Bernstein Strategic Decisions Conference Marcus Desimoni CFO, GN - - PowerPoint PPT Presentation

Bernstein Strategic Decisions Conference

Marcus Desimoni – CFO, GN Store Nord & GN Hearing, September 2019

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Safe Harbor Statement

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. 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). This presentation should not be considered an offer to sell or buy securities in GN Store Nord.

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The GN Group at a glance – unique portfolio of medical, professional and consumer audio solutions

GN Hearing GN Audio

Source: Company information Note: Financials refer to FY 2018 (1) Includes Group Shared Services

… a world class organisation Sales (% of total) DKK 5,833m (55%) DKK 4,774m (45%) EBITA (margin) DKK 1,194m (20.5%) DKK 905m (19.0%) Innovation leader creating best-in-class hearing aid technology Leading position in growing CC&O market Sales (% of total) EBITA (margin) Sales: DKK 10,607m. EBITA(1): DKK 1,956m (margin: 18.4%) ~ 6,000 employees Markets hearing aids and headsets in 100 countries across the world >DKK 900 million R&D investment

We have delivered strongly… and will deliver again

“Innovation & Growth” 2010 - 2013 2014 - 2016

2017 – 2019

 

“SMART” Operations 2008 - 2009 “FAST” R&D focus



”Hear more, do more, be more”

• Innovation excellence
• Commercial excellence
• People excellence

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February 5, 2020

• Annual Report for 2019

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GN Hearing: Strong global markets driven by attractive megatrends

Ageing population

597 791 2013 2018E +6%

Elderly with hearing loss prevalence 2 Room for penetration growth

60-65% 35-40%

USD ~5bn

‘22E ’21E ~3-5% ‘17 ‘14 ’20E ‘11 ‘12 ‘10 ‘07 ‘16 ’19E ‘18 ‘08 ‘09 ‘15 ‘13 Global hearing aids market growth (Value based on wholesale ASP)

~3-5% expected value CAGR in coming years…

With hearing loss Without hearing loss

• 65+ population

expected to grow significantly

• Baby boomers

generation reaching retirement age

Polulation of 65+ years old (million)

• Increase noise pollution

drives prevalence of hearing loss

• Penetration still relatively

low, especially for less severe hearing loss

Profound Severe Moderately severe Moderate Mild

Aided

Source: Broker reports, internal GN figures (1) Market share is based on total units sold

~15% ~17% 2010 2016

~2%-points

8 years of positive organic growth, driven by innovative product launches

2018 2010

GN Hearing market share development over time…(1) … driven by multiple attractive megatrends

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~4%

GN Hearing’s innovation leadership towards natural hearing

New chipset – brilliant sound experience: unprecedented Layers of Sound™ and world’s most advanced rechargeable solution Unprecedented benefits across three key dimensions – Sound Quality, efficient and convenient fitting and groundbreaking remote fine-tuning Surround Sound by ReSound upgraded with Spatial Sense, helping the user hear where sounds are coming from, leading to more natural sound experience The world’s first Made for iPhone hearing aid World’s first 2.4 GHz based ear-to-ear data exchange, Binaural Directionality, enables users to decide which sound to focus on World's first 2.4 GHz wireless system

6th generation 2018 5th generation 2017 4th generation 2015 3rd generation 2014 2nd generation 2012 1st generation 2010

ReSound Alera ReSound Verso ReSound LiNX ReSound LiNX2 ReSound LiNX 3D ReSound LiNX Quattro

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Industry’s first CIC 2.4 GHz wireless hearing aid for direct streaming

New Chipset Impulse Noise Control Increased Input Dynamic Range Extended High- Frequency Bandwidth New Wireless Radio Mix-in Streaming LAYERS OF SOUND UNRIVALED FULL SPECTRUM OF STREAMING SUPPORT & PERSONALIZATION

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Growth through partnerships

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Partnering up with tech giants Exposure to fast-growing cochlear market Refraining from vertical integration

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GN Audio is strongly positioned in a very attractive portfolio of markets

Call-centric

CC&O Consumer

Task-based BT stereo* (incl. sports)

“Calls for a living“ (e.g., contact centers, customer service, traders) Office-based knowledge workers Preference for great calls, music and an active lifestyle

#2

Small in fragmented market

#1

Total relevant market of > DKK 60bn growing at close to 10% per year

Jabra Engage Jabra Evolve Jabra Speak Jabra PanaCast Jabra Elite

* Jabra Elite now accounts for the majority of the consumer business **Indicative

”True wireless”

#3

Market position Relative market size** and market share** Market development Primary product

• ffering

Characteristics Segment Gross margins** Replacement cycles**

~ 5 years ~ 2 years ~ 3-4 years

Jabra PanaCast – first step to position GN Audio in the fast-growing huddle room video conferencing market

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• In August 2019, Jabra started shipment of

Jabra PanaCast, engineered to be the world’s first smart Panoramic-4k Plug- and-Play video solution

• Jabra PanaCast’s leading-edge cameras and

microphones, fourth-generation stitching technology and Intelligent Vision software work as one to ensure optimal performance

• The solution is compatible with popular

cloud-based solutions including Microsoft Teams, Skype, Zoom, Cisco WebEx, Slack, Google Hangouts, GoToMeeting, Unify Circuit, BlueJeans and more

Improving meeting efficiency Strong growth Substantial cost savings and carbon food print reduction

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Focusing on creating shareholder value

Attractive megatrends of aging

population and personal communication in industries with high entry barriers and currently low penetration

Innovation leader – uniquely

positioned towards future technology trends with hearing aid and headset expertise under one roof Strategic agility, with no owned retail, ensuring attractive positioning towards future distribution trends Strong track record of strategic

partnerships with leading

channels and customers as well as with leaders in adjacent industries

Synergistic M&A – channel access

and commercial excellence, technology leadership, streamlining activities Lean business model and resilient cash generation driving attractive

shareholder returns Strong board and management team with

proven ability to drive a growth agenda

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Strict focus on capital allocation drives shareholder value

Organic investments Synergistic M&A Annual dividend Share buybacks

GN capital allocation over the past 3 years (% of aggregated cash flow) CAPEX ~5%1

1: Investments in property, plant and equiptment

R&D ~30% M&A ~15% Share buy back ~45% Dividend ~5%

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GN in a nutshell We deliver on our promises We drive customer satisfaction We pioneer our industry with leading edge technology We are lean and focused You benefit