Interim Report Q3 2022
GN Store Nord in Q
3 2022 delivered 24% revenue growth, while
organic growth was
-1%, supported by solid Enterprise performance.
S
trong initial uptake of ReSound OMNIA
GN Store Nord
-1%
organic growth
•
In Q3 2022, GN delivered 24% revenue growth, while organic revenue growth was -1%, leading to revenue
of DKK 4,701 million
•
Adj. EBITA was DKK 548 million and free cash flow excl. M&A was DKK -217 million driven by positive free
cash flows across GN Hearing and GN Audio, but off-set by negative cash flow in Other primarily due to
timing of financial derivatives
•
Adj. Leverage ended at 5.9x, reflecting a temporary inventory build-up, higher freight and material costs,
the development in FX and cash flow seasonality
•
On November 2, 2022, GN Store Nord revised the financial guidance for growth in adj. EPS as a
consequence of the revised financial guidance for GN Audio
GN Hearing
0%
organic growth
• GN Hearing delivered revenue growth of 15% in Q3 2022, while organic revenue growth was 0%. The
growth was driven by strong performance in Europe while negatively impacted by soft market conditions
in the US and in Rest of World
. Adj. EBITA margin was 10.6% in the Core business impacted by higher
freight and material costs and investments in launch activities
•
The Emerging business, primarily Lively, delivered another strong quarter with 64% organic revenue
growth. EBITA was DKK -40 million
•
Free cash flow excl. M&A was DKK 60 million driven by investments in growth opportunities
•
ReSound OMNIA, which started shipment in the US on August 25, is showing strong initial uptake. The
new platform was rolled out across most of Europe during September
• Financial guidance confirmed
GN Audio
-2%
organic growth
•
GN Audio delivered revenue growth of 29% in Q3 2022, of which -2% was organic, driven by a solid 7%
organic revenue growth in Enterprise due to the world-leading and updated product portfolio. The growth
was negatively impacted by -34% organic revenue growth in the Consumer business, which accounts for
less than 20% of GN Audio Organic
•
SteelSeries’ organic revenue growth was -13% in a declining market. SteelSeries delivered a strong
sequential improvement of more than 20% compared to Q2 2022 driven by better supply, new product
launches and market share gains
•
Adj. EBITA margin was 14.6%, reflecting investments in growth opportunities, higher freight and material
costs, the development in FX and the consolidation of SteelSeries
•
Free cash flow excl. M&A was DKK 21 million reflecting strong operational cash flow before working
capital of DKK 473 million in a challenging environment, but offset by inventory build-up
•
Acknowledging the current sentiment related to a potential recession, GN Audio is taking proactive and
significant actions to reduce the cost base, inventory levels and debt
•
On November 2, 2022, GN Audio revised its financial guidance to reflect the impact of the worsened
macroeconomic environment, lower consumer sentiment and general higher uncertainty
Financial overview
Q3 2022
GN Hearing
GN Audio
DKK million – Q3 2022
Core
business
Emerging
business
GN
Hearing
GN Audio
organic
SteelSeries
GN Audio
Revenue
1,495
59
1,554
2,551
596
3,147
Organic growth
0%
64%
0%
-2%
-13%
-2%
Adj. EBITA**
159
-40
119
461
Adj. EBITA margin**
10.6%
7.7%
14.6%
GN Store Nord*
GN Hearing
GN Audio
DKK million
Q3 2022
Q3 2021
Growth
Q3 2022
Q3 2021
Growth
Q3 2022
Q3 2021
Growth
Revenue
4,701
3,787
24%
1,554
1,347
15%
3,147
2,440
29%
Organic growth
-1%
2%
0%
4%
-2%
1%
M&A growth
18%
0%
6%
-1%
24%
0%
Adj. Gross profit**
2,355
2,113
11%
1,014
891
14%
1,341
1,222
10%
Adj. Gross profit margin**
50.1%
55.8%
-5.7%p
65.3%
66.1%
-0.8%p
42.6%
50.1%
-7.5%p
Adj. EBITA**
548
625
-12%
119
173
-31%
461
488
-6%
Adj. EBITA margin**
11.7%
16.5%
-4.8%p
7.7%
12.8%
-5.1%p
14.6%
20.0%
-5.4%p
Non-recurring items
-59
-14
-38
0
-21
-14
Adj. Earnings per share (EPS)***
2.68
3.70
-28%
Free cash flow excl. M&A
-217
493
-710
60
340
-280
21
281
-260
* Including "Other", ** Excluding non-recurring items (DKK -21 million in OPEX in GN Audio, DKK -26 million in COGS in GN Hearing and
DKK -12 million in OPEX in GN Hearing), *** Excluding non-recurring items (DKK -59 million) and amortization of acquires intangible assets
2
Q3
Q3
YTD
YTD
Full year
2022
2021
2022
2021
2021
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
GN Hearing
Revenue
1,554
1,347
4,420
3,903
5,332
Revenue growth
15%
2%
13%
17%
13%
Organic growth
0%
4%
2%
22%
16%
Gross profit margin
63.6%
66.1%
61.4%
63.8%
63.8%
EBITA*
81
173
17
424
643
EBITA margin*
5.2%
12.8%
0.4%
10.9%
12.1%
ROIC (EBITA*/Average invested capital)
3%
9%
3%
9%
9%
Free cash flow excl. M&A
60
340
-441
259
198
Cash conversion (Free cash flow excl. M&A/EBITA*)
74%
197%
NA
61%
31%
GN Audio
Revenue
3,147
2,440
8,997
7,772
10,443
Revenue growth
29%
1%
16%
29%
20%
Organic growth
-2%
1%
-9%
33%
22%
Gross profit margin
42.6%
50.1%
42.8%
51.0%
50.6%
EBITA*
440
474
1,117
1,720
2,164
EBITA margin*
14.0%
19.4%
12.4%
22.1%
20.7%
ROIC (EBITA*/Average invested capital)
20%
82%
20%
82%
79%
Free cash flow excl. M&A
21
281
-70
1,090
1,288
Cash conversion (Free cash flow excl. M&A/EBITA*)
5%
59%
-6%
63%
60%
GN Store Nord
Revenue
4,701
3,787
13,417
11,675
15,775
Revenue growth
24%
1%
15%
25%
17%
Organic growth
-1%
2%
-5%
29%
20%
Gross profit margin
49.5%
55.8%
48.9%
55.3%
55.0%
EBITA*
489
611
1,004
1,999
2,619
EBITA margin*
10.4%
16.1%
7.5%
17.1%
16.6%
Profit (loss) before tax
273
567
371
1,731
2,271
Effective tax rate
21.2%
21.3%
21.3%
21.3%
21.2%
ROIC (EBITA*/Average invested capital)
10%
27%
10%
27%
25%
Earnings per share, basic (EPS)
1.54
3.37
1.94
10.33
13.63
Earnings per share, fully diluted (EPS diluted)
1.54
3.33
1.94
10.20
13.49
Free cash flow excl. M&A
-217
493
-1,186
981
702
Cash conversion (Free cash flow excl. M&A/EBITA*)
-44%
81%
-118%
49%
27%
Equity ratio
23.2%
32.6%
23.2%
32.6%
26.4%
Net interest-bearing debt
15,241
4,637
15,241
4,637
5,358
Net interest-bearing debt (period-end)/EBITDA
7.2
1.5
7.2
1.5
1.8
Share buybacks**
-
704
-
1,112
1,166
Outstanding shares, end of period (thousand)
127,956
127,776
127,956
127,776
127,718
Average number of outstanding shares (thousand)
127,853
128,507
127,775
129,181
128,816
Average number of outstanding shares, fully diluted (thousand)
128,139
129,996
128,133
130,821
130,194
Treasury shares, end of period (thousand)
9,238
10,400
9,238
10,400
10,458
Share price at the end of the period
134.1
445.1
134.1
445.1
411.3
Market capitalization
17,159
56,873
17,159
56,873
52,530
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 amorti
zation of development projects and software
developed in-house.
** Incl. buybacks as part of share based incentive programs
Financial highlights
3
Highlights Q3 2022
• GN Hearing delivered revenue growth of 15% in Q3 2022,
while organic revenue growth was 0%. The growth was
driven by strong performance in Europe while negatively
impacted by soft market conditions in the US and in Rest
of World. Adj. EBITA margin was 10.6% in the Core
business impacted by higher freight and material costs and
investments in launch activities
• The Emerging business, primarily Lively, delivered another
strong quarter with 64% organic revenue growth. EBITA
was DKK -40 million
• Free cash flow excl. M&A was DKK 60 million driven by
investments in growth opportunities
• ReSound OMNIA, which started shipment in the US on
August 25, is showing strong initial uptake. The new
platform was rolled out across most of Europe during
September
• Financial guidance confirmed
GN Hearing delivered organic revenue growth of 0% in Q3
2022 driven by strong performance in Europe while
negatively impacted by soft market conditions in the US
and in Rest of World. Revenue growth was 15% including
around 9% impact from the development in foreign
exchange rates and around 6% impact from M&A,
reflecting the Lively acquisition. The Emerging business
(Lively) delivered 64% organic revenue growth. In the first
9 months of 2022, GN Hearing delivered 2% organic
revenue growth.
GN Hearing revenue development
North America
The hearing aid market in North America was soft in Q3
2022, with volumes slightly below Q3 2021. GN Hearing’s
organic revenue growth in North America was -3% driven
by solid performance in the independent market following
the launch of ReSound OMNIA, offset by the development
in Costco. Revenue growth was 17% including around 18%
impact from the development in foreign exchange rates
and 2% impact from M&A. In the first 9 months of 2022,
GN Hearing delivered organic revenue growth of -4% in
North America.
Europe
In Europe, GN Hearing delivered strong organic revenue
growth of 7% driven by, among other, Germany. Revenue
growth was 24% including around 1% impact from the
development in foreign exchange rates and 17% impact
from M&A reflecting the acquisition of the Portuguese
retailer acquired in Q2 2022. In the first 9 months of 2022,
GN Hearing delivered organic revenue growth of 11% in
Europe.
Rest of World
The Rest of World region was impacted by soft market
conditions, resulting in an organic revenue of -3%.
Revenue growth was 3% including around 6% impact from
the development in foreign exchange rates. In the first 9
months of 2022, GN Hearing delivered organic revenue
growth of 3% in the Rest of World region.
Earnings and other financial highlights
Adj. gross profit reached DKK 1,014 million in Q3 2022
corresponding to an adj. gross margin of 65.3% compared
to 66.1% in Q3 2021. The adj. gross margin is negatively
impacted by elevated freight costs, increased material
costs, as well as mix effects, but off-set by pricing
initiatives. In the first 9 months of 2022, GN Hearing
delivered an adj. gross margin of 62.4%.
GN Hearing continued to take prudent OPEX measures to
manage costs. However, excluding non-recurring items, Adj.
OPEX increased by 25% compared to Q3 2021. This was
driven by investments in launch activities, FX impact and
consolidation of the Lively acquisition as well as the “retail-in-
transition” we acquired in Q2 2022.
Adj. selling and distribution costs increased by 40% reflecting
Lively, retail-in-transition, additional launch costs and FX. Adj.
general and administrative expenses increased by 2% in Q3
2022 compared to Q3 2021. Adj. R&D costs decreased by 6%
compared to Q3 2021 primarily driven by timing effects.
Other operating income amounted to DKK -34 million in Q3
2022 compared to DKK -15 million in Q3 2021 due to
development in FX. In the first 9 months of 2022, adj. OPEX
increased by 27% compared to the first 9 months of 2021.
GN Hearing’s adj. EBITA was DKK 119 million, with the Core
business delivering adj. EBITA of DKK 159 million
corresponding to an adj. EBITA margin of 10.6%. The
Emerging business, primarily Lively, delivered an EBITA of
DKK -40 million. Reported EBITA amounted to DKK 81
million reflecting non-recurring items of DKK -38 million in
Q3 2022. In the first 9 months of 2022, the adj. EBITA margin
GN Hearing
15% revenue growth and 0% organic revenue growth in the Core business in a soft
hearing aid market
. ReSound OMNIA launched across US and most of Europe by
September
1,347
1,429
1,297
1,488
1,495
Q4 2021
41
Q3 2021
40
Q1 2022
Q2 2022
1,337
Q3 2022
1,529
1,554
59
Revenue Core business (DKKm)
Revenue Emerging business (DKKm)
Org.
growth
4% 2% 2% 4% 0%
4
in the Core business was 6.6%, while the adj. EBITA margin in
GN Hearing was 2.9%.
GN Hearing adj. EBITA development
*Excluding non-recurring items
The return on invested capital (ROIC) was 3% in Q3 2022,
while free cash flow excl. M&A was DKK 60 million in Q3 2022
compared to DKK 340 million in Q3 2021, mainly driven by
lower reported EBITA and a gain from channel investments
last year. In the first 9 months of 2022, free cash flow excl.
M&A was DKK -441 million mainly driven by investment in
growth opportunities.
Business highlights
ReSound OMNIA
On August 25, 2022, GN Hearing started the global launch of
ReSound OMNIA, a new hearing aid platform that sets a new
standard in hearing technology and improve how people
interact with the world around them. ReSound OMNIA
provides significantly better hearing in noisy environments
and has been engineered and proven to deliver 150%
improvement in speech understanding compared to current
hearing aids. Early feedback from audiologists and customers
is very encouraging, highlighting excellent and easy to
demonstrate improvement in hearing ability in noisy
environments. By end of September, the product was rolled
out across North America and most of Europe and will be
rolled out world-wide across most countries by the end of the
year.
Launch of Jabra Enhance Plus into OTC
On October 17, the new OTC hearing aid category was finally
introduced by FDA in the US. On the same day, Jabra
Enhance Plus was launched into the OTC hearing aid
category, empowering millions of Americans with mild to
moderate hearing loss to take the first step on their hearing
health journey. Jabra Enhance Plus is now available in stores
and online at Best Buy and at Jabra.com, expanding current
availability within ReSound and Beltone hearing care clinics.
Jabra Enhance Plus is designed specifically for the OTC
market leveraging the combined knowledge of both GN
Hearing and GN Audio.
Hearing Australia tender
In October 2022 it was announced that GN Hearing will be
the main supplier for hearing aids and ear moulds to Hearing
Australia for the coming 5 years with an extension option for
further 5 years. Hearing Australia is the biggest single
customer in Australia with over 100,000 hearing aid units
distributed per year. The contract is expected to come into
force from Q1 2023.
Restoring profitability and non-recurring items
As communicated, GN Hearing expects the Core business to
restore profitability to an EBITA margin of more than 20% in
2024, driven by above-market revenue growth and several
operational initiatives, primarily related to the supply chain.
To accelerate the initiatives and restore profitability, GN
Hearing will incur DKK ~ -150 million in non-recurring items in
2022. For Q3 2022, non-recurring items amounted to DKK-38
million, translating into DKK -110 million in the first 9 months
of 2022.
GN Hearing non-recurring items
Market development
The hearing aid market has in general recovered from COVID-
19, but is currently negatively impacted by macroeconomic
conditions, which led to a slightly negative global volume
growth in Q3 2022. For 2022, GN Hearing still expects a
global volume growth of 4-6%, but in the low-end of the
range. The ASP development in the quarter was also
negative, impacted by channel and country mix. We continue
to believe that the fundamentals of the hearing aid market
are intact, but with short-term uncertainties impacting the
imminent growth rates.
Management quote
“I’m very encouraged by the positive market reception and the
strong customer demand for our new flagship product,
ReSound OMNIA, and the corresponding Beltone Achieve. The
product has received excellent early feedback highlighting
significant hearing improvements in noisy environments.
Launched only this August, we already now see this product
platform drive strong double-digit growth in October for the
core business. With our fully updated portfolio across all
customer segments, including the newly opened over-the-
counter channel in the U.S., GN Hearing is strongly positioned
to take market shares.”
Gitte Aabo, CEO of GN Hearing
(DKK million) Q3 2022 YTD 2022
Revenue - -
Production costs -26 -45
Gross profit -26 -45
Development costs - -7
Selling and distribution costs -4 -32
Management and administrative expenses -8 -26
Other operating income and costs, net - -
EBITA -38 -110
173
219
98
159
-67
-49
-40
-
41
Q4 2021 Q3 2022Q3 2021
26
Q1 2022 Q2 2022
49
119
Adj. EBITA Core business (DKKm)*
Adj. EBITA Emerging business (DKKm)*
Adj. EBITA
margin Core*
12.8% 15.3% 2.0% 6.6% 10.6%
5
Highlights Q3 2022
• GN Audio delivered revenue growth of 29% in Q3 2022, of
which -2% was organic, driven by a solid 7% organic
revenue growth in Enterprise due to the world-leading and
updated product portfolio. The growth was negatively
impacted by -34% organic revenue growth in the
Consumer business, which accounts for less than 20% of
GN Audio Organic
• SteelSeries’ organic revenue growth was -13% in a
declining market. SteelSeries delivered a strong sequential
improvement of more than 20% compared to Q2 2022
driven by better supply, new product launches and market
share gains
• Adj. EBITA margin was 14.6%, reflecting investments in
growth opportunities, higher freight and material costs,
the development in FX and the consolidation of
SteelSeries
• Free cash flow excl. M&A was DKK 21 million reflecting
strong operational cash flow before working capital of
DKK 473 million in a challenging environment, but offset
by inventory build-up
• Acknowledging the current sentiment related to a
potential recession, GN Audio is taking proactive and
significant actions to reduce the cost base, inventory levels
and debt
• On November 2, 2022, GN Audio revised its financial
guidance to reflect the impact of the worsened
macroeconomic environment, lower consumer sentiment
and general higher uncertainty
GN Audio delivered -2% organic revenue growth in Q3 2022.
The growth was driven by 7% organic revenue growth in
Enterprise despite constraints from an improving yet
challenging global supply chain situation. The growth was
driven by the world-leading and updated product portfolio.
SteelSeries delivered organic revenue growth of -13% while
gaining market share in a significantly declining market,
impacted by lower consumer sentiment. The growth was
driven by the strong and updated product line-up including
category expansion into gaming speakers.
By the end of the quarter the order backlog was further
reduced with only a few SKU’s, including video products and
some high-end wireless headsets, being left in the order
backlog. By the end of Q4 the order backlog is expected to be
fully resolved.
Revenue growth was 29% including a 24% impact from M&A,
reflecting SteelSeries. The impact from the development in
foreign exchange rates was around 7%. In the first 9 month of
2022, GN Audio delivered organic revenue growth of -9%
while SteelSeries delivered -26%.
GN Audio revenue development
North America
In North America, GN Audio delivered -26% organic
revenue growth. Revenue growth was 20% including
around 34% impact from M&A and around 12% impact
from development in foreign exchange rates. In the first 9
months of 2022, GN Audio delivered -19% organic
revenue growth in North America.
Europe
In Europe, GN Audio delivered organic revenue growth of
16% with strong performance in, among other, Germany
and the UK. Revenue growth was 32% including around
15% impact from M&A and around 1% impact from the
development in foreign exchange rates. In the first 9
months of 2022, GN Audio delivered -4% organic revenue
growth in Europe.
Rest of World
In the Rest of World region, GN Audio delivered -1%
organic revenue growth. In the Rest of World region,
strong performance was in particular seen in India.
Revenue growth was 38% including around 29% impact
from M&A and around 10% impact from the development
in foreign exchange rates. In the first 9 months of 2022,
GN Audio delivered -5% organic revenue growth in the
Rest of World region.
Earnings and other financial highlights
GN Audio delivered an adj. gross margin of 42.6% in Q3
2022 compared to 50.1% in Q3 2021, driven by elevated
level of freight costs, increased material costs, the
consolidation of SteelSeries and a significant negative
impact from the development in foreign exchange rates.
The initiated list price increases across the Enterprise
portfolio in February 2022, had a larger impact on ASP in
Q3 2022 compared to the prior quarters. Due to the
GN Audio
29% revenue growth and -2% organic revenue growth in Q3 2022 supported by
solid
Enterprise performance
2,440
2,671
450
487
596
2,072
2,841
2,551
3,328
Q4 2021 Q2 2022
3,147
2,522
Q3 2021 Q1 2022 Q3 2022
Revenue GN Audio Organic (DKKm)
Revenue SteelSeries (DKKm)
Org.
growth
1%
-4% -30% 10% -2%
6
continued high level of inflation, GN Audio has initiated a
similar list price increase across products in the Enterprise
business from January 1, 2023. In the first 9 months of
2022, the adj. gross margin was 45.0%.
GN Audio’s adj. OPEX was DKK -880 million in Q3 2022,
reflecting a 20% increase compared to Q3 2021 primarily
driven by the consolidation of SteelSeries. Selling and
distribution costs increased by 28%, while adj. general &
administrative costs increased by 12%. Investments into
R&D increased 9% compared to Q3 2021. In the first 9
months of 2022, adj. OPEX increased by 17%. GN Audio’s
adj. EBITA ended at DKK 461 million in Q3 2022,
translating into an adj. EBITA margin of 14.6%, compared
to 20.0% in Q3 2021. The development reflects the gross
margin decline due to increasing freight and production
costs, the consolidation of SteelSeries and the
development in FX. Reported EBITA was DKK 440 million,
reflecting DKK -21 million in non-recurring items related
to the acquisition of SteelSeries. In the first 9 months of
2022, GN Audio delivered an adj. EBITA margin of 15.8%.
GN Audio adj. EBITA development
*Excluding non-recurring items
The return on invested capital (ROIC) was 20% in Q3 2022.
Free cash flow excl. M&A was DKK 21 million in Q3 2022
compared to DKK 281 million in Q3 2021, driven by
slightly lower reported EBITA, inventory build-up and
timing of trade receivables. In the first 9 months of 2022,
free cash flow excl. M&A was DKK -70 million.
Business highlights
Product launches
GN Audio had multiple successful product launches in Q3
2022 and all new product families have received stellar
reviews. With these new innovations combined with planned
launches in the coming months, GN Audio will have the
strongest product portfolio ever.
On August 23, SteelSeries announced the launch of its new
franchise – a family of innovative speakers, namely Arena 3,
Arena 7, and Arena 9. On the same day SteelSeries also
launched the Arctis Nova 7 – a further improvement to one of
the best-selling gaming headsets of all time.
On September 6, SteelSeries announced the launch of the
new Apex 9 series keyboards. Built from the ground up to
help gamers create their own momentous occasions, the
Apex 9 series is fast, customizable, esports-ready, and
powered by new SteelSeries OptiPoint technology.
On September 1, GN Audio announced the launch of the
newest addition to its true wireless range, the Jabra Elite 5,
made for those needing to take calls anywhere and is perfect
for enjoying media during leisure.
On September 15, GN Audio announced the launch of a new
Software-as-a-Service (SaaS) solution, Engage AI, leveraging
technology developed by audEERING, an investment GN
completed in 2018. Engineered to transform contact centre
call experiences, the solution employs Artificial Intelligence
(AI) technology that provides real-time insights to improve
customer calls and support employee wellbeing. On the same
day Jabra announced the new generation of contact centre
headsets to the Engage line with two new products set to
empower digital contact centres to enhance customer
experience.
On September 27, GN Audio announced the Jabra Connect 5t
as the third product in Jabra’s Connect series, joining the
Connect 4h, a flexible headset, and the Jabra Connect 4s, a
portable speakerphone, in a range of products created for
those who want to choose their flexible, remote working
solutions at retail.
SteelSeries integration and non-recurring items
The SteelSeries integration is progressing according to plan.
GN Audio continues to expect an annual run-rate of
operational synergies of around DKK 150 million by the end
of 2022. Around half of the synergies are expected to impact
2022 financials. In addition, future revenue synergies are
expected.
During Q3 2022, GN booked non-recurring items relating to
the SteelSeries acquisition of DKK -21 million which was
recognized as general and administrative expenses. In 2022,
GN Audio continues to expect total transaction and
integration costs of around DKK -200 million, and non-cash
PPAs of around DKK -200 million.
Taking strong actions in an ever-changing macroenvironment
Acknowledging the current sentiment related to a potential
recession, GN Audio is taking proactive and significant actions
to reduce our cost base and defend the agility of the
company, while continuing to invest in growth opportunities.
For this purpose, we expect additional DKK -100 million non-
recurring cost in Q4 relating to these initiatives.
488
475
364
600
461
Q4 2021
Q2 2022
Q1 2022
Q3 2021 Q3 2022
Adj. EBITA (DKKm)*
20.0%
17.8% 14.4% 18.0% 14.6%
Adj. EBITA
margin*
7
GN Audio non-recurring items
Current global supply chain situation
As previously communicated, certain components are in
global shortage impacting many industries. In Q3 2022, this
situation saw a continued improving trend, while COVID-19
spikes in China continue to challenge the overall supply chain
predictability and general logistics.
Market development
In Q3 2022, the demand in GN Audio’s core addressable
Enterprise market continued to be solid driven by flexible
working, significant uptake of Unified Communications
platforms and other attractive megatrends. The consumer
and gaming gear markets experienced softness due to lower
consumer sentiment and related channel inventory reset. The
world is adapting to hybrid work and enterprises globally are
continuously deploying productivity enhancing tools. This will
be a medium-term underlying growth driver for GN Audio’s
Enterprise business, but short-term uncertainty remains high
due to the current macroeconomic environment.
Management quote
“Today, GN Audio is double the size of the business it was in
2019, and we continue to see more organizations move
towards flexible and hybrid working environments. In a
macroeconomic instability it is crucial for decision-makers to
continue investing in the types of cost-effective productivity
enhancing devices that GN Audio offers. We are
acknowledging the current sentiment in the market, so we will
take proactive and strong actions to adapt to a changing and
unpredictable world.”
René Svendsen-Tune, CEO of GN Audio
(DKK million) Q3 2022
YTD 2022
Revenue - -
Production costs - -196
Gross profit - -196
Development costs - -
Selling and distribution costs -
-
Management and administrative expenses -21 -112
Other operating income and costs, net - -
EBITA
-21 -308
8
Highlights Q3 2022
• In Q3 2022, GN delivered 24% revenue growth, while
organic revenue growth was -1%, leading to revenue of
DKK 4,701 million
• Adj. EBITA was DKK 548 million and free cash flow excl.
M&A was DKK -217 million driven by positive free cash
flows across GN Hearing and GN Audio, but off-set by
negative cash flow in Other primarily due to timing of
financial derivatives
• Adj. Leverage ended at 5.9x, reflecting a temporary
inventory build-up, higher freight and material costs, the
development in FX and cash flow seasonality
• On November 2, 2022, GN Store Nord revised the financial
guidance for growth in adj. EPS as a consequence of the
revised financial guidance for GN Audio
Revenue
GN delivered -1% organic revenue growth. Revenue growth
was 24% including around 18% impact from M&A, reflecting
Lively and SteelSeries. The impact from the development in
foreign exchange rates was around 7%. In the first 9 months
of 2022, GN delivered organic revenue growth of -5%, while
revenue growth was 15%.
GN Store Nord revenue development
Earnings and other financial highlights
EBITA in Other amounted to DKK -32 million in Q3 2022,
compared to DKK -36 million in Q3 2021 due to prudent cost
management. GN Store Nord’s adj. EBITA was DKK 548
million compared to DKK 625 million in Q3 2021, primarily
driven by the reduced consumer sentiment and the
consolidation of Lively. This corresponds to an adj. EBITA
margin of 11.7% in Q3 2022 compared to 16.5% in Q3 2021.
Reported EBITA was DKK 489 million, reflecting non-
recurring items of DKK -59 million due to supply chain
initiatives in GN Hearing and the non-recurring items related
to SteelSeries. In the first 9 months of 2022, GN delivered an
adj. EBITA margin of 10.6%.
GN Store Nord adj. EBITA development
*Excluding non-recurring items
In Q3 2022, amortization of acquired intangible assets
amounted to DKK -125 million compared to DKK -40 million
in Q3 2021 reflecting the consolidation of SteelSeries.
Financial items were DKK -90 million in Q3 2022 compared to
DKK -13 million in Q3 2021, driven by the financing of
SteelSeries. In Q3 2022, share of profit (loss) in associates was
DKK -1 million compared to DKK 9 million in Q3 2021.
The adj. profit before tax was DKK 332 million in Q3 2022
(reported profit before tax was DKK 273 million) compared to
DKK 581 million in Q3 2021. The effective tax rate was
21.2%, translating into an adj. net profit of DKK 262 million in
Q3 2022 (reported net profit of DKK 215 million) compared
to DKK 457 million in Q3 2021. In the first 9 months of 2022,
adj. net profit was DKK 635 million.
Free cash flow excl. M&A was DKK -217 million in Q3 2022,
mainly driven by positive free cash flows across GN Hearing
and GN Audio, but off-set by negative cash flow in Other
primarily due to timing of financial derivatives.
Adj. earnings per share (Adj. EPS), was DKK 2.68 in Q3 2022
compared to DKK 3.70 in Q3 2021. In the first 9 months of
2022, GN delivered an adj. earnings per share of DKK 6.62.
GN Store Nord adj. EPS development
*Excluding non-recurring items and amortization of acquired intangible asset
By the end of Q3 2022, equity in GN Store Nord amounted to
DKK 7,202 million compared to DKK 6,638 million in Q2
2022. The increase was primarily driven by the net profit
generated in the quarter.
GN Store Nord
3,787
4,100
3,859
4,857
4,701
Q3 2021
Q4 2021 Q1 2022
Q2 2022 Q3 2022
Revenue (DKKm)
Org.
growth
2% -
2% -21% 8% -1%
625
651
264
610
548
Q1 2022
Q3 2021
Q4 2021 Q2 2022 Q3 2022
Adj. EBITA (DKKm)*
16.5% 15.9% 6.8% 12.6% 11.7%
Adj. EBITA
margin*
3.70
4.13
0.77
3.17
2.68
Q1 2022 Q2 2022Q3 2021 Q3 2022Q4 2021
Adj. EPS (DKK)*
9
Capital structure
Net interest-bearing debt was DKK 15,241 million by the end
of Q3 2022 compared to DKK 14,966 million by the end of Q2
2022, which was driven by the negative free cash flow. As a
result, the adj. leverage ended at 5.9x. Reported leverage
ratio was 7.2x reflecting the DKK -449 million non-recurring
items.
By the end of Q3 2022, GN had cash and cash equivalents of
DKK 870 million. Moreover, on September 29, GN signed a
three-year EUR 520 million term loan with its commercial
banking group to cover its short-term funding requirements.
In October, GN received formal project approval from EIB and
KfW concerning new combined R&D loans of EUR 110 million.
The terms and conditions of the loan agreements have been
agreed in principle with the two banks, but execution of the
loan agreements is subject to final approval from the banks’
credit committees which is expected end November
With the recent M&A activity and in line with expectations,
GN Store Nord’s financial leverage ratio is currently above the
long-term leverage target of 1-2x NIBD/EBITDA. In light of
the worsened macroeconomic environment, lower consumer
sentiment and general higher uncertainty, GN has initiated a
comprehensive review into the appropriate capital structure
for the medium term and will update the market together
with the release of full-year 2022 results. As a consequence,
and as announced in October 2021, GN Store Nord’s share
buyback program has been paused for the time being.
During the first 9 months of 2022, GN distributed DKK 214
million to shareholders through the annual dividend payment.
In March 2022, GN paid out DKK 1.55 per share in respect of
the fiscal year 2021, as approved at the Annual General
Meeting in 2022.
In line with the last couple of years, GN continues to
proactively secure a diversified funding profile. The diverse
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 short-term Euro Commercial Paper Program, bilateral
loan facilities provided by EIB, KfW and the commercial
banking group as well as uncommitted bank facilities
including overdraft lines.
Foreign exchange exposure
GN has hedged a substantial part of the expected net cash-
flow 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.
10
Financial guidance 2022 (Confirmed as of November 11)
Organic revenue
growth
Adjusted EBITA
margin
3)
Non-recurring items
(DKK million)
4)
Growth in
adjusted EPS
5)
GN Hearing
- Core business organic
5-8%
~14%
~ -150
- Emerging Business
1)
(DKK million)
~ -200
GN Audio
2) 6)
14-15%
~ -500
- GN Audio organic
-7% to -5%
- SteelSeries
better than -25%
Other (DKK million)
~ -190
GN Store Nord
~ -30%
Note 1) Emerging Business mainly includes the Lively acquisition
Note 2) The SteelSeries organic revenue growth will be reported as M&A growth for GN Audio
Note 3) Excluding non-recurring items
Note 4) Non-recurring items in GN Hearing primarily related to supply chain investments (DKK ~ -150m) and in GN Audio related to transaction and integration costs
(DKK ~ -200m) as well as non-cash PPAs (DKK ~ -200m), associated with SteelSeries and cost reduction measures (DKK ~ -100m)
Note 5) Compared to 2021 adjusted EPS (excluding non-recurring items and amortization and impairment of acquired intangible assets) of DKK 15.29
Note 6) Reflecting updated FX assumptions for 2022 following the significant appreciation of the USD since August 2022
Financial guidance based on foreign exchange rates as of November 11, 2022
Primary risk factors in relation to the financial guidance
Due to the COVID-19 pandemic, the global supply situation, worsened macroeconomic environment, lower consumer
sentiment and general higher uncertainty – which impacts GN in many ways – it must be stressed that the basic assumptions
behind the guidance remain more uncertain than normal. The situation is impacting GN’s operational performance,
predictability and visibility across markets, channels and supply chain.
Financial guidance 202
2
The financial guidance, which was revised on November 2, 2022, is confirmed
Forward-looking statements
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.
11
Teleconference
GN will host a teleconference at 11.00 am CET on November
11, 2022. 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.
Financial calendar 2023
Annual Report 2022: February 9, 2023
Annual general meeting* March 15, 2023
Interim Report Q1 2023: April 27, 2023
Interim Report Q2 2023: August 17, 2023
Interim Report Q3 2023: November 10, 2023
* 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 31, 2023)
Forward-looking statements
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: asveyhe@gn.com
Tel: +45 45 75 85 06
Rune Sandager
Senior Director, Investor Relations
Email: rsandager@gn.com
Tel: +45 45 75 92 57
Company reg. no. 24257843
Additional information
12
Note 1 – Accounting policies 19
Note 2 – Segment disclosures Q3 2022 20
Note 3 – Incentive plans 23
Note 4 – Shareholdings 23
Content
Financial statements
Financial statements
Quarterly reporting by segment
13
Regional growth composition Q1 2022
14
Regional growth composition Q1 2022
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
Notes
13
Quarterly reporting by segment
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
YTD 2021
YTD 2022
Full year
2021
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Income statement
Revenue
GN Hearing
1,234
1,322
1,347
1,429
1,337
1,529
1,554
3,903
4,420
5,332
GN Audio
2,876
2,456
2,440
2,671
2,522
3,328
3,147
7,772
8,997
10,443
Total
4,110
3,778
3,787
4,100
3,859
4,857
4,701
11,675
13,417
15,775
Organic growth
GN Hearing
1%
95%
4%
2%
2%
4%
0%
22%
2%
16%
GN Audio
82%
32%
1%
-4%
-30%
10%
-2%
33%
-9%
22%
Total
46%
49%
2%
-2%
-21%
8%
-1%
29%
-5%
20%
Gross profit
GN Hearing
769
832
891
908
801
924
988
2,492
2,713
3,400
GN Audio
1,480
1,264
1,222
1,316
1,006
1,502
1,341
3,966
3,849
5,282
Total
2,249
2,096
2,113
2,224
1,807
2,426
2,329
6,458
6,562
8,682
Gross profit margin
GN Hearing
62.3%
62.9%
66.1%
63.5%
59.9%
60.4%
63.6%
63.8%
61.4%
63.8%
GN Audio
51.5%
51.5%
50.1%
49.3%
39.9%
45.1%
42.6%
51.0%
42.8%
50.6%
Total
54.7%
55.5%
55.8%
54.2%
46.8%
49.9%
49.5%
55.3%
48.9%
55.0%
Development costs
GN Hearing
-139
-154
-155
-131
-138
-142
-146
-448
-426
-579
GN Audio
-199
-168
-173
-185
-189
-166
-188
-540
-543
-725
Other *
-34
-27
-9
-15
-21
-16
-10
-70
-47
-85
Total
-372
-349
-337
-331
-348
-324
-344
-1,058
-1,016
-1,389
Selling and distribution costs and administrative
expenses etc.
GN Hearing
-532
-525
-563
-558
-733
-776
-761
-1,620
-2,270
-2,178
GN Audio
-567
-564
-575
-687
-672
-804
-713
-1,706
-2,189
-2,393
Other *
-25
-23
-27
-28
-38
-23
-22
-75
-83
-103
Total
-1,124
-1,112
-1,165
-1,273
-1,443
-1,603
-1,496
-3,401
-4,542
-4,674
EBITA
GN Hearing
98
153
173
219
-70
6
81
424
17
643
GN Audio
714
532
474
444
145
532
440
1,720
1,117
2,164
Other *
-59
-50
-36
-43
-59
-39
-32
-145
-130
-188
Total
753
635
611
620
16
499
489
1,999
1,004
2,619
EBITA margin
GN Hearing
7.9%
11.6%
12.8%
15.3%
-5.2%
0.4%
5.2%
10.9%
0.4%
12.1%
GN Audio
24.8%
21.7%
19.4%
16.6%
5.7%
16.0%
14.0%
22.1%
12.4%
20.7%
Total
18.3%
16.8%
16.1%
15.1%
0.4%
10.3%
10.4%
17.1%
7.5%
16.6%
Depreciation and software amortization
GN Hearing
-42
-41
-40
-40
-38
-41
-42
-123
-121
-163
GN Audio
-33
-31
-34
-37
-45
-48
-54
-98
-147
-135
Other *
-30
-33
-32
-36
-35
-37
-36
-95
-108
-131
Total
-105
-105
-106
-113
-118
-126
-132
-316
-376
-429
EBITDA
GN Hearing
140
194
213
259
-32
47
123
547
138
806
GN Audio
747
563
508
481
190
580
494
1,818
1,264
2,299
Other *
-29
-17
-4
-7
-24
-2
4
-50
-22
-57
Total
858
740
717
733
134
625
621
2,315
1,380
3,048
EBITA
753
635
611
620
16
499
489
1,999
1,004
2,619
Amortization and impairment of acquired
intangible assets
-41
-42
-40
-103
-103
-96
-125
-123
-324
-226
Gain (loss) on divestment of operations etc.
-
-9
-
13
-1
-6
-
-9
-7
4
Operating profit (loss)
712
584
571
530
-88
397
364
1,867
673
2,397
Share of profit (loss) in associates
-1
-20
9
-24
17
5
-1
-12
21
-36
Financial items
-99
-12
-13
34
-156
-77
-90
-124
-323
-90
Profit (loss) before tax
612
552
567
540
-227
325
273
1,731
371
2,271
Tax on profit (loss)
-130
-118
-121
-112
49
-70
-58
-369
-79
-481
Profit (loss)
482
434
446
428
-178
255
215
1,362
292
1,790
Balance sheet
Development projects
GN Hearing
1,019
1,001
989
1,014
1,026
1,045
1,047
989
1,047
1,014
GN Audio
508
585
655
708
859
925
874
655
874
708
Other *
-13
-12
-10
-9
-7
-6
-4
-10
-4
-9
Total
1,514
1,574
1,634
1,713
1,878
1,964
1,917
1,634
1,917
1,713
Inventories
GN Hearing
677
675
683
743
770
816
892
683
892
743
GN Audio
939
1,049
1,019
1,205
2,012
2,282
2,968
1,019
2,968
1,205
Total
1,616
1,724
1,702
1,948
2,782
3,098
3,860
1,702
3,860
1,948
Trade receivables
GN Hearing
987
1,020
1,111
1,124
1,144
1,262
1,266
1,111
1,266
1,124
GN Audio
1,670
1,721
2,057
2,169
1,975
2,890
2,729
2,057
2,729
2,169
Other *
-
2
2
-
2
2
-
2
-
-
Total
2,657
2,743
3,170
3,293
3,121
4,154
3,995
3,170
3,995
3,293
Net working capital
GN Hearing
785
862
883
1,010
1,036
1,078
1,052
883
1,052
1,010
GN Audio
652
662
793
837
1,646
2,021
2,145
793
2,145
837
Other *
-189
-136
-149
-122
-165
-319
-259
-149
-259
-122
Total
1,248
1,388
1,527
1,725
2,517
2,780
2,938
1,527
2,938
1,725
Free cash flow excl. M&A
GN Hearing
-204
123
340
-61
-175
-326
60
259
-441
198
GN Audio
438
371
281
198
-140
49
21
1,090
-70
1,288
Other *
-256
16
-128
-416
-242
-135
-298
-368
-675
-784
Total
-22
510
493
-279
-557
-412
-217
981
-1,186
702
Acquisitions and divestments of companies
-38
-1
-1
-314
-7,037
-216
-15
-40
-7,268
-354
Free cash flow
-60
509
492
-593
-7,594
-628
-232
941
-8,454
348
* "Other" comprises Group Functions, GN Ejendomme and eliminations.
14
Regional growth composition Q3 2022
GN Hearing
GN Audio
Consolidated total
Q3
Q3
Q3
Q3
Q3
Q3
2022
2021
2022
2021
2022
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Europe - revenue
425
342
1,408
1,068
1,833
1,410
Organic growth
7%
-11%
16%
-7%
14%
-8%
FX growth
1%
-1%
1%
2%
1%
1%
M&A growth
17%
0%
15%
0%
15%
0%
Revenue growth
24%
-12%
32%
-5%
30%
-7%
North America - revenue
770
656
1,021
852
1,791
1,508
Organic growth
-3%
7%
-26%
5%
-16%
6%
FX growth
18%
-1%
12%
-2%
15%
-2%
M&A growth
2%
-2%
34%
0%
20%
-1%
Revenue growth
17%
4%
20%
3%
19%
3%
Rest of World - revenue
359
349
718
520
1,077
869
Organic growth
-3%
17%
-1%
12%
-2%
14%
FX growth
6%
0%
10%
0%
9%
0%
M&A growth
0%
0%
29%
0%
17%
0%
Revenue growth
3%
17%
38%
12%
24%
14%
Total revenue
1,554
1,347
3,147
2,440
4,701
3,787
Organic growth
0%
4%
-2%
1%
-1%
2%
FX growth
9%
-1%
7%
0%
7%
-1%
M&A growth
6%
-1%
24%
0%
18%
0%
Revenue growth
15%
2%
29%
1%
24%
1%
Regional growth composition YTD 2022
GN Hearing
GN Audio
Consolidated total
YTD
YTD
YTD
YTD
YTD
YTD
2022
2021
2022
2021
2022
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Europe - revenue
1,269
1,042
4,232
3,963
5,501
5,005
Organic growth
11%
10%
-4%
34%
-1%
28%
FX growth
1%
-1%
1%
1%
1%
1%
M&A growth
9%
0%
10%
0%
10%
0%
Revenue growth
22%
9%
7%
35%
10%
29%
North America - revenue
2,100
1,885
2,881
2,348
4,981
4,233
Organic growth
-4%
24%
-19%
35%
-12%
30%
FX growth
13%
-8%
11%
-11%
12%
-10%
M&A growth
2%
-1%
31%
0%
18%
0%
Revenue growth
11%
15%
23%
24%
18%
20%
Rest of World - revenue
1,051
976
1,884
1,461
2,935
2,437
Organic growth
3%
32%
-5%
27%
-2%
29%
FX growth
5%
-3%
8%
-4%
6%
-4%
M&A growth
0%
0%
26%
0%
16%
0%
Revenue growth
8%
29%
29%
23%
20%
25%
Total revenue
4,420
3,903
8,997
7,772
13,417
11,675
Organic growth
2%
22%
-9%
33%
-5%
29%
FX growth
7%
-5%
5%
-4%
5%
-4%
M&A growth
4%
0%
20%
0%
15%
0%
Revenue growth
13%
17%
16%
29%
15%
25%
* "Other" comprises Group Shared Services, GN Ejendomme and eliminations
15
Consolidated income statement
Q3 2022
Q3 2021
YTD 2022
YTD 2021
Full Year
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Revenue
Production costs
-2,372
-1,674
-6,855
-5,217
-7,093
Gross profit
Development costs
-344
-337
-1,016
-1,058
-1,389
Selling and distribution costs
-1,182
-883
-3,424
-2,546
-3,484
Management and administrative expenses
-310
-285
-1,104
-866
-1,205
Other operating income and costs, net
-4
-14
EBITA*
Amortization and impairment of acquired intangible assets
-125
-40
-324
-123
-226
Gain (loss) on divestment of operations etc.
-7
-9
Operating profit (loss)
Share of profit (loss) in associates
-1
-12
-36
Financial items
-90
-13
-323
-124
-90
Profit (loss) before tax
Tax on profit (loss)
-58
-121
-79
-369
-481
Profit (loss) for the period
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
Earnings per share (EPS):
Earnings per share (EPS)
Earnings per share, fully diluted (EPS diluted)
* 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.
Consolidated statement of comprehensive income
Q3 2022
Q3 2021
YTD 2022
YTD 2021
Full Year
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Profit (loss) for the period
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains (losses)
Tax relating to actuarial gains (losses)
-10
Items that may be reclassified subsequently to profit or loss
Adjustment of cash flow hedges
Foreign exchange adjustments, etc.
Tax relating to other comprehensive income
-2
-1
-6
-8
Other comprehensive income for the period
Total comprehensive income for the period
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
16
Consolidated balance sheet
Sep. 30 2022
Jun. 30 2022
Mar. 31 2022
Dec. 31 2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Assets
Intangible assets
Property, plant and equipment
Investments in associates
Deferred tax assets
Other non-current assets
Total non-current assets
Inventories
Trade receivables
Tax receivables
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Bank loans and issued bonds
Lease liabilities, non-current
Pension obligations
Provisions, non-current
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Bank loans
Lease liabilities, current
Trade payables
Tax payables
Provisions, current
Other current liabilities
Total current liabilities
Total equity and liabilities
17
Consolidated statement of cash flow
Q3 2022
Q3 2021
YTD 2022
YTD 2021
Full Year
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Operating activities
Operating profit (loss)
Depreciation, amortization and impairment
Other non-cash adjustments
-68
-19
-41
Cash flow from operating activities before changes in working capital
Changes in working capital
-133
-125
-872
-495
-710
Cash flow from operating activities before financial items and tax
Financial items, net
-327
-49
-552
-153
-219
Tax paid, net
-45
-45
-204
-176
-571
Cash flow from operating activities
Investing activities
Development projects
-190
-195
-643
-538
-755
Investments in other intangible assets, net
-130
-90
-280
-222
-308
Investments in property, plant and equipment, net
-104
-61
-166
-361
-457
Investments in other non-current assets, net
-233
Company acquisitions
-15
-1
-7,268
-40
-354
Cash flow from investing activities
-428
-124
-8,590
-989
-1,764
Cash flow from operating and investing activities (free cash flow)
-232
-8,454
Financing activities
Paid dividends
-198
-188
-188
Share-based payment (exercised)
Purchase/sale of treasury shares and other equity instruments
-704
-1,112
-1,166
Net proceeds from issue of EMTN bonds
Increase/decrease in bank loans and other adjustments
-192
Cash flow from financing activities
-591
-990
Net cash flow
-99
-5,359
-49
Cash and cash equivalents beginning of period
Adjustment foreign currency, cash and cash equivalents
Cash and cash equivalents, end of period
18
Consolidated statement of equity
Other reserves
Q3 2021 (DKK million)
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
Balance at December 31, 2020
-1,500
-21
-3,640
Profit (loss) for the period
Adjustment of cash flow hedges
Foreign exchange adjustments, etc.
Tax relating to other comprehensive
income
-6
-6
-6
Other comprehensive income for the
period
Total comprehensive income for the
period
Reduction of the share capital
-16
-857
Share-based payment (granted)
Share based payment (exercised)
-57
Tax related to share-based incentive
plans
Purchase/sale of treasury shares
-1,112
-1,112
-1,112
Reclassification of non-controlling
interests by recognizing a put option
liability
-28
-14
Paid dividends
-188
-188
-188
Dividends, treasury shares
-18
Balance at September 30, 2021
-1,214
-1
-3,683
Q3 2022 (DKK million)
Balance at December 31, 2021
-1,104
-3,731
Profit (loss) for the period
Adjustment of cash flow hedges
Foreign exchange adjustments, etc.
Tax relating to other comprehensive
income
-1
-1
-1
Other comprehensive income for the
period
Total comprehensive income for the
period
Reduction of the share capital
-4
-293
Share-based payment (granted)
Share-based payment (exercised)
-44
Reclassification of non-controlling
interests by recognizing a put option
liability
-6
-6
-44
-50
Paid dividends
-198
-198
-198
Dividends, treasury shares
-16
Balance at September 30, 2022
-304
-3,370
* shares of DKK 4 each
19
Note 1 – Accounting policies
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.
New standards, interpretations and amendments adopted by GN Store Nord
As of January 1, 2022, GN Store Nord adopted all relevant new or revised International Financial Reporting Standards and
IFRIC Interpretations with effective date January 1, 2022, 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 2021.
20
Note 2 – Segment disclosures Q3 2022
Income statement
GN Hearing
GN Audio
Other**
Consolidated total
Q3 2022
Q3 2021
Q3 2022
Q3 2021
Q3 2022
Q3 2021
Q3 2022
Q3 2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue
1,554
1,347
3,147
2,440
-
-
4,701
3,787
Production costs
-566
-456
-1,806
-1,218
-
-
-2,372
-1,674
Gross profit
988
891
1,341
1,222
-
-
2,329
2,113
Development costs
-146
-155
-188
-173
-10
-9
-344
-337
Selling and distribution costs
-585
-416
-597
-467
-
-
-1,182
-883
Management and administrative expenses
-142
-132
-145
-125
-23
-28
-310
-285
Other operating income and costs, net
-34
-15
29
17
1
1
-4
3
EBITA*
81
173
440
474
-32
-36
489
611
Amortization and impairment of acquired intangible assets
-23
-23
-102
-17
-
-
-125
-40
Gain (loss) on divestment of operations etc.
-
-
-
-
-
-
-
-
Operating profit (loss)
58
150
338
457
-32
-36
364
571
Share of profit (loss) in associates
-1
9
-
-
-
-
-1
9
Financial items
-20
-22
-116
2
46
7
-90
-13
Profit (loss) before tax
37
137
222
459
14
-29
273
567
Tax on profit (loss)
-8
-29
-47
-98
-3
6
-58
-121
Profit (loss) for the period
29
108
175
361
11
-23
215
446
Cash flow statement
GN Hearing
GN Audio
Other**
Consolidated total
Q3 2022
Q3 2021
Q3 2022
Q3 2021
Q3 2022
Q3 2021
Q3 2022
Q3 2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Operating activities before changes in working capital
223
285
473
550
5
-
701
835
Cash flow from changes in working capital
42
-23
-203
-112
28
10
-133
-125
Cash flow from operating activities excluding financial
items and tax
265
262
270
438
33
10
568
710
Cash flow from investing activities:
Development projects
-84
-76
-106
-119
-
-
-190
-195
Other
-26
210
-112
-49
-100
-90
-238
71
Cash flow from operating and investing activities before
financial items and tax
155
396
52
270
-67
-80
140
586
Tax and financial items
-95
-57
-46
11
-231
-48
-372
-94
Cash flow from operating and investing activities (free
cash flow)
60
339
6
281
-298
-128
-232
492
Cash flow from M&A activities
-
-1
-15
-
-
-
-15
-1
Free cash flow excl. M&A
60
340
21
281
-298
-128
-217
493
Additional information
GN Hearing
GN Audio
Other**
Consolidated total
Q3 2022
Q3 2021
Q3 2022
Q3 2021
Q3 2022
Q3 2021
Q3 2022
Q3 2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue distributed geographically
Denmark
26
20
62
47
-
-
88
67
Europe
399
322
1,346
1,021
-
-
1,745
1,343
North America
770
656
1,021
852
-
-
1,791
1,508
Rest of World
359
349
718
520
-
-
1,077
869
Revenue
1,554
1,347
3,147
2,440
-
-
4,701
3,787
Incurred development costs
-146
-141
-220
-239
-11
-10
-377
-390
Capitalized development costs
84
76
106
119
-
-
190
195
Amortization, impairment and depreciation of development
projects***
-84
-90
-74
-53
1
1
-157
-142
Expensed development costs
-146
-155
-188
-173
-10
-9
-344
-337
EBITDA
123
213
494
508
4
-4
621
717
Depreciation and software amortization
-42
-40
-54
-34
-36
-32
-132
-106
EBITA*
81
173
440
474
-32
-36
489
611
EBITA margin
5.2%
12.8%
14.0%
19.4%
N/A
N/A
10.4%
16.1%
Number of employees, end of period
5,018
4,492
2,777
2,300
370
307
8,165
7,099
* 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
21
Note 2 – Segment disclosures Q3 2022 (Continued)
Balance sheet
GN Hearing
GN Audio
Other*
Consolidated total
Sep. 30
Sep. 30
Sep. 30
Sep. 30
Sep. 30
Sep. 30
Sep. 30
Sep. 30
2022
2021
2022
2021
2022
2021
2022
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
ASSETS
Goodwill
5,003
3,421
6,897
1,165
-
-
11,900
4,586
Development projects
1,047
989
874
655
-4
-10
1,917
1,634
Other intangible assets
490
318
2,637
347
787
510
3,914
1,175
Property, plant and equipment
476
476
408
351
445
405
1,329
1,232
Investments in associates
301
361
13
-
34
24
348
385
Deferred tax assets
411
364
157
148
-77
-102
491
410
Loans to dispensers and ownership interests
1,125
933
-
-
-
-
1,125
933
Other financial assets
536
390
2
-
-
-
538
390
Total non-current assets
9,389
7,252
10,988
2,666
1,185
827
21,562
10,745
Inventories
892
683
2,968
1,019
-
-
3,860
1,702
Trade receivables
1,266
1,111
2,729
2,057
-
2
3,995
3,170
Receivables from group companies**
-
-
-
2,198
-
-2,198
-
-
Tax receivables
135
61
55
44
-5
-90
185
15
Other receivables
347
235
266
140
-8
41
605
416
Cash and cash equivalents
329
164
367
177
174
1,278
870
1,619
Total current assets
2,969
2,254
6,385
5,635
161
-967
9,515
6,922
Total assets
12,358
9,506
17,373
8,301
1,346
-140
31,077
17,667
EQUITY AND LIABILITIES
Equity
5,537
5,555
4,877
4,936
-3,212
-4,730
7,202
5,761
Bank loans and issued bonds
-
-
7
-
10,704
5,475
10,711
5,475
Lease liabilities, non-current
193
190
63
70
42
24
298
284
Pension obligations
-
28
7
6
-
-
7
34
Provisions, non-current
86
107
44
108
4
2
134
217
Deferred tax liabilities
319
260
744
156
-50
-52
1,013
364
Other non-current liabilities
517
397
301
164
2
2
820
563
Total non-current liabilities
1,115
982
1,166
504
10,702
5,451
12,983
6,937
Bank loans
1
1
10
8
4,959
371
4,970
380
Lease liabilities, current
76
81
42
35
14
1
132
117
Trade payables
353
234
1,400
749
102
68
1,855
1,051
Amounts owed to group companies**
4,003
1,528
7,263
-
-11,266
-1,528
-
-
Tax payables
10
52
136
202
-102
101
44
355
Provisions, current
163
161
61
193
-
2
224
356
Other current liabilities
1,100
912
2,418
1,674
149
124
3,667
2,710
Total current liabilities
5,706
2,969
11,330
2,861
-6,144
-861
10,892
4,969
Total equity and liabilities
12,358
9,506
17,373
8,301
1,346
-140
31,077
17,667
Invested capital***
8,944
6,752
12,856
3,010
965
752
22,765
10,514
Average invested capital
7,848
6,639
7,933
2,892
859
589
16,640
10,120
* "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 liabili
ties), Goodwill, Development projects, Other intangible assets,
Property, plant and equipment, Loans to dispensers and ownership interests and Provisions
22
Note 2 – Segment disclosures YTD 2022
Income statement
GN Hearing
GN Audio
Other**
Consolidated total
YTD 2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue
4,420
3,903
8,997
7,772
-
-
13,417
11,675
Production costs
-1,707
-1,411
-5,148
-3,806
-
-
-6,855
-5,217
Gross profit
2,713
2,492
3,849
3,966
-
-
6,562
6,458
Development costs
-426
-448
-543
-540
-47
-70
-1,016
-1,058
Selling and distribution costs
-1,689
-1,152
-1,735
-1,394
-
-
-3,424
-2,546
Management and administrative expenses
-482
-457
-543
-332
-79
-77
-1,104
-866
Other operating income and costs, net
-99
-11
89
20
-4
2
-14
11
EBITA*
17
424
1,117
1,720
-130
-145
1,004
1,999
Amortization and impairment of acquired intangible assets
-56
-71
-268
-52
-
-
-324
-123
Gain (loss) on divestment of operations etc.
-7
-9
-
-
-
-
-7
-9
Operating profit (loss)
-46
344
849
1,668
-130
-145
673
1,867
Share of profit (loss) in associates
21
-12
-
-
-
-
21
-12
Financial items
25
-112
-182
-35
-166
23
-323
-124
Profit (loss) before tax
-
220
667
1,633
-296
-122
371
1,731
Tax on profit (loss)
-
-47
-142
-348
63
26
-79
-369
Profit (loss) for the period
-
173
525
1,285
-233
-96
292
1,362
Cash flow statement
GN Hearing
GN Audio
Other**
Consolidated total
YTD 2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Operating activities before changes in working capital
438
775
1,339
2,025
-13
-46
1,764
2,754
Cash flow from changes in working capital
-61
-237
-811
-327
-
69
-872
-495
Cash flow from operating activities excluding financial
items and tax
377
538
528
1,698
-13
23
892
2,259
Cash flow from investing activities:
Development projects, investment
-271
-213
-372
-325
-
-
-643
-538
Other investing activities
-519
101
-7,135
-135
-293
-417
-7,947
-451
Cash flow from operating and investing activities before
financial items and tax
-413
426
-6,979
1,238
-306
-394
-7,698
1,270
Tax and financial items
-268
-203
-119
-152
-369
26
-756
-329
Cash flow from operating and investing activities (free
cash flow)
-681
223
-7,098
1,086
-675
-368
-8,454
941
Cash flow from M&A activities
-240
-36
-7,028
-4
-
-
-7,268
-40
Free cash flow excl. M&A
-441
259
-70
1,090
-675
-368
-1,186
981
Additional information
GN Hearing
GN Audio
Other**
Consolidated total
YTD 2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
YTD
2022
YTD
2021
(DKK million)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
Revenue distributed geographically
Denmark
63
60
164
190
-
-
227
250
Europe
1,206
982
4,068
3,773
-
-
5,274
4,755
North America
2,100
1,885
2,881
2,348
-
-
4,981
4,233
Rest of World
1,051
976
1,884
1,461
-
-
2,935
2,437
Revenue
4,420
3,903
8,997
7,772
-
-
13,417
11,675
Incurred development costs
-454
-384
-701
-723
-51
-74
-1,206
-1,181
Capitalized development costs
271
213
372
325
-
-
643
538
Amortization, impairment and depreciation of development
projects***
-243
-277
-214
-142
4
4
-453
-415
Expensed development costs
-426
-448
-543
-540
-47
-70
-1,016
-1,058
EBITDA
138
547
1,264
1,818
-22
-50
1,380
2,315
Depreciation and software amortization
-121
-123
-147
-98
-108
-95
-376
-316
EBITA*
17
424
1,117
1,720
-130
-145
1,004
1,999
EBITA margin
0.4%
10.9%
12.4%
22.1%
N/A
N/A
7.5%
17.1%
Number of employees, end of period
5,018
4,492
2,777
2,300
370
307
8,165
7,099
* 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
23
Note 3 – Incentive plans
As of September 30, 2022, the total number of outstanding warrants in GN Hearing was 1,066 (0.2% of the shares issued in GN
Hearing). The total number of outstanding warrants in GN Audio was 882 (0.3% of the shares issued in GN Audio). The total
number of outstanding options in GN Store Nord is 3,119,850 (2.3% of the shares issued in GN Store Nord)
Note 4 – Shareholdings
On September 30, 2022, members of the board of directors and the executive management, respectively, own 83,308 and
131,739 shares in GN Store Nord. On September 30, 2022, GN owns 9,237,591 treasury shares, equivalent to 6.7% of the
137,193,378 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 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%.
Note 5 – Acquisition of companies and operations
On January 12 2022, GN Audio acquired 100% of the Danish based company SteelSeries Group A/S, a global pioneer in
premium software-enabled gaming gear. SteelSeries, with its attractive growth profile and margin structure, presents an
attractive new growth opportunity for GN. The acquisition of SteelSeries will bring complementary engineering competencies,
commercial capabilities, differentiated brands, a large customer base and an innovative high-growth product offering, adding
further technical expertise and IP to GN. SteelSeries will benefit from GN‘s commercial and operational excellence, and
financial strength, allowing SteelSeries to continue its strong growth trajectory and take share in the fast-growing market for
premium software-enabled gaming gear.
Based on GN’s successful track-record of integrating acquired assets, it is anticipated that the combination will produce
significant scaling opportunities and revenue synergies when combining SteelSeries with GN’s extensive global distribution
footprint. Goodwill comprises the expected synergies as well as the value of SteelSeries highly skilled workforce.
On April 21 2022, GN Hearing acquired 56% of Belaudicao Lda, as a business combination achieved in stages, after which GN
owns 100% of the company. The acquisition, which is an ownership in transition, will strengthen GN Hearing’s sales and
distribution. Goodwill comprises expected synergies as well as the value of the highly skilled workforce of Belaudicao.
The goodwill of DKK 5,481 million relating to SteelSeries is allocated to the cash-generating unit GN Audio, and the goodwill of
DKK 237 million relating to Belaudicao is allocated to the cash-generating unit GN Hearing. Goodwill of DKK 0 million has been
determined to be deductible for tax purposes.
DKK million
SteelSeries
Belaudicao
Identifiable assets acquired, liabilities assumed and consideration transferred, provisionally determined
Patents, rights and other intangibles
1,015
-
Customer relationships
749
203
Trademarks
764
-
Property plant and equipment and non-current assets
113
54
Current assets
1,227
38
Cash
227
31
Bank debt and non-current liabilities
-1,056
-33
Deferred tax liabilities
-556
-46
Other current liabilities
-724
-42
Fair value of identified net assets
1,759
205
Goodwill
5,481
237
Consideration transferred
7,240
442
Fair value of existing ownership interest
-
-194
Acquired cash and cash equivalents
-227
-31
Cash consideration paid
7,013
217
DKK million
SteelSeries
Belaudicao
The share of revenue and profit (loss) for the period from the acquisition date can be specified as
follows:
Revenue
1,533
110
Profit (loss) before tax*
-427
-3
* Includes effect of PPA adjustments on inventory and amortization of acquired intangible assets
24
Statement by the Executive
Management and the Board of
Directors
November 11, 2022
Executive Management
Board of Directors
25
Co.reg. no 24257843