GN Store Nord (GN)—the Copenhagen-based parent group of ReSound, Beltone, and Otometrics—has issued a report outlining its organic growth of 8% in Q3 2015, driven by continued strong growth in GN ReSound and a recovery in GN Netcom, as projected. According to GN, the cash conversion ended at 55% with solid cash generation in both divisions. A teleconference is planned for today (October 30) at 2:00 PM CET.
In Q3 2015, GN ReSound reportedly grew much faster than the global hearing aid market, with 6% organic growth in GN ReSound and 7% organic growth in Hearing Instruments. According to the company, this growth occurred despite the comparison base being impacted by the accounting fraud in the Beltone distribution network in 2012-2014. According to the company, growth continued to be driven by ReSound LiNX2—its fourth-generation hearing aid with 2.4 GHz technology. EBITA increased by 6% in constant currencies in Q3 2015 and reached DKK 237 million. GN ReSound delivered solid cash conversion of 64% in Q3 2015. During the first 9 months of 2015, cash conversion is 53% or almost double what it was during the same period of 2014, says the company.
GN reports that at the end of Q3 2015, GN ReSound launched ReSound Enya in the essential price segment—intended to make GN ReSound’s technologies accessible to more people with hearing loss. In October 2015, GN ReSound announced the Smart Hearing Alliance with Cochlear to develop and commercialize bimodal hearing solutions.
“The third quarter clearly demonstrates GN ReSound’s great momentum,” said Anders Hedegaard, CEO of GN ReSound. “Adjusting for the accounting fraud last year in the Beltone distribution network, I am really pleased to see the strong growth in our hearing instrument business. During the third quarter, we saw continued strong performance by ReSound LiNX2, and we received recognition worldwide by users highlighting the unique sound experience of ReSound LiNX2, among others, because of Spatial Sense. And with the launch of ReSound Enya, our 2.4 GHz technology is now available across all form factors and price points.”
According to GN Netcom, it returned to double-digit organic growth in Q3 2015. Organic growth was 11% driven by 23% organic growth in the UC headset segment. Mobile grew 12% organically with significant growth in the Sports Audio segment. EBITA was up 12% in constant currencies to DKK 113 million. The cash conversion in GN Netcom was 63% in Q3 2015, reflecting a positive development in trade receivables.
GN Netcom announced several new products in Q3 2015, including the new Jabra Speak 810, the company’s speaker product for medium size meeting rooms, and the new Jabra Sport Pace Wireless product for sports audio.
“After two challenging quarters, I am pleased that GN Netcom in Q3 2015 delivered solid organic growth, as we projected,” said René Svendsen-Tune, CEO of GN Netcom. “During the temporary market headwinds in first half of 2015, the organization stayed focused on execution of our ‘Innovation & Growth’ strategy. I am very pleased to see that our innovation machine is running at full steam, and that we have once again been able to successfully launch attractive and relevant products into both the professional and consumer markets.”
Based on continued strong business performance and GN’s capital structure policy, a share buyback program of DKK 500 million is initiated on October 30, 2015, succeeding the program that expired on October 29, 2015.
Investigations into Accounting Fraud at Beltone
The investigations regarding the accounting fraud committed by the former VP of Finance in the Beltone distribution network have now been finalized. The investigations confirm what was communicated in the Interim Report Q2 2015, and the write-downs already made in Q2 are adequate, according to the company.
Following the decision by the German Federal Supreme Court, the EBITA guidance for 2015 for “Other” is updated from around DKK (60) million to around DKK (75) million reflecting that GN is liable for legal fees, including a court fee, of approximately EUR 2 million. GN Store Nord’s full year organic growth guidance is maintained with growth likely ending in the low end of the 6- 7% organic growth range. Following the updated guidance for “Other”, GN Store Nord’s full year EBITA guidance is adjusted from around DKK 1,480 million to around DKK 1,465 million. The guidance for Financial Items, Amortization, etc, is updated from DKK (325) million to DKK (350) million. The increase mainly reflects a foreign exchange adjustment of certain balance sheet items.
Teleconference Planned for October 30, 2015 at 2:00 PM CET
GN will host a teleconference at 2:00 PM CET today. Please visit the GN website 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, vice president of Investor Relations & Treasury, GN Store Nord A/S, Tel: +45 45 75 87 16.
Source: GN Store Nord Report