GN Store Nord A/S · OMXCOP:GN
GN Store Nord A/S — Q3 2002 Earnings Presentation
28 slides from GN Store Nord A/S's earnings presentation, Nov 20, 2002
Slide 1: Q3 2002 Earnings Release
Q3 2002 Earnings Release November 20, 2002 CEO Jørn Kildegaard CFO Jens Due Olsen
Slide 2: Safe Harbor Statement
Safe Harbor Statement The forward-looking statements in this interim report reflect management's current expectations for certain future events and financial results. Statements regarding 2002 are, of course, subject to risks and uncertainties which may result in material deviations from the outlook
Slide 3: GN – Two Businesses – One Stock
GN – Two Businesses – One Stock Fully Committed to Separate NetTest GN Great Nordic is global innovator in personal communications - # 2 in headsets and top tier in hearing aids Q1-Q3 2002 sales DKK 3.4bn, 84% Group sales Q1-Q3 2002 EBITA DKK 281m The GN Stock Liquid KFX stock, 100% free float and d
Slide 4: Q3 in Brief
Q3 in Brief Headset and Hearing Aids earnings grow despite soft demand -Mobile headsets sale up +50% off-setting decline in CC&O Q-o-Q -All headset production in China from Q2/03 -Low priced digital Canta2, high end Oria and new Beltone dispensers back sales in flat markets -“Closing the Margin Gap”
Slide 5: The hands-free market
The hands-free market - in the call center - at the office - in the car - at home 5
Slide 6: Market potential
Market potential Long-term Potential Penetration Market Growth Call center >5m agent positions >95% 8%-10% GN Netcom global #2 Office 3-500m workstations <5% 8%-12% GN Netcom global #2 Mobile >900m subscribers <10% 25%-30% GN Netcom global #1/2 6
Slide 7: Mobile takes off
Mobile takes off GN Netcom Sales 2500 2000 Mobile DKKm 1500 1000 Call Center & Office 500 0 02 90 01 0 19 20 /2 D YT Still shorter product cycles – 15 years to 15 months or less 7
Slide 8: Bluetooth™
Bluetooth™ • OEM agreements develop successfully – supply shortage in Q3 • Production being ramped up to 100.000 units/month • 3 new Bluetooth headsets in 2002 confirm GN Netcom’s cordless leadership • BT100TM retails at EUR 209 • BT200TM retails at USD 99 • BT300TM retails at USD 170-180 JABRA Siem
Slide 9: The Headset Market
The Headset Market Q3 Call center and office market weak in US and Europe Mobile headsets showing strong growth – legislation banning cell phone use while driving Further restructuring of business – staff lay-offs in total by more than 200 employees Q4 Continued weak market in call center and office
Slide 10: Headlines - Headsets
Headlines - Headsets • Bluetooth sparks organic +50% growth in mobile sales, Q-o-Q • CC&O decline in Europe and US, (10)% Q-o-Q • Hello Direct breaks even in 2002 • Taking further costs out of lean cost base - all production in China from Q2/03 10
Slide 11: Q3 2002 - Financials (GN Netcom)
Q3 2002 - Financials DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 • Sales on par with Q2 Sales 506 456 471 497 406 433 434 - weak USD, seasonality and Gross profit 265 231 247 249 210 223 214 Margin,% 52,4 50,7 52,4 50,1 51,7 51,5 49.3 soft demand in CC&O EBITA 46 (4) 46 41 29 27 34 Margin,% 9,1 (
Slide 12: GN ReSound
Sm # EO - es - ‘ | GN ReSound ~ NETTEST 12
Slide 13: Total US market, 2000-2002
Total US market, 2000-2002* US market 540000 520000 500000 Units 480000 460000 440000 420000 400000 00 00 00 00 01 01 01 01 02 02 02 20 20 20 20 20 20 20 20 20 20 20 1 2 3 4 1 2 3 4 1 2 3 Q Q Q Q Q Q Q Q Q Q *HIA Statistics Q 13
Slide 14: US Development in Digital Segments (units)
US Development in Digital Segments (units*) 10% 10% 15% High Mid Low 17% 12% 27% 17% 8% 10% 2% 2000 Q1 2001 Q1 2002 Q1 2002 Q3 * GN estimates, % of total market 14
Slide 15: New products support growth
New products support growth Benefit Category = I Category = II Category = III Triano Canta7 Diva Adapto Canta4 Oria Prisma Claro Aero Signia Canta2 Senso+ Natura 2 Music-D Bravo DigiFocus II Phoenix Mezzo Senso P DigiLife 25 Ergo A Series Price 1515
Slide 16: The Hearing Aid Market
The Hearing Aid Market Q4 US market returned to small growth and Europe continued limited growth Consumer trend to buy more low and mid price digital products Increase in number of Beltone outlets 2002 Q1 Overall US and European markets flat with substantial digital growth The digital market has spl
Slide 17: Headlines – Hearing Aids
Headlines – Hearing Aids • New products strengthen presence in all segments • Beltone network continues to increase number of outlets • Organic growth (2)% in overall sales, Y-o-Y • “Closing the Margin Gap” on track • ~ 85% in ReSound and Beltone brands • Redwood City closed EBITA margin % • Early c
Slide 18: Positive development in Beltone points of sale
Positive development in Beltone points of sale 2,000 1,750 Q3: 1280 1,800 1,570 1,600 1,380 1,400 1,200 1,200 1,220 1,175 1,175 1,200 1,000 Avada 800 Stabilization 600 Audibel and Growth 400 200 0 Q4 Q4 2000 2001 2002 Total U.S. Locations 18
Slide 19: Q3 2002 - Financials (GN ReSound)
Q3 2002 - Financials DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Sales 701 725 724 756 739 730 680 • Revenue down 7% from Q2 Gross profit 355 361 346 371 387 381 362 Margin,% 50.6 49.8 47.8 49.1 52.4 52.2 53.2 - digital at 70% in Q3 EBITA 43 38 55 67 60 62 69 Margin,% 6.1 5.2 7.6 8.9 8.1 8,5 10.2
Slide 20: NetTest
NetTest . i f; EN Great Nordic al “Sat oe ne = .. oF R&S sce: NETTEST 20
Slide 21: The Test & Measurement Market
The Test & Measurement Market Q3 Weak market with order push-outs and cancellations – gross order intake of DKK 321m September 11 events and a contracting economy with reduced carrier capex Restructuring of business and accelerating integration – staff reduced by 225 employees Q4 Weak market – gross
Slide 22: Headlines - NetTest
Headlines - NetTest • Underperformance in Q3 • Additional cost reductions - staff reduction from 1,100 end Q2 2002 to app. 800 early 2003; down from 1,850 Q1 2001 • Directing R&D from Optical manufacturing towards Network and Systems • MasterQuest starts to be rolled out in AT&T Wireless • Delay of
Slide 23: Write-down of DKK 3,833bn incl. tax
Write-down of DKK 3,833bn incl. tax DKKm Before After Writedown Intangibles 3,057 120 (2,938) Tangibles 256 94 (162) Inventory 753 116 (637) Receivables 185 165 (20) Net tax assets 77 0 (77) EBITA (54) (1,142) EBT (292) (4,048) 23
Slide 24: Q3 2002 - Financials (NetTest)
Q3 2002 - Financials • Gross order intake 35% down to DKK 166m, Q-o-Q DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 - Optical - DKK 28m - Networks - DKK 81m Sales 714 701 475 437 217 245 151 Gross profit 329 335 232 108 75 88 (608) - Systems - DKK 57m Margin,% 46.1 47.8 48.8 24.7 34.6 35,9 na EBITA
Slide 25: Key Financials – P&L and Cash Flow
Key Financials - – P&L and Cash Flow DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Group sales 1.983 1.944 1.682 1.710 1.368 1.415 1.273 GN Netcom 506 456 471 497 406 433 434 GN ReSound 701 725 724 756 739 730 680 NetTest 714 701 475 437 217 245 151 Group EBITA 139 90 47 (78) (50) (31) (1.142) GN N
Slide 26: Cash and Liquidity
Cash and Liquidity • Positive cash flow from operations of DKK 58m in Q3 • Group CFFO YTD improved by DKK 475m Y-o-Y – CFFO YTD before financial items and tax up DKK 333m Y-o-Y in Headset and Hearing Aids • Y-o-Y improvements in working capital reducing inventories and receivables in Headset and Hea
Slide 27: Forecast for 2002
GN ex NetTest maintains EBITA Forecast for 2002 NetTest writes down i.a. goodwill and cuts cost base further GN ex NetTest forecasts total sales of close to DKK 4.7bn, NetTest forecasts sales of DKK EBITA of min DKK 350m close to DKK 0.8bn, EBITA loss of more than DKK 1.6bn. Headsets forecast sales
Slide 28: Summary
Summary • Q3 performance reflects soft demand and leaner earnings platform • CFFO in GN ex NetTest was improved by DKK 370m Q1-Q3 versus Q1-Q3 2001 • Headsets • Mobile sales up +50% sequentially off-setting decline in CC&O • All headset production in China from Q2/03 • Hearing Aids • Canta2, Oria an