Demant A/s · OMXCOP:DEMANT
Demant A/s — Investor Day (2021)
153 slides from Demant A/s's investor day presentation, 2021
Slide 1: Capital Markets Day
Capital Markets Day 1
Slide 2: Welcome to Demant's Capital Markets Day 2021
Welcome to Demant’s Capital Markets Day 2021 Mathias Holten Møller, Head of Investor Relations
Slide 3: Today's speakers
Today’s speakers Søren Nielsen Thomas Behrens Jeppe Dalberg-Larsen Niels Wagner René Schneider President & CEO Vice President, President, EPOS President, Hearing Care CFO Audiology & Applied Research, Hearing Aids 3
Slide 4: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 5: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 6: Delivering sustained growth post coronavirus
Delivering sustained growth post coronavirus Søren Nielsen, President & CEO
Slide 7: Delivering sustained growth post coronavirus
Delivering sustained growth post coronavirus 1 Update on current trading 2 Taking the long-term view 3 Emerging strongly from challenges in recent years 4 Hearing healthcare market fundamentals are intact 5 Gaining market share in hearing healthcare 6 A positive impact business 7
Slide 8: Update on current trading
Update on current trading
Slide 9: Outlook for 2021 is reiterated but with larger skew towards Hearing Healthcare
Outlook for 2021 is reiterated but with larger skew towards Hearing Healthcare Group outlook for 2021 reiterated Strong momentum in Hearing Healthcare • Hearing healthcare market resilient despite continued impacts of coronavirus • Oticon More continuing to drive growth for Hearing Aids, particularl
Slide 10: Resilient hearing aid market despite continued impacts of coronavirus
Resilient hearing aid Hearing aid market (unit growth) Region Q1 ‘21 vs ‘20 Q2 H1 Q1 ‘21 vs ‘19 Q2 H1 market despite Europe North America 10% 9% 130% 182% 52% 61% -1% 9% 15% 16% 7% 12% continued impacts Hereof US (commercial) 12% Hereof US (VA) -7% 156% 522% 59% 74% 12% -7% 22% 3% 17% -2% of coronav
Slide 11: Update on supply chain situation
Update on supply Manufacturing footprint chain situation Global locations: Poland, Mexico, Denmark and France (CI) Current situation: • Highly dynamic sourcing situation for a number of Service and custom components production for local market: Italy, Germany, France, USA, • Shortage in global chips
Slide 12: Life-changing hearing health
Taking the long-term view Life-changing hearing health We create life-changing differences through hearing health Our purpose is based on our past, present and future. It sums up why Demant exists and our legacy to the world. And it captures that what we deliver to individuals and society matters. T
Slide 13: Deep roots: Founded on care in 1904
Deep roots: Founded on care in 1904 1904 1957 1995 1997 Hans Demant founds the William Demant and wife The Group acquires The Company, Oticon company and signs Ida Emilie donate the Bernafon and diagnostic Holding A/S, changes contract with General Demant family's shares company Maico and is name to
Slide 14: The Demant group today
The Demant group today DKK 18.5 billion Multi- Revenue* brand DKK 3.3 billion Multi- 41% 39% 3% 9% 7% EBIT* business Hearing Care Hearing Aids Hearing Implants Diagnostics Communications ~ 17,500 Global 46% 37% 6% 9% 2% Employees presence Europe North America Pacific Asia Other countries Unique ~ DK
Slide 15: The key messages of today
The key messages of today Taking the long-term view Delivering sustained growth Margin potential in all business areas Resilient business models Aim to generate revenue growth of We see potential to expand margin in Ready to service users of today and 7-10% p.a. in local currencies all business area
Slide 16: Emerging strongly from challenges in recent years
Emerging strongly from challenges in recent years
Slide 17: After significant changes since 2018, we emerge in very strong position
After significant changes since 2018, we emerge in very strong position Group revenue (DKK million) 20,000 2018 Completion of 2016-2018 restructuring programme 18,000 2019 Hit by ransomware attack in September 16,000 resulting in estimated loss of revenue of DKK 575 million 14,000 2020 Global corona
Slide 18: Key achievements in last three years
Key achievements in last three years Despite major challenges, we have achieved a number of milestones since our last Capital Markets Day in 2018 Hearing Aids Hearing Care Hearing Implants Diagnostics Communications Succesfully rolled out Gained significant Built global operating Delivered significa
Slide 19: Hearing Implants
Hearing Implants Bone anchored hearing systems Our bone anchored hearing systems business recently launched the Ponto 5 Mini, a new sound processor that takes the open sound experience to a whole new level. We have also introduced MONO, the next-generation surgical procedure, which will further enha
Slide 20: Diagnostics
Diagnostics In recent years, Diagnostics has delivered very strong growth and further consolidated the position as market leader. The performance has been broad- based with particular success in the balance and fitting business. The calibration and service business has been expanded supporting recur
Slide 21: Increased level of transparency
Increased level of transparency Due to expansion of the Demant Group in recent years and increasing complexity for external stakeholders, we have taken steps to increase transparency 1 Segment reporting 2 Revenue splits EBIT-level P&Ls are now reported for two Revenue for Hearing Aids and Hearing Ca
Slide 22: Intact hearing healthcare market fundamentals
Intact hearing healthcare market fundamentals
Slide 23: Addressing markets with structural growth
Addressing markets with structural growth Structural growth & market size (USD) Structural drivers & characteristics Hearing Aids 2-4% • Ageing populations across the world and increasing life-expectancy 6 billion Hearing Care • Baby-boomer generations in developed markets 2-4% • Gradually improving
Slide 24: Ageing populations across the world
Ageing populations across the world Significant increase in share and size of 65+ population 2020 2050 9.3% 15.9% 728 million 1,549 million Share of 65+ Less than 7% 7-13.9% 14-20.9% 21-27.9% 17% 19% 12% 28% 28% or more 22% 28% 26% 38% 24 Source: United Nations, Population Division, Department of Ec
Slide 25: Pent-up demand to support volumes in the hearing aid market in the coming years
Pent-up demand to support volumes in the hearing aid market in the coming years • Underlying need for hearing aids is unchanged and a Hearing aid market volume (illustrative) significant share of ”lost” units is likely to come back as pent-up demand • Short-term growth difficult to predict as magnit
Slide 26: Gaining market share in hearing healthcare
Gaining market share in hearing healthcare
Slide 27: Leading hearing healthcare
Our ambition is to Leading hearing become the world's healthcare leading hearing healthcare company 27
Slide 28: Strategy framework
Purpose We create life-changing differences through hearing health Ambition To become the world's leading hearing healthcare company Strategy Operating model Organisation People & culture Sustainability framework The Demant approach 28
Slide 29: Key enablers for becoming the world's leading hearing healthcare company
Key enablers for becoming the world’s leading hearing healthcare company Innovation • World-class R&D organisations comprising around 1,500 employees • High cadence of new and innovative product launches such as Oticon More, Ponto 5, Affinity Compact, EPOS Expand Vision 3T etc. • Mastering ever-incr
Slide 30: Resilient business models
Resilient business models
Slide 31: Key barriers to wider adoption of hearing aids
Key barriers to wider adoption of hearing aids Estimated hearing aid adoption by severity of Profound hearing loss 70% Many people do not Lack of realise or recognise Even in markets that offer recognition that they have a mild hearing aids free of charge Moderate 50% hearing loss as part of public
Slide 32: Multitude of choices facing the user
Multitude of choices Form factor facing the user RITE, ITE, Ranging earbud etc. • Users seek help navigating the many from approx. $800-$3,500 choices they face when it comes to Technology treating their hearing loss Price level • They buy a service rather than a product User Audiology, choices conn
Slide 33: Overcoming the barriers to adoption requires specialisation and expertise
Overcoming the barriers to adoption requires specialisation and expertise There are a number of user-defined measures that Demant builds on many years of expertise trying are needed to overcome barriers to adoption to solve the problem Discrete or Hearing aids need to be highly discreet invisible de
Slide 34: A positive impact business
Demant A positive impact business ®
Slide 35: In 2020 we have…
In 2020 we have… helped nearly supported more than 2 million facilitated the hearing screening of a double-digit million 5 million hearing aid users number of newborns with headsets for collaborative work and gaming helped well above facilitated the diagnosing of 10,000 implant users living with a t
Slide 36: Our sustainability strategy at a glance
Our sustainability strategy at a glance Ambition to make sustainability a competitive advantage Aside from our core contribution to global health, we have two main priorities: 1. Diversity and inclusion New diversity policy and framework under development 2. Climate impact Setting goals for emission
Slide 37: Results in all areas of sustainability
Results in all areas of sustainability Selected results 2020 People & culture Society & local community Business ethics & People & Culture governance Diversity Sustainable packaging 1 percentage point increase in Hearing assessments Code of Conduct More sustainable hearing aid female managers from 4
Slide 38: Partnering with Philips for greener hearing aids
Partnering with Philips for greener hearing aids Three main activities in focus: Sustainable manufacturer Green products Responsible Business Alliance (RBA) audit every three years at our production sites. Focal areas RBA audits: In-depth evaluations of the social, ethical, Energy Specific end-goals
Slide 39: Increasing focus on ESG ratings
Increasing focus on ESG ratings We are actively engaging with three key rating agencies We see clear scope for improving ratings over coming years, particularly through more disclosure on our strong product governance and reporting in accordance with GRI standards. 39
Slide 40: We are setting Science Based Targets
We are setting Science Based Targets 27 September: Our commitment to the Science Based Targets Initiative is official • We will set ambitious targets aligned with the Paris Agreement to limit global warming to 1.5°C. We aim to reach net-zero emissions before 2050. • Baseline calculation in progress:
Slide 41: Summary
Summary
Slide 42: Summary
Summary • We are emerging from challenging years in very good shape • We address attractive markets with strong, structural drivers • We see scope for pent-up demand supporting market volumes in the coming years • We have an ambition to become the world's leading hearing healthcare company • We have
Slide 43: Q&A
Demant Q&A
Slide 44: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 45: Audiological leadership through BrainHearing
Audiological leadership through BrainHearing Thomas Behrens Vice President, Audiology & Applied Research Hearing Aids
Slide 46: Audiological leadership through BrainHearing
Audiological leadership through BrainHearing Agenda: 1. 25 years of research building on scientific discoveries in hearing and neuroscience 2. Oticon More – raising the bar in hearing aid technology and outcomes 3. Latest additions and new strong evidence
Slide 47: A visionary journey of Oticon's BrainHearing philosophy
A visionary journey of Oticon’s BrainHearing philosophy Natural Oticon’s BrainHearing hearing vision More and clearer sound to the brain Enchanced selective attention More speech cues Improved to the brain Reduced memory recall Improved speech listening effort understanding 2010 2016 2019 2020 Time
Slide 48: BrainHearing
BrainHearing Focus Recognise Hearing Neural Orient Focus Recognise Orient Code From ear to brain Hearing system Cognition in the brain 4 8 Increasing separation 48 Oticon More
Slide 49: Oticon More
Oticon More Hearing aid innovation taken to a new level 49 Oticon More
Slide 50: Deep learning in health care driving end-user benefits
Deep learning in health care driving end-user benefits • Medical imaging & diagnostics • Well-known stronghold of deep learning; identity patterns/anomalies that humans cannot see – also applies to sound • Personalised treatment • Understanding the individual patient from many types of data • Improv
Slide 51: Deep Learning: Potential future application
Deep Learning: Potential future application • Medical imaging & diagnostics • Well-known stronghold of deep learning – identify patterns/anomalies that humans cannot see • Personalised treatment • Understanding the individual patient from many types of data • Improved health monitoring • Including w
Slide 52: Deep Learning requires rich data
Deep Learning requires rich data Training with 12 million sound scenes 5 2
Slide 53: Deep Learning mimics learning in real life
Deep Learning mimics learning in real life Learning a language requires • Words – sentences – context Training with 12 million sound scenes • Repeated exposure • Feedback to enable learning 5 3 Deep learning for hearing aids • Recordings of relevant sound scenes • Sound scenes representing all daily
Slide 54: Successful Deep Learning
Successful Deep Learning Capturing details humans cannot describe Providing the right feedback during training will allow the deep neural network to capture the important details
Slide 55: The trained Deep Neural Network is embedded on the Polaris platform
The trained Deep Neural Network is embedded on the Polaris platform
Slide 56: The Polaris platform
The Polaris platform 100% More processing power Secure platform 12 million Sound scenes x8 More memory 500 Scans per second On-board trained Deep Neural Network 28nm 64 Chip technology 154 million Signal-processing channels Transistors 56
Slide 57: Make sure benefits apply when needed
Make sure benefits apply when needed Normal hearing The Deep Neural Network • Has learned to recognise challenging situations • Creates clarity where hearing loss Hearing loss compromises it • Impact is individual • Fitting software is setup to allow individualisation Oticon More
Slide 58: Oticon More delivers 30% more sound to the brain with even less effort
Oticon More delivers 30% Better speech understanding more sound to the brain with even less effort MoreSound Intelligence is proven to make Resources are freed for remembering, the full sound scene clearer responding and engaging EEG strength in orient dB SNR subsystem -3.0 0.03 30% -2.5 0.025 15% -
Slide 59: Oticon More
Oticon More Latest additions and new strong evidence 59 Oticon More
Slide 60: Evidence obtained by bringing the real world to the lab…
Evidence obtained by bringing the real world to the lab… …
Slide 61: Oticon More outperforms competition in real-life situations
Oticon More outperforms competition in real-life situations… Differences due to: 60 Normal hearing • Speech made clearer relative to with hearing aid noise 50 Speech Cues (SII, %) • Speech made more audible Normal hearing relative to hearing loss 40 30 20 10 0 Unaided Oticon Competitor Competitor Mo
Slide 62: …and the gap to competitors is even larger in difficult listening environments
…and the gap to competitors is even larger in difficult listening environments Differences due to: 60 • Speech made clearer relative to Normal hearing noise 50 with hearing aid Speech Cues (SII, %) • Speech made more audible Normal hearing relative to hearing loss 40 30 20 10 0 Unaided Oticon Compet
Slide 63: Oticon MyMusic
Threshold of pain Oticon MyMusic d Music Language A fuller and more detailed experience Threshold of audibility Optimised settings 24 More of Virtual channels Outer Ear Sound in ”Aware” access to details Optimizer setting New prescription Gain settings that enhance details and preserve dynamics
Slide 64: Oticon MyMusic
Oticon MyMusic A fuller and more detailed experience
Slide 65: Oticon More & BrainHearing
Oticon More & BrainHearing Evidence & whitepapers
Slide 66: Audiological leadership through BrainHearing
Audiological leadership through BrainHearing 1. BrainHearing – a unique approach, that has proven itself to lead to strong innovations and better outcomes 2. Oticon More – clarity and precision – sound delivered the way the brain needs it – leading to new benefits never seen before in the industry 3
Slide 67: Q&A
Q&A
Slide 68: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 69: Lunch break
Lunch break Up next (13:45 CET): A transformational journey in Hearing Care presented by Niels Wagner
Slide 70: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 71: A transformational journey in Hearing Care
A transformational journey in Hearing Care Niels Wagner President, Hearing Care
Slide 72: Hearing Care: Today
Hearing Care: Today
Slide 73: Over the past 25+ years, Hearing Care has been on a significant growth journey
Over the past 25+ years, Hearing Care has been on a significant growth journey THE AUDIKA JOURNEY Attractive and profitable global 20+ countries retailer 6.3 Revenue (DKK billion) 5.5 2,500+ full time-clinics 2015 2010 7,700+ employees 2000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Slide 74: We are present in the key world markets with North America, Europe and Pacific
We are present in the key world markets with North America, Europe and Pacific accounting for the majority of our business NORTH AMERICA EUROPE PA C I F I C 700+ full time clinics 1,500+ full-time clinics 200+ full time-clinics 2,300+ employees 4,250+ employees 650+ employees 74 Data as of June 2021
Slide 75: Audika's broad and attractive portfolio of markets
Audika’s broad and attractive portfolio of markets – aimed at building market-leading positions Maintain and develop position LEADER Organic growth and MARKET POSITION margin expansion CHALLENGER Build scale to obtain/accelerate profitability BUILD-UP LOW PROFIT MEDIUM PROFIT HIGH PROFIT EARNINGS 75
Slide 76: Several markets experiencing significant development over the past three years
Several markets experiencing significant development over the past three years – with various growth paths SELECTED MARKETS LEADER MARKET POSITION CHALLENGER BUILD-UP LOW PROFIT MEDIUM PROFIT HIGH PROFIT EARNINGS 76
Slide 77: Structured for success – coupling global scale with local agility
Structured for success – coupling global scale with local agility to deliver results GLOBAL SCALE LOCAL AGILITY Global processes and functions Local adaptation to specific providing added value to markets country requirements Commercial Marketing Excellence Localised customer-facing operations and k
Slide 78: Hearing Care: Achievements
Hearing Care: Achievements
Slide 79: Tailoring our key activities towards the three key characteristics of the hearing care industry
Tailoring our key activities towards addressing the three key characteristics of the hearing care industry CUSTOMERS IN DENIAL SALES FUNNEL LEAKAGE AUDIOLOGIST CONSTRAINTS Stigma and reluctance to act on Costly to move customers through the Audiologist’s time is limited, hearing loss sales funnel, d
Slide 80: Transforming our business model – establishing Audika as the Modern Hearing Care Expert
Transforming our business model over the past three years – establishing Audika as the ‘Modern Hearing Care Expert’ Modern Hearing Care Expert BRAND D I G I TA L EXPERTISE Consolidating and establishing a At the forefront of digital Focus on building organisational life-changing, global hearing inno
Slide 81: Audika's consumer-centric and advanced omnichannel approach
Audika’s consumer-centric and advanced omnichannel approach CONSUMER JOURNEY Unaware/ Aware Reach out Decision Adapting Replacement in denial Phone EXAMPLE Email Audika consumer journey Digital media Offline media Website In-person SMS 81
Slide 82: Brand
BRAND CONSUMER JOURNEY Unaware/ Aware Reach out Decision Adapting Replacement in denial Phone Email Digital media Offline media Website In-person SMS 82
Slide 83: Consolidating and establishing a life-changing Hearing Care brand
Consolidating and establishing a life-changing Hearing Care brand 3 YEARS AGO… NOW… 200+ brands One Corporate Visual Identity – with 3 main brands 83
Slide 84: Stronger together – experiencing major benefits of our brand consolidation
Stronger together – experiencing major benefits of our brand consolidation with high future potential B E N E F I T S O F C O N S O L I D AT I O N B R A N D T R A C K E R R E S U LT S SELECTED MARKETS Brand position1 Aided brand awareness – Europe, May ‘21 ✓ Harvesting group synergies in marketing s
Slide 85: Digital
DIGITAL CONSUMER JOURNEY Unaware/ Aware Reach out Decision Adapting Replacement in denial Phone Email Digital media Offline media Website In-person SMS 85
Slide 86: Substantial investments in transforming and developing digital best-in-class capabilities
Substantial investments in transforming and developing digital best-in-class capabilities A C C E L E R AT E D D I G I T A L I N V E S T M E N T SALES FUNNEL BENEFITS Investing in global and local digital capabilities Digital growth over the past three years1 ... EXAMPLE: US MARKET Onboarding digita
Slide 87: A continuous journey to stay ahead at the forefront of digital innovation
A continuous journey to stay ahead and at the forefront of digital innovation within hearing care SELECTED EXAMPLES • Data-driven and highly personalised automation programs • Focused on consumer-centricity, spanning the entire consumer journey Example: Automated Onboarding Example: Store capacity o
Slide 88: Web 2.0 – Advancing the Audika digital experience
Web 2.0 – Advancing the Audika digital experience Web 2.0 Rolled out in 2021 to continue to advance our user experience Conversion Rate Optimisation Programs Global, structured and scalable programs increasing number of leads on our websites Global SEO Programs SEMrush Optimising the quality and qua
Slide 89: Accelerating our data-driven approach by combining insights from multiple channels
Accelerating our data-driven approach by combining insights from multiple channels Leveraging scale and advanced digital capabilities Improving the way we draw and collect Digital valuable customer insights across all Power BI Marketing digital touchpoints Resulting in data-driven decisions and more
Slide 90: Expertise
EXPERTISE CONSUMER JOURNEY Unaware/ Aware Reach out Decision Adapting Replacement in denial Phone Email Digital media Offline media Website In-person SMS 90
Slide 91: The in-person experience remains one of the most valuable elements
The in-person experience remains one of the most valuable elements of becoming the ‘Modern Hearing Care Expert’ CONSUMER PREFERENCES1 OUR AUDIOLOGISTS Appointment setting Preference for where to preference purchase hearing aids 94% 88% The Modern Hearing At least some in-person appts. Hearing care p
Slide 92: We continue to invest in our people to enable the optimal consumer experience
We continue to invest in our people to enable the optimal consumer experience – success evidenced by high NPS scores PEOPLE DEVELOPMENT NET PROMOTER SCORE NPS Score 1 Modern learning approach – global digital learning platform enabling remote training 0 Organisational engagement – pulse surveys 50 7
Slide 93: Hearing Care: Future
Hearing Care: Future
Slide 94: Positioned for success – with proven resilience of our business model
Positioned for success – with proven resilience of our business model and strong support for in-person experience ILLUSTRATIVE RESILIENT BUSINESS MODEL Appointment creation, Q4 ’19 – Q2 ‘21 Global support and Exceeding pre- coronavirus local agility appt. creation Quick recovery - High proximity alr
Slide 95: Accelerating growth by building highly profitable market leaders
Accelerating growth by continuing to build highly profitable market leaders organically and through acquisitions MARKET POSITION AND EARNINGS Building scale MARKET POSITION Increasing productivity Greenfield opportunities Acquisitions and consolidation EARNINGS 95
Slide 96: Ready for the next leap forward to deliver on our customer promise
Ready for the next leap forward to deliver on our customer promise Modern Hearing Care Expert BRAND D I G I TA L EXPERTISE Consolidating and establishing a At the forefront of digital Focus on building organisational life-changing, global hearing innovation with continuous competencies and providing
Slide 97: Q&A
Q&A
Slide 98: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 99: Becoming the preferred premium audio brand in Enterprise Solutions and Gaming
Becoming the preferred premium audio brand in Enterprise Solutions and Gaming Jeppe Dalberg-Larsen President, EPOS
Slide 100: EPOS presentation outline
1. Strong foundation for future growth 2. Attractive market fundamentals 3. Current situation and strategic focus 4. Summary
Slide 101: Strong foundation for future growth
Strong foundation for future growth
Slide 102: EPOS at a glance
EPOS at a glance EPOS has its roots in the Sennheiser Communications joint venture established in 2003 EPOS today: • 500+ employees worldwide • Enterprise Solutions & Gaming • Headquarters in Ballerup, Denmark • Outsourced manufacturing • R&D in Denmark, China and Hong Kong • Outsourced R&D in India
Slide 103: Joint venture with Sennheiser to full control, high ambitions
Joint venture with sales through Full control, high ambitions and Sennheiser KG willingness to invest Until 31 December 2019 From 1 January 2020 Joint venture set-up: Demerger Transition Full control, willingness and • Developing headsets within Enterprise Establishing IT systems systems ability to
Slide 104: Strong track-record of growth in successful JV – new growth journey ahead
Strong track-record of growth in successful JV – new growth journey ahead for EPOS We call it “Integrate | Mature | Expand” Integrate | Mature | Expand (Sales out of sales subsidiaries) Establishment phase Globalisation phase 1,306 (Sales into sales subsidiaries) 1,126 2003 2004 2005 2006 2007 2008
Slide 105: The EPOS brand pillars
The EPOS brand pillars Pioneering audio technology Crafted to last, designed to excite Passion for performance
Slide 106: Brand video
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Slide 107: We will continue to strengthen our position in our core business areas
We will continue to strengthen Strong synergies between Enterprise and Gaming headsets our position in our core business areas Enterprise Solutions Gaming Headsets Meeting room solutions Premium gaming audio Approx. 2/3 of revenue Approx. 1/3 of revenue 107
Slide 108: A complete Enterprise Solutions portfolio
A complete Enterprise Solutions portfolio IMPACT ADAPT EXPAND COMMAND When talk matters Work your way Seamless collaboration Always in control Ensure excellent customer Wherever you are, ensure flawless Expand your ability to collaborate For professionals who demand experience with a line of premium
Slide 109: Complimentary management software
Complimentary management software EPOS Manager Optimise your business and boost employee performance with a free, flexible and secure tool that manages your audio devices and analyses their use. EPOS Connect Update to the latest firmware and personalise your EPOS audio device settings to ensure flaw
Slide 110: Strategic alliances
Strategic alliances Our partnerships with other technology-driven companies and vendors have a common goal - to simplify your daily business. We work with strategic alliance partners to ensure that our products are easy to deploy and are fully compatible with all major Unified Communications platfor
Slide 111: Premium Gaming portfolio
Premium Gaming portfolio Out of this world gaming audio New New H6 Pro Series H3 Series GSP 500/600 Series GSP 300 Series Wired Wired / Bluetooth® / Wired / Bluetooth® / Wired / Low Latency wireless Low Latency wireless Low Latency wireless Game One/Zero GTW 270 B20 Streaming Microphone GSX 300 Wire
Slide 112: EPOS Gaming Suite
EPOS Gaming Suite Put on your wireless GSP 670 or GSP 370 gaming headset or use the GSX 300 external sound card to listen to the difference in the sound as you tweak the audio settings in the EPOS Gaming Suite.
Slide 113: EPOS sales channel structure
EPOS sales channel structure We maintain a diversified channel set-up IT/telecom A/V channel Consumer channel (video) channel Tier 1: Distributors Tier 2: Resellers End customers Enterprises Gamers 113 Above names are examples of current and potential distribution partners
Slide 114: Attractive market fundamentals
Attractive market fundamentals
Slide 115: Attractive market growth
Attractive market growth Attractive medium- to long-term market fundamentals in place Video collaboration Enterprise Enterprise audio audio Video collaboration EPOS TAM EPOS TAM 2020 CAGR ~12% 2025 (prev. 8-10%) Gaming Gaming audio audio USD ~6bn 115 Source: EPOS insights, Frost & Sullivan & Future
Slide 116: Trends in Enterprise Solutions
Trends in Enterprise Solutions UC&C adoption Hybrid working Virtual meetings Multiple devices and open offices (huddle rooms, and platforms small and mid-sized meeting rooms)
Slide 117: Trends in Gaming
Trends in Gaming Better global access Gamer engagement to high speed and communities on internet the rise and average age of gamers increasing Socialisation and E-sports and gaming as collaboration entertainment becoming bigger growing part of gaming
Slide 118: Highly dynamic market environment in 2020 and 2021
Highly dynamic market environment in 2020 and 2021 Development in addressable market 2020 (illustrative) • Strong momentum driven by working-from- home trend, especially in EMEA • Segment of low-priced wired headsets was the main growth driver • Strong demand for gaming headsets 2021 • EMEA slowdown
Slide 119: Current situation and strategic focus
Current situation and strategic focus
Slide 120: Short-term volatility and revenue slowdown impacting short-term profitability
Short-term volatility and revenue slowdown impacting short- term profitability – back on growth track in 2022 Revenue drivers in 2020 Challenges in 2021 We expect revenue in H2 2021 to decline by more Significant boost in demand due to Headset market conditions normalising, but than 10% compared to
Slide 121: Significant room for gaining market share
Significant room for gaining market share Market Characteristics EPOS positioning #3 with 7% market share. Relatively Enterprise headsets Consolidated higher exposure to EMEA and lower to Americas and APAC Low single-digit overall market share Gaming headsets Fragmented market but focusing on premiu
Slide 122: Our winning aspiration
Our winning aspiration “ We want to become the preferred premium audio brand in Enterprise Solutions and Gaming”
Slide 123: How to win Enterprise Solutions
How to win Enterprise Solutions Perfecting end-to-end solution selling with relevant portfolio Full product portfolio with distinct Focused strategic partnerships Global impact and deliver premium Dedicated sales and marketing team premium brand position for a full IT eco-system in all aspects and s
Slide 124: Rationale for entering video space
Rationale for entering video space Attractive growth with strong fundamental drivers • Market growth boosted by coronavirus Video considered natural portfolio extension for EPOS • Important for being relevant to customers and partners All-in-one (on device computing) is a new segment EPOS well posit
Slide 125: Slide 125
Slide 126: How to win Gaming
How to win Gaming Premium products, distinct brand position and distribution focus EPOSAUDIO.COM Premium products with distinct Build legitimacy and relevance to our Global impact and deliver premium Dedicated sales team and premium brand position target audience in all aspects streamline focused di
Slide 127: Summary
Summary
Slide 128: EPOS finalising the transition and positioning for future growth
EPOS finalising the transition and positioning for future growth Joint venture mode Transition mode Future mode (2003 - 2019) (2020 – 2022) (2023 - ) • Stable growth • Volatile growth • Stable growth • Market share gains • Stable market share • Market share gains • Low investment level • Accelerated
Slide 129: EPOS set for future success
EPOS set for future success Proven track record Attractive market and strong outlook, including foundation for strong growth in future growth video Clear strategic Gradually improve focus on growing profitability while faster than investing in growth the market 129
Slide 130: EPOS: The power of audio
EPOS THE POWER OF AUDIO
Slide 131: Q&A
Q&A
Slide 132: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 133: Break
Break Up next (16:15 CET): Sustained growth with potential for margin expansion presented by René Schneider
Slide 134: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 135: Sustained growth with potential for margin expansion
Sustained growth with potential for margin expansion René Schneider, CFO
Slide 136: Our value proposition to shareholders
Our value proposition to shareholders Structural We will deliver attractive returns for our shareholders by: Market Value- market share gains adding M&A 1. Addressing attractive markets with structural growth and high entry barriers growth 2. Being leaders in innovation and leveraging strong distrib
Slide 137: In a strong position after challenging years
In a strong position after challenging years Group revenue Recent years have seen large impacts on our 20,000 business and financial results: DKK million 15,000 • The IT incident had an estimated negative impact of DKK 575 million on revenue and DKK 550 million on EBIT in 2019 10,000 • Coronavirus h
Slide 138: Building on track record of solid growth
Building on track record of solid growth Group revenue On track to deliver revenue growth of 10% p.a. in 20,000 local currencies since 2012 DKK million 15,000 6% 4% 10% 10,000 Organic Acquisitive LCY growth growth growth 5,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* After exchange rate ef
Slide 139: Medium- to long-term outlook
Medium- to long-term outlook Each metric will be addressed in the following slides Metric Medium- to long-term outlook 1. Revenue growth 7-10% p.a. in local currencies with organic growth of 6-8% p.a. and acquisitive growth of 1-2% p.a. 2. EBIT margin Aim to increase the EBIT margin in each business
Slide 140: Attractive and stable structural growth
Attractive and stable structural growth Aiming to generate organic growth of 6-8% p.a. for the Group Hearing Healthcare Communications Medium- to Market value growth: Demant organic growth: Market value growth: Demant organic growth: long-term ~4% p.a. At least 5% p.a. ~12% p.a. At least 12% p.a. ou
Slide 141: We will continue to pursue value-adding acquisitions
We will continue to pursue value-adding acquisitions Cash spent on acquisitions • Acquisitions have formed an integral part of Demant’s strategy 2,000 since the 1990s Audika DKK million 1,500 • Strategic acquisitions to form new business areas Neurelec 1,000 • Bolt-on acquisitions to expand our netw
Slide 142: The Group's business mix has changed significantly over the years
The Group’s business mix has changed significantly over the years Revenue and revenue share by business area The Group’s business mix has changed significantly over the years driven by: 45% 39% 58% • Different organic growth rates in different business areas • Extensive value-adding M&A activities,
Slide 143: Underlying margin expansion more than offset by business mix change
Underlying margin expansion more than offset by business mix change 20.8% +1.5% 19.3% -3.0% 17.8% Assuming an unchanged business mix vs 2012, the Group’s EBIT Entry into cochlear implants margin has improved by 1.5pp and the consolidation of with improvements in all business EPOS have had a negative
Slide 144: Varying best-in-class margin levels across industry segments
Varying best-in-class margin levels across industry segments Distribution costs and Indicative best-in-class margin levels by industry segment Production costs R&D costs administrative expenses EBIT Hearing Aids Hearing Care Hearing Implants Diagnostics Communications 15% 25% 25% 40% 50% 10% 15% 5%
Slide 145: Potential for margin expansion in Hearing Healthcare
Potential for margin expansion in Hearing Healthcare Hearing Healthcare Hearing Aids Hearing Care Hearing Implants Diagnostics Demant vs industry’s best-in-class EBIT margin Top-tier Top-tier Behind Best-in-class Top-2 margin 1. Market share gains through 1. Increased scale and 1. Sustained market s
Slide 146: Communications currently in transition phase – returning to positive EBIT in 2023
Communications currently in transition phase – returning to positive EBIT in 2023 Communications Highly dynamic revenue development Investments in future growth EPOS • Very strong demand boost in 2020 • Establishing the EPOS brand driven by working-from-home trend in Demant vs • Ensuring competitive
Slide 147: CAPEX, gearing and capital allocation
CAPEX, gearing and capital allocation
Slide 148: Operating a capital-efficient business model with high cash flow generation
Operating a capital-efficient business model with high cash flow generation • In the medium to long term, we expect investments in • Profit growth and continued capital efficiency to deliver tangible and intangible assets (CAPEX) of approx. 4% of growth in free cash flow and sustained cash conversio
Slide 149: Unchanged gearing target and capital allocation priorities
Unchanged gearing target and capital allocation priorities Gearing 3.0 2.8 2.6 2.5 >> We target a gearing multiple (NIBD/EBITDA) of 2.0- Gearing target range 2.0 2.1 2.5 (gearing was 2.1 at the end of H1 2021) 2.0 1.7 1.7 1.5 1.5 1.2 1.1 0.9 1.0 0.5 >> We will continue to prioritise value-adding acq
Slide 150: Committed to delivering attractive returns for our shareholders
Committed to delivering attractive returns for our shareholders Delivering sustained growth Potential for margin expansion 10% We aim to grow revenue by 7-10% p.a. in local currencies We see potential for margin expansion in all business areas LCY growth 2012-2021* Organic growth of 6-8% p.a. Increm
Slide 151: Q&A
Demant Q&A
Slide 152: Agenda
Agenda Time (CET) Topic Presenter 11.00 Welcome Mathias Holten Møller 11.10 Delivering sustained growth post coronavirus Søren Nielsen 12.00 Q&A 12.15 Audiological leadership through BrainHearing Thomas Behrens 12.35 Q&A 12.45 Lunch 13.45 A transformational journey in Hearing Care Niels Wagner 14.30
Slide 153: Thank you
For those joining us for dinner, pre- dinner drinks are served at 7pm at: NO. 2 Nicolai Eigtvedsgade 32 Christianshavn 1402 København K Thank you Walk: ~20 minutes Taxi: ~10 minutes