | 9,365 | 13,449 |
| Revenue growth | 1% | 25% | 25% | 5% | 7% |
| Organic growth | 2% | 29% | 29% | 6% | 9% |
| Gross profit margin | 55.8% | 56.1% | 55.3% | 54.5% | 54.3% |
| EBITA* | 611 | 795 | 1,999 | 1,120 | 1,866 |
| EBITA margin* | 16.1% | 21.3% | 17.1% | 12.0% | 13.9% |
| Profit (loss) before tax | 567 | 801 | 1,731 | 955 | 1,612 |
| Effective tax rate | 21.3% | 22.2% | 21.3% | 22.3% | 21.3% |
| ROIC (EBITA*/Average invested capital) | 27% | 20% | 27% | 20% | 19% |
| Earnings per share, basic (EPS) | 3.37 | 4.78 | 10.33 | 5.63 | 9.72 |
| Earnings per share, fully diluted (EPS diluted) | 3.33 | 4.74 | 10.20 | 5.58 | 9.63 |
| Free cash flow excl. M&A | 493 | 612 | 981 | 969 | 1,865 |
| Cash conversion (Free cash flow excl. M&A/EBITA*) | 81% | 77% | 49% | 87% | 100% |
| Equity ratio | 32.6% | 29.5% | 32.6% | 29.5% | 31.0% |
| Net interest-bearing debt | 4,637 | 5,105 | 4,637 | 5,105 | 4,198 |
| Net interest-bearing debt (period-end)/EBITDA | 1.5 | 2.2 | 1.5 | 2.2 | 1.8 |
| Share buybacks** | 704 | - | 1,112 | 453 | 453 |
| Outstanding shares, end of period (thousand) | 127,776 | 128,813 | 127,776 | 128,813 | 128,975 |
| Average number of outstanding shares (thousand) | 128,507 | 128,790 | 129,181 | 128,775 | 128,805 |
| Average number of outstanding shares, fully diluted (thousand) | 129,996 | 130,048 | 130,821 | 129,909 | 130,032 |
| Treasury shares, end of period (thousand) | 10,400 | 13,455 | 10,400 | 13,455 | 13,293 |
| Share price at the end of the period | 445.1 | 480.8 | 445.1 | 480.8 | 487.2 |
| Market capitalization | 56,873 | 61,933 | 56,873 | 61,933 | 62,837 |
ROIC and NIBD/EBITDA are calculated based on EBITA and EBITDA for the latest four quarters
* Excluding gain (loss) on divestments of operations etc. and amortization of acquired intangible assets but including amortization of development projects and software
developed in-house.
** Including buybacks as part of share based incentive programs
In Q3 2021, GN Hearing delivered 4% organic revenue growth in a hearing aid market, which is still impacted by significant regional differences due to COVID-19
GN Hearing delivered organic revenue growth of 4% in Q3 2021 (-6% compared to Q3 2019). Revenue growth was 2% including around -1% impact from the development in foreign exchange rates and around -1% impact from M&A. In the first nine months of 2021, GN Hearing delivered organic revenue growth of 22% (-8% compared to YTD 2019).
As for the hearing aid industry overall, COVID-19 continued to impact GN Hearing in Q3 2021 due to mutations of the virus and related restrictions.
In North America, our biggest and most important region, the hearing aid market in Q3 2021 did not improve further from Q2 2021 but hearing aid volumes continued being above 2019 levels with significant differences across channels. GN Hearing's organic revenue growth in North America was 7% (-12% vs. Q3 2019) driven by solid performance in the independent market with the full and
updated ReSound portfolio, but offset by the performance in the VA.
In North America overall, revenue growth was 4% including around -1% impact from the development in foreign exchange rates and -2% impact from M&A. In the first nine months of 2021, GN Hearing delivered organic revenue growth of 24% in North America (-13% compared to YTD 2019).
In Europe, the hearing aid market continued to be impacted by COVID-19, but with significant differences across countries. Especially France saw continued strong market growth, while Germany softened a bit compared to Q3 2020. GN Hearing experienced organic revenue growth of -11% (-3% vs. Q3 2019), while revenue growth was - 12% including around -1% impact from the development in foreign exchange rates. In the first nine months of 2021, GN Hearing delivered organic revenue growth of 10% in Europe (-7% compared to YTD 2019).
The Rest of World region continued to be impacted by COVID-19 in different ways across countries, dependent on the level of local restrictions. GN Hearing saw strong performance in, among other, China while Japan continued to be heavily impacted by local restrictions. In the Rest of World region organic revenue growth was 17% (7% compared to Q3 2019). Revenue growth was 17% including an insignificant impact from the development in foreign exchange rates. In the first nine months of 2021, GN Hearing delivered organic revenue growth of 32% in the Rest of World region (2% compared to YTD 2019).
Gross profit reached DKK 891 million in Q3 2021 corresponding to a gross margin of 66.1% compared to 65.2% in Q3 2020 due to higher volumes and mix effects. For the first nine months of 2021 the gross margin reached 63.8%.
GN Hearing's OPEX continued to be prudently managed also during Q3 2021. Sales, distribution, and administrative expenses decreased by 5% in Q3 2021 compared to Q3 2020, mainly driven by tight OPEX control while continuing to invest into market normalization and IT infrastructure. Compared to Q3 2019, sales, distribution, and administrative expenses decreased by 14%. Investments in R&D increased by 29% in line with the strategy. In the first nine months of 2021, OPEX has decreased by 4% driven by tight cost control.
GN Hearing's EBITA increased to DKK 173 million in Q3 2021 compared to DKK 169 million in Q3 2020. As a result, the EBITA margin was 12.8% in Q3 2021. In the first nine months of 2021, EBITA increased to DKK 424 million equal to an EBITA margin of 10.9%.
The return on invested capital (ROIC) was 9% in Q3 2021, compared to 4% in Q3 2020, mainly due to the revenue growth. ROIC is still below historical levels due to the impact from COVID-19 as ROIC is calculated based on a 12-months rolling EBITA.
Free cash flow excl. M&A was DKK 340 million in Q3 2021 compared to DKK 47 million in Q3 2020, mainly driven by a gain from channel investments. Cash conversion was 197% compared to 28% in the same period last year. In the first nine months of 2021, free cash flow excl. M&A was DKK 259 million compared to DKK -136 million in the same period of 2020. In the first nine months of 2021, cash conversion was 61%.
As announced on October 5, GN Hearing has decided to initiate a transformation of R&D with the objective to increase quality, predictability of delivery times, and R&D efficiency. The R&D leadership has been changed with appointing Dr Günther Pausch as head of R&D, an industry experienced leader.
On October 19, FDA issued the proposed OTC Hearing Aid ruling, which GN welcomes and will seek to understand the full implications of. GN is committed to enable millions of Americans who need support to make their first step on their hearing health journey and aims to develop new innovative solutions complying with the new US over-the-counter hearing aid regulation. GN will leverage the unique combination of medical grade technology and consumer audio expertise. This development will be the culmination of years of GN Group research into consumer behavior, hearing challenges and preferences.
During 2021, the global hearing aid markets continued to be impacted by COVID-19 and the consequential regional and local restrictions. Towards the end of the period, the market recovery trend seems to have stabilized. Due to the Delta variant and consequential reinforced local restrictions normalization has not yet materialized in all markets.
We continue to believe that the fundamentals of the hearing aid market are intact and, in the mid-term, GN Hearing still estimates the annual market growth to be around 4 - 6% in volumes with annual ASP decline of around 1 - 2%. GN Hearing's mid-term target of growing faster than the market is intact.
"Unfortunately, we had to revise our financial guidance for the year due to product launch delays. However, we firmly believe that the transformation we have initiated of our R&D setup will secure the new product launches in 2022 that enables our continued journey towards delivering more natural and individualized hearing instruments. Further, we are very pleased to finally see the draft over-the-counter regulation, which will open new market opportunities, and we look forward to having the opportunity to comment on FDA's proposal."
Gitte Aabo, CEO of GN Hearing
In Q3 2021, GN Audio delivered 1% organic revenue growth, reflecting strong demand but a challenged global supply situation. The increased volatility in the global supply situation has caused a revision of the organic revenue guidance
GN Audio delivered 1% organic revenue growth in Q3 2021 on top of the 72% delivered in Q3 2020, driven by strong demand across consumer and enterprise products. Revenue growth was 1% including an insignificant impact from the development in foreign exchange rates. In the first nine months of 2021, GN Audio delivered an organic revenue growth of 33%.
GN Audio saw solid performance in Q3 2021 in North America, especially within the enterprise segment, leading to 5% organic revenue growth for the region (67% compared to Q3 2019). Revenue growth was 3% including around -2% impact from the development in foreign exchange rates. In the first nine months of 2021, GN Audio delivered organic revenue growth of 35% in North America.
In Europe, GN Audio delivered revenue of DKK 1,068 million corresponding to organic revenue growth of -7% (74% compared to Q3 2019), on top of a very high comparison base. Especially Germany performed strongly during the quarter. Revenue growth was -5% including around 2% impact from the development in foreign exchange rates. In the first nine months of 2021, GN Audio delivered organic revenue growth of 34% in Europe.
In the Rest of World region, GN Audio saw strong performance across the region with particularly strong organic revenue growth in, among other, Australia and Brazil. Organic revenue growth for the Rest of World region was 12% (77% compared to Q3 2019). Revenue growth was 12% including an insignificant impact from the development in foreign exchange rates. In the first nine months of 2021, GN Audio delivered organic revenue growth of 27% in Rest of World.
GN Audio's gross profit reached DKK 1,222 million in Q3 2021 compared to DKK 1,239 million in Q3 2020. The gross margin was 50.1% in Q3 2021 compared to 51.2% in Q3 2020 driven by a negative impact from increased freight and production costs due to COVID-19 and mix effects. GN Audio continues to be impacted by tariffs. In the first nine months of 2021, the gross profit increased by 29% to DKK 3,966 million, corresponding to a gross margin of 51.0%, in line with the first nine months of 2020.
GN Audio's OPEX was DKK 734 million in Q3 2021 (excluding transaction related costs of DKK 14 million associated with the acquisition of SteelSeries), reflecting a 7% increase compared to Q3 2020 (excluding gain from legal settlements and litigation of DKK 114 million in Q3 2020). Selling, distribution and administrative costs increased by 22%, mainly driven by continued investments in future growth opportunities. Expensed R&D decreased by 4% reflecting timing effects as incurred R&D
investments increased by 60% compared to Q3 2020. In the first nine months of 2021, GN Audio has significantly increased OPEX investments leading to growth of 22% compared to the same period of 2020 (excluding transaction related costs and gain from legal settlements and legislation).
GN Audio's EBITA, excluding transaction related costs, ended at DKK 488 million in Q3 2021. As a result, the EBITA margin was 20.0%, compared to 22.7% (excluding gain from legal settlements and litigation) realized in Q3 2020, reflecting the slightly lower gross margin and the investments in future growth opportunities, in line with the strategy and financial guidance. In the first nine months of 2021, the EBITA margin was 22.3% (excluding transaction related costs) compared to 20.7% (excluding the gain from legal settlements and litigation) in the same period of 2020.
* Excluding gain of DKK 114 million from legal settlements and litigation ** Excluding transaction related costs of DKK -14 million associated with the acquisition of SteelSeries
The return on invested capital (ROIC) was 82% in Q3 2021 compared to 69% in Q3 2020, driven by the growth in EBITA as ROIC is calculated based on a 12-months rolling EBITA.
Free cash flow excl. M&A was DKK 281 million in Q3 2021 compared to DKK 592 million in Q3 2020. The decrease in cash flow was mainly driven by the DKK 114 million gain from legal settlements and litigation in Q3 2020 as well as investments in future growth opportunities. Cash conversion was 59% compared to 89% in the same period last year. In the first nine months of 2021, free cash flow excl. M&A was DKK 1,090 million compared to DKK 1,104 million in the same period of 2020. In the first nine months of 2021, cash conversion was 63% compared to 81% in the first nine months of 2020.
On August 31, 2021, GN Audio announced three products to establish a new era of Jabra Elite true wireless earbuds. The additions to the Elite portfolio include the Jabra Elite 7 Pro, a revolutionary product that features Jabra MultiSensor VoiceTM technology, offering best-in-class call performance. GN Audio is also releasing the Jabra Elite 7 Active with pioneering ShakeGripTM coating, perfect for those with active lifestyles. Finally, the third addition to the range is the Jabra Elite 3, which brings fantastic sound while on-the-go to a wide audience. Jabra Elite 3 was available beginning of September 2021, whilst Jabra Elite 7 Pro and Elite 7 Active were available since early October 2021, all at selected retailers.
On October 12, 2021, GN Audio announced the release of the latest in its Evolve range of enterprise headsets, the Evolve2 75. With more and more employees seeing their ideal work week including a hybrid model of working, the Evolve2 75 introduces an innovative new solution, specifically engineered to make flexible working simpler and more productive for everyone, everywhere. To address the needs, Jabra has packed the Evolve2 75 with new features that push sound quality and comfort even further. Maximizing flexibility and increasing concentration, the Evolve2 75 delivers crystal-clear calls and pitch-perfect music in any surroundings. Jabra Evolve2 75 offers fully adjustable ANC as the first in the Evolve range. Jabra Evolve2 75 was available from mid-October 2021 at selected retailers.
In Q3 2021, the demand in GN Audio's core addressable market continued to be strong and robust, partly driven by the continued need for flexible working solutions. For the coming years, GN Audio expects that the favorable global enterprise market trend will continue and that the market will grow at around 10% in value when assuming a stable macro environment and supply situation. GN Audio's mid-term target of growing faster than the market is fully intact.
"We see continued very strong demand across our segments and given the increasing challenges and volatility related to the global shortage of certain components, we are very satisfied with the growth achieved in the quarter on top of the very strong base from last year. However, the increased volatility related to the global supply situation has forced us to revise the guidance. We are naturally disappointed by the guidance revision, but we continue to be very comfortable with the underlying demand and trends, which bodes well for our business in the years to come. With launches of the new Jabra Elite line-up of true wireless earbuds, the launch of Jabra Evolve2 75 as well as our expanded Jabra PanaCast conference video portfolio, GN Audio continues to offer an industry leading product portfolio."
René Svendsen-Tune, CEO of GN Audio
We believe that the fundamentals of the company are strong and that the business will return to "normality" when the impact of the pandemic is safely behind us. The impact of COVID-19 obviously influences GN Hearing in a completely different way than GN Audio. We see having the two businesses under one roof as a position of strength for the company both in the short and long-term, and the synergies have never been stronger.
GN delivered 2% organic revenue growth in Q3 2021. Revenue growth was 1% including around -1% impact from the development in foreign exchange rates. In the first nine months of 2021, GN delivered organic revenue growth of 29%.
EBITA in Other amounted to DKK -36 million in Q3 2021, compared to DKK -38 million in Q3 2020. GN Store Nord's EBITA, excluding transaction related costs, ended at DKK 625 million in Q3 2021 compared to DKK 681 million in Q3 2020 (excluding gain of from legal settlements and litigation), reflecting continuous investments into the business. This corresponds to an EBITA margin of 16.5% in Q3 2021 (excluding transaction related costs) compared to 18.2% in
Q3 2020 (excluding gain from legal settlement and litigation). In the first nine months of 2021, EBITA grew by 100% to DKK 2,013 million (excluding transaction related costs and gain from legal settlement and litigation) equal to an EBITA margin of 17.2% compared to 10.7% in the same period in 2020.
* Excluding gain of DKK 114 million from legal settlements and litigation ** Excluding transaction related costs of DKK 14 million related to the acquisition of SteelSeries
In Q3 2021, amortization of acquired intangible assets amounted to DKK -40 million compared to DKK -82 million in Q3 2020. Q3 2020 was impacted by impairment loss in the Beltone retail in relation to the ongoing optimization of the portfolio.
Financial items were DKK -13 million in Q3 2021 compared to DKK 91 million in Q3 2020, mainly related to a positive noncash contribution from foreign exchange revaluation of certain balance sheet items from the depreciating USD in Q3 2020. In Q3 2021, share of profit (loss) in associates was DKK 9 million compared to DKK -2 million in Q3 2020.
The profit before tax was DKK 581 million in Q3 2021 (excluding transaction related costs) compared to DKK 687 million in Q3 2020 (excluding gain from legal settlements and litigation). The effective tax rate was 21.3%, translating into a net profit of DKK 457 million in Q3 2021 (excluding transaction related costs) compared to DKK 534 million in Q3 2020 (excluding gain from legal settlements and litigation). In the first nine months of 2021, this corresponds to a net profit increase of 110% (excluding transaction related costs) compared to the same period of 2020 (excluding gain from legal settlements and litigation).
Free cash flow excl. M&A was DKK 493 million in Q3 2021 compared to DKK 612 million in Q3 2020, mainly driven by the gain from legal settlements and litigation of DKK 114 million in Q3 2020 as well as investments in future growth opportunities. This equals a cash conversion of 81% in Q3 2021. In the first nine months of 2021, free cash flow excl. M&A was DKK 981 million compared to DKK 969 million in the same period last year, which translates into a cash conversion of 49% compared to 87% in the same period last year.
Earnings per share (EPS), was DKK 3.46 in Q3 2021 (excluding transaction related costs) compared to DKK 4.09 in Q3 2020 (excluding gain from legal settlements and litigation). For the first nine months of 2021 this corresponds to an EPS of DKK 10.41 (excluding transaction related costs) compared to DKK 5.63 in the same period last year (reported).
* Excluding gain of DKK 114 million from legal settlements and litigation ** Excluding transaction related costs of DKK -14 million associated with the acquisition of SteelSeries
By the end of Q3 2021, equity in GN Store Nord amounted to DKK 5,761 million compared to DKK 4,874 million in Q3 2020, corresponding to an increase of 18%. The increase was driven by the net profits generated during the period, on top of the execution of the ongoing share buyback program and the yearly dividend payment.
On October 6, GN announced a signed agreement to acquire SteelSeries – a global innovation driven pioneer in premium software-enabled gaming gear. Following the expected acquisition, GN gains a very strong position in the attractive upscale market and expands its position in the premium audio market. SteelSeries, with its best-in-class product portfolio, attractive growth profile and margin structure, is a company that presents an attractive growth and scaling opportunity for GN Audio. SteelSeries brings a highly relevant and competitive portfolio and strong engineering competencies. Combining these forces with GN Audio's strong track record, flawless supply chain setup and wide-ranging distribution channels will drive synergies and further value creation for both organizations.
The total purchase price for SteelSeries amounts to DKK 8.0 billion on a cash and debt free basis. Closing of the transaction is subject to customary regulatory approvals and is anticipated by the beginning of 2022.
Net interest-bearing debt was DKK 4,637 million in Q3 2021 compared to DKK 5,105 million in Q3 2020, which was driven by the strong cash flow generation but offset by the ongoing share buyback program. Net interest-bearing debt to EBITDA leverage ratio increased to 1.5x compared to 1.3x by the end of Q2 2021. The balance sheet remains very sound with ample sources of liquidity. GN had cash and cash equivalents of DKK 1,619 million at the end of Q3 2021.
With the announcement of the SteelSeries acquisition, GN expects its financial leverage to increase above the long-term leverage target of 1-2x NIBD/EBITDA in 2022, subject to closing of the transaction. The transaction represents an enterprise value on a cash and debt free basis of DKK 8.0 billion. The acquisition will be structured as a 100% cash payment financed through existing cash balances and a bridge loan, which is expected to be replaced with other debt instruments at a later point in time. As a result, GN Store Nord's share buyback program, initiated in May 2021 (see announcement 14) was paused with immediate effect. GN Store Nord will focus on de-leveraging in order to be within its capital structure policy again within a couple of years.
In the first nine months of 2021, GN has in total distributed DKK 1,318 million to shareholders through share buybacks and dividend. In March 2021, GN paid out DKK 206 million in dividend (DKK 1.45 per share) in respect of the fiscal year 2020 as approved at the Annual General Meeting in 2021.
In line with the last couple of years, GN continues to proactively secure a diversified funding profile. The different sources of financing now available to GN include the convertible bond market (via the listed convertible bond), traditional bonds (via the Euro Medium-Term Note program), the Euro Commercial Paper Program, bilateral loan facilities provided by EIB as well as uncommitted bank facilities including overdraft lines. GN considers this debt funding flexibility, in addition to the equity market access as a listed company, important for navigating the current uncertain capital markets.
GN has hedged a substantial part of the expected net cashflow in foreign currencies to secure the EBITA contribution of the material trading currencies for the next 12 months across both GN Hearing and GN Audio.
The financial guidance for 2021 is revised
Due to the ongoing COVID-19 pandemic – which impacts GN in many ways – it must be stressed that the basic assumptions behind the guidance remain significantly more uncertain than normal. The COVID-19 situation has and will not only strongly impact GN's operational performance in 2021, but it is also impacting predictability and visibility across GN's markets, channels and supply chain. Certain components remain in global shortage impacting many different industries. GN has commitment from component suppliers to deliver on the guidance. This is based on an assumption that the GN suppliers will not face new unexpected reductions in access to raw materials. The financial guidance is contingent on no new significant local restrictions due to COVID-19 and no new major disruptions in the supply chain.
For full year 2021, GN Hearing expects an organic revenue growth of around 16% and an EBITA margin of more than 12%.
For full year 2021, GN Audio expects organic revenue growth of 22-25% and an EBITA margin of more than 21%, excluding transaction related costs of around DKK 150 million associated with the acquisition of SteelSeries.
For full year 2021, EBITA in "Other" is expected to be around DKK -185 million.
GN Store Nord expects a growth in EPS of more than 40% for full year 2021, excluding transaction related costs of around DKK 150 million associated with the acquisition of SteelSeries.
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).
Due to the COVID-19 situation – which impacts the company in many different ways – it must be stressed that the basic assumptions behind the guidance remain significantly more uncertain than normal.
GN will host a teleconference at 11.00 am CET on October 29, 2021. Please visit www.gn.com to access the teleconference. Presentation material will be available on the website approximately one hour prior to the start of the teleconference.
Annual Report 2021: February 10, 2022 Annual general meeting*: March 9, 2022 Interim Report Q1 2022: May 5, 2022 Interim Report Q2 2022: August 18, 2022 Interim Report Q3 2022: November 11, 2022
* Proposals to the agenda for the GN Store Nord Annual General Meeting must be submitted no later than six weeks before the meeting (i.e., January 25, 2022)
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).
For further information please contact:
Henriette Wennicke VP, Investor Relations & Treasury GN Store Nord A/S Email: [email protected] Tel: +45 45 75 03 33
Rune Sandager Director, Investor Relations & Treasury GN Store Nord A/S Email: [email protected] Tel: +45 45 75 92 57
GN Store Nord A/S Lautrupbjerg 7 2750 Ballerup Denmark Company reg. no. 24257843
GN will continue enabling people to Hear More, Do More and Be More, driven by innovation leadership and commercial & eco-system excellence. Specifically, in the years ahead, GN will increasingly leverage synergies between both divisions and drive growth by delivering unique and increasingly individualized customer experiences in products and solutions
Utilizing the synergies derived from GN's hearing and audio technologies and expertise, the Group is now able to significantly improve and personalize customers' hearing and listening experiences. Enabling a whole new level of individualization, GN will continue to deliver industry-leading innovation that addresses real life challenges for people with hearing loss, for businesses seeking productivity gains and for audio consumers looking for experiences beyond what can be delivered today.
GN's strategy for 2020 and beyond is to take individualized customer experience to a whole new level, and:
GN's core technology capabilities have successfully taken the company to where it is today. Going forward, the company will stay true to our technology foundation and pursue to take our innovation and technology excellence to the next level.
We will do this via a much deeper understanding of our customers' true needs. We will aspire to develop much improved individualized products that will serve individual customers even better. Furthermore, we aim to take our commercial and operational execution to the next level.
We see great opportunities to leverage the skill-sets in our two operating companies to drive further synergies and to become even more relevant to our customers.
And we will add adjacent acquisitions where we see opportunities and synergies.
In the mid-term, GN will continue to invest in growth through innovation to deliver double-digit organic growth rates. We expect to continue delivering a strong EBITA margin in line with existing levels and competition, and to deliver doubledigit growth in earnings per share.
GN expects to maintain a conservative capital structure policy of net interest-bearing debt to EBITDA of 1.0 - 2.0x, where excess liquidity will be distributed to shareholders through share buybacks and dividends.
| DKK million | Organic revenue growth | EBITA margin | Growth in EPS |
|---|---|---|---|
| GN Hearing | >market growth1 | >20% | |
| GN Audio | >market growth2 | >20% | |
| GN Store Nord | >10% | >10% |
1) In the mid-term, GN Hearing expects the global hearing aid market to continue to grow at around 4-6% in units with an ASP decline of around 1-2% annually 2) In the mid-term, GN Audio expects its markets to continue to grow at around 10% annually
| Quarterly reporting by segment | 13 |
|---|---|
| Regional growth composition | 14 |
| Consolidated income statement | 15 |
| Consolidated statement of comprehensive income | 15 |
| Consolidated balance sheet | 16 |
| Consolidated statement of cash flow | 17 |
| Consolidated statement of equity | 18 |
| Note 1 – Accounting policies | 19 |
|---|---|
| Note 2 – Segment disclosures Q2 2021 | 20 |
| Note 3 – Incentive plans | 23 |
| Note 4 – Shareholdings | 23 |
| DKK million | Q1 2020 (unaud.) |
Q2 2020 (unaud.) |
Q3 2020 (unaud.) |
Q4 2020 (unaud.) |
Q1 2021 (unaud.) |
Q2 2021 (unaud.) |
Q3 2021 (unaud.) |
YTD 2020 (unaud.) |
YTD 2021 (unaud.) |
Full year 2020 (aud.) |
|---|---|---|---|---|---|---|---|---|---|---|
| Income statement Revenue GN Hearing GN Audio |
1,314 1,653 |
715 1,944 |
1,318 2,421 |
1,378 2,706 |
1,234 2,876 |
1,322 2,456 |
1,347 2,440 |
3,347 6,018 |
3,903 7,772 |
4,725 8,724 |
| Total Organic growth GN Hearing GN Audio Total |
2,967 -14% 22% 3% |
2,659 -54% 32% -13% |
3,739 -11% 72% 29% |
4,084 -16% 43% 15% |
4,110 1% 82% 46% |
3,778 95% 32% 49% |
3,787 4% 1% 2% |
9,365 -27% 42% 6% |
11,675 22% 33% 29% |
13,449 -24% 42% 9% |
| Gross profit GN Hearing GN Audio Total |
841 827 1,668 |
332 1,009 1,341 |
859 1,239 2,098 |
873 1,318 2,191 |
769 1,480 2,249 |
832 1,264 2,096 |
891 1,222 2,113 |
2,032 3,075 5,107 |
2,492 3,966 6,458 |
2,905 4,393 7,298 |
| Gross profit margin GN Hearing GN Audio Total |
64.0% 50.0% 56.2% |
46.4% 51.9% 50.4% |
65.2% 51.2% 56.1% |
63.4% 48.7% 53.6% |
62.3% 51.5% 54.7% |
62.9% 51.5% 55.5% |
66.1% 50.1% 55.8% |
60.7% 51.1% 54.5% |
63.8% 51.0% 55.3% |
61.5% 50.4% 54.3% |
| Development costs GN Hearing GN Audio Other * |
-149 -110 -22 |
-124 -118 -20 |
-120 -181 -19 |
-118 -145 -23 |
-139 -199 -34 |
-154 -168 -27 |
-155 -173 -9 |
-393 -409 -61 |
-448 -540 -70 |
-511 -554 -84 |
| Total Selling and distribution costs and administrative expenses etc. GN Hearing GN Audio |
-281 -637 -429 |
-262 -544 -483 |
-320 -570 -394 |
-286 -602 -531 |
-372 -532 -567 |
-349 -525 -564 |
-337 -563 -575 |
-863 -1,751 -1,306 |
-1,058 -1,620 -1,706 |
-1,149 -2,353 -1,837 |
| Other * Total EBITA GN Hearing |
-21 -1,087 55 |
-27 -1,054 -336 |
-19 -983 169 |
-26 -1,159 153 |
-25 -1,124 98 |
-23 -1,112 153 |
-27 -1,165 173 |
-67 -3,124 -112 |
-75 -3,401 424 |
-93 -4,283 41 |
| GN Audio Other * Total EBITA margin |
288 -43 300 |
408 -47 25 |
664 -38 795 |
642 -49 746 |
714 -59 753 |
532 -50 635 |
474 -36 611 |
1,360 -128 1,120 |
1,720 -145 1,999 |
2,002 -177 1,866 |
| GN Hearing GN Audio Total Depreciation and software amortization |
4.2% 17.4% 10.1% |
-47.0% 21.0% 0.9% |
12.8% 27.4% 21.3% |
11.1% 23.7% 18.3% |
7.9% 24.8% 18.3% |
11.6% 21.7% 16.8% |
12.8% 19.4% 16.1% |
-3.3% 22.6% 12.0% |
10.9% 22.1% 17.1% |
0.9% 22.9% 13.9% |
| GN Hearing GN Audio Other * Total EBITDA |
-47 -28 -29 -104 |
-45 -29 -32 -106 |
-54 -31 -30 -115 |
-35 -34 -24 -93 |
-42 -33 -30 -105 |
-41 -31 -33 -105 |
-40 -34 -32 -106 |
-146 -88 -91 -325 |
-123 -98 -95 -316 |
-181 -122 -115 -418 |
| GN Hearing GN Audio Other * Total |
102 316 -14 404 |
-291 437 -15 131 |
223 695 -8 910 |
188 676 -25 839 |
140 747 -29 858 |
194 563 -17 740 |
213 508 -4 717 |
34 1,448 -37 1,445 |
547 1,818 -50 2,315 |
222 2,124 -62 2,284 |
| EBITA Amortization and impairment of acquired intangible assets Gain (loss) on divestment of operations etc. |
300 -50 1 |
25 -52 -1 |
795 -82 -1 |
746 -51 -3 |
753 -41 - |
635 -42 -9 |
611 -40 - |
1,120 -184 -1 |
1,999 -123 -9 |
1,866 -235 -4 |
| Operating profit (loss) Share of profit (loss) in associates Financial items Profit (loss) before tax |
251 -1 -111 139 |
-28 -6 49 15 |
712 -2 91 801 |
692 - -35 657 |
712 -1 -99 612 |
584 -20 -12 552 |
571 9 -13 567 |
935 -9 29 955 |
1,867 -12 -124 1,731 |
1,627 -9 -6 1,612 |
| Tax on profit (loss) Profit (loss) Balance sheet Development projects |
-33 106 |
-2 13 |
-178 623 |
-130 527 |
-130 482 |
-118 434 |
-121 446 |
-213 742 |
-369 1,362 |
-343 1,269 |
| GN Hearing GN Audio Other * Total |
1,058 377 -19 1,416 |
1,069 399 -18 1,450 |
1,080 369 -16 1,433 |
1,084 426 -15 1,495 |
1,019 508 -13 1,514 |
1,001 585 -12 1,574 |
989 655 -10 1,634 |
1,080 369 -16 1,433 |
989 655 -10 1,634 |
1,084 426 -15 1,495 |
| Inventories GN Hearing GN Audio Total |
580 585 1,165 |
603 711 1,314 |
610 805 1,415 |
650 1,072 1,722 |
677 939 1,616 |
675 1,049 1,724 |
683 1,019 1,702 |
610 805 1,415 |
683 1,019 1,702 |
650 1,072 1,722 |
| Trade receivables GN Hearing GN Audio Other * Total |
1,095 1,477 - 2,572 |
835 1,593 - 2,428 |
1,025 1,860 - 2,885 |
972 1,704 - 2,676 |
987 1,670 - 2,657 |
1,020 1,721 2 2,743 |
1,111 2,057 2 3,170 |
1,025 1,860 - 2,885 |
1,111 2,057 2 3,170 |
972 1,704 - 2,676 |
| Net working capital GN Hearing GN Audio Other * Total |
927 765 -142 1,550 |
649 512 -121 1,040 |
581 764 -139 1,206 |
552 357 -93 816 |
785 652 -189 1,248 |
862 662 -136 1,388 |
883 793 -149 1,527 |
581 764 -139 1,206 |
883 793 -149 1,527 |
552 357 -93 816 |
| Free cash flow excl. M&A GN Hearing GN Audio Other * |
-66 -67 -27 |
-117 579 55 |
47 592 -27 |
263 625 8 |
-204 438 -256 |
123 371 16 |
340 281 -128 |
-136 1,104 1 |
259 1,090 -368 |
127 1,729 9 |
| Total Acquisitions and divestments of companies |
-160 -29 |
517 -10 |
612 -107 |
896 - |
-22 -38 |
510 -1 |
493 -1 |
969 -146 |
981 -40 |
1,865 -146 |
| Free cash flow | -189 | 507 | 505 | 896 | -60 | 509 | 492 | 823 | 941 | 1,719 |
* "Other" comprises Group Functions, GN Ejendomme and eliminations.
| GN Hearing | GN Audio | Consolidated total | ||||
|---|---|---|---|---|---|---|
| Q3 | Q3 | Q3 | Q3 | Q3 | Q3 | |
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
| (DKK million) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| Europe - revenue | 342 | 387 | 1,068 | 1,125 | 1,410 | 1,512 |
| Organic growth | -11% | -7% | -8% | |||
| FX growth | -1% | 2% | 1% | |||
| M&A growth | 0% | 0% | 0% | |||
| Revenue growth | -12% | 10% | -5% | 82% | -7% | 56% |
| North America - revenue | 656 | 632 | 852 | 830 | 1,508 | 1,462 |
| Organic growth | 7% | 5% | 6% | |||
| FX growth | -1% | -2% | -2% | |||
| M&A growth | -2% | 0% | -1% | |||
| Revenue growth | 4% | -25% | 3% | 52% | 3% | 5% |
| Rest of World - revenue | 349 | 299 | 520 | 466 | 869 | 765 |
| Organic growth | 17% | 12% | 14% | |||
| FX growth | 0% | 0% | 0% | |||
| M&A growth | 0% | 0% | 0% | |||
| Revenue growth | 17% | -12% | 12% | 56% | 14% | 20% |
| Total revenue | 1,347 | 1,318 | 2,440 | 2,421 | 3,787 | 3,739 |
| Organic growth | 4% | -11% | 1% | 72% | 2% | 29% |
| FX growth | -1% | -2% | 0% | -5% | -1% | -3% |
| M&A growth | -1% | -1% | 0% | 0% | 0% | -1% |
| Revenue growth | 2% | -14% | 1% | 66% | 1% | 25% |
| GN Hearing | GN Audio | Consolidated total | ||||
|---|---|---|---|---|---|---|
| YTD | YTD | YTD | YTD | YTD | YTD | |
| (DKK million) | 2021 (unaud.) |
2020 (unaud.) |
2021 (unaud.) |
2020 (unaud.) |
2021 (unaud.) |
2020 (unaud.) |
| Europe - revenue | 1,042 | 956 | 3,963 | 2,936 | 5,005 | 3,892 |
| Organic growth | 10% | 34% | 28% | |||
| FX growth | -1% | 1% | 1% | |||
| M&A growth | 0% | 0% | 0% | |||
| Revenue growth | 9% | -15% | 35% | 53% | 29% | 28% |
| North America - revenue | 1,885 | 1,636 | 2,348 | 1,890 | 4,233 | 3,526 |
| Organic growth | 24% | 35% | 30% | |||
| FX growth | -8% | -11% | -10% | |||
| M&A growth | -1% | 0% | 0% | |||
| Revenue growth | 15% | -35% | 24% | 22% | 20% | -13% |
| Rest of World - revenue | 976 | 755 | 1,461 | 1,192 | 2,437 | 1,947 |
| Organic growth | 32% | 27% | 29% | |||
| FX growth | -3% | -4% | -4% | |||
| M&A growth | 0% | 0% | 0% | |||
| Revenue growth | 29% | -24% | 23% | 49% | 25% | 8% |
| Total revenue | 3,903 | 3,347 | 7,772 | 6,018 | 11,675 | 9,365 |
| Organic growth | 22% | 33% | 29% | |||
| FX growth | -5% | -4% | -4% | |||
| M&A growth | 0% | 0% | 0% | |||
| Revenue growth | 17% | -28% | 29% | 41% | 25% | 5% |
| Full Year | |||||
|---|---|---|---|---|---|
| (DKK million) | Q3 2021 (unaud.) |
Q3 2020 (unaud.) |
YTD 2021 (unaud.) |
YTD 2020 (unaud.) |
2020 (aud.) |
| Revenue | 3,787 | 3,739 | 11,675 | 9,365 | 13,449 |
| Production costs | -1,674 | -1,641 | -5,217 | -4,258 | -6,151 |
| Gross profit | 2,113 | 2,098 | 6,458 | 5,107 | 7,298 |
| Development costs Selling and distribution costs |
-337 -883 |
-320 -808 |
-1,058 -2,546 |
-863 -2,427 |
-1,149 -3,349 |
| Management and administrative expenses | -285 | -271 | -866 | -801 | -1,037 |
| Other operating income and costs, net | 3 | 96 | 11 | 104 | 103 |
| EBITA* | 611 | 795 | 1,999 | 1,120 | 1,866 |
| Amortization and impairment of acquired intangible assets | -40 | -82 | -123 | -184 | -235 |
| Gain (loss) on divestment of operations etc. | - | -1 | -9 | -1 | -4 |
| Operating profit (loss) | 571 | 712 | 1,867 | 935 | 1,627 |
| Share of profit (loss) in associates | 9 | -2 | -12 | -9 | -9 |
| Financial items | -13 | 91 | -124 | 29 | -6 |
| Profit (loss) before tax | 567 | 801 | 1,731 | 955 | 1,612 |
| Tax on profit (loss) | -121 | -178 | -369 | -213 | -343 |
| Profit (loss) for the period | 446 | 623 | 1,362 | 742 | 1,269 |
| Attributable to: | |||||
| Non-controlling interests | 13 | 7 | 28 | 17 | 17 |
| Shareholders in GN Store Nord A/S | 433 | 616 | 1,334 | 725 | 1,252 |
| Earnings per share (EPS): | |||||
| Earnings per share (EPS) | 3.37 | 4.78 | 10.33 | 5.63 | 9.72 |
| Earnings per share, fully diluted (EPS diluted) | 3.33 | 4.74 | 10.20 | 5.58 | 9.63 |
* Excluding gain (loss) on divestments of operations etc. and amortization of acquired intangible assets but including amortization of development projects and software developed in-house.
| Full Year | |||||
|---|---|---|---|---|---|
| (DKK million) | Q3 2021 (unaud.) |
Q3 2020 (unaud.) |
YTD 2021 (unaud.) |
YTD 2020 (unaud.) |
2020 (aud.) |
| Profit (loss) for the period | 446 | 623 | 1,362 | 742 | 1,269 |
| Other comprehensive income | |||||
| Items that will not be reclassified to profit or loss | |||||
| Actuarial gains (losses) | - | - | - | -8 | -1 |
| Items that may be reclassified subsequently to profit or loss | |||||
| Adjustment of cash flow hedges | 8 | - | 26 | 26 | -13 |
| Foreign exchange adjustments, etc. | 119 | -296 | 286 | -349 | -601 |
| Tax relating to other comprehensive income | -2 | 10 | -6 | 1 | 14 |
| Other comprehensive income for the period | 125 | -286 | 306 | -330 | -601 |
| Total comprehensive income for the period | 571 | 337 | 1,668 | 412 | 668 |
| Attributable to: | |||||
| Non-controlling interests | 13 | 7 | 28 | 17 | 17 |
| Shareholders in GN Store Nord A/S | 558 | 330 | 1,640 | 395 | 651 |
| (DKK million) | Sep. 30 2021 (unaud.) |
Jun. 30 2021 (unaud.) |
Mar. 31 2021 (unaud.) |
Dec. 31 2020 (aud.) |
|---|---|---|---|---|
| Assets | ||||
| Intangible assets | 7,395 | 7,210 | 7,214 | 7,007 |
| Property, plant and equipment | 1,232 | 1,224 | 1,243 | 1,057 |
| Investments in associates | 385 | 506 | 537 | 523 |
| Deferred tax assets | 410 | 402 | 405 | 392 |
| Other non-current assets | 1,323 | 1,333 | 1,289 | 1,187 |
| Total non-current assets | 10,745 | 10,675 | 10,688 | 10,166 |
| Inventories | 1,702 | 1,724 | 1,616 | 1,722 |
| Trade receivables | 3,170 | 2,743 | 2,657 | 2,676 |
| Tax receivables | 15 | 21 | 27 | 63 |
| Other receivables | 416 | 462 | 429 | 398 |
| Cash and cash equivalents | 1,619 | 1,715 | 1,898 | 1,657 |
| Total current assets | 6,922 | 6,665 | 6,627 | 6,516 |
| Total assets | 17,667 | 17,340 | 17,315 | 16,682 |
| Equity and liabilities | ||||
| Equity | 5,761 | 5,874 | 5,905 | 5,178 |
| Bank loans and issued bonds | 5,475 | 5,460 | 5,445 | 5,069 |
| Lease liabilities, non-current | 284 | 287 | 320 | 324 |
| Pension obligations | 34 | 34 | 35 | 36 |
| Provisions, non-current | 217 | 227 | 237 | 203 |
| Deferred tax liabilities | 364 | 364 | 364 | 362 |
| Other non-current liabilities | 563 | 519 | 498 | 482 |
| Total non-current liabilities | 6,937 | 6,891 | 6,899 | 6,476 |
| Bank loans | 380 | 257 | 352 | 341 |
| Lease liabilities, current | 117 | 119 | 115 | 121 |
| Trade payables | 1,051 | 1,148 | 1,018 | 1,238 |
| Tax payables | 355 | 284 | 199 | 253 |
| Provisions, current | 356 | 374 | 391 | 333 |
| Other current liabilities | 2,710 | 2,393 | 2,436 | 2,742 |
| Total current liabilities | 4,969 | 4,575 | 4,511 | 5,028 |
| Total equity and liabilities | 17,667 | 17,340 | 17,315 | 16,682 |
| Full Year | |||||
|---|---|---|---|---|---|
| Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | 2020 | |
| (DKK million) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (aud.) |
| Operating activities | |||||
| Operating profit (loss) | 571 | 712 | 1,867 | 935 | 1,627 |
| Depreciation, amortization and impairment | 283 | 356 | 839 | 892 | 1,167 |
| Other non-cash adjustments | -19 | 140 | 48 | 297 | 346 |
| Cash flow from operating activities before changes in working capital | 835 | 1,208 | 2,754 | 2,124 | 3,140 |
| Changes in working capital | -125 | -90 | -495 | 67 | 368 |
| Cash flow from operating activities before financial items and tax | 710 | 1,118 | 2,259 | 2,191 | 3,508 |
| Financial items, net | -49 | 21 | -153 | -39 | -13 |
| Tax paid, net | -45 | -69 | -176 | -188 | -289 |
| Cash flow from operating activities | 616 | 1,070 | 1,930 | 1,964 | 3,206 |
| Investing activities | |||||
| Development projects | -195 | -143 | -538 | -447 | -638 |
| Investments in other intangible assets, net | -90 | -52 | -222 | -189 | -234 |
| Investments in property, plant and equipment, net | -61 | -81 | -361 | -180 | -219 |
| Investments in other non-current assets, net | 223 | -182 | 172 | -179 | -250 |
| Company acquisitions | -1 | -107 | -40 | -147 | -147 |
| Company divestments | - | - | - | 1 | 1 |
| Cash flow from investing activities | -124 | -565 | -989 | -1,141 | -1,487 |
| Cash flow from operating and investing activities (free cash flow) | 492 | 505 | 941 | 823 | 1,719 |
| Financing activities | |||||
| Paid dividends | - | - | -188 | -187 | -187 |
| Share-based payment (exercised) | 6 | 6 | 139 | 176 | 194 |
| Purchase/sale of treasury shares and other equity instruments | -704 | - | -1,112 | -453 | -453 |
| Net proceeds from issue of Eurobonds | - | - | 363 | - | - |
| Increase/decrease in bank loans and other adjustments | 107 | -16 | -192 | -614 | -1,325 |
| Cash flow from financing activities | -591 | -10 | -990 | -1,078 | -1,771 |
| Net cash flow | -99 | 495 | -49 | -255 | -52 |
| Cash and cash equivalents beginning of period | 1,715 | 967 | 1,657 | 1,728 | 1,728 |
| Adjustment foreign currency, cash and cash equivalents | 3 | -6 | 11 | -17 | -19 |
| Cash and cash equivalents, end of period | 1,619 | 1,456 | 1,619 | 1,456 | 1,657 |
| Other reserves | ||||||||
|---|---|---|---|---|---|---|---|---|
| Share capital * |
Foreign exchange adjustmen ts |
Hedging reserve |
Treasury shares |
Proposed dividends for the year |
Retained earnings |
Equity, sharehold ers in GN Store Nord A/S |
Non controllin g interests |
Total equity |
| 569 | -910 | -11 | -3,424 | 206 | 8,419 | 4,849 | - | 4,849 |
| - | - | - | - | - | 725 | 725 | 17 | 742 |
| -8 | ||||||||
| 26 | ||||||||
| -349 | ||||||||
| - | 7 | -6 | - | - | - | 1 | - | 1 |
| - | -342 | 20 | - | - | -8 | -330 | - | -330 |
| - | -342 | 20 | - | - | 717 | 395 | 17 | 412 |
| 59 | ||||||||
| 176 | ||||||||
| 41 | ||||||||
| -453 | ||||||||
| - | - | - | - | - | -6 | -6 | -11 | -17 |
| - | - | - | - | -187 | - | -187 | -6 | -193 |
| - | - | - | - | -19 | 19 | - | - | - |
| 569 | -1,252 | 9 | -3,673 | - | 9,221 | 4,874 | - | 4,874 |
| - - - - - - - |
- - -349 - - - - |
- 26 - - - - - |
- - - - 204 - -453 |
- - - - - - - |
-8 - - 59 -28 41 - |
-8 26 -349 59 176 41 -453 |
- - - - - - - |
| Balance at December 31, 2020 | 569 | -1,500 | -21 | -3,640 | 206 | 9,564 | 5,178 | - | 5,178 |
|---|---|---|---|---|---|---|---|---|---|
| Profit (loss) for the period | - | - | - | - | - | 1,334 | 1,334 | 28 | 1,362 |
| Adjustment of cash flow hedges | - | - | 26 | - | - | - | 26 | - | 26 |
| Foreign exchange adjustments, etc. | - | 286 | - | - | - | - | 286 | - | 286 |
| Tax relating to other comprehensive | |||||||||
| income | - | - | -6 | - | - | - | -6 | - | -6 |
| Other comprehensive income for the period | - | 286 | 20 | - | - | - | 306 | - | 306 |
| Total comprehensive income for the period | - | 286 | 20 | - | - | 1,334 | 1,640 | 28 | 1,668 |
| Reduction of the share capital | -16 | - | - | 873 | - | -857 | - | - | - |
| Share-based payment (granted) | - | - | - | - | - | 44 | 44 | - | 44 |
| Share-based payment (exercised) | - | - | - | 196 | - | -57 | 139 | - | 139 |
| Tax related to share-based incentive plans | - | - | - | - | - | 46 | 46 | - | 46 |
| Purchase/sale of treasury shares | - | - | - | -1,112 | - | - | -1,112 | - | -1,112 |
| Reclassification of non-controlling interests | |||||||||
| by recognizing a put option liability | - | - | - | - | - | 14 | 14 | -28 | -14 |
| Paid dividends | - | - | - | - | -188 | - | -188 | - | -188 |
| Dividends, treasury shares | - | - | - | - | -18 | 18 | - | - | - |
| Balance at September 30, 2021 | 553 | -1,214 | -1 | -3,683 | - | 10,106 | 5,761 | - | 5,761 |
* shares of DKK 4 each
This interim report has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and Danish interim financial reporting requirements for listed companies.
As of January 1, 2021, GN Store Nord adopted all relevant new or revised International Financial Reporting Standards and IFRIC Interpretations with effective date January 1, 2021, or earlier. The new or revised Standards and Interpretations did not affect recognition and measurement or result in any material changes to disclosures. Apart from this, the accounting policies applied are unchanged from those applied in the Annual Report 2020.
| Income statement | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| (DKK million) | Q3 2021 (unaud.) |
Q3 2020 (unaud.) |
Q3 2021 (unaud.) |
Q3 2020 (unaud.) |
Q3 2021 (unaud.) |
Q3 2020 (unaud.) |
Q3 2021 (unaud.) |
Q3 2020 (unaud.) |
| Revenue | 1,347 | 1,318 | 2,440 | 2,421 | - | - | 3,787 | 3,739 |
| Production costs | -456 | -459 | -1,218 | -1,182 | - | - | -1,674 | -1,641 |
| Gross profit | 891 | 859 | 1,222 | 1,239 | - | - | 2,113 | 2,098 |
| Development costs | -155 | -120 | -173 | -181 | -9 | -19 | -337 | -320 |
| Selling and distribution costs | -416 | -421 | -467 | -387 | - | - | -883 | -808 |
| Management and administrative expenses | -132 | -154 | -125 | -98 | -28 | -19 | -285 | -271 |
| Other operating income and costs, net | -15 | 5 | 17 | 91 | 1 | - | 3 | 96 |
| EBITA* | 173 | 169 | 474 | 664 | -36 | -38 | 611 | 795 |
| Amortization and impairment of acquired intangible assets | -23 | -63 | -17 | -19 | - | - | -40 | -82 |
| Gain (loss) on divestment of operations etc. | - | -1 | - | - | - | - | - | -1 |
| Operating profit (loss) | 150 | 105 | 457 | 645 | -36 | -38 | 571 | 712 |
| Share of profit (loss) in associates | 9 | -2 | - | - | - | - | 9 | -2 |
| Financial items | -22 | 71 | 2 | 14 | 7 | 6 | -13 | 91 |
| Profit (loss) before tax | 137 | 174 | 459 | 659 | -29 | -32 | 567 | 801 |
| Tax on profit (loss) | -29 | -39 | -98 | -149 | 6 | 10 | -121 | -178 |
| Profit (loss) for the period | 108 | 135 | 361 | 510 | -23 | -22 | 446 | 623 |
| Cash flow statement | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| Q3 2021 | Q3 2020 | Q3 2021 | Q3 2020 | Q3 2021 | Q3 2020 | Q3 2021 | Q3 2020 | |
| (DKK million) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| Operating activities before changes in working capital | 285 | 324 | 550 | 890 | - | -6 | 835 | 1,208 |
| Cash flow from changes in working capital | -23 | 63 | -112 | -169 | 10 | 16 | -125 | -90 |
| Cash flow from operating activities excluding financial | ||||||||
| items and tax | 262 | 387 | 438 | 721 | 10 | 10 | 710 | 1,118 |
| Cash flow from investing activities: | ||||||||
| Development projects | -76 | -76 | -119 | -67 | - | - | -195 | -143 |
| Other | 210 | -219 | -49 | -159 | -90 | -44 | 71 | -422 |
| Cash flow from operating and investing activities before | ||||||||
| financial items and tax | 396 | 92 | 270 | 495 | -80 | -34 | 586 | 553 |
| Tax and financial items | -57 | -45 | 11 | -10 | -48 | 7 | -94 | -48 |
| Cash flow from operating and investing activities (free | ||||||||
| cash flow) | 339 | 47 | 281 | 485 | -128 | -27 | 492 | 505 |
| Cash flow from M&A activities | -1 | - | - | -107 | - | - | -1 | -107 |
| Free cash flow excl. M&A | 340 | 47 | 281 | 592 | -128 | -27 | 493 | 612 |
| Additional information | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| Q3 2021 | Q3 2020 | Q3 2021 | Q3 2020 | Q3 2021 | Q3 2020 | Q3 2021 | Q3 2020 | |
| (DKK million) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| Revenue distributed geographically | ||||||||
| Denmark | 20 | 24 | 47 | 29 | - | - | 67 | 53 |
| Europe | 322 | 363 | 1,021 | 1,096 | - | - | 1,343 | 1,459 |
| North America | 656 | 632 | 852 | 830 | - | - | 1,508 | 1,462 |
| Rest of World | 349 | 299 | 520 | 466 | - | - | 869 | 765 |
| Revenue | 1,347 | 1,318 | 2,440 | 2,421 | - | - | 3,787 | 3,739 |
| Incurred development costs | -141 | -121 | -239 | -149 | -10 | -20 | -390 | -290 |
| Capitalized development costs | 76 | 76 | 119 | 67 | - | - | 195 | 143 |
| Amortization, impairment and depreciation of development | ||||||||
| projects*** | -90 | -75 | -53 | -99 | 1 | 1 | -142 | -173 |
| Expensed development costs | -155 | -120 | -173 | -181 | -9 | -19 | -337 | -320 |
| EBITDA | 213 | 223 | 508 | 695 | -4 | -8 | 717 | 910 |
| Depreciation and software amortization | -40 | -54 | -34 | -31 | -32 | -30 | -106 | -115 |
| EBITA* | 173 | 169 | 474 | 664 | -36 | -38 | 611 | 795 |
| EBITA margin | 12.8% | 12.8% | 19.4% | 27.4% | N/A | N/A | 16.1% | 21.3% |
| Number of employees, end of period | 4,492 | 4,280 | 2,300 | 1,783 | 307 | 229 | 7,099 | 6,292 |
* Excluding gain (loss) on divestments of operations etc. and amortization of acquired intangible assets but including amortization of development projects and software developed in-house. ** "Other" comprises Group Shared Services, GN Ejendomme and eliminations
*** Does not include amortization of acquired intangible assets, cf. definition of EBITA
| Sep. 30 Sep. 30 Sep. 30 Sep. 30 Sep. 30 Sep. 30 Sep. 30 Sep. 30 2021 2020 2021 2020 2021 2020 2021 2020 (unaud.) (unaud.) (unaud.) (unaud.) (unaud.) (unaud.) (unaud.) (unaud.) (DKK million) Goodwill 3,421 3,392 1,165 1,155 - - 4,586 4,547 Development projects 989 1,080 655 369 -10 -16 1,634 1,433 Other intangible assets 318 461 347 399 510 335 1,175 1,195 Property, plant and equipment 476 535 351 326 405 246 1,232 1,107 Investments in associates 361 495 - - 24 27 385 522 Deferred tax assets 364 304 148 156 -102 -57 410 403 Loans to dispensers and ownership interests 933 801 - - - - 933 801 Other financial assets 390 384 - - - - 390 384 7,252 7,452 2,666 2,405 827 535 10,745 10,392 Inventories 683 610 1,019 805 - - 1,702 1,415 Trade receivables 1,111 1,025 2,057 1,860 2 - 3,170 2,885 Receivables from group companies - - 2,198 730 -2,198 -730 - - Tax receivables 61 191 44 50 -90 -205 15 36 Other receivables 235 219 140 80 41 41 416 340 Cash and cash equivalents 164 293 177 162 1,278 1,001 1,619 1,456 2,254 2,338 5,635 3,687 -967 107 6,922 6,132 9,506 9,790 8,301 6,092 -140 642 17,667 16,524 5,555 5,014 4,936 3,193 -4,730 -3,333 5,761 4,874 Bank loans and issued bonds - - - - 5,475 5,184 5,475 5,184 Lease liabilities, non-current 190 224 70 94 24 38 284 356 Pension obligations 28 28 6 5 - - 34 33 Provisions, non-current 107 75 108 15 2 - 217 90 Deferred tax liabilities 260 238 156 184 -52 128 364 550 Other non-current liabilities 397 334 164 143 2 - 563 477 982 899 504 441 5,451 5,350 6,937 6,690 Bank loans 1 - 8 - 371 892 380 892 Lease liabilities, current 81 83 35 35 1 11 117 129 Trade payables 234 296 749 722 68 58 1,051 1,076 Amounts owed to group companies 1,528 2,243 - - -1,528 -2,243 - - Tax payables 52 28 202 218 101 -215 355 31 161 250 193 224 2 - 356 474 912 977 1,674 1,259 124 122 2,710 2,358 2,969 3,877 2,861 2,458 -861 -1,375 4,969 4,960 9,506 9,790 8,301 6,092 -140 642 17,667 16,524 6,752 6,525 3,010 2,774 752 426 10,514 9,725 Average invested capital 6,639 6,883 2,892 2,622 589 371 10,120 9,876 |
Balance sheet | GN Hearing | GN Audio | Other* | Consolidated total | |
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Total non-current assets | ||||||
| Total current assets | ||||||
| Total assets | ||||||
| EQUITY AND LIABILITIES | ||||||
| Equity | ||||||
| Total non-current liabilities | ||||||
| Provisions, current | ||||||
| Other current liabilities | ||||||
| Total current liabilities | ||||||
| Total equity and liabilities | ||||||
| Invested capital*** | ||||||
* "Other" comprises Group Shared Services, GN Ejendomme and eliminations
** Net amount
*** Includes Net working capital (Inventories, Trade receivables, Other receivables, Trade payables and Other current liabilities), Goodwill, Development projects, Other intangible assets, Property, plant and equipment, Loans to dispensers and ownership interests and Provisions
| Income statement | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| (DKK million) | YTD 2021 (unaud.) |
YTD 2020 (unaud.) |
YTD 2021 (unaud.) |
YTD 2020 (unaud.) |
YTD 2021 (unaud.) |
YTD 2020 (unaud.) |
YTD 2021 (unaud.) |
YTD 2020 (unaud.) |
| Revenue Production costs |
3,903 -1,411 |
3,347 -1,315 |
7,772 -3,806 |
6,018 -2,943 |
- - |
- - |
11,675 -5,217 |
9,365 -4,258 |
| Gross profit | 2,492 | 2,032 | 3,966 | 3,075 | - | - | 6,458 | 5,107 |
| Development costs Selling and distribution costs Management and administrative expenses Other operating income and costs, net |
-448 -1,152 -457 -11 |
-393 -1,317 -441 7 |
-540 -1,394 -332 20 |
-409 -1,110 -293 97 |
-70 - -77 2 |
-61 - -67 - |
-1,058 -2,546 -866 11 |
-863 -2,427 -801 104 |
| EBITA* | 424 | -112 | 1,720 | 1,360 | -145 | -128 | 1,999 | 1,120 |
| Amortization and impairment of acquired intangible assets Gain (loss) on divestment of operations etc. |
-71 -9 |
-125 -2 |
-52 - |
-59 1 |
- - |
- - |
-123 -9 |
-184 -1 |
| Operating profit (loss) | 344 | -239 | 1,668 | 1,302 | -145 | -128 | 1,867 | 935 |
| Share of profit (loss) in associates Financial items |
-12 -112 |
-9 25 |
- -35 |
- 22 |
- 23 |
- -18 |
-12 -124 |
-9 29 |
| Profit (loss) before tax | 220 | -223 | 1,633 | 1,324 | -122 | -146 | 1,731 | 955 |
| Tax on profit (loss) | -47 | 54 | -348 | -305 | 26 | 38 | -369 | -213 |
| Profit (loss) for the period | 173 | -169 | 1,285 | 1,019 | -96 | -108 | 1,362 | 742 |
| Cash flow statement | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| YTD | YTD | YTD | YTD | YTD | YTD | YTD | ||
| YTD 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
| (DKK million) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| Operating activities before changes in working capital | 775 | 392 | 2,025 | 1,768 | -46 | -36 | 2,754 | 2,124 |
| Cash flow from changes in working capital | -237 | 198 | -327 | -198 | 69 | 67 | -495 | 67 |
| Cash flow from operating activities excluding financial | ||||||||
| items and tax | 538 | 590 | 1,698 | 1,570 | 23 | 31 | 2,259 | 2,191 |
| Cash flow from investing activities: | ||||||||
| Development projects, investment | -213 | -249 | -325 | -198 | - | - | -538 | -447 |
| Other investing activities | 101 | -361 | -135 | -206 | -417 | -127 | -451 | -694 |
| Cash flow from operating and investing activities before | ||||||||
| financial items and tax | 426 | -20 | 1,238 | 1,166 | -394 | -96 | 1,270 | 1,050 |
| Tax and financial items | -203 | -155 | -152 | -169 | 26 | 97 | -329 | -227 |
| Cash flow from operating and investing activities (free | ||||||||
| cash flow) | 223 | -175 | 1,086 | 997 | -368 | 1 | 941 | 823 |
| Cash flow from M&A activities | -36 | -39 | -4 | -107 | - | - | -40 | -146 |
| Free cash flow excl. M&A | 259 | -136 | 1,090 | 1,104 | -368 | 1 | 981 | 969 |
| Additional information | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| YTD | YTD | YTD | YTD | YTD | YTD | YTD | ||
| YTD 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
| (DKK million) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| Revenue distributed geographically | ||||||||
| Denmark | 60 | 71 | 190 | 113 | - | - | 250 | 184 |
| Europe | 982 | 885 | 3,773 | 2,823 | - | - | 4,755 | 3,708 |
| North America | 1,885 | 1,636 | 2,348 | 1,890 | - | - | 4,233 | 3,526 |
| Rest of World | 976 | 755 | 1,461 | 1,192 | - | - | 2,437 | 1,947 |
| Revenue | 3,903 | 3,347 | 7,772 | 6,018 | - | - | 11,675 | 9,365 |
| Incurred development costs | -384 | -429 | -723 | -413 | -74 | -65 | -1,181 | -907 |
| Capitalized development costs | 213 | 249 | 325 | 198 | - | - | 538 | 447 |
| Amortization, impairment and depreciation of development | ||||||||
| projects*** | -277 | -213 | -142 | -194 | 4 | 4 | -415 | -403 |
| Expensed development costs | -448 | -393 | -540 | -409 | -70 | -61 | -1,058 | -863 |
| EBITDA | 547 | 34 | 1,818 | 1,448 | -50 | -37 | 2,315 | 1,445 |
| Depreciation and software amortization | -123 | -146 | -98 | -88 | -95 | -91 | -316 | -325 |
| EBITA* | 424 | -112 | 1,720 | 1,360 | -145 | -128 | 1,999 | 1,120 |
| EBITA margin | 10.9% | -3.3% | 22.1% | 22.6% | N/A | N/A | 17.1% | 12.0% |
| Number of employees, end of period | 4,492 | 4,280 | 2,300 | 1,783 | 307 | 229 | 7,099 | 6,292 |
* Excluding gain (loss) on divestments of operations etc. and amortization of acquired intangible assets but including amortization of development projects and software developed in-house. ** "Other" comprises Group Shared Services, GN Ejendomme and eliminations
*** Does not include amortization of acquired intangible assets, cf. definition of EBITA
As of September 30, 2021, the total number of outstanding warrants in GN Hearing was 1,571 (0.2% of the shares issued in GN Hearing). The total number of outstanding warrants in GN Audio was 1,553 (0.4% of the shares issued in GN Audio). The total number of outstanding options in GN Store Nord is 1,900,145 (1.4% of the shares issued in GN Store Nord)
On September 30, 2021, members of the board of directors and the executive management, respectively, own 86,677 and 131,739 shares in GN Store Nord.
On September 30, 2021, GN owns 10,399,641 treasury shares, equivalent to 7.5% of the 138,175,982 shares issued.
The GN stock is 100% free float, and the company has no dominant shareholders. APG Asset Management N.V. has reported an ownership interest in excess of 5% of GN's share capital. Foreign ownership of GN is estimated to be around 70%.
Today, the board of directors and the executive management have reviewed and approved the interim report for GN Store Nord A/S for the period January 1 – September 30, 2021.
The interim report, which has not been audited or reviewed by the company's auditors, has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and Danish disclosure requirements for listed companies.
In our opinion, the interim report gives a true and fair view of the group's assets, liabilities and financial position at
September 30, 2021, and of the results of the group's operations and cash flows for the period January 1 – September 30, 2021.
Further, in our opinion the executive management's review gives a true and fair view of the development in the group's operations and financial matters, the results of the group for the period and the group's financial position as a whole and describes the significant risks and uncertainties pertaining to the group.
Ballerup, October 29, 2021
René Svendsen-Tune CEO, GN Store Nord & GN Audio Gitte Aabo CEO, GN Hearing
Peter la Cour Gormsen CFO, GN Store Nord & GN Audio
Wolfgang Reim
Per Wold-Olsen Chairman
Hélène Barnekow Ronica Wang
Jukka Pekka Pertola Deputy Chairman
Montserrat Maresch Pascual Anette Weber
Leo Larsen Morten Andersen Marcus Stuhr Perathoner
Lautrupbjerg 7 2750 Ballerup Denmark
Co.reg. no 24257843
+45 45 75 00 00 [email protected] gn.com
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