Earnings Release • Aug 16, 2023
Earnings Release
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GN Store Nord delivered strong organic growth in GN Hearing and solid sequential growth in GN Audio generating DKK 622 million positive free cash flow. Financial guidance updated
| GN Store Nord -8% organic growth |
• GN executed strongly across the company despite continued challenging market conditions in GN Audio. GN increased revenue by 4% compared to Q1 2023, equal to an organic revenue growth of -8% due to a high comparison base from last year • Adj. EBITA was DKK 404 million, equal to an adj. EBITA margin improvement of 3.2 percentage points compared to Q1 2023 (decline of 3.4 percentage points compared to Q2 2022) • Due to a relentless focus on balance sheet items, free cash flow excl. M&A was DKK 622 million • On May 24, GN announced its new capital plan including a private placing of 17 million shares. Following the successful placing, new debt facilities, the ongoing disposal program and operational measures, GN has effectively pushed all material debt maturities from 2024 and 2025 to 2026 • Reflecting the guidance updates for GN Hearing and GN Audio, GN Store Nord's organic revenue growth guidance is narrowed from "-5% to +7%" to "-4% to +2%" |
|---|---|
| GN Hearing 15% organic growth |
• GN Hearing delivered strong organic revenue growth of 15%, driven by continued strong performance of ReSound OMNIA and JabraEnhance.com resulting in significant market share gains in a stable growing hearing aid market • Adj. EBITA margin was 14.1% in the Core business, equal to an increase of 4.2 percentage points compared to Q1 2023, driven by operating leverage and tightly managing OPEX (increase of 7.5 percentage points compared to Q2 2022) • As a result of the earnings and working capital improvements free cash flow excl. M&A was DKK 131 million • Following a stronger than expected Q2 2023 and continued strong sales momentum, GN Hearing is upgrading its organic revenue growth guidance from "5% to 10%" to "9% to 13%". The EBITA margin in the core business of "14% to 16%" is confirmed to allow for further investments to drive growth, as well as preserving flexibility to take appropriate actions to ensure continued margin expansion |
| GN Audio -18% organic growth |
• GN Audio delivered solid execution but as a consequence of a high comparison base and challenged market conditions organic revenue growth was -18% • The organic revenue decline was driven by Enterprise (-23%) and Consumer (-29%) while SteelSeries gained market share again and delivered strong 16% organic revenue growth. Despite continued challenged market conditions GN Audio increased Enterprise revenue by 5% compared to Q1 2023 and 3% for total GN Audio • Adj. EBITA margin was 9.5%, equal to an improvement of 2.5 percentage points compared to Q1 2023, primarily driven by lower freight and input costs (decline of 8.5 percentage points compared to Q2 2022) • Free cash flow excl. M&A was DKK 464 million reflecting the earnings level and a significant improvement in working capital supported by the inventory reduction in the consumer-related businesses driven by successful promotional activities • Following a slower than expected market recovery in GN Audio's Enterprise business, GN Audio's organic revenue guidance is narrowed from "-10% to +5%" to "-10% to -4%". As a consequence of the expected revenue |
| development, GN Audio's adj. EBITA margin is narrowed from "10% to 15%" to "10% to 12%" |
| GN Hearing | GN Audio | |||||||
|---|---|---|---|---|---|---|---|---|
| DKK million – Q2 2023 | Core | Emerging | GN Hearing | Enterprise | Consumer | SteelSeries | GN Audio | |
| Revenue | 1,658 | 61 | 1,719 | 1,861 | 271 | 543 | 2,675 | |
| Organic growth | 14% | 51% | 15% | -23% | -29% | 16% | -18% | |
| Adj. EBITA** | 234 | -40 | 194 | 253 | ||||
| Adj. EBITA margin ** | 14.1% | 11.3% | 9.5% |
| GN Store Nord* | GN Hearing | GN Audio | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DKK million | Q2 2023 | Q2 2022 | Growth | Q2 2023 | Q2 2022 | Growth | Q2 2023 | Q2 2022 | Growth | |
| Revenue | 4,394 | 4,857 | -10% | 1,719 | 1,529 | 12% | 2,675 | 3,328 | -20% | |
| Organic growth | -8% | 8% | 15% | 4% | -18% | 10% | ||||
| Adj. Gross profit** | 2,232 | 2,496 | -11% | 1,049 | 940 | 12% | 1,183 | 1,556 | -24% | |
| Adj. Gross profit margin** | 50.8% | 51.4% | -0.6%p | 61.0% | 61.5% | -0.5%p | 44.2% | 46.8% | -2.6%p | |
| Adj. EBITA** | 404 | 610 | -34% | 194 | 49 | 296% | 253 | 600 | -58% | |
| Adj. EBITA margin** | 9.2% | 12.6% | -3.4%p | 11.3% | 3.2% | 8.1%p | 9.5% | 18.0% | -8.5%p | |
| Non-recurring items | -73 | -111 | -26 | -43 | -47 | -68 | ||||
| Adj. Earnings per share (EPS)*** | 1.21 | 3.17 | -62% | |||||||
| Free cash flow excl. M&A | 622 | -412 | 1,034 | 131 | -326 | 457 | 464 | 49 | 415 | |
* Including "Other", ** Excluding non-recurring items (DKK -47 million in OPEX in GN Audio, DKK -10 million in COGS in GN Hearing and DKK -16 million in OPEX in GN Hearing), *** Excluding non-recurring items (DKK -73 million OPEX and COGS) and amortization of acquired intangible assets
| DKK million | Q2 | Q2 | YTD | YTD | Full year |
|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2022 | |
| (unaud.) | (unaud.) | (unaud.) | (unaud.) | (aud.) | |
| GN Hearing | |||||
| Revenue | 1,719 | 1,529 | 3,341 | 2,866 | 6,227 |
| Revenue growth | 12% | 16% | 17% | 12% | 17% |
| Organic growth | 15% | 4% | 15% | 3% | 5% |
| Gross profit margin | 60.4% | 60.4% | 60.4% | 60.2% | 62.7% |
| EBITA* | 168 | 6 | 221 | -64 | 453 |
| EBITA margin* | 9.8% | 0.4% | 6.6% | -2.2% | 7.3% |
| ROIC (EBITA*/Average invested capital) | 9% | 4% | 9% | 4% | 5% |
| Free cash flow excl. M&A | 131 | -326 | -1 | -501 | -377 |
| Cash conversion (Free cash flow excl. M&A/EBITA*) | 78% | NA | -0% | NA | -83% |
| GN Audio | |||||
| Revenue | 2,675 | 3,328 | 5,267 | 5,850 | 12,460 |
| Revenue growth | -20% | 36% | -10% | 10% | 19% |
| Organic growth | -18% | 10% | -10% | -12% | -7% |
| Gross profit margin | 44.2% | 45.1% | 42.6% | 42.9% | 41.9% |
| EBITA* | 206 | 532 | 369 | 677 | 1,299 |
| EBITA margin* | 7.7% | 16.0% | 7.0% | 11.6% | 10.4% |
| ROIC (EBITA*/Average invested capital) | 8% | 21% | 8% | 21% | 17% |
| Free cash flow excl. M&A | 464 | 49 | 160 | -91 | -91 |
| Cash conversion (Free cash flow excl. M&A/EBITA*) | 225% | 9% | 43% | -13% | -7% |
| GN Store Nord | |||||
| Revenue | 4,394 | 4,857 | 8,608 | 8,716 | 18,687 |
| Revenue growth | -10% | 29% | -1% | 10% | 18% |
| Organic growth | -8% | 8% | -1% | -7% | -3% |
| Gross profit margin | 50.6% | 49.9% | 49.5% | 48.6% | 48.9% |
| EBITA* | 331 | 499 | 504 | 515 | 1,560 |
| EBITA margin* | 7.5% | 10.3% | 5.9% | 5.9% | 8.3% |
| Profit (loss) before tax | 56 | 325 | - | 98 | 725 |
| Effective tax rate | 23.2% | 21.5% | 0% | 21.4% | 21.4% |
| ROIC (EBITA*/Average invested capital) | 7% | 11% | 7% | 11% | 9% |
| Earnings per share, basic (EPS) | 0.23 | 1.89 | (0.17) | 0.40 | 4.00 |
| Earnings per share, fully diluted (EPS diluted) | 0.23 | 1.89 | (0.17) | 0.40 | 3.99 |
| Free cash flow excl. M&A | 622 | -412 | 44 | -969 | -1,291 |
| Cash conversion (Free cash flow excl. M&A/EBITA*) | 188% | -83% | 9% | -188% | -83% |
| Equity ratio | 30.7% | 22.6% | 30.7% | 22.6% | 22.2% |
| Net interest-bearing debt** | 12,073 | 14,360 | 12,073 | 14,360 | 14,561 |
| Net interest-bearing debt (period-end)/EBITDA** | 6.0 | 6.5 | 6.0 | 6.5 | 7.1 |
| Outstanding shares, end of period (thousand) | 145,295 | 127,750 | 145,295 | 127,750 | 127,973 |
| Average number of outstanding shares (thousand) | 136,635 | 127,750 | 132,304 | 127,737 | 127,823 |
| Average number of outstanding shares, fully diluted (thousand) | 136,825 | 128,024 | 132,473 | 128,176 | 128,126 |
| Treasury shares, end of period (thousand) | 5,600 | 9,444 | 5,600 | 9,444 | 9,220 |
| Share price at the end of the period | 170.2 | 248.7 | 170.2 | 248.7 | 159.8 |
| Market capitalization | 24,729 | 31,771 | 24,729 | 31,771 | 20,444 |
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.
** NIBD including Loans to dispensers
15% organic revenue growth driven by strong ReSound OMNIA performance resulting in market share gains. Financial guidance upgraded
Strong revenue growth of 12% as a result of 15% organic revenue growth, around -3% impact from the development in foreign exchange rates and a minor negative impact from M&A. The Emerging business delivered 51% organic revenue growth, while the Core business delivered 14%. The strong performance was a result of the continued momentum of ReSound OMNIA.
In H1 2023, GN Hearing delivered 15% organic revenue growth and a revenue of DKK 3,341 million.
GN Hearing revenue development
In North America, GN delivered organic revenue growth of 22% as a result of strong performance across channels
including strong growth in JabraEnhance.com. The hearing aid market grew in line with historical trends of 2- 4% while GN Hearing continued to outgrow the market significantly. Consequently, North America delivered revenue growth of 19% including around -3% impact from M&A.
In H1 2023, GN Hearing delivered strong organic revenue growth of 18% in North America.
In Europe, GN Hearing delivered 5% organic revenue growth in a soft hearing aid market with particular strong growth observed in France and Spain. The hearing aid market was impacted by current macroeconomic headwinds especially affecting France and Germany, while the market growth in Europe as a whole is estimated to be slightly positive. Consequently, Europe delivered revenue growth of 7% including around -1% impact from the development in foreign exchange rates and 3% impact from M&A.
In H1 2023, GN Hearing delivered organic revenue growth of 11% in Europe.
In the Rest of World region GN delivered 13% organic revenue growth with particular strong performance in China, Japan and Australia. The market saw strong growth driven by a normalized market on top of an undemanding comparison base from last year. Consequently, Rest of World delivered revenue growth of 7% including around -6% impact from the development in foreign exchange rates.
In H1 2023, GN Hearing delivered organic revenue growth of 13% in the Rest of World region.
Adj. gross profit reached DKK 1,049 million in Q2 2023 corresponding to a gross margin of 61.0% compared to 61.5% in Q2 2022. The gross margin was positively impacted by product mix driven by ReSound OMNIA but offset by increasing input costs and channel/country mix.
In H1 2023, GN Hearing delivered an adj. gross margin of 61.2%.
OPEX was prudently managed during the quarter with a reduction in selling and distribution costs as well as R&D, offset by increasing general and administrative expenses. Consequently, total OPEX excl. non-recurring items and hedging effects increased 1% compared to Q2 2022.
GN Hearing's adj. EBITA was DKK 194 million, with the Core business delivering adj. EBITA of DKK 234 million, equal to an EBITA margin of 14.1% compared to 6.6% in Q2 2022. This was achieved as a result of the strong topline development and cost management driving operating leverage. The Emerging business delivered an EBITA of DKK -40 million due to continued investments in lead generation to drive topline growth. Reported EBITA amounted to DKK 168 million reflecting non-recurring items of DKK -26 million. In H1 2023, the adj. EBITA margin in the Core business was 12.1%, while the adj. EBITA margin in GN Hearing was 9.2%.
*Excluding non-recurring items
Free cash flow excl. M&A was DKK 131 million in Q2 2023 compared to DKK -326 million in Q2 2022, mainly driven by the improved EBITA margin as well as a positive impact from change in working capital. In H1 2023, free cash flow excl. M&A was DKK -1 million.
As earlier communicated, GN Hearing expects its Core business to return to historical profitability levels including an expectation to return to 20% EBITA margin by 2024. As part of the initiatives to restore profitability, GN Hearing is investing in several operational initiatives primarily related to the supply chain. As a consequence, GN Hearing will incur DKK ~ -150 million in non-recurring items in 2023. For Q2 2023, non-recurring items amounted to DKK -26 million as a result of continued design for manufacturing initiatives, simplification of supply chain as well as targeted redundancies.
| (DKK million) | Q2 2022 | Q2 2023 | YTD 2023 |
|---|---|---|---|
| Revenue | - | - | - |
| Production costs | -16 | -10 | -27 |
| Gross profit | -16 | -10 | -27 |
| Development costs | -4 | - | -9 |
| Selling and distribution costs | -10 | -9 | -27 |
| Management and administrative expenses | -13 | -7 | -23 |
| Other operating income and costs, net | - | - | - |
| EBITA | -43 | -26 | -86 |
In Q2 2023, the market grew in line with historical growth rates of 4-6% volume growth and -1% to -2% market ASP decline. Following a few years of volatility it appears that the market has normalized. GN Hearing is projecting markets to grow with similar growth rates for 2023 as a whole.
"It is very encouraging that GN Hearing in Q2 continued the strong performance we have seen since late 2022, making it the third consecutive quarter with strong double-digit organic growth. The hearing aid markets have broadly returned to healthy growth rates, and GN Hearing continues to significantly outperform the market due to the success of ReSound OMNIA."
Gitte Aabo, CEO of GN Hearing
Solid execution in challenging market conditions realizing a sequential improvement in revenue and EBITA, while delivering a strong free cash flow excl. M&A of DKK 464 million
The quarter was characterized by continued challenged market conditions in Enterprise driven by uncertainty and buyer hesitancy. Despite the unimproving market conditions, GN Audio executed solidly leading to a sequential Enterprise growth of 5% resulting in an absolute revenue of DKK 1,861 million. The solid execution was equal to an organic revenue growth in Enterprise of -23% reflecting the high comparison base from Q2 2022, which was driven by unwinding of order backlog in an easing supply chain environment. The performance in the consumer-oriented businesses was supported by targeted promotional activities to reduce inventory levels and continued market share gains in SteelSeries in stabilizing markets. As a result, SteelSeries delivered strong organic revenue growth of 16% resulting in absolute revenue of DKK 543 million, while the Consumer business delivered revenue of DKK 271 million, equal to an organic revenue growth of -29%.
For GN Audio, revenue improved sequentially by 3% equal to revenue of DKK 2,675 million and consequently an organic revenue growth of -18% due to the high comparison base from Q2 2022. Compared to Q2 2022, revenue growth was -20%, while the impact from the development in foreign exchange rates was -2%.
In H1 2023, GN Audio delivered organic revenue growth of -10% and a revenue of DKK 5,267 million.
In North America, GN Audio delivered -21% organic revenue growth due to the challenged market conditions primarily driven by continued buying hesitancy from large corporations and a challenging comparison base from last year. Despite the difficult market conditions, the Enterprise business improved its revenue sequentially. Consequently, North America delivered revenue growth of -22% including around -1% impact from the development in foreign exchange rates.
In H1 2023, GN Audio delivered organic revenue growth of -15% in North America.
In Europe, GN Audio delivered organic revenue growth of -19% and revenue growth of -19% as a consequence of the difficult comparison base from last year.
In H1 2023, GN Audio delivered -8% organic revenue growth in Europe.
In the Rest of World region, GN Audio delivered -13% organic revenue growth, while revenue growth was -17% with -4% impact from the development in foreign exchange rates. The negative growth reflects the difficult comparison base from last year.
In H1 2023, GN Audio delivered -5% organic revenue growth in Rest of World.
GN Audio delivered adj. gross margin of 44.2% in Q2 2023 compared to adj. gross margin of 46.8% in Q2 2022, due
to business mix as well as ongoing promotional activities in the consumer-oriented businesses. Compared to Q1 2023, the gross margin increased 3.2 percentage points primarily driven by a positive impact from freight and input costs as well as a slightly positive business mix. Further gross margin improvements remain a key priority for the rest of the year.
OPEX was prudently managed during the quarter with significant cost reduction initiatives, somewhat offset by continued investments into R&D. OPEX excl. non-recurring items and hedging effects decreased by 7% compared to Q2 2022.
GN Audio's adj. EBITA ended at DKK 253 million, translating into an adjusted EBITA margin of 9.5%, compared to 18.0% in Q2 2022. The development reflects the revenue decline as well as the gross margin development. Compared to Q1 2023, the adj. EBITA margin increased by 2.5 percentage points reflecting the gross margin improvement partly off-set by continued investments into R&D. Reported EBITA was DKK 206 million, reflecting DKK -47 million in non-recurring items. In H1 2023, GN Audio delivered an adj. EBITA margin of 8.2%.
Free cash flow excl. M&A was DKK 464 million compared to DKK 49 million in Q2 2022. The strong increase in cash flow was mainly driven by continued cost management as well as a positive impact from working capital including a further reduction in inventories as well as a significant improvement in trade payables driven by a new commercial agreement with a major manufacturing and logistics provider. In H1 2023, free cash flow excl. M&A was DKK 160 million.
On June 14, 2023, GN Audio announced an update to Jabra PanaCast 50, which will make it one of the first video bars to enable Microsoft IntelliFrame with multiple video streams, making hybrid work meetings more collaborative and inclusive. This deepened collaboration with Microsoft, will allow for multiple video streams as well as face and voice recognition functionality.
Acknowledging the uncertain environment, GN Audio continued to take actions to reduce the cost base and defend the agility of the company. For this purpose, GN Audio booked non-recurring items of DKK -47 million in Q2 2023 related to right-sizing of the organization as well as a noncash write-down on development projects in connection with a review of business plans including anticipated market conditions.
| (DKK million) | Q2 2022 | Q2 2023 | YTD 2023 |
|---|---|---|---|
| Revenue | - | - | |
| Production costs | -54 | - | - |
| Gross profit | -54 | - | - |
| Development costs | - | -37 | -37 |
| Selling and distribution costs | - | - | - |
| Management and administrative expenses | -14 | -10 | -28 |
| Other operating income and costs, net | - | - | |
| EBITA | -68 | -47 | -65 |
In Q2 2023, the demand in GN Audio's core enterprise markets was challenged by the continued buyer hesitancy impacting overall demand across enterprise categories. While we expect that the enterprise market gradually will improve, the recovery is happening slower than earlier anticipated. For 2023 as a whole, we therefore currently expect that the market will experience a double-digit decline. While the market remains challenged in the short-term we continue to believe in the long term attractiveness of the market driven by hybrid working and the continued upgrade of collaboration tools to make the experience seamless and more efficient. The consumer-oriented markets are currently seeing some early signs of stabilization, following the material market decline in 2022, but with limited growth expected for 2023 as a whole. Once the current market challenges are behind us, we expect the market to return to attractive annual growth rates of around 10% driven by the favorable long-term trends.
"We continue to work ourselves through a challenging time in our markets. We focus on execution and we are pleased to deliver sequential growth and margin improvement over Q1, as well as our cash focused initiatives leading to a strong cash flow. We continue to balance cost control with continued strategic investments and are ready to capture opportunities as the market evolves."
Peter Karlstromer, CEO of GN Audio
GN delivered -10% revenue growth, of which -8% was organic revenue growth, and around -2% was from the development in foreign exchange rates.
In H1 2023, GN delivered organic revenue growth of 1%, while revenue growth was -1%.
Earnings and other financial highlights
EBITA in Other amounted to DKK -43 million, compared to DKK -39 million in Q2 2022 driven by timing effects. GN Store Nord's adj. EBITA was DKK 404 million compared to DKK 610 million in Q2 2022, primarily driven by negative operating leverage in GN Audio as a result of the revenue decline as well as ongoing promotional activities in the consumer-oriented businesses. This corresponds to an adj. EBITA margin of 9.2% in Q2 2023 compared to 12.6% in Q2 2022. Due to the strong execution in the quarter, the adj. EBITA margin increased sequentially by 3.2 percentage points. In H1 2023, GN delivered an adj. EBITA margin of 7.6%.
Reported EBITA was DKK 331 million, reflecting nonrecurring items of DKK -73 million due to initiatives to restore profitability across GN Hearing and GN Audio.
GN Store Nord adj. EBITA development
*Excluding non-recurring items
Amortization of acquired intangible assets amounted to DKK -101 million compared to DKK -96 million in Q2 2022. Financial items were DKK -129 million in the quarter compared to DKK -77 million in Q2 2022 driven by the general increase in interest rate levels as well as some one-off effects from the debt refinancing. Share of profit (loss) in associates was DKK -46 million compared to DKK 5 million in Q2 2022 primarily due to a non-cash fair value write-down of certain minority investments in connection with the ongoing balance sheet optimization, while gain on disposals were DKK 1 million in the quarter.
The adj. profit before tax was DKK 128 million (reported profit before tax was DKK 56 million) compared to DKK 436 million in Q2 2022. The effective tax rate was 23.2% compared to 21.5% in Q2 2022 due to a previous R&D tax relief scheme in Denmark not expected to be prolonged. Adj. net profit was DKK 99 million in Q2 2023 (reported net profit of DKK 43 million) compared to DKK 342 million in Q2 2022. In H1 2023, adj. net profit was DKK 116 million.
Strong free cash flow excl. M&A of DKK 622 million compared to DKK -412 million in Q2 2022, driven by the relentless focus on balance sheet items resulting in a positive impact from working capital of DKK 481 million. In H1 2023, free cash flow excl. M&A was DKK 44 million.
*Excluding non-recurring items and amortization of acquired intangible assets
Adj. earnings per share (Adj. EPS), was DKK 1.21 in Q2 2023 compared to DKK 3.17 in Q2 2022 driven by the decline in earnings and the issuance of 13 million new shares as part of the private placing during the quarter. In H1 2023, GN delivered an adj. earnings per share of DKK 1.89.
By the end of Q2 2023, equity in GN Store Nord amounted to DKK 9,283 million compared to DKK 6,638 million in Q2 2022. The increase was driven by the private placing as well as net profits for the period.
Net interest-bearing debt decreased significantly to DKK 12,073 million in Q2 2023 compared to DKK 15,275 million by the end of Q1 2023, mainly driven by the private placing of 17 million shares and the strong positive free cash flow generation. As a result, the adj. leverage ended at 5.0x. Reported leverage ratio was 6.0x reflecting the DKK -399 million non-recurring items in the last four quarters. By the end of Q2 2023, GN had cash and cash equivalents of DKK 1,008 million.
On May 24, GN announced a new capital plan, which aims to strike the right balance between current market challenges and future significant growth opportunities, allowing GN to execute on both short- and long-term market share opportunities.
GN's new capital plan prepares for repayment of approximately DKK 7 billion debt that matures in 2024 and effectively pushes all material debt maturities to 2026. Execution of the four pillars of the plan is progressing well. The pillars are:
In addition, GN has executed an increase of its current undrawn revolving credit facility. The new facility has been increased to DKK 3.9 billion (EUR 520 million) from DKK 2.6 billion (EUR 350 million) with maturity in 2027 (finalization of the facility subject to final agreement on customary long form documentation).
GN is confident that these actions will put the company in the best position going forward to continue our innovation strategy built on 150 years of technology-driven enhancement of vital human senses with the underlying philosophy of bringing people closer.
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.
| Organic revenue growth | Adjusted EBITA margin2) | Non-recurring items (DKK | |
|---|---|---|---|
| million) | |||
| GN Hearing | 9% to 13% | ||
| - Core Business | 14% to 16% | ~ -150 | |
| - Emerging Business1) (DKK million) | ~ -150 | ||
| GN Audio | -10% to -4% | 10% to 12% | ~ -150 |
| Other (DKK million) | ~ -200 | ||
| GN Store Nord | -4% to +2% | ~ -300 |
Note 1) Emerging Business mainly includes the JabraEnhance.com (formerly Lively) Note 2) Excluding non-recurring items
Based on foreign exchange rates as of August 16, 2023
The basic assumptions behind the guidance remain more uncertain than normal. Primary risk factors include inflationary pressures, consumer sentiment and general economic uncertainty. GN's supply chains, including component sourcing and local and geopolitical instability and deteriorating trade relations may impact key suppliers and GN's operations.
The forward-looking statements in this 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. Changes to such expectation and assumptions will not be disclosed on an ongoing basis, unless required pursuant to general disclosure obligations to which GN is subject.
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 11.30 am CEST on August 17, 2023. 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.
Interim Report Q3 2023: November 10, 2023
The forward-looking statements in this 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. Changes to such expectation and assumptions will not be disclosed on an ongoing basis, unless required pursuant to general disclosure obligations to which GN is subject.
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:
Anne Sofie Staunsbæk Veyhe Vice President, Investor Relations, Treasury and M&A GN Store Nord A/S Email: [email protected] Tel: +45 45 75 85 06
Rune Sandager Senior Director, Investor Relations 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
| Quarterly reporting by segment | 12 |
|---|---|
| Regional growth composition Q2 2023 | 13 |
| Regional growth composition YTD 2023 | 13 |
| Consolidated income statement | 14 |
| Consolidated statement of comprehensive income | 14 |
| Consolidated balance sheet | 15 |
| Consolidated statement of cash flow | 16 |
| Consolidated statement of equity | 17 |
| Note 1 – Accounting policies | 18 |
|---|---|
| Note 2 – Segment disclosures Q2 2023 | 19 |
| Note 2 – Segment disclosures YTD 2023 | 21 |
| Note 3 – Incentive plans | 22 |
| Note 4 – Shareholdings | 22 |
| Note 5 – Assets held for sale | 22 |
| DKK million | Q1 2022 (unaud.) |
Q2 2022 (unaud.) |
Q3 2022 (unaud.) |
Q4 2022 (unaud.) |
Q1 2023 (unaud.) |
Q2 2023 (unaud.) |
YTD 2022 (unaud.) |
YTD 2023 (unaud.) |
Full year 2022 (aud.) |
|---|---|---|---|---|---|---|---|---|---|
| Income statement | |||||||||
| Revenue GN Hearing |
1,337 | 1,529 | 1,554 | 1,807 | 1,622 | 1,719 | 2,866 | 3,341 | 6,227 |
| GN Audio Total |
2,522 3,859 |
3,328 4,857 |
3,147 4,701 |
3,463 5,270 |
2,592 4,214 |
2,675 4,394 |
5,850 8,716 |
5,267 8,608 |
12,460 18,687 |
| Organic growth | |||||||||
| GN Hearing | 2% | 4% | 0% | 14% | 15% | 15% | 3% | 15% | 5% |
| GN Audio Total |
-30% -21% |
10% 8% |
-2% -1% |
-3% 3% |
2% 7% |
-18% -8% |
-12% -7% |
-10% 1% |
-7% -3% |
| Gross profit | |||||||||
| GN Hearing GN Audio |
801 1,006 |
924 1,502 |
988 1,341 |
1,194 1,376 |
979 1,062 |
1,039 1,183 |
1,725 2,508 |
2,018 2,245 |
3,907 5,225 |
| Total | 1,807 | 2,426 | 2,329 | 2,570 | 2,041 | 2,222 | 4,233 | 4,263 | 9,132 |
| Gross profit margin | |||||||||
| GN Hearing GN Audio |
59.9% 39.9% |
60.4% 45.1% |
63.6% 42.6% |
66.1% 39.7% |
60.4% 41.0% |
60.4% 44.2% |
60.2% 42.9% |
60.4% 42.6% |
62.7% 41.9% |
| Total | 46.8% | 49.9% | 49.5% | 48.8% | 48.4% | 50.6% | 48.6% | 49.5% | 48.9% |
| Development costs GN Hearing |
-138 | -142 | -146 | -124 | -166 | -130 | -280 | -296 | -550 |
| GN Audio Other * |
-189 -21 |
-166 -16 |
-188 -10 |
-238 -27 |
-188 -13 |
-226 -14 |
-355 -37 |
-414 -27 |
-781 -74 |
| Total | -348 | -324 | -344 | -389 | -367 | -370 | -672 | -737 | -1,405 |
| Selling and distribution costs and administrative | |||||||||
| expenses etc. GN Hearing |
-733 | -776 | -761 | -634 | -760 | -741 | -1,509 | -1,501 | -2,904 |
| GN Audio Other * |
-672 -38 |
-804 -23 |
-713 -22 |
-956 -35 |
-711 -30 |
-751 -29 |
-1,476 -61 |
-1,462 -59 |
-3,145 -118 |
| Total | -1,443 | -1,603 | -1,496 | -1,625 | -1,501 | -1,521 | -3,046 | -3,022 | -6,167 |
| EBITA GN Hearing |
-70 | 6 | 81 | 436 | 53 | 168 | -64 | 221 | 453 |
| GN Audio Other * |
145 -59 |
532 -39 |
440 -32 |
182 -62 |
163 -43 |
206 -43 |
677 -98 |
369 -86 |
1,299 -192 |
| Total | 16 | 499 | 489 | 556 | 173 | 331 | 515 | 504 | 1,560 |
| EBITA margin GN Hearing |
-5.2% | 0.4% | 5.2% | 24.1% | 3.3% | 9.8% | -2.2% | 6.6% | 7.3% |
| GN Audio | 5.7% | 16.0% | 14.0% | 5.3% | 6.3% | 7.7% | 11.6% | 7.0% | 10.4% |
| Total | 0.4% | 10.3% | 10.4% | 10.6% | 4.1% | 7.5% | 5.9% | 5.9% | 8.3% |
| Depreciation and software amortization GN Hearing |
-38 | -41 | -42 | -41 | -42 | -41 | -79 | -83 | -162 |
| GN Audio Other * |
-45 -35 |
-48 -37 |
-54 -36 |
-47 -21 |
-46 -21 |
-45 -27 |
-93 -72 |
-91 -48 |
-194 -129 |
| Total | -118 | -126 | -132 | -109 | -109 | -113 | -244 | -222 | -485 |
| EBITDA GN Hearing |
-32 | 47 | 123 | 477 | 95 | 209 | 15 | 304 | 615 |
| GN Audio Other * |
190 -24 |
580 -2 |
494 4 |
229 -41 |
209 -22 |
251 -16 |
770 -26 |
460 -38 |
1,493 -63 |
| Total | 134 | 625 | 621 | 665 | 282 | 444 | 759 | 726 | 2,045 |
| EBITA Amortization and impairment of acquired intangible |
16 | 499 | 489 | 556 | 173 | 331 | 515 | 504 | 1,560 |
| assets | -103 | -96 | -125 | -116 | -102 | -101 | -199 | -203 | -440 |
| Gain (loss) on divestment of operations etc. Operating profit (loss) |
-1 -88 |
-6 397 |
- 364 |
-2 438 |
-1 70 |
1 231 |
-7 309 |
- 301 |
-9 1,111 |
| Share of profit (loss) in associates | 17 | 5 | -1 | -2 | -1 | -46 | 22 | -47 | 19 |
| Financial items Profit (loss) before tax |
-156 -227 |
-77 325 |
-90 273 |
-82 354 |
-125 -56 |
-129 56 |
-233 98 |
-254 - |
-405 725 |
| Tax on profit (loss) | 49 | -70 | -58 | -76 | 13 | -13 | -21 | - | -155 |
| Profit (loss) | -178 | 255 | 215 | 278 | -43 | 43 | 77 | - | 570 |
| Balance sheet | |||||||||
| Inventories GN Hearing |
770 | 816 | 892 | 850 | 842 | 841 | 816 | 841 | 850 |
| GN Audio Other * |
2,012 - |
2,282 - |
2,968 - |
2,666 - |
2,506 - |
2,449 -8 |
2,282 - |
2,449 -8 |
2,666 - |
| Total | 2,782 | 3,098 | 3,860 | 3,516 | 3,348 | 3,282 | 3,098 | 3,282 | 3,516 |
| Trade receivables GN Hearing |
1,144 | 1,262 | 1,266 | 1,442 | 1,446 | 1,398 | 1,262 | 1,398 | 1,442 |
| GN Audio Other * |
1,975 2 |
2,890 2 |
2,729 - |
2,589 - |
2,314 - |
2,429 -13 |
2,890 2 |
2,429 -13 |
2,589 - |
| Total | 3,121 | 4,154 | 3,995 | 4,031 | 3,760 | 3,814 | 4,154 | 3,814 | 4,031 |
| Net working capital | |||||||||
| GN Hearing GN Audio |
1,036 1,646 |
1,078 2,021 |
1,052 2,145 |
1,323 1,937 |
1,380 2,222 |
1,281 1,872 |
1,078 2,021 |
1,281 1,872 |
1,323 1,937 |
| Other * Total |
-165 2,517 |
-319 2,780 |
-259 2,938 |
-151 3,109 |
-43 3,559 |
-102 3,051 |
-319 2,780 |
-102 3,051 |
-151 3,109 |
| Free cash flow excl. M&A | |||||||||
| GN Hearing GN Audio |
-175 -140 |
-326 49 |
60 21 |
64 -21 |
-132 -304 |
131 464 |
-501 -91 |
-1 160 |
-377 -91 |
| Other * Total |
-242 -557 |
-135 -412 |
-298 -217 |
-148 -105 |
-142 -578 |
27 622 |
-377 -969 |
-115 44 |
-823 -1,291 |
| Acquisitions and divestments of companies | -7,037 | -216 | -15 | 11 | -36 | - | -7,253 | -36 | -7,257 |
| Free cash flow | -7,594 | -628 | -232 | -94 | -614 | 622 | -8,222 | 8 | -8,548 |
* "Other" comprises Group Functions, GN Ejendomme and eliminations including held for sale classification
| GN Hearing | GN Audio | Consolidated total | |||||
|---|---|---|---|---|---|---|---|
| Q2 | Q2 | Q2 | Q2 | Q2 | Q2 | ||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | |
| Europe - revenue | 510 | 475 | 1,296 | 1,601 | 1,806 | 2,076 | |
| Organic growth | 5% | 25% | -19% | 22% | -14% | 23% | |
| FX growth | -1% | 1% | 0% | 1% | 0% | 1% | |
| M&A growth | 3% | 11% | 0% | 10% | 1% | 10% | |
| Revenue growth | 7% | 37% | -19% | 33% | -13% | 34% | |
| North America - revenue | 819 | 689 | 831 | 1,069 | 1,650 | 1,758 | |
| Organic growth | 22% | -9% | -21% | -5% | -4% | -7% | |
| FX growth | 0% | 12% | -1% | 14% | -1% | 13% | |
| M&A growth | -3% | 2% | 0% | 31% | -1% | 18% | |
| Revenue growth | 19% | 5% | -22% | 40% | -6% | 24% | |
| Rest of World - revenue | 390 | 365 | 548 | 658 | 938 | 1,023 | |
| Organic growth | 13% | 9% | -13% | 0% | -4% | 4% | |
| FX growth | -6% | 6% | -4% | 7% | -4% | 6% | |
| M&A growth | 0% | 0% | 0% | 26% | 0% | 16% | |
| Revenue growth | 7% | 15% | -17% | 33% | -8% | 26% | |
| Total revenue | 1,719 | 1,529 | 2,675 | 3,328 | 4,394 | 4,857 | |
| Organic growth | 15% | 4% | -18% | 10% | -8% | 8% | |
| FX growth | -3% | 8% | -2% | 6% | -2% | 7% | |
| M&A growth | 0% | 4% | 0% | 20% | 0% | 14% | |
| Revenue growth | 12% | 16% | -20% | 36% | -10% | 29% |
| GN Hearing | GN Audio | Consolidated total | |||||
|---|---|---|---|---|---|---|---|
| YTD | YTD | YTD | YTD | YTD | YTD | ||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | |
| Europe - revenue | 1,006 | 844 | 2,607 | 2,824 | 3,613 | 3,668 | |
| Organic growth | 11% | 14% | -8% | -12% | -4% | -7% | |
| FX growth | -1% | 1% | 0% | 1% | 0% | 1% | |
| M&A growth | 9% | 6% | 0% | 9% | 3% | 8% | |
| Revenue growth | 19% | 21% | -8% | -2% | -1% | 2% | |
| - | - | ||||||
| North America - revenue | 1,581 | 1,330 | 1,571 | 1,860 | 3,152 | 3,190 | |
| Organic growth | 18% | -4% | -15% | -15% | -1% | -10% | |
| FX growth | 3% | 9% | -1% | 9% | 1% | 9% | |
| M&A growth | -2% | 3% | 0% | 30% | -1% | 18% | |
| Revenue growth | 19% | 8% | -16% | 24% | -1% | 17% | |
| - | - | - | |||||
| Rest of World - revenue | 754 | 692 | 1,089 | 1,166 | 1,843 | 1,858 | |
| Organic growth | 13% | 6% | -5% | -7% | 2% | -2% | |
| FX growth | -4% | 4% | -2% | 6% | -3% | 5% | |
| M&A growth | 0% | 0% | 0% | 25% | 0% | 15% | |
| Revenue growth | 9% | 10% | -7% | 24% | -1% | 18% | |
| Total revenue | 3,341 | 2,866 | 5,267 | 5,850 | 8,608 | 8,716 | |
| Organic growth | 15% | 3% | -10% | -12% | -1% | -7% | |
| FX growth | 0% | 6% | 0% | 4% | 0% | 4% | |
| M&A growth | 2% | 3% | 0% | 18% | 0% | 13% | |
| Revenue growth | 17% | 12% | -10% | 10% | -1% | 10% |
| Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | Full Year 2022 |
|
|---|---|---|---|---|---|
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (aud.) |
| Revenue | 4,394 | 4,857 | 8,608 | 8,716 | 18,687 |
| Production costs | -2,172 | -2,431 | -4,345 | -4,483 | -9,555 |
| Gross profit | 2,222 | 2,426 | 4,263 | 4,233 | 9,132 |
| Development costs | -370 | -324 | -737 | -672 | -1,405 |
| Selling and distribution costs Management and administrative expenses |
-1,094 -428 |
-1,225 -372 |
-2,219 -804 |
-2,242 -794 |
-4,563 -1,587 |
| Other operating income and costs, net | 1 | -6 | 1 | -10 | -17 |
| EBITA* | 331 | 499 | 504 | 515 | 1,560 |
| Amortization and impairment of acquired intangible assets | -101 | -96 | -203 | -199 | -440 |
| Gain (loss) on divestment of operations etc. | 1 | -6 | - | -7 | -9 |
| Operating profit (loss) | 231 | 397 | 301 | 309 | 1,111 |
| Share of profit (loss) in associates | -46 | 5 | -47 | 22 | 19 |
| Financial items | -129 | -77 | -254 | -233 | -405 |
| Profit (loss) before tax | 56 | 325 | - | 98 | 725 |
| Tax on profit (loss) | -13 | -70 | - | -21 | -155 |
| Profit (loss) for the period | 43 | 255 | - | 77 | 570 |
| Attributable to: | |||||
| Non-controlling interests | 11 | 13 | 22 | 26 | 59 |
| Shareholders in GN Store Nord A/S | 32 | 242 | -22 | 51 | 511 |
| Earnings per share (EPS): | |||||
| Earnings per share (EPS) | 0.23 | 1.89 | -0.17 | 0.40 | 4.00 |
| Earnings per share, fully diluted (EPS diluted) | 0.23 | 1.89 | -0.17 | 0.40 | 3.99 |
* 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.
| DKK million | Q2 2023 (unaud.) |
Q2 2022 (unaud.) |
YTD 2023 (unaud.) |
YTD 2022 (unaud.) |
Full Year 2022 (aud.) |
|---|---|---|---|---|---|
| Profit (loss) for the period | 43 | 255 | - | 77 | 570 |
| Other comprehensive income | |||||
| Items that will not be reclassified to profit or loss | |||||
| Actuarial gains (losses) | - | - | - | - | 7 |
| Tax relating to actuarial gains (losses) | - | - | - | - | -2 |
| Items that may be reclassified subsequently to profit or loss | |||||
| Adjustment of cash flow hedges | 14 | 12 | 17 | 5 | -73 |
| Foreign exchange adjustments, etc. | -54 | 334 | -162 | 456 | 258 |
| Tax relating to other comprehensive income | -3 | -1 | -3 | -1 | 16 |
| Other comprehensive income (loss) for the period | -43 | 345 | -148 | 460 | 206 |
| Total comprehensive income (loss) for the period | - | 600 | -148 | 537 | 776 |
| Attributable to: | |||||
| Non-controlling interests | 11 | 13 | 22 | 26 | 59 |
| Shareholders in GN Store Nord A/S | -11 | 587 | -170 | 511 | 717 |
| DKK million | Jun. 30 2023 (unaud.) |
Mar. 31 2023 (unaud.) |
Dec. 31 2022 (aud.) |
Sep. 30 2022 (unaud.) |
Jun. 30 2022 (unaud.) |
|---|---|---|---|---|---|
| Assets | |||||
| Intangible assets | 17,115 | 17,548 | 17,546 | 17,731 | 17,202 |
| Property, plant and equipment | 1,097 | 1,198 | 1,255 | 1,329 | 1,357 |
| Investments in associates | 269 | 315 | 319 | 348 | 340 |
| Deferred tax assets | 476 | 481 | 491 | 491 | 366 |
| Other non-current assets | 1,711 | 1,636 | 1,612 | 1,663 | 1,525 |
| Total non-current assets | 20,668 | 21,178 | 21,223 | 21,562 | 20,790 |
| Inventories | 3,282 | 3,348 | 3,516 | 3,860 | 3,098 |
| Trade receivables | 3,814 | 3,760 | 4,031 | 3,995 | 4,154 |
| Tax receivables | 119 | 108 | 107 | 185 | 150 |
| Other receivables | 788 | 837 | 722 | 605 | 665 |
| Cash and cash equivalents | 1,008 | 676 | 990 | 870 | 560 |
| Total current assets | 9,011 | 8,729 | 9,366 | 9,515 | 8,627 |
| Assets held for sale | 569 | - | - | - | - |
| Total assets | 30,248 | 29,907 | 30,589 | 31,077 | 29,417 |
| Equity and liabilities | |||||
| Equity | 9,283 | 6,630 | 6,800 | 7,202 | 6,638 |
| Bank loans and issued bonds, non-current | 7,496 | 12,142 | 9,866 | 10,711 | 10,693 |
| Lease liabilities, non-current | 212 | 253 | 262 | 298 | 308 |
| Pension obligations | 7 | 8 | 7 | 7 | 7 |
| Provisions, non-current | 175 | 140 | 138 | 134 | 179 |
| Deferred tax liabilities | 881 | 914 | 915 | 1,013 | 929 |
| Other non-current liabilities | 811 | 802 | 867 | 820 | 773 |
| Total non-current liabilities | 9,582 | 14,259 | 12,055 | 12,983 | 12,889 |
| Bank loans and issued bonds, current | 6,034 | 4,181 | 6,016 | 4,970 | 4,393 |
| Lease liabilities, current | 98 | 95 | 109 | 132 | 132 |
| Trade payables | 1,621 | 1,166 | 1,554 | 1,855 | 1,724 |
| Tax payables | 111 | 131 | 226 | 44 | - |
| Provisions, current | 199 | 225 | 223 | 224 | 228 |
| Other current liabilities | 3,212 | 3,220 | 3,606 | 3,667 | 3,413 |
| Total current liabilities | 11,275 | 9,018 | 11,734 | 10,892 | 9,890 |
| Liabilities directly associated with the assets held for sale | 108 | - | - | - | - |
| Total equity and liabilities | 30,248 | 29,907 | 30,589 | 31,077 | 29,417 |
| Full Year | |||||
|---|---|---|---|---|---|
| DKK million | Q2 2023 (unaud.) |
Q2 2022 (unaud.) |
YTD 2023 (unaud.) |
YTD 2022 (unaud.) |
2022 (aud.) |
| Operating activities Operating profit (loss) |
231 | 397 | 301 | 309 | 1,111 |
| Depreciation, amortization and impairment | 398 | 366 | 758 | 727 | 1,534 |
| Other non-cash adjustments | 25 | -84 | 41 | 27 | 58 |
| Cash flow from operating activities before changes in working capital | 654 | 679 | 1,100 | 1,063 | 2,703 |
| Changes in working capital | 481 | -255 | 84 | -739 | -1,293 |
| Cash flow from operating activities before financial items and tax | 1,135 | 424 | 1,184 | 324 | 1,410 |
| Financial items, net Tax paid, net |
-70 -35 |
-172 -81 |
-179 -116 |
-225 -159 |
-598 -185 |
| Cash flow from operating activities | 1,030 | 171 | 889 | -60 | 627 |
| Investing activities | |||||
| Development projects | -248 | -251 | -497 | -453 | -1,005 |
| Investments in other intangible assets, net | -90 | -59 | -204 | -150 | -454 |
| Investments in property, plant and equipment, net | - | -42 | -32 | -62 | -204 |
| Investments in other non-current assets, net | -70 | -231 | -112 | -244 | -255 |
| Company acquisitions | - | -216 | -36 | -7,253 | -7,257 |
| Cash flow from investing activities | -408 | -799 | -881 | -8,162 | -9,175 |
| Cash flow from operating and investing activities (free cash flow) | 622 | -628 | 8 | -8,222 | -8,548 |
| Financing activities | |||||
| Proceeds from share placement, net of costs | 2,640 | - | 2,640 | - | - |
| Paid dividends | -18 | -43 | -32 | -198 | -208 |
| Share-based payment (exercised) | 1 | - | 2 | 5 | 22 |
| Increase/decrease in bank loans and other adjustments | -2,855 | 267 | -2,538 | 2,756 | 3,530 |
| Cash flow from financing activities | -232 | 224 | 72 | 2,563 | 3,344 |
| Net cash flow | 390 | -404 | 80 | -5,659 | -5,204 |
| Cash and cash equivalents beginning of period | 676 | 959 | 990 | 6,208 | 6,208 |
| Adjustment foreign currency, cash and cash equivalents | -6 | 5 | -10 | 11 | -14 |
| Cash attributable to the assets held for sale | -52 | - | -52 | - | - |
| Cash and cash equivalents, end of period | 1,008 | 560 | 1,008 | 560 | 990 |
| Proposed Equity, Foreign dividends shareholders Non Share exchange Hedging Treasury for the Retained in GN Store controlling Total Q2 2022 DKK million capital adjustments reserve shares year earnings Nord A/S interests equity Balance at December 31, 2021 553 -1,104 6 -3,731 214 10,291 6,229 - 6,229 Profit (loss) for the period - - - - - 51 51 26 77 Adjustment of cash flow hedges - - 5 - - - 5 - 5 Foreign exchange adjustments, etc. - 456 - - - - 456 - 456 Tax relating to other comprehensive income - - -1 - - - -1 - -1 Other comprehensive income for the period - 456 4 - - - 460 - 460 Total comprehensive income for the period - 456 4 - - 51 511 26 537 Reduction of the share capital -4 - - 297 - -293 - - - Share-based payment (granted) - - - - - 83 83 - 83 Share-based payment (exercised) - - - 8 - -3 5 - 5 Tax related to share-based incentive plans - - - - - 1 1 - 1 Reclassification of non-controlling interests by recognizing a put option liability - - - - - 7 7 -26 -19 Paid dividends - - - - -198 - -198 - -198 Dividends, treasury shares - - - - -16 16 - - - Balance at June 30, 2022 549 -648 10 -3,426 - 10,153 6,638 - 6,638 shares of DKK 4 each Q2 2023 DKK million Balance at December 31, 2022 549 -846 -51 -3,366 - 10,514 6,800 - 6,800 Profit (loss) for the period - - - - - -22 -22 22 - Adjustment of cash flow hedges - - 17 - - - 17 - 17 Foreign exchange adjustments, etc. - -160 - - - - -160 - -160 Tax relating to other comprehensive income - - -3 - - - -3 - -3 Other comprehensive income for the period - -160 14 - - - -146 - -146 Total comprehensive income for the period - -160 14 - - -22 -168 22 -146 Increase of share capital, net of costs 55 - - - - 2,031 2,086 - 2,086 Share-based payment (granted) - - - - - 28 28 - 28 Share-based payment (exercised) - - - 6 - -6 - - - Treasury shares placement, net of costs - - - 547 - - 547 - 547 Reclassification of non-controlling interests by recognizing a put option liability - - - - - -21 -21 21 - Paid dividends - - - - - - - -32 -32 Balance at June 30, 2023 604 -1,006 -37 -2,813 - 12,524 9,272 11 9,283 |
Other reserves | ||||
|---|---|---|---|---|---|
* 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, 2023, GN Store Nord adopted all relevant new or revised International Financial Reporting Standards and IFRIC Interpretations with effective date January 1, 2023, 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 2022.
| Income statement | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| Q2 2023 | Q2 2022 | Q2 2023 | Q2 2022 | Q2 2023 | Q2 2022 | Q2 2023 | Q2 2022 | |
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| Revenue | 1,719 | 1,529 | 2,675 | 3,328 | - | - | 4,394 | 4,857 |
| Production costs | -680 | -605 | -1,492 | -1,826 | - | - | -2,172 | -2,431 |
| Gross profit | 1,039 | 924 | 1,183 | 1,502 | - | - | 2,222 | 2,426 |
| Development costs | -130 | -142 | -226 | -166 | -14 | -16 | -370 | -324 |
| Selling and distribution costs | -556 | -563 | -538 | -662 | - | - | -1,094 | -1,225 |
| Management and administrative expenses | -186 | -166 | -213 | -182 | -29 | -24 | -428 | -372 |
| Other operating income and costs, net | 1 | -47 | - | 40 | - | 1 | 1 | -6 |
| EBITA* | 168 | 6 | 206 | 532 | -43 | -39 | 331 | 499 |
| Amortization and impairment of acquired | ||||||||
| intangible assets | -18 | -18 | -83 | -78 | - | - | -101 | -96 |
| Gain (loss) on divestment of operations etc. | 2 | -6 | -1 | - | - | - | 1 | -6 |
| Operating profit (loss) | 152 | -18 | 122 | 454 | -43 | -39 | 231 | 397 |
| Share of profit (loss) in associates | -17 | 5 | - | - | -29 | - | -46 | 5 |
| Financial items | -46 | 73 | -76 | -47 | -7 | -103 | -129 | -77 |
| Profit (loss) before tax | 89 | 60 | 46 | 407 | -79 | -142 | 56 | 325 |
| Tax on profit (loss) | -21 | -13 | -11 | -87 | 19 | 30 | -13 | -70 |
| Profit (loss) for the period | 68 | 47 | 35 | 320 | -60 | -112 | 43 | 255 |
| Cash flow statement | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| Q2 2023 | Q2 2022 | Q2 2023 | Q2 2022 | Q2 2023 | Q2 2022 | Q2 2023 | Q2 2022 | |
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| Operating activities before changes in | ||||||||
| working capital | 308 | 140 | 360 | 541 | -14 | -2 | 654 | 679 |
| Cash flow from changes in working capital | 84 | -40 | 375 | -295 | 22 | 80 | 481 | -255 |
| Cash flow from operating activities | ||||||||
| excluding financial items and tax | 392 | 100 | 735 | 246 | 8 | 78 | 1,135 | 424 |
| Cash flow from investing activities: | ||||||||
| Development projects | -97 | -96 | -151 | -155 | - | - | -248 | -251 |
| Other | -80 | -455 | -2 | 22 | -78 | -115 | -160 | -548 |
| Cash flow from operating and investing | ||||||||
| activities before financial items and tax | 215 | -451 | 582 | 113 | -70 | -37 | 727 | -375 |
| Tax and financial items | -84 | -91 | -118 | -64 | 97 | -98 | -105 | -253 |
| Cash flow from operating and investing | ||||||||
| activities (free cash flow) | 131 | -542 | 464 | 49 | 27 | -135 | 622 | -628 |
| Cash flow from M&A activities | - | -216 | - | - | - | - | - | -216 |
| Free cash flow excl. M&A | 131 | -326 | 464 | 49 | 27 | -135 | 622 | -412 |
| Additional information | GN Hearing | GN Audio | Other** | Consolidated total | |||||
|---|---|---|---|---|---|---|---|---|---|
| DKK million | Q2 2023 (unaud.) |
Q2 2022 (unaud.) |
Q2 2023 (unaud.) |
Q2 2022 (unaud.) |
Q2 2023 (unaud.) |
Q2 2022 (unaud.) |
Q2 2023 (unaud.) |
Q2 2022 (unaud.) |
|
| Revenue distributed geographically | |||||||||
| Denmark | 17 | 19 | 48 | 55 | - | - | 65 | 74 | |
| Europe | 493 | 456 | 1,248 | 1,546 | - | - | 1,741 | 2,002 | |
| North America | 819 | 689 | 831 | 1,069 | - | - | 1,650 | 1,758 | |
| Rest of World | 390 | 365 | 548 | 658 | - | - | 938 | 1,023 | |
| Revenue | 1,719 | 1,529 | 2,675 | 3,328 | - | - | 4,394 | 4,857 | |
| Incurred development costs | -151 | -158 | -264 | -252 | -16 | -18 | -431 | -428 | |
| Capitalized development costs | 97 | 96 | 151 | 155 | - | - | 248 | 251 | |
| Amortization, impairment and depreciation | |||||||||
| of development projects*** | -76 | -80 | -113 | -69 | 2 | 2 | -187 | -147 | |
| Expensed development costs | -130 | -142 | -226 | -166 | -14 | -16 | -370 | -324 | |
| EBITDA | 209 | 47 | 251 | 580 | -16 | -2 | 444 | 625 | |
| Depreciation and software amortization | -41 | -41 | -45 | -48 | -27 | -37 | -113 | -126 | |
| EBITA* | 168 | 6 | 206 | 532 | -43 | -39 | 331 | 499 | |
| EBITA margin | 9.8% | 0.4% | 7.7% | 16.0% | N/A | N/A | 7.5% | 10.3% | |
| Number of employees, end of period | 4,560 | 5,047 | 2,569 | 2,710 | 354 | 356 | 7,483 | 8,113 |
* 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 including held for sale classification
*** Does not include amortization of acquired intangible assets, cf. definition of EBITA
| Balance sheet | GN Hearing | GN Audio | Other* | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| Jun. 30 | Jun. 30 | Jun. 30 | Jun. 30 | Jun. 30 | Jun. 30 | Jun. 30 | Jun. 30 | |
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) |
| ASSETS | ||||||||
| Goodwill | 4,606 | 4,747 | 6,835 | 6,687 | -237 | - | 11,204 | 11,434 |
| Development projects | 1,138 | 1,045 | 1,089 | 925 | - | -6 | 2,227 | 1,964 |
| Other intangible assets | 425 | 474 | 2,392 | 2,615 | 867 | 715 | 3,684 | 3,804 |
| Property, plant and equipment | 381 | 500 | 322 | 406 | 394 | 451 | 1,097 | 1,357 |
| Investments in associates | 254 | 293 | 11 | 13 | 4 | 34 | 269 | 340 |
| Deferred tax assets | 414 | 393 | 155 | 50 | -93 | -77 | 476 | 366 |
| Loans to dispensers and ownership interests | 1,154 | 1,007 | - | - | 4 | - | 1,158 | 1,007 |
| Other financial assets | 546 | 516 | 8 | 2 | -1 | - | 553 | 518 |
| Total non-current assets | 8,918 | 8,975 | 10,812 | 10,698 | 938 | 1,117 | 20,668 | 20,790 |
| Inventories | 841 | 816 | 2,449 | 2,282 | -8 | - | 3,282 | 3,098 |
| Trade receivables | 1,398 | 1,262 | 2,429 | 2,890 | -13 | 2 | 3,814 | 4,154 |
| Receivables from group companies** | - | - | - | - | - | - | - | - |
| Tax receivables | 69 | 108 | 118 | 51 | -68 | -9 | 119 | 150 |
| Other receivables | 428 | 361 | 260 | 275 | 100 | 29 | 788 | 665 |
| Cash and cash equivalents | 195 | 205 | 261 | 332 | 552 | 23 | 1,008 | 560 |
| Total current assets | 2,931 | 2,752 | 5,517 | 5,830 | 563 | 45 | 9,011 | 8,627 |
| Assets held for sale | - | - | - | - | 569 | - | 569 | - |
| Total assets | 11,849 | 11,727 | 16,329 | 16,528 | 2,070 | 1,162 | 30,248 | 29,417 |
| EQUITY AND LIABILITIES | ||||||||
| Equity | 5,443 | 5,276 | 4,750 | 4,590 | -910 | -3,228 | 9,283 | 6,638 |
| Bank loans and issued bonds, non-current | - | - | 5 | 7 | 7,491 | 10,686 | 7,496 | 10,693 |
| Lease liabilities, non-current | 150 | 205 | 45 | 58 | 17 | 45 | 212 | 308 |
| Pension obligations | - | - | 7 | 7 | - | - | 7 | 7 |
| Provisions, non-current | 112 | 93 | 59 | 82 | 4 | 4 | 175 | 179 |
| Deferred tax liabilities | 344 | 317 | 616 | 662 | -79 | -50 | 881 | 929 |
| Other non-current liabilities | 422 | 484 | 389 | 287 | - | 2 | 811 | 773 |
| Total non-current liabilities | 1,028 | 1,099 | 1,121 | 1,103 | 7,433 | 10,687 | 9,582 | 12,889 |
| Bank loans and issued bonds, current | -29 | - | - | 10 | 6,063 | 4,383 | 6,034 | 4,393 |
| Lease liabilities, current | 57 | 80 | 37 | 38 | 4 | 14 | 98 | 132 |
| Trade payables | 268 | 286 | 1,251 | 1,337 | 102 | 101 | 1,621 | 1,724 |
| Amounts owed to group companies** | 3,765 | 3,774 | 6,821 | 7,160 | -10,586 | -10,934 | - | - |
| Tax payables | 78 | 12 | 256 | 98 | -223 | -110 | 111 | - |
| Provisions, current | 121 | 125 | 78 | 103 | - | - | 199 | 228 |
| Other current liabilities | 1,118 | 1,075 | 2,015 | 2,089 | 79 | 249 | 3,212 | 3,413 |
| Total current liabilities | 5,378 | 5,352 | 10,458 | 10,835 | -4,561 | -6,297 | 11,275 | 9,890 |
| Liabilities held for sale | - | - | - | - | 108 | - | 108 | - |
| Total equity and liabilities | 11,849 | 11,727 | 16,329 | 16,528 | 2,070 | 1,162 | 30,248 | 29,417 |
| Invested capital*** | 8,752 | 8,633 | 12,373 | 12,469 | 922 | 837 | 22,047 | 21,939 |
| Average invested capital | 8,693 | 7,586 | 12,421 | 7,619 | 880 | 772 | 21,994 | 15,977 |
* "Other" comprises Group Shared Services, GN Ejendomme and eliminations including held for sale classification
** 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 | |||||
|---|---|---|---|---|---|---|---|---|---|
| YTD 2023 | YTD 2022 | YTD 2023 | YTD 2022 | YTD 2023 | YTD 2022 | YTD 2023 | YTD 2022 | ||
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | |
| Revenue | 3,341 | 2,866 | 5,267 | 5,850 | - | - | 8,608 | 8,716 | |
| Production costs | -1,323 | -1,141 | -3,022 | -3,342 | - | - | -4,345 | -4,483 | |
| Gross profit | 2,018 | 1,725 | 2,245 | 2,508 | - | - | 4,263 | 4,233 | |
| Development costs | -296 | -280 | -414 | -355 | -27 | -37 | -737 | -672 | |
| Selling and distribution costs | -1,143 | -1,104 | -1,076 | -1,138 | - | - | -2,219 | -2,242 | |
| Management and administrative expenses | -361 | -340 | -384 | -398 | -59 | -56 | -804 | -794 | |
| Other operating income and costs, net | 3 | -65 | -2 | 60 | - | -5 | 1 | -10 | |
| EBITA* | 221 | -64 | 369 | 677 | -86 | -98 | 504 | 515 | |
| Amortization and impairment of acquired | |||||||||
| intangible assets | -36 | -33 | -167 | -166 | - | - | -203 | -199 | |
| Gain (loss) on divestment of operations etc. | 1 | -7 | -1 | - | - | - | - | -7 | |
| Operating profit (loss) | 186 | -104 | 201 | 511 | -86 | -98 | 301 | 309 | |
| Share of profit (loss) in associates | -17 | 22 | -1 | - | -29 | - | -47 | 22 | |
| Financial items | -102 | 45 | -161 | -66 | 9 | -212 | -254 | -233 | |
| Profit (loss) before tax | 67 | -37 | 39 | 445 | -106 | -310 | - | 98 | |
| Tax on profit (loss) | -16 | 8 | -9 | -95 | 25 | 66 | - | -21 | |
| Profit (loss) for the period | 51 | -29 | 30 | 350 | -81 | -244 | - | 77 |
| Cash flow statement | GN Hearing | GN Audio | Other** | Consolidated total | ||||
|---|---|---|---|---|---|---|---|---|
| DKK million | YTD 2023 (unaud.) |
YTD 2022 (unaud.) |
YTD 2023 (unaud.) |
YTD 2022 (unaud.) |
YTD 2023 (unaud.) |
YTD 2022 (unaud.) |
YTD 2023 (unaud.) |
YTD 2022 (unaud.) |
| Operating activities before changes in working capital |
498 | 215 | 641 | 866 | -39 | -18 | 1,100 | 1,063 |
| Cash flow from changes in working capital | 43 | -103 | 78 | -608 | -37 | -28 | 84 | -739 |
| Cash flow from operating activities excluding financial items and tax |
541 | 112 | 719 | 258 | -76 | -46 | 1,184 | 324 |
| Cash flow from investing activities: Development projects, investment Other investing activities |
-197 -183 |
-187 -493 |
-299 -24 |
-266 -7,023 |
-1 -177 |
- -193 |
-497 -384 |
-453 -7,709 |
| Cash flow from operating and investing activities before financial items and tax |
161 | -568 | 396 | -7,031 | -254 | -239 | 303 | -7,838 |
| Tax and financial items | -198 | -173 | -236 | -73 | 139 | -138 | -295 | -384 |
| Cash flow from operating and investing activities (free cash flow) |
-37 | -741 | 160 | -7,104 | -115 | -377 | 8 | -8,222 |
| Cash flow from M&A activities | -36 | -240 | - | -7,013 | - | - | -36 | -7,253 |
| Free cash flow excl. M&A | -1 | -501 | 160 | -91 | -115 | -377 | 44 | -969 |
| Additional information | GN Hearing | GN Audio | Other** | Consolidated total | |||||
|---|---|---|---|---|---|---|---|---|---|
| YTD 2023 | YTD 2022 | YTD 2023 | YTD 2022 | YTD 2023 | YTD 2022 | YTD 2023 | YTD 2022 | ||
| DKK million | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (unaud.) | |
| Revenue distributed geographically | |||||||||
| Denmark | 37 | 37 | 91 | 102 | - | - | 128 | 139 | |
| Europe | 969 | 807 | 2,516 | 2,722 | - | - | 3,485 | 3,529 | |
| North America | 1,581 | 1,330 | 1,571 | 1,860 | - | - | 3,152 | 3,190 | |
| Rest of World | 754 | 692 | 1,089 | 1,166 | - | - | 1,843 | 1,858 | |
| Revenue | 3,341 | 2,866 | 5,267 | 5,850 | - | - | 8,608 | 8,716 | |
| Incurred development costs | -337 | -308 | -528 | -481 | -30 | -40 | -895 | -829 | |
| Capitalized development costs | 197 | 187 | 299 | 266 | 1 | - | 497 | 453 | |
| Amortization, impairment and depreciation | |||||||||
| of development projects*** | -156 | -159 | -185 | -140 | 2 | 3 | -339 | -296 | |
| Expensed development costs | -296 | -280 | -414 | -355 | -27 | -37 | -737 | -672 | |
| EBITDA | 304 | 15 | 460 | 770 | -38 | -26 | 726 | 759 | |
| Depreciation and software amortization | -83 | -79 | -91 | -93 | -48 | -72 | -222 | -244 | |
| EBITA* | 221 | -64 | 369 | 677 | -86 | -98 | 504 | 515 | |
| EBITA margin | 6.6% | -2.2% | 7.0% | 11.6% | N/A | N/A | 5.9% | 5.9% | |
| Number of employees, end of period | 4,560 | 5,047 | 2,569 | 2,710 | 354 | 356 | 7,483 | 8,113 |
* 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 including held for sale classification
*** Does not include amortization of acquired intangible assets, cf. definition of EBITA
As of June 30, 2023, the total number of outstanding warrants in GN Hearing was 822 (0.1% of the shares issued in GN Hearing). The total number of outstanding warrants in GN Audio was 762 (0.2% of the shares issued in GN Audio). The total number of outstanding options in GN Store Nord is 4.057.677 (2.7% of the shares issued in GN Store Nord)
On June 30, 2023, members of the board of directors and the executive management, respectively, own 31,242 and 18,073 shares in GN Store Nord.
On June 30, 2023, GN owns 5,600,445 treasury shares, equivalent to 3.7% of the 150,895,371 shares issued.
The GN stock is 100% free float, and the company has no dominant shareholders. William Demant Invest A/S has reported an ownership interest in excess of 10%, while Norges Bank has reported an ownership interest in excess of 5% of GN's share capital. Foreign ownership of GN is estimated to be around 70%.
On June 28, 2023, GN has signed an agreement to divest BelAudição, Unipessoal Lda ("BelAudição") to MCH Private Equity. BelAudição is the owner of the leading retailer of hearing aid solutions in Portugal, AudiçãoActiva, with around 50 hearing aid stores. The sale, which was subject to the buyer completing financing and obtaining anti-trust clearance, is expected to close in Q3 2023.
The transaction demonstrates GN Hearing's commitment to its successful strategy of not owning retail and instead focusing on being a key supplier to strong independent hearing aid dispensers. GN finalized the acquisition of BelAudição – a long-time GN Hearing customer – in 2022 to facilitate a generational transition. GN Hearing has, therefore, carefully considered potential buyers to back the next phase of BelAudição's impressive growth journey while securing that GN Hearing remains a key supplier of hearing aids to the business.
As at June 30, 2023, the assets and liabilities are classified as held for sale under the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Such assets, or disposal groups, are measured at the lower of their carrying amount and fair value less costs to sell.
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 – June 30, 2023.
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
Ballerup, August 16, 2023
Gitte Aabo CEO, GN Store Nord & GN Hearing Peter Karlstromer CEO, GN Audio
Board of Directors
Jukka Pekka Pertola Chairman
Klaus Holse Deputy Chairman Søren Jelert CFO, GN Store Nord
Hélène Barnekow
Ronica Wang Anette Weber
Leo Larsen Cathrin Inge Hansen Claus Holmbeck-Madsen
June 30, 2023, and of the results of the group's operations and cash flows for the period January 1 – June 30, 2023.
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.
Lautrupbjerg 7 2750 Ballerup Denmark
Co.reg. no 24257843
+45 45 75 00 00 [email protected] gn.com
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