Interim Report Q2 2015

Ballerup, DENMARK

Copenhagen, 2015-08-13 07:39 CEST (GLOBE NEWSWIRE) -- ReSound LiNX2™ drives strong hearing aid growth

  • GN Store Nord delivered organic growth of 4% and very good cash conversion in both GN ReSound and GN Netcom
  • GN ReSound continued its strong growth and delivered 8% organic growth in the quarter. The growth was driven by the successful launch of ReSound LiNX2, ReSound’s 4th generation 2.4 GHz technology hearing aid. ReSound LiNX2 has proved GN ReSound’s ability to continuously advance its technology lead based on the unmatched connectivity competencies and the audiological expertise demonstrated in the Surround Sound by ReSoundsound processor
  • GN ReSound’s EBITA increased by 7% in constant currencies. In reported figures, EBITA increased by 4% to DKK 218 million. GN ReSound delivered very strong free cash flow excluding M&A of DKK 225 million corresponding to a cash conversion of 103%
  • In Q2 2015, organic growth for GN Netcom ended at (2)% mainly as a result of a continued significant decline in the low-margin traditional Mobile segment. Following the unexpectedly slow CC&O market activity in the first half of 2015, GN Netcom has seen an improved activity level going out of Q2 2015 and is on track to generate double-digit growth in Q3 2015. Organic growth in the CC&O business ended at 3% in Q2 2015. Compared to Q1 2015, the CC&O sequential growth was 10%
  • In Q2 2015, GN Netcom’s EBITA was DKK 107 million equivalent to the Q2 2014 figure. As expected, GN Netcom’s cash generation in Q2 2015 was strong – free cash flow excluding M&A was DKK 121 million equaling a cash conversion of 113%
  • In August 2015, GN refinanced its primary banking facilities at attractive terms. In line with the communicated capital structure policy, and in order to facilitate continued transfer of excess cash to the shareholders in the years to come, the amount of the new facility has been increased significantly from DKK 2,350 million to DKK 4,000 million
  • In Q2 2015, it was discovered that the VP of Finance in the Beltone distribution network had committed accounting fraud. As a result, a one-off loss of DKK 150 million related to fraud conducted from 2012 – 2014 has been booked by GN ReSound in Q2 2015 in the line ”Beltone Network non-recurring items” (no cash effect)   

Updated guidance 2015

  • GN ReSound has generated strong organic revenue growth during the first half of 2015. The better than expected performance in several parts of GN ReSound more than offsets that revenue and EBITA in 2015 in the Beltone distribution network will be lower than previously anticipated. Consequently, the full year organic revenue growth guidance and EBITA guidance are upgraded
  • GN Netcom has seen a slower than expected return to normal activity in the CC&O market but is guiding for double-digit growth in this core market already in Q3 2015. Mainly as a reflection of the decline in the traditional Mobile market, GN Netcom’s organic growth guidance for the full year is downgraded. The EBITA guidance for GN Netcom is only adjusted slightly, reflecting that the revenue gap is mainly seen in the low-margin Mobile division
  • Consequently, GN Store Nord’s full year organic revenue growth guidance is amended from “more than 8%” to “6 – 7%”, and the EBITA guidance is amended from previously “more than DKK 1,480 million” to “around DKK 1,480 million”
  • The guidance for Financial Items, Amortization etc. is changed from DKK (160) million to DKK (325) million due to the one-off loss related to the accounting fraud in the Beltone distribution network as well as foreign exchange adjustments on certain intercompany balances


Quotes from the executive management

Anders Hedegaard, CEO of GN ReSound: “Obviously, I’m troubled with the accounting fraud in Beltone. But having said that, what matters is that GN ReSound continued its very strong momentum in Q2. The successful launch of ReSound LiNX2 documents our ability to continuously advance our technology leadership. With the launch, we have also demonstrated strong commercial execution leading to significant growth in key segments such as Veterans Affairs, Germany and Japan. It is truly exciting to see the recognition of our innovative technology as a contributor to improving the quality of life for hearing impaired”

René Svendsen-Tune, CEO of GN Netcom: “We have experienced two challenging quarters in 2015 with surprisingly weak market conditions across our businesses. As far as I can see, we are now on the other side of this period, and the market is normalizing, which gives me confidence that we can turn the company back to solid growth in the second half of 2015. During my first four months with GN Netcom, I have been highly encouraged by the very positive feedback I have received on our technology and products from corporates, retail and distribution partners”

GN will host a teleconference at 2.00 pm CEST today. Please visit to access the teleconference. Presentation material will be available on the website approximately one hour prior to the start of the teleconference.

For further information please contact:

Peter Justesen
VP – Investor Relations & Treasury
GN Store Nord A/S
Tel: +45 45 75 87 16


Michael Nass Nielsen
Manager – Investor Relations & Competitive Intelligence
GN Store Nord A/S
Tel: +45 45 75 02 40


GNSN - Interim_Report_Q2_2015.pdf