Company announcementno 2021-11
Interim Report 2021
Recovery in the global hearing healthcare market in H1 at least in line with our expectations
EBIT of
Positive trends expected to continue in H2 – 2021 organic growth outlook upgraded to 26-30% (prev. 24-28%)
EBIT guidance for 2021 upgraded to
Revenue (DKK million) | Growth H1 2021 vs H1 2020 | Growth H1 2021 vs H1 2019 | ||||||||||
Revenue and growth rates |
| H1 2021 | H1 2020 | H1 2019 |
| Org. | Acq. | LCY |
| Org. | Acq. | LCY |
Hearing Aids | 4,416 | 2,937 | 3,852 | 55% | 0% | 55% | 17% | 1% | 17% | |||
Hereof sales to Hearing Care | -871 | -465 | -607 | 90% | 4% | 94% | 42% | 6% | 48% | |||
Hearing Care | 3,737 | 2,154 | 3,128 | 72% | 5% | 78% | 15% | 7% | 23% | |||
Hearing Implants | 266 | 246 | 304 | 11% | 0% | 12% | -9% | 1% | -8% | |||
Diagnostics | 843 | 660 | 673 | 34% | 1% | 35% | 29% | 2% | 31% | |||
Hearing Healthcare |
| 8,391 | 5,532 | 7,350 |
| 55% | 2% | 57% |
| 14% | 3% | 17% |
Communications |
| 621 | 546 | - |
| 16% | 0% | 16% |
| n.a. | n.a. | n.a. |
Group |
| 9,012 | 6,078 | 7,350 |
| 51% | 2% | 53% |
| 15% | 11% | 26% |
Please note that there are no comparative figures for Communications in 2019, as EPOS was not consolidated until 2020. Unless otherwise indicated, 2020 figures are adjusted for one-offs related to the consolidation of EPOS with financial effect from
- In H1, Group revenue amounted to
DKK 9,012 million , corresponding to growth of 53% in local currencies compared to H1 2020, with 51% organic growth and 2% acquisitive growth. Exchange rate effects were -5%. Compared to pre-pandemic levels in H1 2019, the Group saw growth of 26% in local currencies, with 15% organic growth and 11% acquisitive growth. The latter can mainly be attributed to the consolidation of EPOS in 2020. Exchange rate effects were -3%. -
Our Hearing Healthcare segment saw growth of 57% in local currencies compared to H1 2020, reflecting both strong business performance and the severe negative impact of coronavirus on comparative figures. Hearing Aids and Hearing Care benefitted from the strong recovery of the hearing aid market, particularly in the US where we saw the release of some pent-up demand in Q2. We also saw a significant positive impact of the hearing healthcare reform in
France , which we estimate added aroundDKK 200 million to revenue in H1 that will not recur to the same extent in H2. Furthermore, Hearing Aids gained market share thanks to the highly successful launch of new flagship hearing aids, including Oticon More and Philips HearLink. Diagnostics delivered very strong performance and gained market share and exited H1 with an all-time high number of orders in the order book. Hearing Implants continued to see a significant negative impact of the slow recovery in a number of our key cochlear implants markets. Relative to H1 2019,Hearing Healthcare grew by 17% in local currencies, with 14% organic growth and 3% acquisitive growth, which is significantly above the market growth rate. - In Communications, growth was 16% in local currencies compared to H1 2020, all of which was organic growth. Following the very high double-digit organic growth rate realised in the first months of the year – also aided by extraordinarily low comparative figures – growth decelerated significantly. Besides higher comparative figures, the deceleration was driven by a softening in the number of new orders, particularly for low-priced wired headsets. While we view this as a temporary slowdown, it will also impact growth in H2 negatively.
-
The Group realised a gross margin of 74.5% in H1, corresponding to growth of 4.5 percentage points compared to H1 2020 and to sequential growth of 2.0 percentage points compared to H2 2020. The improvement was mainly driven by higher production volumes and by strong growth in
Hearing Healthcare , which has a structurally higher gross margin than the Communications segment. -
The Group’s OPEX grew by 18% in local currencies compared to H1 2020, with organic growth of 16% and acquisitive growth of 2%. This reflects both the substantial sales growth and the very significant, temporary cost savings realised in the comparative period, including support from government schemes related to coronavirus. We continued to see material temporary savings in OPEX, although these, as expected, gradually diminished during the reporting period. While we will continue to benefit from the structural savings announced in
October 2020 , we only expect a limited impact of further temporary savings in H2. - EBIT for the Group was better than expected and amounted to
DKK 1,638 million in H1, corresponding to an EBIT margin of 18.2%. Hearing Healthcare delivered very strong profitability with an EBIT margin of 20.0% driven by a combination of strong revenue and temporary cost savings. Profitability was strongly supported by the success of the new flagship hearing aids, and we estimate that the reform inFrance added aroundDKK 100 million to EBIT in H1 that will not recur to the same extent in H2. Conversely, the slowdown in Communications resulted in an EBIT ofDKK -44 million , as we continued to invest in R&D and distribution that will support our medium- to long-term growth. -
Reflecting the Group’s improved profitability, cash flow was very strong, and both CFFO and FCF more than doubled to
DKK 1,511 million andDKK 1,234 million , respectively. M&A activities have largely found their normal level with cash spent on acquisitions amounting toDKK 406 million , predominantly relating to Hearing Care. - Share buy-backs amounted to
DKK 1,813 million , while the Group’s gearing multiple (NIBD/EBITDA) was 2.1 at the end of H1, which is in line with our medium- to long-term target of 2.0-2.5.
Outlook for 2021
Based on expectations that our strong business momentum and market share gains in
Metric | Outlook for 2021 |
Organic growth | 26-30% (previously 24-28%). For Communications, we expect negative organic growth in H2. |
Acquisitive growth | 1% based on revenue from acquisitions completed as of |
FX growth | -1% (previously -2%) based on exchange rates as of |
EBIT | |
Effective tax rate | Around 23%. |
Gearing | Gearing multiple at the end of 2021 in line with medium- to long-term target of 2.0-2.5 (NIBD relative to EBITDA). |
Share buy-backs | More than |
“Overall, we look at the first half-year with great satisfaction, we perform extremely well and win market share. We have once again been let into many people’s lives with our innovative technologies and services, and based on trustful collaboration, we continue to make life-changing differences for our customers and users around the world. With the launch of our flagship hearing aids Oticon More and Philips HearLink standing out, we have generally succeeded with our sales activities, leading to market share gains and sales above our original expectations. Our Hearing Aids, Hearing Care and Diagnostics businesses have performed particularly well, resulting in strong profitability for the period. Based on our expectations of continued strong performance in the second half-year, we now upgrade our guidance for growth and profit for the year,” says Søren Nielsen, President & CEO of Demant.
Demant will host a conference call on
Further information: Søren Nielsen, President & CEO Phone +45 3917 7300 www.demant.com | Other contacts: |
About Demant A/S
Demant is a world-leading hearing healthcare group that offers solutions and services to help people with hearing loss connect with the world around them. In every aspect, from hearing devices, hearing implants, diagnostics to audio and video solutions and hearing care all over the world, Demant is active and engaged. Our innovative technologies and know-how help improve people’s health and hear-ing. We create life-changing differences through hearing health.
Attachments
- 2021-11 Interim Report 2021.pdf
© Ritzau Denmark, source