GN 2019 Annual Report Financial Highlights:
- GN delivered DKK 12.6 billion ($1.85 billion USD) revenue with organic growth of 15%,
- EBITA increased 19% to DKK 2.3 billion,
- EPS was DKK 11.12, an increase of 20% compared to 2018,
- DKK 1.4 billion was returned to shareholders via dividends and share buybacks during the year.
According to GN’s press announcement, GN Hearing continued to execute on the global rollout of the ReSound LiNX Quattro product family, including the launch of custom hearing aid variants during 2019. The new portfolio includes the world’s first Completely-in-Canal (CIC) 2.4 GHz hearing aid with ear-to-ear connectivity and direct streaming to iOS and Android devices. The performance during the year led to 7% organic revenue growth.
GN Audio continued the performance based on a “leading product portfolio and best-in-class commercial execution during 2019.” In the enterprise business targeting the Call Center & Office (CC&O) market, GN Audio achieved “exceptional organic revenue growth” throughout 2019. This was particularly driven by the Unified Communications (UC) segment. GN Audio accelerated its market share gains on the back of its leading product portfolio and continued strong execution across the organization, which resulted in 26% organic revenue growth.
Shareholder returns – Dividend and share buyback proposal
GN continued to deliver “attractive shareholder returns enabled by solid cash flow generation during 2019.” GN has distributed around DKK 1.4 billion to shareholders in 2019 via dividends and share buybacks.
At the Annual General Meeting on March 11, 2020, the Board of Directors will propose to pay out DKK 1.45 per share in dividend for the fiscal year 2019, compared to DKK 1.35 per share in 2018.
The current one-year DKK 1 billion share buyback program will be concluded no later than March 10, 2020. As part of the current capital structure policy, it is GN’s ambition to continue to buy back shares in order to continue to focus on creating shareholder value, subject to approvals by Annual General Meetings.
GN strategy 2020 and beyond
GN will, in the years ahead, drive growth by delivering uniquely individualized customer experiences, according to its announcement. It will continue enabling people to “Hear More, Do More and Be More.” Specifically, in the years ahead, the company says it will grow by offering increasingly individualized products and solutions.
Utilizing the synergies derived from GN’s audio and hearing technologies and expertise, the group is now able to “significantly improve and personalize customers’ hearing and listening experiences.”
GN’s strategy for 2020 and beyond is to take individualized customer experience to a whole new level, and:
- to further broaden the reach and appeal of GN’s hearing and audio product portfolios, where management sees ample opportunities for continued growth,
- and, as new market segments open up, to leverage GN’s technological expertise and commercial platform, where these provide a particular competitive advantage.
Mid-term financial targets
Based on the updated strategy, GN expects continued market share gains in the mid-term with the following financial targets:
– – GN Store Nord
In the mid-term, GN will continue to invest in growth through innovation to deliver what it says are “double-digit organic growth rates.” The company expects to continue delivering a strong EBITA margin in line with existing levels and competition, and to deliver double-digit growth in earnings per share.
GN expects to maintain a conservative capital structure policy of net interest-bearing debt to EBITDA of 1.0 – 2.0x, where excess liquidity will be distributed to shareholders through share buybacks and dividends.
– – GN Hearing
In the mid-term, GN Hearing expects the global hearing aid market to continue to grow at around 4-6% in volumes with an ASP decline of around 1-2% annually. GN Hearing expects to continue to grow faster than the market and to achieve organic revenue growth above this level. Assuming a stable environment and stable currency exchange rates, the expected organic revenue growth and operational leverage should lead to an EBITA margin of >20%, on top of investments in growth opportunities, as the company operates in attractive markets.
– – GN Audio
In the mid-term, GN Audio expects its markets to continue to grow at around 10% in value when assuming a stable macro environment. GN Audio expects to continue to grow faster than the market and to achieve organic revenue growth above this level. Assuming a stable environment and stable currency exchange rates, the expected organic revenue growth and operational leverage should lead to an EBITA margin of >20%, on top of investments in growth opportunities, as it operates in attractive markets.
Financial guidance for 2020
The financial guidance for 2020 assumes continued strong profitable growth:
Financial guidance for 2020* | GN Hearing | GN Audio | GN Store Nord |
Organic revenue growth | >6% | >14% | |
EBITA margin | >20% | >20% | |
Growth in earnings per share | ~15% |
* Based on foreign exchange rates as of February 1, 2020
EBITA in “Other” is expected to be around DKK (185) million ($27.2 million USD). GN will continue to actively research and explore future business opportunities outside the current area of operation in GN Hearing and GN Audio, leveraging on the core knowledge and competencies of the Group.
The financial guidance does not include any impact from the Coronavirus outbreak. Based on the company’s current knowledge, it expects to see an impact on Q1 financials. Provided that the situation resolves during February, it assumes it will follow guidance for the rest of the year.
Gitte Aabo, CEO of GN Hearing, said: “Our talented organization, again in 2019, delivered great innovation to the benefit for people in need of hearing care, leading to strong financial results. Going forward, we will build on these strengths and take hearing solutions much further towards individualized customer experiences. We see ample opportunities for helping more people even better and, thereby, driving further profitable growth as we apply our strong innovation engine to deliver unmatched customer experience, both for users of hearing aids and hearing care professionals.”
René Svendsen-Tune, CEO of GN Audio, said: “Our strong team delivered cutting-edge innovation and exceptional commercial drive yet again in 2019. The demand for our industry-leading enterprise solutions continues to increase and our consumer business shows impressive growth rates. Going forward, we will maintain and further refine our ability to take advantage of major technology shifts in targeted and profitable high-growth market segments, where we can deliver even better customer experiences.”
Marcus Desimoni, CFO of GN Store Nord, said: “In 2019, we delivered better than our initial guidance and returned DKK 1.4 billion to our shareholders via dividends and share buybacks.”
Teleconference
GN Store Nord will host a teleconference at 11.00 am 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.
Source: GN Group