Gn Store Nord A/s · OMXCOP:GN
Gn Store Nord A/s — FY2011 Earnings Presentation
45 slides from Gn Store Nord A/s's earnings presentation, Feb 23, 2012
Slide 1: Annual Report 2011
Annual Report 2011 CEO, GN ReSound Lars Viksmoen CEO, GN Netcom Mogens Elsberg CFO, GN Store Nord Anders Boyer VP IR & Communications, GN Store Nord Mikkel Danvold Copenhagen, February 23, 2012
Slide 2: Agenda
Agenda • 2011 Full-year highlights • GN ReSound • GN Netcom • 2012 guidance • Update on 2013 targets 2 February 23, 2012 Slide 2
Slide 3: 2011 group highlights
2011 group highlights - Strong growth and continued underlying improvements in the fundamentals 2011 financial performance FY FY Group financials (DKK million) 2011 2010 • Strong organic growth in both operating entities • EBITA in the two operating entities increased by 33% from DKK 553 million to
Slide 4: Agenda
Agenda • 2011 Full-year highlights • GN ReSound • GN Netcom • 2012 guidance • Update on 2013 targets 4 February 23, 2012 Slide 4
Slide 5: GN ReSound – key financials
GN ReSound – key financials - Strong combination of continued revenue growth and profitability improvements in Q4 2011 Q4 Q1 Q2 Q3 Q4 DKK million 2010 FY 2010 2011 2011 2011 2011 FY 2011 Revenue 855 3,164 820 827 841 962 3,450 Organic growth 5% 2% 9% 9% 9% 8% 9% Gross margin 61% 60% 60% 59% 61% 62%
Slide 6: Significant improvement in Q4 EBITA margin
Significant improvement in Q4 EBITA margin - Driven by highest quarterly revenue in GN ReSound’s history Key comments Organic growth and EBITA margin 2009-2011 Organic EBITA growth Organic growth (Left axis) margin 15 % EBITA margin (Right axis) 20% • EBITA margin was close to 20% in Q4 2011 compare
Slide 7: Supply chain transformation has positive impact on gross margin
Supply chain transformation has positive impact on gross margin - Positive impact dented by increase in other costs Key comments • The supply chain transformation project essentially delivered as promised – around DKK 63% GN ReSound gross margin 175 million on an annual run rate basis by the end of
Slide 8: GN ReSound – Q4 2011 revenue
GN ReSound – Q4 2011 revenue - Sustained strong growth momentum driven by the full ReSound Alera product family The full family is demonstrating Revenue Q4 2011 its strength in the market place Revenue Alera Wave 1 (MDKK) Hearing Instruments 846 Pedrell Product Management: Rasmus Porsgaard Marketing
Slide 9: Hearing aid market development
Hearing aid market development - 58% of total 2011 US unit market growth was captured by GN Resound 58% of total US market growth Market comments was captured by GN ReSound • Continued robust market unit growth around 5% in 2011 Total US unit market • Value growth in 2011 around 2-3% growth in 2011
Slide 10: ReSound Alera is only the beginning
ReSound Alera is only the beginning - Comprehensive product pipeline will sustain the growth momentum Product portfolio related concerns from the market • “Will you be able to develop new top line products to sustain the growth momentum as ReSound Alera grows older?” • “When will you launch top-end
Slide 11: Essentials
Current ReSound Scheduled products 2012 product introductions -- today Best-in-class efficiency on R&D spending Life style/ Super Performance Design Tinnitus Power Pediatrics Alera 9 Top Alera 9 TS Alera 7 Alera 7 Premium Plus TS Basic Alera 5 & Alera 4 ReSound Unite – premium connectivity Essential
Slide 12: Innovation drives growth
Innovation drives growth - The unique R&D capabilities of GN ReSound will demonstrate its strength again in 2012 Superior 2.4 GHz technology is still exclusively offered by GN ReSound The power of 2.4 GHz technology 12 February 23, 2012 Slide 12
Slide 13: Agenda
Agenda • 2011 Full-year highlights • GN ReSound • GN Netcom • 2012 guidance • Update on 2013 targets 13 February 23, 2012 Slide 13
Slide 14: GN Netcom – key financials
GN Netcom – key financials - 38% improvement in EBITA compared to 2010 Q4 Q1 Q2 Q3 Q4 DKK million 2010 FY 2010 2011 2011 2011 2011 FY 2011 Revenue 580 1,973 476 503 516 611 2,106 Organic growth 17% 9% 5% 8% 19% 5% 9% Gross margin 52% 53% 58% 57% 55% 56% 56% SG&A, R&D etc. (203) (819) (222) (215) (21
Slide 15: Revenue split by business areas
Revenue split by business areas - CC&O growth continues, virtually unaffected by macroeconomic uncertainty Revenue Q4 2011 Revenue split on business areas DKK Million Revenue Q4 2011 CC&O 384 Mobile 227 37% GN Netcom 611 Organic 0 growth CC&O 9% Mobile excl. OEM 10% 63% GN Netcom excl. OEM 9% Mobile
Slide 16: CC&O growth expected to continue into 2012
CC&O growth expected to continue into 2012 - No noticeable impact on CC&O from elevated macroeconomic uncertainty CC&O revenue Key observations • 2011 economic turmoil had no MDKK noticeable impact on the CC&O 1,600 headset market and GN Netcom’s CC&O business. • Microsoft keeps producing strong num
Slide 17: CC&O market growth drivers
CC&O market growth drivers - Market trends are supporting headset sales Key growth drivers • Shift toward software based communication • Enterprise mobility – The need for constantly being able to access core data & services through multiple communication devices. Wireless headsets support the freed
Slide 18: CC&O market growth projection
CC&O market growth projection - Continued acceleration of UC deployments leads to CC&O market growth of 16-19% every year until 2015 Market comments Updated CC&O market projections • The total CC&O market growth BDKK 14 continues to remain attractive. The 11-12 market growth from 2011 to 2015 is 12
Slide 19: Update on market growth – CC&O
Update on market growth – CC&O - Deep dive into the segments of the market • Base: Around 400-420 million • Base: 7-8 million UC users by the end office workers in total by the of 2011 end of 2011 • Growth: Around 60% CAGR until 2015 • Growth: 1-2% growth in 46% of 11% of • Expected ASP development:
Slide 20: Mobile was profitable in a challenging 2011
Mobile was profitable in a challenging 2011 - The trend is set to continue Key comments Mobile EBITA margin • EBITA margin increased further to above 2% in 3% 2011 in a challenging environment • Organic growth was impacted by the continued category weakness in the US market. Positive growth is howev
Slide 21: Agenda
Agenda • 2011 Full-year highlights • GN ReSound • GN Netcom • 2012 guidance • Update on 2013 targets 21 February 23, 2012 Slide 21
Slide 22: Outlook for 2012
Outlook for 2012 - Solid underlying improvement in EBITA for both operating businesses Revenue DKK million EBITA GN Netcom: More than 9% organic growth GN ReSound: 3-5% organic growth 1.000 GN Store Nord: More than 5% organic growth EBITA 800 GN Netcom DKK 350-375 million GN ReSound DKK 525-575 mill
Slide 23: Agenda
Agenda • 2011 Full-year highlights • GN ReSound • GN Netcom • 2012 guidance • Update on 2013 targets 23 February 23, 2012 Slide 23
Slide 24: Revisiting 2013 revenue assumptions
Revisiting 2013 revenue assumptions – ReSound Alera has driven growth above the market. 2013 revenue target increased by more than DKK 100 million Development since GN ReSound revenue development announcement of targets • In 2011, the market has been growing slower DKK More than anticipated in 2010
Slide 25: Building on the restructuring efforts
Building on the restructuring efforts - Vast opportunities to improve fundamentals in the business beyond the supply chain transformation • The supply chain project has revealed fundamental legacy issues preventing the company from operating as a truly global company • The outcome of the supply chai
Slide 26: SMART Program
SMART Program - Delivering DKK 190-240 million in EBITA improvements compared to the 2011 level 2012 EBITA improvement Incremental 2013 EBITA Total EBITA improvements (MDKK) improvements (MDKK) compared to 2011 level 50 190-240 140-190 S M A R T Streamlined Complexity Globalize ONE go-to- reduction
Slide 27: SMART Program
SMART Program - Complexity reduction: Significant simplification of product portfolio and packaging standardization Complexity reduction – key initiatives EBITA improvements (MDKK) • SKU reduction - significant simplification of product portfolio and streamline SKUs 8% Packaging 8% processes (DKK 20
Slide 28: SMART Program
SMART Program - Globalization of operations and further offshoring of production Globalize operations – key initiatives EBITA improvements (MDKK) • Take final steps to establish one global operations function • Further offshoring of production to the SKUs 8% Packaging existing manufacturing site in
Slide 29: SMART Program
SMART Program - Go-to-market: Standardize go-to-market, reduce non-core businesses and turnaround of underperforming entities Go-to-market – key initiatives EBITA improvements (MDKK) • Go-to-market blueprint – create best practice for structure of sales organizations, Turn- arounds SKUs 8% increase
Slide 30: GN ReSound bridge from 2011 to 2013
GN ReSound bridge from 2011 to 2013 - SMART program is the primary EBITA margin driver With the launch of a new high-end product family in the second half of 2012, mix and leverage effect will further support the EBITA margin EBITA margin 25% Around 20% 20% 14-16% 15% 13.0% 10% 5% 0% *Excluding non-
Slide 31: Updated 2013 financial targets
Updated 2013 financial targets - Revenue of more than DKK 3.8 billion and EBITA margin of around 20% GN ReSound revenue More DKK than 3.8 2012 guidance: 4,0 billion • 3-5% organic growth 3,0 • EBITA: DKK 525-575 million 2,0 2013 targets: 1,0 • Revenue: More than DKK 3.8 billion 0,0 • EBITA margin: A
Slide 32: Revisiting 2013 EBITA margin target
Revisiting 2013 EBITA margin target – 2013 EBITA margin target is confirmed despite an overall adverse industry development Development since Change in industry EBITA margins announcement of targets • The general ASP development in the market Hearing aid industry - end 2010 GN ReSound Most profitabl
Slide 33: Revisiting GN Netcom 2013 target assumptions
Revisiting GN Netcom 2013 target assumptions as announced in November 2010 - Assumptions largely unchanged on all parameters Original assumptions Evaluating assumptions • Significant CC&O market growth – driven • Unified Communications continues to by Unified Communications. unfold despite of macroe
Slide 34: GN Netcom bridge from 2011 to 2013
GN Netcom bridge from 2011 to 2013 - UC growth and leverage on cost base is the primary EBITA margin driver EBITA margin 25% Around 20% 18% 14.7% 15-17% 15% 10% 5% 0% -5% -10% -15% 34 February 23, 2012 GN ReSound GN Netcom GN Store Nord Slide 34
Slide 35: Updated 2013 financial targets
Updated 2013 financial targets - Revenue of more than DKK 2.6 billion and EBITA margin of around 18% 2012 guidance: DKK 3,0 GN Netcom revenue More billion than 2.6 • More than 9% organic growth 2,5 • EBITA: DKK 350-375 million 2,0 1,5 2013 targets (unchanged): 1,0 0,5 • Revenue: More than DKK 2.6 bi
Slide 36: Updated group financial 2013 targets
Updated group financial 2013 targets - Revenue target upgraded and EBITA margin confirmed ON TRACK TO DOUBLE EBITA MARGIN FROM 2010 TO 2013 GN Store Nord revenue GN Store Nord EBITA margin Around DKK More 19% 7,0 20,0% billion than 6.4 6,0 16,0% 5,0 12,0% 4,0 3,0 8,0% 2,0 4,0% 1,0 0,0 0,0% 2009 2010
Slide 37: Safe Harbor Statement
Safe Harbor Statement The forward-looking statements in this presentation reflect management's current expectations of certain future events and financial results. Statements regarding the future are, of course, subject to risks and uncertainties which may result in material deviations from the outl
Slide 38: Q&A
Q&A
Slide 39: Appendix
Appendix
Slide 40: Original GN ReSound financial targets as presented in November 2010
Original GN ReSound financial targets as presented when announced in November 2010 Around DKK 4,0 GN ReSound revenue 3.7 2013 targets: billion 3,0 • Revenue: Around DKK 3.7 billion • EBITA margin: Around 20% 2,0 Key assumptions: 1,0 • Revenue growth in line with or above the 0,0 market 2009 2010 201
Slide 41: Original GN Netcom financial targets as presented in November 2010
Original GN Netcom financial targets as presented when announced in November 2010 DKK 3,0 More than billion GN Netcom revenue 2.6 2013 targets: 2,5 • Revenue: More than DKK 2.6 billion 2,0 • EBITA margin: Around 18% 1,5 1,0 Key assumptions: 0,5 • Significant CC&O market growth – driven 0,0 by Unifie
Slide 42: GN ReSound – Balance Sheet & Cash Flow
GN ReSound – Balance Sheet & Cash Flow Q4 Q1 Q2 Q3 Q4 Balance sheet (DKK million) 2010 FY 2010 2011 2011 2011 2011 FY 2011 Inventories 378 378 404 399 451 454 454 Trade receivables 783 783 788 781 807 904 904 Trade payables 221 221 197 181 191 253 253 Cash flow (DKK million) Cash flow before working
Slide 43: GN Netcom – Balance Sheet & Cash Flow
GN Netcom – Balance Sheet & Cash Flow Q4 FY Q1 Q2 Q3 Q4 FY Balance sheet (DKK million) 2010 2010 2011 2011 2011 2011 2011 Inventories 93 93 105 90 79 95 95 Trade receivables 317 317 263 285 321 351 351 Trade payables 149 149 128 129 149 183 183 Cash flow (DKK million) Cash flow before working 129 34
Slide 44: GN Store Nord – Income Statement
GN Store Nord – Income Statement DKK million Q4 2010 FY 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 FY 2011 Revenue 1,437 5,145 1,298 1,334 1,359 1,573 5,564 Gross margin 57% 57% 60% 58% 59% 60% 59% SG&A, R&D etc. (611) (339) (677) (644) (629) (61) (2,011) EBITA 208 2,595 97 136 173 878 1,284 Amortisation,
Slide 45: GN Store Nord – Balance Sheet
GN Store Nord – Balance Sheet Balance sheet (DKK million) FY 2010 Q1 2011 Q2 2011 Q3 2011 FY 2011 Goodwill 2,861 2,697 2,660 2,847 3,048 Other intangible assets 1,170 1,160 1,145 1,156 1,200 Tangible & other non-current 1,285 1,218 1,209 1,260 1,024 assets Current assets 4,490 4,499 4,618 4,689 5,75