Q4 2022: Strong organic revenue growth of 14% in GN Hearing and -3%
in GN Audio primarily driven by 9% in Enterprise
2022 Highlights
- GN delivered DKK 18.7 billion revenue with organic revenue
growth of -3%
- Adj. EBITA of DKK 2.2 billion
- Intention to initiate a fully underwritten rights issue with
gross proceeds of DKK 7 billion in order to accelerate deleveraging
to 1-2x NIBD/EBITDA in the short-term
GN Hearing had a very strong finish to the year with 14% organic
revenue growth in Q4 2022 driven by significant market share gains
as a result of the successful ReSound OMNIA launch. Consequently,
GN Hearing delivered 5% organic revenue growth in 2022, in line
with the financial guidance. Revenue growth was 17% including
around 7% impact from the development in foreign exchange rates and
around 5% impact from M&A. The Emerging business
(JabraEnhance.com) delivered 73% organic revenue growth. The
revenue in 2022 reached DKK 6,227 million, compared to DKK 5,332
million in 2021.
GN Audio executed strongly in the Enterprise business in Q4 2022
with 9% organic revenue growth. Consequently in 2022, the
Enterprise business matched the all-time high revenue from 2021
despite significant market challenges. The strong performance
resulted in market share gains due to a world-leading product
portfolio and solid channel execution. In spite of supply chain
challenges and soft market conditions SteelSeries increased their
revenues quarter by quarter, and ended with a strong finish,
delivering organic revenue growth of -4% in Q4 2022, resulting in
market share gains. The Consumer business was challenged by reduced
consumer sentiment and significant promotions, which resulted in
organic revenue growth of -37% for 2022. As a result, GN Audio
delivered -7% organic revenue growth in 2022, in line with the
updated financial guidance. The revenue in 2022 reached DKK 12,460
million, compared to DKK 10,443 million in 2021.
The acquisitions of Lively – now rebranded JabraEnhance.com –
and SteelSeries are strategically important to GN Hearing and GN
Audio, both doing very well in their market segments and present
significant growth opportunities. The decision on how to fund the
SteelSeries acquisition was taken in October 2021 under different
macro-economic assumptions.
Multiple external factors presented GN with significant
headwinds throughout 2022: War in Ukraine, soaring inflation,
declining consumer confidence, looming recession. This came on top
of continued COVID-19 market disturbances, supply chain challenges,
FX headwinds, and very high freight costs.
In accordance with our announcement on November 11, 2022, GN has
conducted a comprehensive review of the appropriate capital
structure. In light of the macroeconomic environment and GN’s
leverage, GN has announced that it intends to raise gross proceeds
of DKK 7 billion in the first half of 2023 through the issuance of
new shares with pre-emptive rights for GN’s shareholders (the
“Rights Offering”).
Proceeds from the Rights Offering will be used to strengthen
GN’s balance sheet and provide appropriate financial flexibility.
With these actions we are confirming our commitment to the capital
structure policy with a target of 1-2x NIBD/EBITDA, which we plan
to reach in the short term.
GN has entered into a standby underwriting letter and, as such,
the Rights Offering is, subject to certain customary conditions,
fully underwritten by a syndicate of banks. In connection with the
Annual General Meeting on March 15, 2023, GN’s Board of Directors
plan to seek authorization to increase the share capital with
pre-emptive rights for the existing shareholders.
Financial highlights Q4 2022
- GN Store Nord delivered revenue of DKK 5.3 billion in Q4 2022
and an organic revenue growth of 3%. Adj. EBITA was DKK 744
million, equal to a growth of 14% compared to Q4 2021
- GN Hearing delivered a very strong 14% organic revenue growth
in Q4 2022 driven by significant market share gains as a result of
the successful ReSound OMNIA launch. Adj. EBITA was DKK 503 million
in the core business, equal to an EBITA margin of 28.9%, reflecting
strong operating leverage. The Emerging business delivered an EBITA
of DKK -31 million
- GN Audio delivered -3% organic revenue growth in Q4 2022 driven
by 9% organic revenue growth in Enterprise but offset by -38%
organic revenue growth in Consumer. SteelSeries delivered a strong
finish to the year leading to an organic growth of -4% in Q4 2022
in a soft market. Adj. EBITA ended at DKK 334 million in Q4
2022
Financial highlights Q4 2022
|
GN Hearing |
GN Audio |
DKK million |
GN Hearing |
Core business |
Emerging business |
GN Audio |
GN Audio organic |
Steel- Series |
Revenue |
1,807 |
1,742 |
65 |
3,463 |
2,679 |
784 |
Organic growth |
14% |
14% |
77% |
-3% |
-3% |
-4% |
Adj. EBITA** |
472 |
503 |
-31 |
334 |
|
|
Adj. EBITA margin** |
26.1% |
28.9% |
|
9.6% |
|
|
|
Group total* |
GN Hearing |
GN Audio |
DKK million |
Q4 2022 |
Q4 2021 |
Growth |
Q4 2022 |
Q4 2021 |
Growth |
Q4 2022 |
Q4 2021 |
Growth |
Revenue |
5,270 |
4,100 |
29% |
1,807 |
1,429 |
26% |
3,463 |
2,671 |
30% |
Organic growth |
3% |
-2% |
|
14% |
2% |
|
-3% |
-4% |
|
Adj. Gross profit** |
2,581 |
2,224 |
16% |
1,205 |
908 |
33% |
1,376 |
1,316 |
5% |
Adj. Gross profit margin** |
49.0% |
54.2% |
-5.2%p |
66.7% |
63.5% |
3.2%p |
39.7% |
49.3% |
-9.6%p |
Adj. EBITA** |
744 |
651 |
14% |
472 |
219 |
116% |
334 |
475 |
-30% |
Adj. EBITA margin** |
14.1% |
15.9% |
-1.8%p |
26.1% |
15.3% |
10.8%p |
9.6% |
17.8% |
-8.2%p |
Adj. Earnings per share (EPS)*** |
3.92 |
4.14 |
-5% |
|
|
|
|
|
|
Free cash flow excl. M&A |
-105 |
-279 |
NA |
64 |
-61 |
NA |
-21 |
198 |
NA |
* Including “Other” ** Excluding non-recurring items (DKK -152
million in OPEX in GN Audio, DKK -11 million in COGS in GN Hearing
and DKK -25 million in OPEX in GN Hearing) in 2022. Excluding
non-recurring items (DKK -31 million in OPEX in GN Audio) in
2021*** Excluding non-recurring items (DKK -188 million in 2022 and
DKK -31 million in 2021) and amortization of acquired intangible
assets
Financial highlights 2022
|
GN Hearing |
GN Audio |
DKK million |
GN Hearing |
Core business |
Emerging business |
GN Audio |
GN Audio organic |
Steel-Series |
Revenue |
6,227 |
6,022 |
205 |
12,460 |
10,143 |
2,317 |
Organic growth |
5% |
5% |
73% |
-7% |
-7% |
-19% |
Adj. EBITA** |
599 |
786 |
-187 |
1,759 |
|
|
Adj. EBITA margin** |
9.6% |
13.1% |
|
14.1% |
|
|
|
GN Store Nord* |
GN Hearing |
GN Audio |
DKK million |
2022 |
2021 |
Growth |
2022 |
2021 |
Growth |
2022 |
2021 |
Growth |
Revenue |
18,687 |
15,775 |
18% |
6,227 |
5,332 |
17% |
12,460 |
10,443 |
19% |
Organic growth |
-3% |
20% |
|
5% |
16% |
|
-7% |
22% |
|
Adj. Gross profit** |
9,384 |
8,682 |
8% |
3,963 |
3,400 |
17% |
5,421 |
5,282 |
3% |
Adj. Gross profit margin** |
50.2% |
55.0% |
-4.8%p |
63.6% |
63.8% |
-0.2%p |
43.5% |
50.6% |
-7.1%p |
Adj. EBITA** |
2,166 |
2,664 |
-19% |
599 |
643 |
-7% |
1,759 |
2,209 |
-20% |
EBITA margin** |
11.6% |
16.9% |
-5.3%p |
9.6% |
12.1% |
-2.5%p |
14.1% |
21.2% |
-7.1%p |
Adj. Earnings per share (EPS)*** |
10.54 |
15.29 |
-31% |
|
|
|
|
|
|
Free cash flow excl. M&A |
-1,291 |
702 |
NA |
-377 |
198 |
NA |
-91 |
1,288 |
NA |
* Including “Other” ** Excluding non-recurring items (DKK -196
million in COGS in GN Audio, DKK -264 million in OPEX in GN Audio,
DKK -56 million in COGS in GN Hearing and DKK -90 million in OPEX
in GN Hearing) in 2022. Excluding non-recurring items (DKK -45 in
OPEX in GN Audio) in 2021 *** Excluding non-recurring items (DKK
-624 million in 2022 and DKK -45 million in 2021) and amortization
of acquired intangible assets
Shareholder returns – dividend and share buybacksIn 2022,
GN distributed DKK 214 million to shareholders (equivalent to DKK
1.55 per share) in respect of the fiscal year 2021, as approved at
the Annual General Meeting in 2022. Due to the acquisition of
SteelSeries, as announced in October 2021, GN Store Nord’s share
buyback program has been paused for the time being.
As a consequence of the concluded capital structure review, GN
will not pay a dividend in respect of the fiscal year 2022. As GN’s
capital structure policy is confirmed, GN expects to return to
making dividend payments, once the leverage is back within the
long-term target.
Financial guidance for 2023
GN Hearing
In 2023, GN Hearing expects to continue to grow faster than the
projected market growth. Due to the current macroeconomic
environment, GN Hearing is projecting 1-3% market volume growth and
-1% to -2% market ASP decline. It is currently expected that market
growth will be higher in H2 2023 compared to H1 2023. Due to GN
Hearing’s current momentum and competitive product portfolio, an
organic revenue growth between 2% to 8% driven by market share
gains is expected for 2023.
Non-recurring items primarily relates to investments in the
supply chain in the magnitude of DKK ~ -150 million is expected in
2023 in order to restore profitability. For the core hearing aid
business, the EBITA margin is expected to be between 13% to 16% for
2023 excluding non-recurring items. In the Emerging Business
(including JabraEnhance.com (formerly Lively) and further
investments into the digital space), GN Hearing will continue to
invest, and with the expected strong topline growth, the EBITA
impact for 2023 is expected to be DKK ~ -150 million.
The GN Hearing financial guidance is based on the following
assumptions for Q1 2023:
- Revenue: Q1 2023 organic revenue growth is assumed to be within
the 2-8% guidance
- EBITA: Q1 2023 EBITA margin assumed to be mid-single digit
(excluding non-recurring items) due to seasonality and launch
costs. The EBITA margin is expected to improve in H2 2023 due to
operating leverage
GN Audio
In 2023, GN Audio expects to continue to grow faster than the
market. The uncertainties arising from the current macroeconomic
environment are expected to negatively impact the market growth. GN
Audio is expecting organic revenue growth between -10% to +5%. The
EBITA margin is expected to be 10% to 15% for 2023 excluding
non-recurring items. This reflects an expectation of gaining market
share in a challenging market environment and continued cost
prudence.
In order to further reduce the cost base GN Audio is expecting
non-recurring items of DKK ~ -150 million in 2023 in relation to
cost reduction measures.
The GN Audio financial guidance is based on the following
assumptions for Q1 2023:
- Revenue: Q1 2023 organic revenue growth is assumed to be
negative, due to challenged market conditions
- EBITA: Q1 2023 EBITA margin assumed to be mid-single digit
(excluding non-recurring items) due to the topline development and
investment in growth opportunities. The EBITA margin is expected to
improve in H2 2023 due to improvement in operating leverage
GN Store Nord
For full year 2023, GN Store Nord consequently expects organic
revenue growth of -6% to +6% in 2023, while EBITA in “Other” is
expected to be DKK ~ -200 million.
Financial guidance 2023
|
Organic revenue growth |
Adjusted EBITA margin2) |
Non-recurring items (DKK million) |
GN Hearing |
2% to 8% |
|
|
- Core business |
|
13% to 16% |
~ -150 |
- Emerging Business1) (DKK million) |
|
~ -150 |
|
GN Audio |
-10% to +5% |
10% to 15% |
~ -150 |
Other (DKK million) |
|
~ -200 |
|
GN Store Nord |
-6% to +6% |
|
~ -300 |
Note 1) Emerging Business mainly includes the JabraEnhance.com
(formerly Lively)Note 2) Excluding non-recurring items Based on
foreign exchange rates as of February 9, 2023
Primary risk factors in relation to the financial guidance
The basic assumptions behind the guidance remain more uncertain
than normal. Primary risk factors include inflationary pressures,
consumer sentiment and general economic uncertainty. GN’s supply
chains, including component sourcing and local and geopolitical
instability and deteriorating trade relations may impact key
suppliers and GN’s operations.
Quotes from Executive Management Gitte Aabo, CEO of GN
Hearing, comments: “We are very pleased with delivering 14%
organic growth in Q4 and taking share in soft hearing aid markets.
Our new flagship platform ReSound OMNIA has exceeded our high
expectations and we are thrilled that customer reception and
initial sales numbers have been very strong. GN Hearing’s new
ReSound OMNIA product family is available in a full line-up of
popular styles to cater to all hearing needs and preferences. In
addition to the Receiver-in-Ear hardware launched in August 2022,
the family now includes miniRIE, Behind-the-Ear (BTE) and
custom-made styles all benefiting from 150% improvement in hearing
in noisy environments, which puts us in a very strong competitive
position going into 2023.”
Peter Karlstromer, CEO of GN Audio, comments: “I’m very
pleased to take over from René Svendsen-Tune after his successful 8
years. GN Audio is innovative, well run, and I am confident in our
team’s ability to execute strongly. In 2023, we will continue to
launch new industry leading products, making us strongly positioned
to continue to delight customers and gain market share in a
difficult environment.”
Peter la Cour Gormsen, CFO of GN Store Nord,
comments: “2022 was a challenging year with significant
external headwinds. Still, GN took market shares across business
segments and delivered revenue of DKK 18.7 billion and adj. EBITA
of DKK 2.2 billion.”
TeleconferenceGN Store Nord will host a teleconference at
11.00 a.m. CET today. Please visit www.gn.com/investor to access
the teleconference. Presentation material will be available on the
website prior to the start of the teleconference.
For further information, please contact:
Investor RelationsAnne Sofie Staunsbæk Veyhe +45 45 75 85
06Rune Sandager +45 45 75 92 57 Media Relations Steen Frentz
Laursen +45 20 65 34 20
Forward-looking statementsThe 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.
Changes to such expectation and assumptions will not be disclosed
on an ongoing basis, unless required pursuant to general disclosure
obligations to which GN is subject.
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).
The securities offered will not be and have not been registered
under the U.S. Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements
For more information, see the "Management's report" and "Risk
management” elsewhere in this Annual Report. This Annual Report
should not be considered an offer to sell securities in GN.
About GN
GN facilitates communication between people through intelligent
hearing, audio, video, and gaming technology. Inspired by people
and driven by our passion for innovation, we leverage technologies
to deliver unique user experiences that bring people closer through
the power of sound and vision.
GN was founded more than 150 years ago with a vision to connect
the world. Today, we proudly honor that legacy with our
world-leading expertise in the human ear, audio, video and speech,
wireless technologies, software, miniaturization, and collaboration
with leading technology partners. GN's solutions are marketed by
the brands ReSound, SteelSeries, Jabra, Beltone, Interton,
BlueParrott, Danavox and FalCom in 100 countries. Founded in 1869,
the GN Group employs 8,000 people and is listed on Nasdaq
Copenhagen (GN.CO).
Visit our homepage GN.com - and connect with us on LinkedIn,
Facebook and Twitter
- GN Annual Report 2022
- GNStoreNord-2022-12-31
GN Store Nord (LSE:GSN)
Historical Stock Chart
From Jun 2024 to Jul 2024
GN Store Nord (LSE:GSN)
Historical Stock Chart
From Jul 2023 to Jul 2024