Demant A/s · OMXCOP:DEMANT
Demant A/s — William Demant Holding — Investor Day (2016)
45 slides from Demant A/s's investor day presentation, Sep 28, 2016
Slide 1: Hearing Devices
Hearing Devices Søren Nielsen COO, William Demant Niels Wagner President of Retail, William Demant
Slide 2: Agenda
Agenda • Hearing aid market • Hearing aid wholesale • Hearing aid retail 2
Slide 3: Solid structural growth drivers in hearing devices
Solid structural growth drivers in hearing devices Demography Increasing points of sales Emerging markets • Growing ageing population • Greenfield store openings • Demography • Increasing life expectancy • New channels being tested • Growing penetration rates with a few showing • Improved healthcare
Slide 4: OECD countries continue to dominate
OECD countries continue to dominate Market value split 45% OECD Country 40% 35% Non-OECD member 30% 25% 20% 15% 10% 5% 0% 4
Slide 5: Underlying growth driven by baby boomers
Underlying growth driven by baby boomers Baby boomers will drive growth for the next 10-15 years 70 years old ~69 years old Increasing longevity Active and tech-savvy Age of the first baby boomers Average age of first-time user We live longer and longer Characteristics of the baby boomers US birth r
Slide 6: China’s emerging senior market
China’s emerging senior market 65+ population (China) Disposable income per capita (CNY) Thousands 2015-20 40,000 2006-15 CAGR 12% 180 CAGR ~5% 30,000 20,000 160 2005-15 CAGR 2.7% 10,000 140 - 120 100 Large regional differences (rural vs. urban) 80 Health expenditure per capita (Index 2005) 60 600 5
Slide 7: Global market development
Global market development Annual volume Volume development Other Public 13 million units Independents Large chains Other Annual value Public • Stabile volume growth with small volatilities • Slow change in country and channel mix 4 Large chains Billion, USD • Independents continue to grow Independen
Slide 8: North America market development
North America market development Annual volume Volume development Other Public 4 million units Large chains Independents North America excl. VA VA Other Annual value Public • Major players growing • Growing number of independents seek support from networks and 2 buying groups Large chains Billion, U
Slide 9: European market development
European market development Annual volume Volume development Other Public 6 million units Independents Large chains Europe excl. NHS NHS Other Annual value Public • Germany returning to normal growth rates • France, Italy and UK maintaining encouraging growth rates 1.3 Billion, USD • Scandinavia sti
Slide 10: Asia Pacific
Asia Pacific Annual volume Other • Low penetration in Asia Independents • Highly unregulated in many markets 2.5 Public million units Large chains Other Annual value Public 0.5 Billion, USD Large chains Independents Source: William Demant estimates and official market statistics 10
Slide 11: Hearing aid distribution channels
Hearing aid distribution channels Public/ Conventional Value-added Conventional Direct online Specialty Multi-line hospital settings independents wholesalers retail chains sales retailers retailers • Professional procurement • Owners are an integral • More and more • Typically have strong • Model cu
Slide 12: Regulation and reimbursement
Regulation and reimbursement Changes to reimbursements and regulation are made from time-to-time (examples): • Germany: Increase in reimbursement, but only limited ~1/3 co-payment • Netherlands: Lowering of reimbursement • Denmark: Lowering of reimbursement • Switzerland: Lowering of reimbursement N
Slide 13: Status of the current hearing aid market
Status of the current hearing aid market Top 5 >70% Centralised market Retail consolidation Wholesale value shrinking proportionally • Top 5 markets continue to • Dispensers consolidating in • Average selling prices hold >70% of the global different forms and sizes continue to decline market value •
Slide 14: William Demant Wholesale business
William Demant Wholesale business 14
Slide 15: Our strategy
Our strategy • Grow market share through strong and innovative R&D effort combined with global multi-brand strategy • Effective infrastructure to ensure competitive cost base Multi-brand strategy Truly global reach Gain market share in a Through our hearing diverse distribution system healthcare pla
Slide 16: Successful multi-brand strategy
Successful multi-brand strategy • Differentiated brand strategy, positioning and Utilise synergies across brands without customer targeting jeopardising the individual brand value and • To be different where it matters, e.g. brand recognition products/features, people (customer interface), communica
Slide 17: Leading hearing aid technology innovation
Leading hearing aid technology innovation Powered by VeloxTM 17
Slide 18: Giant leap in innovation
Giant leap in innovation Extreme processing power – without sacrificing power Unique capability, enabling superior audiology VeloxTM Inium Sense Technology (nm) 65 130/180 Transistors (M) 64.5 8.7 Die size FE+DSP 15.8 23.7 FE+DSP+RF (mm2) 23.5 - DSPs 7+1 1 Channels 64 16 Module: 5.8 x 4.2 x 1 mm3 =
Slide 19: TwinLink® technology
TwinLink® technology Near Field Magnetic Induction Near Field Magnetic Induction (NFMI) is used to interface binaurally between hearing instruments • A short range (1-1.5 m) wireless system • Operates at <15 MHz (Oticon 3.84 MHz) and only needs <10% of the transmission power of RF (e.g. 2.4 GHz) sys
Slide 20: TwinLink® technology
TwinLink® technology Radio frequency (2.4 GHz) 2.4 GHz Bluetooth Smart® RF is suited for interfacing with consumer devices • Long-distance capability • Acceptable power consumption for media consumption and phone calls • Standardisation eliminating the need for intermediate devices • Higher current
Slide 21: Market leading 2.4 GHz performance
Market leading 2.4 GHz performance Proprietary developed chip delivering superior performance • Oticon’s 2.4 GHz IC radio is among the best in Oticon Nordic Nordic (current) (new) class across all industries with respect to current consumption Chip size [mm2] 7.9 13.2 9.6 • Receiver performance has
Slide 22: Benefits of in-house design
Benefits of in-house design Electronics designed for running directly on 1V battery • Optimised current consumption • No efficiency loss from battery to integrated circuits (IC) Size and integration advantages • Smaller IC dies with aspect ratios optimised for the hearing instrument application • Fu
Slide 23: Driving technological leadership
Driving technological leadership Innovation and performance as key to market leadership Ultra-low power chip design, incl. Custom interface (how to fit to people) advanced wireless systems Wireless system integration and connectivity Advanced digital signal processing Micromechanics and high perform
Slide 24: Expand our global reach into new markets
Expand our global reach into new markets 45% Building presence in new markets 40% 35% • Build relationship with new distributors 30% • Open sales company where necessary, e.g. 25% • Myanmar – 2015 20% • Turkey – 2014 15% • Leverage on our other business activities 10% • Diagnostic Instruments has ac
Slide 25: William Demant’s global wholesale footprint
William Demant’s global wholesale footprint = Headquarters = Wholesale company = Production 25
Slide 26: Continue to be the desired partner for our customers
Continue to be the desired partner for our customers Full suite of innovative products Marketing Sales people Customer Customer service Audiology support Training and education Diagnostic equipment 26
Slide 27: Well positioned to continue growth in hearing aids
Well positioned to continue growth in hearing aids Technology leadership Multi-brand strategy Global presence Strong cost base 27
Slide 28: William Demant Retail business
William Demant Retail business 28
Slide 29: Niels Wagner
Niels Wagner President of Retail in William Demant Holding A/S • Born in 1971 • Cand. Oecon, Aarhus University • President, Retail in William Demant since 2007 • Vice President, Retail, GN ReSound 2006-2007 • Sales Director, Synoptik, 2003-2006 • General Manager, Oticon Australia, 2000-2003 29
Slide 30: Hearing aid market value chain
Hearing aid market value chain End Suppliers Manufacturers Retailers users/payers ~5% ~25% ~70% 100% Percentage of value chain ~30% wholesale ~10% retail profit margin profit margin 30
Slide 31: Consolidating retail with wholesale accounts
Consolidating retail with wholesale accounts COGS Sales & Marketing Wholesale Combined R&D General & Admin. 30% 30% 9% EBIT 19% 7% Retail 12% 21% 10% + = 12% 10% 30% 4% 56% 50% Note: The illustration above is a mechanical example, showing percentage of revenue without possible synergies etc. 31
Slide 32: Recurring sales are key to profitability
Recurring sales are key to profitability First-time user Recurring sales Distribution costs Distriution cost Profit COGS R&D COGS R&D Overhead & adm. Overhead & Profit adm. Fitting, Lead service & Lead generation admin. generation Fitting, service & admin. • Material up-front investments in lead • R
Slide 33: Retail is a defensive, but important, value driver
Retail is a defensive, but important, value driver In addition to securing distribution – retail contributes by: New technologies across retail Developing consumer Getting closer to the end-user and wholesale competences in retail • Closer end-user • Technology for optimising • Better understanding
Slide 34: William Demant’s retail strategy
William Demant’s retail strategy Defensive retail strategy Deep market insight and access through the wholesale business Shared back office across Country-by-country strategy William Sales and marketing excellence Demant Organic and selective acquired growth 34
Slide 35: Retail benefits our wholesale business
Retail benefits our wholesale business Insight into understanding our wholesale customers’ business challenges Building competences in lead generation Carefully planned retail expansion Lifetime support including exit Extended transition from wholesale to retail 35
Slide 36: Survey: Choice of clinic and brand positioning
Survey: Choice of clinic and brand positioning Consumer research with 2,452 respondents in Top 5 drivers of choice for visiting a clinic 9 markets* 1. It was an easy clinic/place to get to (accessible) 2. It offered a free hearing test (tactical) 3. It had a good reputation in general (brand image)
Slide 37: End-user insights
End-user insights Who motivated you the most to visit a clinic? 60% 50% What made you aware of the clinic? 40% 22% Users make 50% 16% 45% 43% 20% 7% 5% their own 40% 0% choice 35% 30% 26% 25% 22% 20% 16% 15% 9% Marketing is 10% 6% the key driver Who decided which specific clinic to visit? 5% - of aw
Slide 38: Shared vision and positioning, but local execution
Shared vision and positioning, but local execution Expertise Local Differentiation Professional operating Positioning people and best model Qualifiers technology Tactical drivers Basic drivers Location and Great value easy access for money 38
Slide 39: Sales excellence
Sales excellence Recruit, retain and develop our people Focus on creating Living our brand position – opportunities operating model Sales excellence Optimising the sales funnel Schedule management – retail is detail 39
Slide 40: Marketing excellence
Marketing excellence Marketing is local Data mining, profiling and Marketing best practice segmentation Marketing excellence Telemarketing Multiple sources of leads 40
Slide 41: Mix of mature and new retail markets
Mix of mature and new retail markets New development (Italy) Mature (France) • Regional • National • Several brands • One brand • Several models • One model • Decentralised leadership • Central leadership • Acquired growth • Organic growth • Several systems and back-office functions • One system and
Slide 42: Digital marketing strategy
Digital marketing strategy Develop innovative and effective models for lead generation Lead generation National coverage End-user Creating awareness Call centre Wholesale e.g. tripadvisor.com customers Objective reseller Network e.g. hotels.com members Brand website Own retail e.g. “Hotel name”.com
Slide 43: Lead generation requires integration with retailers
Lead generation requires integration with retailers Distribution costs Profit COGS R&D Own retail Overhead & adm. Fitting, service & Lead Online revenue model admin. generation Fee model 43
Slide 44: Multi-line retailers vs. specialty retailers
Multi-line retailers vs. specialty retailers Overall aim for hearing retailer: Advance consumer from denial to decision Many different models, but two models are Multi-line retailers Specialty retailers currently getting a lot of attention • Service and support business can be challenging • Lead gen
Slide 45: Thank you
William Demant / Thank you