Company Announcement No 2009-01 10 March 2009
Publication of Annual Report 2008
Today, the Board of Directors of William Demant Holding A/S adopted the
Company's Annual Report 2008. This announcement includes the highlights of the
annual report:
In 2008, consolidated revenues totalled DKK 5,374 million, matching a growth
rate of 2% in local currencies. Revenues were negatively impacted by exchange
rates by approximately 4%.
While retaining high profitability, the business area Diagnostic Instruments
captured significant market shares in 2008 thanks to 16% revenue growth measured
in local currencies.
Operating profits (EBIT) amounted to DKK 1,042 million, or a profit margin of
19.4%. Due to the weakening of the British pound and the US dollar, in
particular, EBIT was negatively impacted by exchange rates in the amount of
approximately DKK 90 million.
Despite the financial crisis and generally unfavourable market conditions,
consolidated cash flows from operating activities totalled DKK 828 million in
2008. The considerable cash flows generated in the period under review match
last year's cash flows and also reflect a satisfactory development in
inventories, receivables and payables.
At the beginning of 2009, the Group's hearing aid businesses have strong product
portfolios, which are expected to be enhanced even further in spring through
significant new products. Based on this, we expect corporate wholesale of
hearing aids to exceed market growth by 2-4 percentage points in 2009.
We maintain our decision to temporarily suspend our buy-back of shares, as
announced in November 2008. The global financial crisis and our wish to always
have substantial financial resources available for any further expansion are the
main reasons for this decision.
2008 was in many respects an unusual and challenging year for the entire hearing
aid industry. We have rarely seen a volume decline on several markets
simultaneously and it is estimated that in 2008 the global hearing aid market
saw positive volume trends at a mere 0-2%.
The decelerating demand must be viewed in light of the global financial crisis
and the recession in world economy, which has to a great extent affected the
commercial markets. Also, it is estimated that particularly in the second half
of 2008 average selling prices came under pressure. It seems that some customers
have chosen slightly less expensive instruments and that some manufacturers have
attempted to lower their selling prices in order to compensate for the sluggish
unit sales.
The sales success of recent years, Oticon Delta, faced increased competition
from the beginning of the year, and Oticon has therefore not been able to
maintain the substantial sales generated by Delta since its launch in spring
2006. As the year passed, the Group significantly invigorated especially
Oticon's pro-duct programme, so that at the beginning of 2009 the Oticon
portfolio is probably the strongest in the industry as regards both breadth and
depth. Thus, spring 2008 saw the launch of Oticon Vigo and Oticon Vigo Pro,
which further consolidated the Group's position in the mid-priced segment. Based
on Oticon's fast RISE platform, the Vigo products have generated handsome sales.
The most distinctive launch of the year, Oticon Dual, was presented in autumn in
connection with the German hearing aid congress EUHA. Dual combines the best of
Delta with the best of Epoq in one and the same product, and with its large
range of product variants, Dual appeals to a very broad target group, as far as
both prices and user benefits are concerned. The first feedback from customers
and end-users has been very positive, and sales have been generated evenly
within the relatively broad spectrum of price variants. Since Dual was launched
towards year-end, the main effects of its introduction will not materialise
until 2009. Last but not least, Oticon introduced in autumn the new Power RITE
solutions to be used together with all BTE variants of Epoq and Vigo.
In overall terms, the Group did indeed emerge stronger from 2008, despite
difficult market conditions and the somewhat slower pace of product launches at
the beginning of the year.
Outlook for the future
The current financial crisis and the uncertainty resulting from the global
recession make it difficult to forecast precise trends for 2009.
Growth on the global hearing aid market in 2009 is difficult to forecast, and
growth estimates are thus subject to considerable uncertainty. Preliminary
indications from our main markets seem to suggest that the adverse market
conditions prevailing towards the end of 2008 will still prevail in 2009. For
2009, we estimate flat volume growth in the market, and average selling prices
are expected to contribute neutrally or negatively to market growth.
At the start of 2009, the Group's hearing aid businesses have strong product
portfolios which will be further strengthened through significant product
introductions scheduled for spring 2009. The development in corporate wholesale
of hearing aids is therefore estimated to exceed market growth by 2-4 percentage
points in 2009 and the Group expects to capture market shares again in 2009.
In spring 2009, the Group will launch a broad spectrum of hearing aids,
including Oticon Hit and Oticon Hit Pro, which are two completely new product
families to be positioned in the lower end of the mid-price segment. In
addition, we will introduce new BTE and Power variants of Epoq, Vigo and Hit as
well as new wireless features like connectivity to TV and landline phones.
Furthermore, the Group today announced that Oticon has established Oticon
Medical, whose main activities are the development and sale of so-called
bone-anchored hearing solutions. The Group's product introductions scheduled for
spring 2009 appear from a separate Company Announcement, which will be published
immediately after the Company's Annual Report 2008.
The Group's effective tax rate for 2009 is estimated at 25%, corresponding to
the tax rate level in Denmark.
For 2009, total consolidated investment in property, plant and equipment is
estimated at DKK 180-200 million.
Major proposals from the Board for adoption by the annual general meeting
At the annual general meeting in 2009, Mr Lars Nørby Johansen, Mr Peter Foss and
Mr Niels B. Christiansen will all accept re-election. Mr Michael Pram Rasmussen
will not accept re-election. The Board of Directors therefore proposes that Mr
Thomas Hofman-Bang, President and CEO of NKT Holding A/S, be elected new member
of the Board.
Lars Nørby Johansen Niels Jacobsen
Chairman of the Board of Directors President & CEO
The full Annual Report 2008 for William Demant Holding A/S totalling 69 pages
will be published immediately after this announcement, after which the Company
will publish an announcement regarding a number of important product
introductions.
Further information:
Phone +45 39 17 71 00
www.demant.com
Contact:
Niels Jacobsen, President & CEO
Other contacts:
Stefan Ingildsen, Vice President, Finance & IR
Søren B. Andersson, IR Officer
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| | 2004 | 2005 | 2006 | 2007 | 2008 | Developm |
| | | | | | | ent |
| | | | | | | 2007-20 |
| | | | | | | 08 |
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| Key figures, DKK | | | | | | |
| million | | | | | | |
--------------------------------------------------------------------------------
| Revenue | 4,121 | 4,523 | 5,085 | 5,488 | 5,374 | -2.1% |
--------------------------------------------------------------------------------
| Gross profit | 2,859 | 3,133 | 3,575 | 3,971 | 3,725 | -6.2% |
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| Operating profit | 1,004 | 1,103 | 1,271 | 1,268 | 1,042 | -17.8% |
| (EBIT) | | | | | | |
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| Net financials | -39 | -37 | -61 | -97 | -139 | 43.9% |
--------------------------------------------------------------------------------
| Profit before tax | 965 | 1,066 | 1,209 | 1,171 | 903 | -22.9% |
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| Profit for the year | 717 | 791 | 901 | 894 | 682 | -23.7% |
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| Total assets | 2,441 | 2,893 | 3,135 | 3,726 | 3,926 | 5.4% |
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| Equity | 646 | 756 | 671 | 435 | 541 | 24.3% |
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| Cash flows from | 720 | 892 | 964 | 848 | 828 | -2.4% |
| operating activities | | | | | | |
| (CFFO) | | | | | | |
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| Financial ratios | | | | | | |
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| Gross profit ratio | 69.4% | 69.3% | 70.3% | 72.4% | 69.3% | - |
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| Profit margin | 24.4% | 24.4% | 25.0% | 23.1% | 19.4% | - |
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| Earnings per share | 10.7 | 12.2 | 14.4 | 14.8 | 11.6 | -21.6% |
| (EPS), DKK | | | | | | |
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| Return on equity | 134.2 | 106.7 | 114.0% | 169.0% | 161.1% | - |
| | % | % | | | | |
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