GN Store Nord A/S Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Hassan Al-Wakeel - Barclays Bank PLC - Analyst : Thank you for taking my questions. I have two, please. Firstly, can you talk about the strength in the Hearing business, and which channels you feel you're taking the most share? Is this continuing into Q2? And are you seeing any impact from competitor launches? And then secondly, on Enterprise, can you talk about the dynamics you're seeing in this market and the visibility you have and whether it will the upper end of the guidance range or at least positive growth for the full year looks more likely to you now? Thank you.

Question: Hassan Al-Wakeel - Barclays Bank PLC - Analyst : It was very helpful. If I can just follow up on Hearing. I mean, I appreciate comps remain tough, but do you expect Q2 to already be meaningfully slower from a growth perspective. I'm just trying to understand whether it's anything that you see currently as to why you've retained the guidance in Hearing rather than raising it. Thank you.

Question: Hassan Al-Wakeel - Barclays Bank PLC - Analyst : Perfect. Thank you.

Question: Martin Parkh°i - SEB - Analyst : Hello. Martin Parkh°i, SEB. Just first to stick on the hearing aid side because you talk about some potential tougher comps in the second half, but could you go a little bit more detail to your position in managed care and US? We have seen recently that one of your Danish competitors has gone into infight with UnitedHealth and also maybe pull a little bit out on that. So do you see a bigger opportunity in managed care now in US than you saw in the beginning of the year. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 02, 2024 / 9:00AM, GN.CO - Q1 2024 GN Store Nord A/S Earnings Call And then secondly, just on the Enterprise side, I appreciate that you now have a different divisional structure, but prior to all the COVID thing, you had asked a 10% expectation for growth in GN Audio, which of course includes a bit more than just Enterprise. Do think that after we have -- we are behind the stabilization period, do you think that your business is still back to a potential level of double-digit growth?

Question: Veronika Dubajova - Citigroup Inc. - Analyst : Hi, guys. Good morning and thank you for taking my questions. I'll also keep it to two. My first one is just, Peter, on your comments about expanding your point of sales by over 5%. Can you give us a little bit of color on what type of customers you're winning with when it comes to next year? And obviously, looks like the US is in particular off to a strong start. I noticed you also called out France and Australia. It's awesome how well this product might perform in Europe as we get a bit of momentum on the product as well, that would be great. Sorry, I know that's very long question much. My question two is for Soren on the cost phasing through the year. Obviously, a fair amount of commentary from you on benefits from phasing, if you could maybe clarify how substantial those are. And as we look through the rest of the year in particular, I'm curious about selling and marketing which was down quite substantial year-on-year, whether you see the need to step that up sequentially as we move through Q2, Q3 and into Q4. Thank you, guys.

Question: Veronika Dubajova - Citigroup Inc. - Analyst : Understood. Thank you guys so much. I'll jump back into the queue.

Question: Christian Ryom - Danske Bank A/S - Analyst : Yes. Good morning. Peter and Soren, two questions from my side as well. The first one is on margins and a split one, if I may. So I can say relative to my numbers, and I can see also to consensus your enterprise gross margin came in significantly strong. Can you elaborate on whether there was anything exceptional here in this quarter? And the other margin related question is on these pension provisions that you talk about in the Hearing business. Any chance you might be able to give us a little bit of a feel for the size of this, whether we are talking [1, 2, 3 percentage points] on the margin here for the quarter? And then the second question is to the Gaming & Consumer business. And specifically, if you can help me understand the comment that you have on slide 13 in today's presentation where you talk about the gaming gear categories and true wireless categories growing mid-single digit. How should I square that with the fact that your business was flat year-on-year, is that a market comment or what's the missing component here, product categories that you've exited for instance? Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 02, 2024 / 9:00AM, GN.CO - Q1 2024 GN Store Nord A/S Earnings Call

Question: Christian Ryom - Danske Bank A/S - Analyst : Perfect. Thank you very much. That's very helpful.

Question: Maja Stephanie Pataki - Kepler Cheuvreux - Analyst : Hi, good morning. Two questions from my side as well and focusing on hearing, please. I was wondering if you could give us a bit more detail why you think that the success of Nexia is coming through in this extent, is it really product related or is it due to the fact that the service is better fitting software is better just to have a bit of a granularity. What is behind the success of the product will be very helpful. And then second of all, if we look at the dynamics in Q1, the market processed was really strong, and we've seen sustained good growth coming out of North America or the US, could you maybe talk about what you're seeing as market dynamics in April? Thank you very much. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 02, 2024 / 9:00AM, GN.CO - Q1 2024 GN Store Nord A/S Earnings Call

Question: Maja Stephanie Pataki - Kepler Cheuvreux - Analyst : That's fine. Thank you very much.

Question: Hugo Solvet - BNP Paribas Exane - Analyst : Hello. Thanks for taking my questions. The first on core hearing margin, which is coming close to 20% at 19.9% in the quarter, we are seeing continued traction from next year. Any reasons or moving parts we should have in mind that could hold back further margin progression throughout the year. And second, a follow-up to the reading, especially on the data points you gave on point of sale you need by point of sale. Did it gradually increased Q3 to Q4 and into Q1 or the bulk of the increase was seen in Q1 and maybe you can help us understand the issue. So the difference in terms of trend independent versus large account, you mentioned independent, but just keen to here larger companies? Thank you.

Question: Hugo Solvet - BNP Paribas Exane - Analyst : Thank you.

Question: David Adlington - JPMorgan Chase & Co - Analyst : Hey, guys. Thanks for the questions. Most have been asked, but maybe I just push a little bit more on the managed care contribution. I just wondered how much your expansion of managed care contributed about 14% growth or maybe how much faster than the 14% growth managed care grew? And then secondly, just a housekeeping question. Your net financial charges in the quarter were clearly lower than we were going forward. Just wondering if you had any guidance for the rest of the year there, please.

Question: David Adlington - JPMorgan Chase & Co - Analyst : Well, thank you.

Question: Oliver Metzger - ODDO BHF Corporate & Markets - Analyst : Yeah, good morning. Thanks a lot for taking my questions. Two on enterprise, please. So first one on enterprise, one of which will come is the reordering of headsets after restoring market basically two years or even more time it goes. So when do you expect the repurchase cycle to come and how far you have that incorporated this into your expectations for the rest of the year? Second question it's on the recovery pattern. So you provided some positive comments on the C market also for IT infrastructure. So given your experience the time lag between improving underlying fundamental spend, also the recovery of the demand for headsets. Thank you.

Question: Oliver Metzger - ODDO BHF Corporate & Markets - Analyst : Thank you very helpful.

Question: Shubhangi Gupta - HSBC - Analyst : Hi, thanks for taking my question and congrats on the strong quarter. I have two questions, please. First on the hearing business for you all as you progress into the year, some of your peers are also launching new products. So should we think about the growth for the year, more weighted towards the enterprise and gaming business rather than hearing business? And for the enterprise business, how is the recovery factor is it like more sequential recovery? And second, do you have this disclosed Beltone corporate retail to any other businesses you're planning to both this year? Thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 02, 2024 / 9:00AM, GN.CO - Q1 2024 GN Store Nord A/S Earnings Call

Question: Robert Davies - Morgan Stanley - Analyst : Thanks for taking my questions. My first one was just on your comments you made on the hearing business about the continued market share gains. I just wondered if you could break that down a little bit across some of the key regions where you think you're making the strongest progress. And my other one was on the gaming and consumer growth, your outlook for the full year, given where you sort of started off and the fact that comps get tougher, just your kind of conviction level because it's still quite a broad range, I think in terms of the guidance to gaming consumer for the full year. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 02, 2024 / 9:00AM, GN.CO - Q1 2024 GN Store Nord A/S Earnings Call And then the final one, which is just sort of a few people have touched on it already, but I guess just kind of drilling into the kind of key feedback from the audiologist and the customers of what they like around the products and what's different, what is do you think some of the sort of top two or three things you're hearing from customers and what they like around the product? Is it the kind of sort of signal processing the sort of hitting what are the key kind of features of the product that people are really kind of telling you they like? Thank you.

Question: Robert Davies - Morgan Stanley - Analyst : Okay. That's all my questions. Thank you.

Question: Mattias Haggblom - Handelsbanken - Analyst : Yeah, good morning. Thanks so much. Two questions, please. So in light of savings, somewhat ahead of plan in the quarter, any thoughts at this stage if this group of a total DKK600 million savings could prove conservative? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 02, 2024 / 9:00AM, GN.CO - Q1 2024 GN Store Nord A/S Earnings Call And then secondly, in light of an improvement of more than DKK600 million in cash generation in Q1, comparable Q1 last year. Why no further fruit and increase into the outlook for the full year free cash flow? I guess another way of asking would be how you see it about the consensus expectation of roughly DKK1 billion for the year. Thanks so much.

Question: Mattias Haggblom - Handelsbanken - Analyst : Thanks so much.

Question: Niels Granholm-Leth - Carnegie Investment Bank AB - Analyst : Thank you. First question on R&D capitalization, which contributed DKK69 million in the quarter. Could you talk about if you also experienced a contribution from IC cost capitalizations in this quarter? And my second question would be in, since the business is now well, who well back in good shape, would you consider to raise more capital? Thank you.

Question: Niels Granholm-Leth - Carnegie Investment Bank AB - Analyst : Great. Thank you.

Question: Julien Ouaddour - BofA Securities - Analyst : Thank you very much and good morning, everyone, I have two in hearing and one in audio. So forth in hearing just regarding the market, I think in your press release, you said that trends have benefited quite a lot. Can you just comment a bit of lag the market dynamic in France? And how do you see the sort of like recovery in this market and as well, just in the US have good traction with the independents, you're putting the next year on the VA this month. So what's your expectation in terms of market share gain just based on strong momentum? And the second question on hearing is probably a follow-up to the very good questions there. You mentioned sort of timing of certain cost items in Q1? And just how should we think about like the phasing of the margin going forward? So could we I mean, should we expect sort of like margin decline in the coming quarters? And the last question in audio, so I understand that you said that headset like PC by one to two quarter, we've seen a plus 1% in the PC growth. I mean, how should we understand the like for like plus 1% should translate in a headset gross in two quarters? So I mean is it like one to one? And what kind of PC volume growth you need to get back to, let's say, high single or double-digit headsets at some point? Thanks.

Question: Julien Ouaddour - BofA Securities - Analyst : Thanks. I think that I'd just like if I can come back on your comment with margins. So I mean you. I think, in the press release, you can see timing of certain cost items. So I'm not talking about the pension, but really like a bill at the other cost any kind of phasing for this cost that should I mean, should we have in mind for the coming quarters?

Question: Julien Ouaddour - BofA Securities - Analyst : Perfect. Thank you.