Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Demant AS (WILLF, Financial) reported a solid cash flow from operations of DKK1.5 billion and a free cash flow of DKK1.157 billion.
- The company achieved a significant increase in gross margin, driven by a positive ASP development and a strong product mix in hearing aids.
- Demant AS (WILLF) has increased its share of renewable energy and expects further significant improvements in the coming months.
- The share of women in top management has increased to 30%, achieving the company's goal for 2025 ahead of time.
- The hearing care segment showed strong momentum, supported by acquisitions, particularly in Germany and Belgium.
Negative Points
- The company's first-half performance was below expectations, leading to a downward revision of growth and EBIT forecasts.
- Demant AS (WILLF) experienced a significant loss of market share in the US managed care segment, impacting overall growth.
- The diagnostics business grew at a slower pace than expected, with challenges in accessing the Chinese market.
- Operating expenses increased by 7% organically, reflecting a lack of operating leverage and contributing to a 1.5-percentage-point drop in EBIT margin.
- The restructuring plan for EPOS resulted in a negative impact of DKK400 million, with a significant portion being non-cash.
Q & A Highlights
Q: Can you elaborate on the negative impact from your Managed Care strategy and whether you expect to compensate for the loss in managed care with more sales in independent channels?
A: The negative impact from Managed Care was immediate and significant, making it difficult to compensate quickly. We expect to see positive sentiments around the strategy for independent channels and growth in managed care. The strategy aims to better position our brands across various channels, allowing for a free choice of products and service models. - Søren Nielsen, President and CEO
Q: Regarding the restructuring of EPOS, if you cannot find a buyer, what additional costs should we expect?
A: The current restructuring plan is comprehensive and does not include costs for a potential closure. We believe the plan right-sizes the organization, making it profitable and attractive to buyers. The restructuring aligns OpEx with current sales levels. - René Schneider, CFO
Q: How does the new AI technology from competitors compare to your offerings, and what are your thoughts on the guidance provided?
A: We have been working on AI-driven processing for three product releases and feel well-positioned in this space. The focus is on improving signal-to-noise ratio, not on the number of chips used. Our guidance reflects our best assessment, considering industry dynamics and competition. - Søren Nielsen, President and CEO
Q: Can you provide insights into the potential market share loss in Managed Care and expectations for independent channels in H2?
A: We expect a more balanced result between units and ASP in the second half. It would be difficult to lose more share in Managed Care, so we see more upside potential. - Søren Nielsen, President and CEO
Q: What is the status of Bernafon's brand establishment in Managed Care, and what are your expectations for the French market in 2025?
A: We are in constructive dialogues with Managed Care players about Bernafon, which is recognized for its technology. The French market is expected to see a renewal wave in 2025 due to the reform, leading to significant market growth. - Søren Nielsen, President and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
