1 Interim Report Q2 2023
Financial overview Q
2 2023
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
Interim Report Q2 2023
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%”
2
Q2
Q2
YTD
YTD
Full year
2023
2022
2023
2022
2022
DKK million
(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
* Excludi
ng 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
Financial highlights
3
Highlights Q2 2023
• 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 from 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
Revenue
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
North America
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.
Europe
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.
Rest of World
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.
Earnings and other financial highlights
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
15% organic revenue growth driven by strong ReSound OMNIA performance
resulting in
market share gains. Financial guidance upgraded
1,488
1,495
1,742
1,560
1,658
Q2 2022
59
41
Q3 2022
65
Q4 2022
1,719
62
Q1 2023
61
1,807
Q2 2023
1,529
1,554
1,622
Revenue Emerging business (DKKm)
Revenue Core business (DKKm)
Org.
growth
15% 15%4% 0% 14%
4
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%.
GN Hearing adj. EBITA development
*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.
Non-recurring items
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.
GN Hearing non-recurring items
Market development
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.
Management quote
“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
(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
98
159
503
154
234
-41
Q4 2022
-49
Q2 2022
Q3 2022
-40
Q1 2023
-31
-40
Q2 2023
49
119
113
472
194
Adj. EBITA Core business (DKKm)*
Adj. EBITA Emerging business (DKKm)*
Adj. EBITA
margin Core*
9.9% 14.1%6.6%
10.6% 26.1%
5
Highlights Q2 2023
• 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’ 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%”
Revenue
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.
GN Audio revenue development
North America
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.
Europe
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.
Rest of World
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.
Earnings and other financial highlights
GN Audio delivered adj. gross margin of 44.2% in Q2 2023
compared to adj. gross margin of 46.8% in Q2 2022, due
GN Audio
Solid execution in challenging market conditions realizing a sequential
improvement in revenue and EBIT
A, while delivering a strong free cash flow excl.
M&A of DKK
464 million
2,450
2,175
2,237
1,767
1,861
487
596
784
540
391
376
442
Q2 2022
271
Q2 2023
3,147
285
Q3 2022 Q4 2022
543
Q1 2023
3,328
3,463
2,592
2,675
Revenue Consumer (DKKm)
Revenue SteelSeries (DKKm)
Revenue Enterprise (DKKm)
Org.
growth
2% -18%10% -2% -3%
6
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%.
GN Audio adj. EBITA development
*Excluding non-recurring items
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.
Product launches
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.
Non-recurring items
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 non-
cash write-down on development projects in connection with
a review of business plans including anticipated market
conditions.
GN Audio non-recurring items
Market development
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.
Management quote
“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
(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
600
461
334
181
253
Q4 2022Q3 2022Q2 2022 Q1 2023 Q2 2023
Adj. EBITA (DKKm)*
7.0% 9.5%18.0% 14.6% 9.6%
Adj. EBITA
margin*
7
Highlights Q2 2023
• 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%”
Revenue
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%.
GN Store Nord revenue development
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 non-
recurring 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.
GN Store Nord adj. EPS development
*Excluding non-recurring items and amortization of acquired intangible assets
GN Store Nord
Strong cash flow and execution of newly announced capital plan
4,857
4,701
5,270
4,214
4,394
Q4 2022
Q2 2022 Q3 2022 Q1 2023
Q2 2023
Revenue (DKKm)
Org.
growth
7% -8%
8% -1% 3%
610
548
744
251
404
Q4 2022
Q3 2022Q2 2022
Q1 2023 Q2 2023
Adj. EBITA (DKKm)
*
6.0% 9.2%
12.6%
11.7% 14.1%
Adj. EBITA
margin*
3.17
2.68
3.92
0.66
1.21
Q3 2022Q2 2022 Q4 2022 Q1 2023 Q2 2023
Adj. EBITA
margin
8
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.
Capital structure
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.
New capital plan
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:
• Equity
: An accelerated bookbuild of a directed issue and
private placing of 17 million new shares and existing
treasury shares executed on May 24, 2023, which
generated DKK 2.6 billion net proceeds
• Debt refinancing
: DKK 2.1 billion new debt (EUR 280
million) via debt refinancing, replacing the existing DKK
3.9 billion (EUR 520 million) term loan maturing in 2025
with a new DKK 6.0 billion (EUR 800 million) term loan
facility maturing in 2026 (signing of the loan subject to
final agreement on customary long form documentation)
• Disposals
: DKK 1.0 – 2.0 billion to be generated by
disposals of selected assets. Disposal of BelAudição
announced on June 28 generating DKK ~0.5 billion in net
proceeds at closing. The transaction is expected to close
in Q3 2023 subject to MCH Private Equity completing
financing.
• Operational measures: Cash at hand and positive free
cash flow excl. M&A for 2023 and 2024 at Group level;
DKK 622 million cash flow excl. M&A generated in Q2
2023
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.
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.
9
Financial guidance 2023
Organic revenue growth
Adjusted EBITA margin
2)
Non-recurring items (DKK
million)
GN Hearing
9% to 13%
- Core Business
14% to 16%
~ -150
- Emerging Business
1)
(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
Primary risk factors in relation to the financial guidance
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.
Financial guidance
2023
(Financial guidance is updated on August 16, 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).
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.
10
Teleconference
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.
Financial calendar 2023
Interim Report Q3 2023: November 10, 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
GN Store Nord A/S
Email: rsandager@gn.com
Tel: +45 45 75 92 57
GN Store Nord A/S
Lautrupbjerg 7
2750 Ballerup
Denmark
Company reg. no. 24257843
Additional information
11
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
Content
Fina
ncial statements
Financial statements
Quarterly reporting by segment
12
Regiona
l 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
Notes
12
Quarterly reporting by segment
Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 YTD 2022 YTD 2023
Full year
2022
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(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
2,522
3,328
3,147
3,463
2,592
2,675
5,850
5,267
12,460
Total
3,859
4,857
4,701
5,270
4,214
4,394
8,716
8,608
18,687
Organic growth
GN Hearing
2%
4%
0%
14%
15%
15%
3%
15%
5%
GN Audio
-30%
10%
-2%
-3%
2%
-18%
-12%
-10%
-7%
Total
-21%
8%
-1%
3%
7%
-8%
-7%
1%
-3%
Gross profit
GN Hearing
801
924
988
1,194
979
1,039
1,725
2,018
3,907
GN Audio
1,006
1,502
1,341
1,376
1,062
1,183
2,508
2,245
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
59.9%
60.4%
63.6%
66.1%
60.4%
60.4%
60.2%
60.4%
62.7%
GN Audio
39.9%
45.1%
42.6%
39.7%
41.0%
44.2%
42.9%
42.6%
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
-189
-166
-188
-238
-188
-226
-355
-414
-781
Other *
-21
-16
-10
-27
-13
-14
-37
-27
-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
-672
-804
-713
-956
-711
-751
-1,476
-1,462
-3,145
Other *
-38
-23
-22
-35
-30
-29
-61
-59
-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
145
532
440
182
163
206
677
369
1,299
Other *
-59
-39
-32
-62
-43
-43
-98
-86
-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
-45
-48
-54
-47
-46
-45
-93
-91
-194
Other *
-35
-37
-36
-21
-21
-27
-72
-48
-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
190
580
494
229
209
251
770
460
1,493
Other *
-24
-2
4
-41
-22
-16
-26
-38
-63
Total
134
625
621
665
282
444
759
726
2,045
EBITA
16
499
489
556
173
331
515
504
1,560
Amortization and impairment of acquired intangible
assets
-103 -96 -125 -116 -102 -101 -199 -203 -440
Gain (loss) on divestment of operations etc.
-1
-6
-
-2
-1
1
-7
-
-9
Operating profit (loss)
-88
397
364
438
70
231
309
301
1,111
Share of profit (loss) in associates
17
5
-1
-2
-1
-46
22
-47
19
Financial items
-156
-77
-90
-82
-125
-129
-233
-254
-405
Profit (loss) before tax
-227
325
273
354
-56
56
98
-
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
2,012
2,282
2,968
2,666
2,506
2,449
2,282
2,449
2,666
Other *
-
-
-
-
-
-8
-
-8
-
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
1,975
2,890
2,729
2,589
2,314
2,429
2,890
2,429
2,589
Other *
2
2
-
-
-
-13
2
-13
-
Total
3,121
4,154
3,995
4,031
3,760
3,814
4,154
3,814
4,031
Net working capital
GN Hearing
1,036
1,078
1,052
1,323
1,380
1,281
1,078
1,281
1,323
GN Audio
1,646
2,021
2,145
1,937
2,222
1,872
2,021
1,872
1,937
Other *
-165
-319
-259
-151
-43
-102
-319
-102
-151
Total
2,517
2,780
2,938
3,109
3,559
3,051
2,780
3,051
3,109
Free cash flow excl. M&A
GN Hearing
-175
-326
60
64
-132
131
-501
-1
-377
GN Audio
-140
49
21
-21
-304
464
-91
160
-91
Other *
-242
-135
-298
-148
-142
27
-377
-115
-823
Total
-557
-412
-217
-105
-578
622
-969
44
-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
13
Regional growth composition Q2 2023
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%
Regional growth composition YTD 2023
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%
14
Consolidated income statement
Q2 2023
Q2 2022
YTD 2023
YTD 2022
Full Year
2022
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Revenue
Production costs
-2,172
-2,431
-4,345
-4,483
-9,555
Gross profit
Development costs
-370
-324
-737
-672
-1,405
Selling and distribution costs
-1,094
-1,225
-2,219
-2,242
-4,563
Management and administrative expenses
-428
-372
-804
-794
-1,587
Other operating income and costs, net
-6
-10
-17
EBITA*
Amortization and impairment of acquired intangible assets
-101
-96
-203
-199
-440
Gain (loss) on divestment of operations etc.
-6
-7
-9
Operating profit (loss)
Share of profit (loss) in associates
-46
-47
Financial items
-129
-77
-254
-233
-405
Profit (loss) before tax
Tax on profit (loss)
-13
-70
-21
-155
Profit (loss) for the period
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
-22
Earnings per share (EPS):
Earnings per share (EPS)
-0.17
Earnings per share, fully diluted (EPS diluted)
-0.17
* 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
Q2 2023
Q2 2022
YTD 2023
YTD 2022
Full Year
2022
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)
-2
Items that may be reclassified subsequently to profit or loss
Adjustment of cash flow hedges
-73
Foreign exchange adjustments, etc.
-54
-162
Tax relating to other comprehensive income
-3
-1
-3
-1
Other comprehensive income (loss) for the period
-43
-148
Total comprehensive income (loss) for the period
-148
Attributable to:
Non-controlling interests
Shareholders in GN Store Nord A/S
-11
-170
15
Consolidated balance sheet
Jun. 30
2023
Mar. 31
2023
Dec. 31
2022
Sep. 30
2022
Jun. 30
2022
DKK million
(unaud.)
(unaud.)
(aud.)
(unaud.)
(unaud.)
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
Assets held for sale
Total assets
Equity and liabilities
Equity
Bank loans and issued bonds, non-current
Lease liabilities, non-current
Pension obligations
Provisions, non-current
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Bank loans and issued bonds, current
Lease liabilities, current
Trade payables
Tax payables
Provisions, current
Other current liabilities
Total current liabilities
Liabilities directly associated with the assets held for sale
Total equity and liabilities
16
Consolidated statement of cash flow
Q2 2023
Q2 2022
YTD 2023
YTD 2022
Full Year
2022
DKK million
(unaud.)
(unaud.)
(unaud.)
(unaud.)
(aud.)
Operating activities
Operating profit (loss)
Depreciation, amortization and impairment
Other non-cash adjustments
-84
Cash flow from operating activities before changes in working capital
Changes in working capital
-255
-739
-1,293
Cash flow from operating activities before financial items and tax
Financial items, net
-70
-172
-179
-225
-598
Tax paid, net
-35
-81
-116
-159
-185
Cash flow from operating activities
-60
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)
-628
-8,222
-8,548
Financing activities
Proceeds from share placement, net of costs
Paid dividends
-18
-43
-32
-198
-208
Share-based payment (exercised)
Increase/decrease in bank loans and other adjustments
-2,855
-2,538
Cash flow from financing activities
-232
Net cash flow
-404
-5,659
-5,204
Cash and cash equivalents beginning of period
Adjustment foreign currency, cash and cash equivalents
-6
-10
-14
Cash attributable to the assets held for sale
-52
-52
Cash and cash equivalents, end of period
17
Consolidated statement of equity
Other reserves
Q2 2022 DKK million
Share
capital*
Foreign
exchange
adjustments
Hedging
reserve
Treasury
shares
Proposed
dividends
for the
year
Retained
earnings
Equity,
shareholders
in GN Store
Nord A/S
Non-
controlling
interests
Total
equity
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 compreh
ensive income for the
period
Reduction of the share capital
-4
-293
Share-based payment (granted)
Share-based payment (exercised)
-3
Tax related to share-based incentive plans
Reclassification of non-controlling
interests by recognizing a put option
liability
-26
-19
Paid dividends
-198
-198
-198
Dividends, treasury shares
-16
Balance at June 30, 2022
-648
-3,426
* shares of DKK 4 each
Q2 2023 DKK million
Balance at December 31, 2022
-846
-51
-3,366
Profit (loss) for the period
-22
-22
Adjustment of cash flow hedges
Foreign exchange adjustments, etc.
-160
-160
-160
Tax relating to other comprehensive
income
-3
-3
-3
Other comprehensive income for the
period
-160
-146
-146
Total comprehensive income for the
period
-160
-22
-168
-146
Increase of share capital, net of costs
Share-based payment (granted)
Share-based payment (exercised)
-6
Treasury shares placement, net of costs
Reclassification of non-controlling
interests by recognizing a put
option
liability
-21
-21
Paid dividends
-32
-32
Balance at June 30, 2023
-1,006
-37
-2,813
* shares of DKK 4 each
18
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, 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.
19
Note 2 – Segment disclosures Q2 2023
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
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 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
20
Note 2 – Segment disclosures Q2 2023 (Continued)
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, Tra
de 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
21
Note 2 – Segment disclosures YTD 2023
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
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.)
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
-197
-187
-299
-266
-1
-
-497
-453
Other investing activities
-183
-493
-24
-7,023
-177
-193
-384
-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
22
Note 3 – Incentive plans
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)
Note 4 – Shareholdings
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%.
Note 5 – Assets held for sale
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.
23
August 16, 2023
Executive Management
Board of Directors
24
Co.reg. no 24257843