Q2 Interim Report Director IR & Communications, GN Store Nord

Transcription

1 Q2 Interim Report 2010 CEO, GN ReSound CEO, GN Netcom CFO, GN Store Nord Director IR & Communications, GN Store Nord Lars Viksmoen Mogens Elsberg Anders Boyer Mikkel Danvold Copenhagen,

2 Financial Highlights Q Continued improvement in revenue and EBITA GN continued to see clear results of the comprehensive restructuring Positive organic growth for the second consecutive quarter fuelled by UC Q2 showed strong improvement in EBITA up DKK 111 million compared to Q2 Revenue and EBITA outlook for 2010 confirmed Revenue: DKK 1,286m EBITA: DKK 113m Free cash flow: DKK 78m Q2 DKK 1,196m Q2 DKK 2m Q2 DKK 89m DKK 88 million share buyback program announced and completed during Q2 NIBD: DKK 1,014m Q2 DKK 1,438m 2 Slide 2

3 Additional Highlights TPSA In the DPTG/TPSA arbitration proceedings, GN is awaiting a decision from the Arbitration Tribunal on DPTG s claim for phase 1 (1994 to mid-2004). The parties to the DPTG/TPSA arbitration proceedings have been informed by the Arbitration Tribunal in Vienna that a decision on the award will not be issued before September 2010 due to logistical reasons Claim against the Federal Cartel Office On May 5, GN received the complete wording of the ruling in which the German Federal Supreme Court declared the decision made by the German Federal Cartel Office on April 11, 2007 prohibiting the sale of GN ReSound to Sonova unlawful GN will file a claim against the German Federal Cartel Office claiming compensation for the losses imposed on GN which as of July 2010 amount to around EUR 1 billion Long-term financial targets As mentioned in the Q1 Interim Report 2010, GN will announce its aspirations in regards to long-term financial targets during the fall 3 Slide 3

4 Dividend, Share Buyback & Capital Structure Capital structure It is GN s long-term target to maintain a capital structure consisting of a combination of debt and equity, subject to a net interest-bearing debt of up to a maximum of 2.0 x EBITDA Dividend and share buyback policy GN aims to pay out a dividend corresponding to 15-25% of the annual net result GN will initiate share buyback programs when deemed appropriate Dividend payments and share buybacks are subject to among others cash requirements to support the ongoing operations, strategic opportunities and capital structure Plan for the fiscal year 2010 Based on the expected significant improvement in EBITA for GN Store Nord from DKK 8 million in to DKK million in 2010, the Board of Directors plans to recommend the initiation of a share buyback program in addition to a dividend pay-out based on the net result for 2010 The use of the potential proceeds from TPSA will be dealt with separately and as a one-time event 4 Slide 4

5 GN Netcom 5 Slide 5

6 GN Netcom Financial Highlights 20% organic growth in Q2, excl OEM (DKK million) Q1 Q2 Q3 Q4 FY Q Q Revenue , Organic growth (36)% (30)% (32)% (19)% (30)% 9% 8% Gross margin 35% 42% 43% 50% 43% 52% 53% SG&A, R&D etc. (229) (224) (187) (284) (924) (205) (211) EBITA (82) (43) (11) (48) (184) EBITA margin (19.5)% (9.9)% (2.7)% (10.3)% (10.6)% 5.8% 10.5% Non-recurring costs Excluding the OEM business, organic growth in Q2 was 20% Accelerating deployment of UC Strong operational leverage resulting in a double-digit EBITA-margin 6 Slide 6

7 GN Netcom Balance Sheet and Cash Flow Continued strong cash flow Balance sheet selected items (DKK million) Q1 Q2 Q3 Q4 FY Q Q Inventories Trade receivables Trade payables Cash flow (DKK million) Cash flow before working capital Change in working capital & restructuring/non-recurring costs paid (2) Cash flow from investing activities (20) (25) (25) (20) (90) (13) (19) Free cash flow excl. tax & financial items Net working capital continued to decline and was only DKK 35 million at the end of Q2. Net working capital is expected to increase during the remaining part of Slide 7

8 Unified Communications UC brings together the many disparate communication systems that exist today voice, video, collaboration, conferencing, instant messaging, mail etc The first step towards achieving full benefit from UC is voice integration which requires a headset solution Today, many people have three telephones: a mobile, their landline, and a soft phone application GN Netcom helps you achieve true UC, switching seamlessly from one device to the other Instant benefits from UC Reduce costs Telecommunications Conferencing Travel & commuting Real estate Supporting environmental initiatives Increase productivity and collaboration Reduce latency Work everywhere and at any time Work together across locations 8

9 The UC Market Opportunity Based on GN Netcom s current 30% share of the CC&O market, UC translates into a significant CC&O revenue opportunity Full benefit of UC requires a headset solution headsets becomes part of the core infrastructure UC will drive significantly higher headset attachment rates UC vendors and systems integrators drive the market GN Netcom s revenue from UC enabled products increased by more than 50% in Q compared to prior year GN Netcom CC&O revenue opportunity million office workers world wide Of which 50 million are using UC With a 50% headset attachment rate DKK 10bn market in 2014* 9 * Source: Frost and Sullivan, GN estimates

10 Broad Deployment of UC in H Proof of concept, technology is in place Projects with early adaptors Broad deployment H Companies are beginning transition towards UC solutions Broad deployment is accelerating and is happening now "Through 2013, 40% of knowledge workers will have abandoned their desk phones and headsets will become essential communication tools. Analyst Steve Blood, Gartner Group 10 Slide 10

11 GN Netcom UC status GN Netcom has the largest installed base of UC devices GN Netcom is the most experienced UC headset supplier in the world GN Netcom has delivered the world s largest UC installation in one single company close to 100,000 headsets installed In Q2 2010, GN Netcom won several very large UC customers including customers installing more than 100,000 headsets New product portfolio ready to support Microsoft s Wave 14 11

12 GN Netcom s UC Strategy Win early adopters in the UC market Stay in the front and benefit from Jabra s state-of-the art product portfolio Continued focus on developing user friendly products compatible with all major UC applications Maintain and develop successful partnering with UC vendors and systems integrators Strong focus on new opportunities arising out of the UC development Sales focus towards systems integrators 12

13 Plug-and-play with all Leading UC Applications UC integrates technologies such as voice, and instant messaging GN Netcom s UC headsets are plug-and-play with all leading UC applications 13

14 Wide Range of Jabra UC Solutions Jabra has a wide range of UC ready audio end-points for all major UC platforms Solutions in four categories: - Corded headsets - Wireless headsets - Speakerphones - Software: Jabra PC suite allows IT departments to maintain and update Jabra headsets as any other standard infrastructure solution. 14

15 New Products from GN Netcom Expansion of the product portfolio UC speaker phones and corded mobile headsets Jabra STONE now also in white Jabra SPEAK TM 410 your portable conference room (launch in October) During the next few months, Mobile Headsets will enter the market for corded mobile stereo headsets. The market for corded mobile headsets constitutes some 20% of the total handsfree market. 15 Slide 15

16 Mobile Market and Prospect Unchanged growth rates but corded up and Bluetooth mono down mdkk BT Mono BT Stereo Speakerphones Corded Key Trends: Mono Bluetooth headsets are still the largest part of the market, but market value declines slightly Significant growth in corded headsets constitute 20% of the market Bluetooth stereo headsets show highest growth of all handsfree categories, although from a low base The speakerphone category makes up 20% of the total mobile handsfree market and continues to grow strongly Source: Strategy analytics, NPD, GFK and team analysis. 16 Slide 16

17 Drivers and Challenges for GN Netcom Key Value Drivers Prospect of significant mid/longterm market growth from UC. No additional investments are required to participate in the attractive UC opportunity. Attractive margins in the CC&O industry. High operational leverage and low working capital. Very strong product portfolio from both Mobile and CC&O Headsets. Challenges Build a long-term sustainable business model for Mobile Headsets. Leverage on GN Netcom s strong UC base and remain a key player on the UC market. Gain market share in North America. 17 Slide 17

18 GN ReSound ReSound Alera TM 18 Slide 18

19 Continued Focus on Fundamentals 2010 Focus Unchanged Competitive new launches based on innovative technology Further develop and leverage collaborations with key accounts Expand position in Emerging markets Continued cost containment except selected growth initiatives Accelerate end-to-end supply chain transformation Achieved YTD Positive sales trend development Successful nano-coating introduction Significant growth with Strategic Accounts including VA Launch of first true wireless hearing aid: ReSound Alera with improved Surround Sound by ReSound technology MADSEN AccuScreen TM and AURICAL FreeFit TM launched by GN Otometrics Supply chain transformation well on track 19 Slide 19

20 GN ReSound - Financial Highlights ReSound broke the negative growth seen during the last 5 quarters (DKK million) Q1 Q2 Q3 Q4 FY Q Q Revenue , Organic growth (4)% (7)% (13)% (3)% (6)% (2)% 0% Gross margin 62% 61% 60% 60% 61% 59% 59% SG&A, R&D etc. (448) (405) (364) (367) (1,584) (359) (399) EBITA EBITA margin 3.7% 7.1% 7.9% 11.4% 7.5% 9.6% 8.0% Revenue in GN ReSound improved in Q2 and broke the negative organic growth seen during the last five quarters. GN ReSound expects to outgrow the market in the second half of 2010 and therefore confirms the revenue outlook for 2010 provided in the Q1 Interim Report Excluding DKK 19 million costs related to the supply chain transformation, the EBITA-margin was 10.4%. 20 Slide 20

21 Positive Sales Trend Development mdkk 900 GN ReSound Revenue 15% Organic growth % 800 5% 750 0% 700-5% % 600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q % of Top segment sales and 80% of Plus segment sales in Q2 came from products launched within the last 24 months 21 Slide 21

22 GN ReSound Balance Sheet & Cash Flow Inventory increases driven by nano-coating and ReSound Alera Balance sheet selected items (DKK million) Q1 Q2 Q3 Q4 FY Q Q Inventories Trade receivables Trade payables Cash flow (DKK million) Cash flow before working capital Change in working capital & restructuring/non-recurring costs paid (66) (59) Cash flow from investing activities (75) (61) 16 (77) (197) (42) (82) Free cash flow excl. tax & financial items (8) Cash flow impact from investing activities was at DKK (82) million up from DKK (61) million in Q2 driven by investment in distribution and production technology/facilities. 22 Slide 22

23 Solid Long-term Market Growth Market Volume Drivers World HI market Ageing population Higher prevalence Improving adoption rates Improving binaural fitting rates Additional replacement cycles Developing countries potential Million units Solid long-term market growth rates expected Slide 23

24 The Market is Growing at Healthy Rates Hearing aid market unit growth data vs. UK Total market -18% (Q1) UK NHS -22% UK private +2% Canada +4% (Q1) Germany +15% (Q2) Japan +3% (Q2) Netherlands +12% (Q2) US Total market +3% (Q2) VA market +12% Private market +1% Italy +9% (Q2) France +9% (Q1) New Zealand +5% (Q1) 24 24

25 ReSound Alera TM Groundbreaking advance in wireless ReSound Alera Improved Surround Sound by ReSound TM Breakthrough technology - first truly wireless connectivity - with nothing to wear around your neck! Slim, small with award-winning design With ReSound Unite wireless accessories 25 Slide 25

26 isolate Nanotech Introduction Water-repellent and wear & tear proof products ReSound Live and dot 2 by ReSound recently introduced with isolate nano-coating at AudiologyNOW! The technology provides the best protection in the industry, with every component internally and externally coated. More than 90% of all Behind-The-Ear (BTE) instruments manufactured by GN ReSound now come with a hypoallergenic nano-layer of protective coating. All of these benefits are achieved while maintaining the superior ReSound sound quality. 26 Slide 26

27 Supply Chain Transformation Progressing as planned End-to-end transformation is progressing as planned A major milestone was reached with the recent opening of a new regional operations center in Oxford, UK. All critical global systems and infrastructure are expected to be in place already by the end of 2010 and subsequently production and customers will gradually be converted to the new set-up. The expected cost reductions are equivalent to a further improvement of GN ReSound's EBITA margin by 6-7%-points at unchanged revenue level. The transformation builds on three pillars Manufacturing Warehousing Service & Repairs 27 Slide 27

28 2010 Focus per Area remain North America Win top end share Grow share in Veterans Affairs Expand distribution Grow and protect market share in Canada Europe Refocus Germany and France Grow Strategic Accounts EuroShape focus on sales & marketing APAC/Emerging markets China and India expansion strategy Optimize key account management in more mature markets GN Otometrics China strategy execution Launch new products in fitting and new screening category Global launch of product roadmap 28 Slide 28

29 Drivers and Challenges for GN ReSound Key Value Drivers Solid long-term market growth in an industry with attractive margins Leverage attractive partner strategy Strong position in Emerging markets Strengthening of position with VA Scalable and competitive cost base Continued innovation resulting in new and groundbreaking products Comprehensive transformation of the supply chain in 2010 Challenges Pressure on average prices Win top end share Shorter product life cycles, demanding more effective R&D Outgrow competition with no growth in spending 29 Slide 29

30 Outlook for 2010 GN confirms outlook provided in Q1 Interim Report 2010 Revenue (DKK/USD 5.5) GN Netcom s organic revenue growth for 2010 is expected to be at least 5%. GN ReSound s revenue is expected to show positive organic growth for GN s total revenue is expected to show positive organic growth of 3-5%. EBITA GN Netcom GN ReSound Other GN Total DKK million DKK million Around DKK (30) million DKK million DKK million EBITA Outlook Amortization, finance etc. DKK ~(50) million 30 Slide 30

31 Safe Harbour Statement The forward-looking statements in this interim report reflect management's current expectations of certain future events and financial results. Statements regarding 2010 are, of course, subject to risks and uncertainties which may result in material 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 subcontractor supplies and developments in ongoing litigation (including but not limited to class action and patent infringement litigation in the United States). This interim report, announcement or presentation should not be considered an offer to sell or buy securities in GN Store Nord. 31 Slide 31

32 Q2 Interim Report 2010 Q&A

33 Profit and Loss (DKK million) FY 2008 Q1 Q2 Q3 Q4 FY Q Q Revenue 5,624 1,198 1,196 1,108 1,227 4,729 1,174 1,286 Gross Profit 2, , SG&A, R&D etc. (2,836) (692) (642) (553) (666) (2,553) (576) (614) EBITA 65 (65) Amort., finance, associates etc. (148) (54) (13) 83 (25) (9) (7) (9) EBT (83) (119) (11) (1) Slide 33

34 Balance Sheet & Cash Flow (DKK million) End Q2/ End Q3/ End Q4/ End Q1/2010 End Q2/2010 Goodwill 2,651 2,563 2,605 2,754 2,991 Other intangible assets 1,169 1,158 1,157 1,158 1,184 Tangible & other noncurrent assets 1,414 1,389 1,344 1,349 1,402 Current assets 2,265 2,034 2,029 2,099 2,250 Equity 4,427 4,445 4,435 4,684 5,006 Liabilities 3,072 2,699 2,700 2,676 2,821 Total assets/liabilities 7,499 7,144 7,135 7,360 7,827 NIBD 1,438 1,135 1, ,014 Free cash flow Slide 34