Demant A/s · OMXCOP:DEMANT
Demant A/s — Investor Day (2024)
165 slides from Demant A/s's investor day presentation, 2024
Slide 1: Capital Markets Day 2024
Capital Markets Day 2024 1
Slide 2: Welcome to Demant's Capital Markets Day 2024
Welcome to Demant’s Capital Markets Day 2024 Peter Pudselykke, Head of Investor Relations 2
Slide 3: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 4: Sharpened focus on Hearing Healthcare
Sharpened focus on Hearing Healthcare Søren Nielsen, President & CEO 4
Slide 5: Agenda – key messages
Agenda 1 Company update – key messages 2 Hearing aid market dynamics 3 Our strategy 4 Focusing on sustainable business practices 5 Summary 5
Slide 6: Life-changing hearing health
Life-changing Our roots are in hearing health, and our hearing health shared purpose is to create life-changing differences through hearing health … whereby we contribute to building a more sustainable world where people have the opportunity to enjoy an active life. Caring for people’s health and we
Slide 7: Key messages
Key messages We are a focused Hearing Healthcare company and remain firmly 1 committed to value-creating capital allocation towards market-leading innovation and distribution We address a hearing healthcare market characterised by stability and 2 high entry barriers, and we now expect our addressabl
Slide 8: Long history as a hearing healthcare company
Long history as a hearing healthcare company 1904 1957 1995 Hans Demant founds the William Demant and wife Ida The Group acquires company and signs contract Emilie donate the Demant Bernafon and diagnostic with General Acoustic family's shares to the Oticon company MAICO and is Company Foundation li
Slide 9: The Demant Group today
The Demant Group today Revenue Multi- DKK 22.4 billion brand (FY 2023) EBIT Multi- 45% 40% 11% 4% DKK 4.15 billion business (FY 2023) (2023 revenue) Hearing Aids Hearing Care Diagnostics Communications1 Employees Global 41% 41% 5% 10% 3% ~ 21,600 presence (as of 31 December 2023) (2023 revenue) Euro
Slide 10: The Group has evolved since the 2021 CMD
The Group has evolved since the 2021 CMD Key developments Strong Hearing Aids Further acceleration in Continued growth and performance in a acquisitions into new market share gains in volatile hearing aid markets in Hearing Care Diagnostics market Pioneered innovation and Continued to grow and Expan
Slide 11: A more focused Demant
A more focused Demant Decision to discontinue Hearing Decision to undertake strategic Implants taken in 2022 review of Communications in 2024 • Still expect the divestment of our Cochlear • The purpose of the review is to explore Implants business to close in H1 2024 whether a different owner may be
Slide 12: Despite volatile markets, we have delivered strong revenue growth
Despite volatile markets, we have delivered strong revenue growth 2019 IT incident impacting Demant significantly 25,000 Group revenue1 2020 Global coronavirus pandemic, lockdowns and uncertainty 20,000 ~10% Recovery from pandemic, French hearing healthcare CAGR 2021 DKK million reform and release o
Slide 13: 2024 guidance unchanged with strong organic revenue and EBIT growth
2024 guidance unchanged with strong organic revenue and EBIT growth 2023 was a strong year for Demant1 Organic growth EBIT Share buybacks Key performance drivers in 2023 (%) (DKK million) (DKK million) • Normalised hearing healthcare market following weakness 12% 4,148 846 in 2022 vs. initial target
Slide 14: Hearing aid market dynamics
Hearing aid market dynamics 14
Slide 15: Ageing populations are driving market growth
Ageing populations are driving market growth Continued increase in size of 65+ population in key markets in the coming years +21% +14% +27% 82 169 258 67 148 203 2023 2030 2023 2030 2023 2030 Million Million Million 15 Source: United Nations, Population Division, Department of Economics and Social A
Slide 16: Increasing penetration supports growth
Increasing penetration supports growth Hearing aid penetration rates across countries (people with hearing loss1) Highest penetration in countries DK 2012 – 2022 with full reimbursement UK 2009 – 2022 NO 2012 – 2019 We have seen increased penetration FR 2009 – 2022 across countries over the last dec
Slide 17: Consequences of an untreated hearing loss
Consequences of an untreated hearing loss Hearing loss Signals to the The brain will Fatigue Acceleration brain have reconstruct and social of health lower quality and withdrawal problems compensate (e.g. depression and dementia) Campbell & Sharma, 2014 17
Slide 18: Evidence of correlation between cognitive decline and hearing aid usage
Recent advancements and evidence of correlation between cognitive decline and hearing aid usage Evidence Dementia incidence (%) based on age groups1 • There’s an increasing body of evidence pointing to a link between hearing difficulties and risk of developing dementia • Data suggests that it is not
Slide 19: Historical and future market growth
Historical and future market growth 19
Slide 20: Resilient hearing aid market with strong structural growth drivers
Resilient hearing aid market with strong structural growth drivers Global hearing aid market A resilient and structurally growing 25 market 20 CAGR: +6% • Incredibly stable market, though 2020 was significantly impacted by the coronavirus pandemic Units (millions) 15 • People with hearing loss have
Slide 21: Market ASP has been flat since 2018
We estimate that market ASP has been flat since 2018 Indicative Estimated wholesale hearing aid market ASP ~0% 2018 2019 2020 2021 2022 2023 • We estimate that since 2018, the global hearing aid market has seen a flat ASP development Headwinds Pricing levers Country mix developments Innovation and p
Slide 22: Growing markets with a core focus on Hearing Healthcare
Growing markets with a core focus on Hearing Healthcare Hearing Aids Hearing Care Diagnostics Structural growth drivers Market size USD 6 billion USD 20 billion USD 0.7 billion • Ageing populations across the world and increasing life-expectancy Estimated market ~4-6%1 ~4-6%1 ~4-6% growth rates • Gr
Slide 23: Strategy
Strategy 23
Slide 24: Demant's strategy
Demant’s strategy Our AMBITION is as the leading hearing healthcare company to improve as many lives as possible Our PRIORITISATION is to support the entire journey to better Our PURPOSE is hearing by focusing on personalised care and innovative solutions to create life-changing differences through
Slide 25: Demant's strategic choices and enablers
Demant's strategic choices and enablers CHOICES Fuel innovation and core technology Participate in consolidation Grow across geographies and development to ensure strong of distribution and leverage channels and in adjacent business customer value generation commercial position activities ENABLERS L
Slide 26: Innovation to improve hearing health
Innovation to improve hearing health Natural hearing The journey Open Sound continues Paradigm Access to all sounds Access to all speech Traditional directionality Time 2016 2020 2024 360-degree Onboard 4D sensor soundscape Deep Neural technology Network 26
Slide 27: The game we play
The game we play As hearing loss remains stigmatised and worsens gradually, there's minimal pull from first-time users Counselling is crucial for Limited brand awareness Distribution sales among users consolidates Effective counselling and information Limited brand awareness among users The distribu
Slide 28: Continue to leverage our strong position to expand distribution
Continue to leverage our strong position to expand distribution Focus on leveraging our commercial position to further Greenfield and acquisition strategy to expand our improve our wholesale offerings to customers to win the retail distribution in our markets premium segment Continued focus on growi
Slide 29: Summing up: Our aspirations for the future
Summing up: Our aspirations for the future What we choose to do: What we expect to deliver: Fuel innovation and core technology Metric Medium- to long-term outlook development to ensure strong customer value generation 8-10% p.a. in local currencies Revenue - organic growth of 6-8%1 - acquisitive gr
Slide 30: Sustainability
Sustainability 30
Slide 31: Our core contribution is clear
Our core contribution is clear Based on 2023 figures 31
Slide 32: Core focus on sustainability is an integrated part of how we work
Core focus on sustainability is an integrated part of how we work Responsible and sustainable Leadership and people business practices development • Changing mindsets and behaviour • Introduced DE&I Group policy and targets activities • Implementing environmental sustainability into • Improving empl
Slide 33: Improved sustainability ratings
We have seen our progress reflected in improved sustainability ratings • We work closely with key rating agencies to improve our sustainability ratings (CCC to AAA)1 2020 2023 • As a part of our strategy, we continue our progress to drive responsible and sustainable C+ business practices by: C • Imp
Slide 34: Summary
Summary 34
Slide 35: Summary
Summary We are a focused Hearing Healthcare company and remain firmly 1 committed to value-creating capital allocation towards market-leading innovation and distribution We address a hearing healthcare market characterised by stability and 2 high entry barriers, and we now expect our addressable mar
Slide 36: Q&A
Q&A 36
Slide 37: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 38: Lunch break & Product demos
Lunch break & Product demos Up next (13:00 CET): 38 Fuelling innovation and core technology development in hearing aids
Slide 39: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 40: Fuelling innovation and core technology development in hearing aids
Fuelling innovation and core technology development in hearing aids 40
Slide 41: Our ambition: leading hearing healthcare company
Our AMBITION is as the leading hearing healthcare company to improve as many lives as possible 41
Slide 42: Demant's strategic choices and enablers
Demant's strategic choices and enablers CHOICES Fuel innovation and core technology Participate in consolidation Grow across geographies and development to ensure strong of distribution and leverage channels and in adjacent business customer value generation commercial position activities ENABLERS L
Slide 43: Organisational setup in Hearing Aids
Organisational setup in Hearing Aids Hearing Instrument Group Hearing Aids President Søren Nielsen In Demant, the Hearing Instrument Group comprises a range of functions dedicated to all our hearing aid North America brands: Commercial organisations • Research & Development International Sales Kim B
Slide 44: Speakers
Speakers Taking Hearing Trends in hearing Leading in hearing Introducing Healthcare to next healthcare aid innovation Oticon Intent level with AI Photo Photo Photo Q&A Patrik Hartvig Kim Brusgaard Haldne James Michael Harte Ole Asboe Jørgensen Senior Vice President Senior Vice President Senior Direc
Slide 45: Fuelling innovation and core technology development in Hearing Aids
Fuelling innovation and core technology development in Hearing Aids Taking Hearing Trends in Leading in Healthcare to Introducing hearing hearing aid Q&A next level with Oticon Intent healthcare innovation AI Patrik Hartvig Senior Vice President Portfolio & Programme Management 45
Slide 46: How we work: From megatrends to roadmap
How we work: From megatrends to roadmap In Portfolio and Programme Management, we work with R&D to define and develop Demant’s future hearing aid portfolio and solutions roadmap Megatrends Industry trends Portfolio vision Solutions roadmap Exploring the futures of Exploring the futures of Defining t
Slide 47: Setting up the long-term direction
Setting up the long-term direction From outside trends… …to market opportunities and enablers Demographic shift Technological progress 1 Ease of doing business Megatrends Health & wellness 2 Life-centric solutions Digital transformation Social & cultural evolution 3 Living longer and healthier Heari
Slide 48: A roadmap that delivers to the needs of customers and users
A roadmap that delivers to the needs of customers and users 1 Ease of doing business 2 Life-centric solutions 3 Living longer and healthier Customers request flexibility and fitting Develop an array of discreet, attractive, user- Healthcare systems, providers and users will efficiency to support the
Slide 49: Fuelling innovation and core technology development in Hearing Aids
Fuelling innovation and core technology development in Hearing Aids Taking Hearing Trends in Leading in Healthcare to Introducing hearing hearing aid Q&A next level with Oticon Intent healthcare innovation AI Kim Brusgaard Haldne Senior Vice President Research & Development 49
Slide 50: Deliver innovative and competitive hearing solutions
Deliver innovative and competitive hearing solutions that drive preference for hearing care professionals and end users 50
Slide 51: Hearing Aids: R&D locations and headcounts
Hearing Aids: R&D locations and headcounts People in R&D Locations Competency split Smørum 900 Mierzyn Warszawa 22% Female Denmark Poland Software Hardware Other 650 250 51
Slide 52: Deliveries of Hearing Aids R&D
Deliveries of Hearing Aids R&D Complete portfolio to cover customer and user needs Audiological research Multi-brand product development Patents 52
Slide 53: R&D innovation horizons and flow
R&D innovation horizons and flow Major innovations are up to 10 years in the pipeline Audiology research and Ideation to Product programme In-market optimization long-term concepts proof-of-concept Merging concepts, prototyping, Firmware updates, supply chain, New chipset generations, New styles con
Slide 54: Technology and Hearing Aids R&D
Technology and Hearing Aids R&D Drivers of R&D complexity: Intent Technology/complexity growth and (Sirius) • Audiological concepts R&D spend (indexed) • Amounts of variants Real • Connectivity (Polaris R) • Rechargeability More • Usability and comfort Opn S (Polaris) • Medical device Opn (Velox S)
Slide 55: Technologies for world's best hearing aids
Technologies for world’s best hearing aids Brain science Cellular / 5G Audiology Ultra Wideband (UWB) Specialised chipset Sensors Wi-Fi Specialised AI for audiology Displays Bluetooth LE Audio Fitting software Hearing Consumer aids Rechargeability electronics Cameras Wearing comfort Apps Off-the-she
Slide 56: Audiology is our core
Audiology is our core Level of competitor differentiation decreases as we move away from the core Delivering audiology for the hearing impaired using only very little power sets us apart from consumer udiology electronic manufacturers 56
Slide 57: Hearing science starts with brain science
Hearing science starts with brain science Everything changed in 2010 when we focused on user’s brain processing and intent Orient Focus Full sound scene Neural code 57
Slide 58: Trade-offs in chipset design for audiology
Trade-offs in chipset design for audiology Optimising features, power consumption and size for best hearing aid performance Development of hearing aid platform Audiology (illustrative differences) features Size Audiology features Power consumption General features Cost per chipset Power consumption
Slide 59: Video: Behind the scenes in the R&D chipset team
Video: Behind the scenes in the R&D chipset team [1m 30s] 59
Slide 60: The physical result: Our 2024 launch
The physical result: Our 2024 launch Significantly shorter design Future Optimal proofed microphone connector placement More discreet and comfortable design Better comfort and retention New, higher capacity battery (up to Better bass, 50% more) down to 80 Hz Faster charging 60 concept
Slide 61: LE Audio: New 2-way Bluetooth standard
LE Audio: New 2-way Bluetooth standard for both hearing aids and consumer electronics Expected install base for Android smartphones Bluetooth features1 100 • Two-way streaming fully adopted Install base (%) (Apple proprietary) Bluetooth Classic and one-way streaming on Android (ASHA protocol) • One-
Slide 62: Endless potential for innovation
Endless potential for innovation Three technologies to watch: Wireless features, rechargeability and particularly AI Brain science Cellular / 5G Audiology Ultra Wideband (UWB) Specialised chipset Sensors Wi-Fi Specialised AI for audiology Displays Bluetooth LE Audio Fitting software Hearing Consumer
Slide 63: Fuelling innovation and core technology development in Hearing Aids
Fuelling innovation and core technology development in Hearing Aids Taking Trends in Leading in Hearing Introducing hearing hearing aid Healthcare to Q&A Oticon Intent healthcare innovation next level with AI James Michael Harte Senior Director Eriksholm Research Centre 63
Slide 64: The Eriksholm Research Centre
The Eriksholm Research Centre • Dedicated translational research facility established in 1977 • Located in Snekkersten, Denmark (around 45 min from Demant HQ) • Multi-disciplinary research and clinical staff with backgrounds in engineering, computer science, psychology, neuroscience and audiology 64
Slide 65: Eriksholm's mission and points of collaboration
Eriksholm’s mission and points of collaboration: Connecting the dots Hearing Care Professionals End-users We advance scientific understanding and treatment of hearing difficulties We do translational research to support the development of future hearing aid technologies Academia Demant 65
Slide 66: Four strategic research focus areas at Eriksholm
Our four strategic research focus areas at Eriksholm Personalised Cognitive Hearing Audiology Science Intent Decoding Artificial Intelligence AI elevated to strategic research area at end of 2023, but research has been carried out for many years 66
Slide 67: Understanding artificial intelligence and data science
Understanding artificial intelligence and data science Artificial Intelligence Data Science Developing machines that can simulate human thinking, Artificial Processing, analysis and extraction of meaning reasoning and behavior Intelligence from data Machine Machine Learning Learning A subset of AI,
Slide 68: Second generation of our Deep Neural Network
In Demant, we are already on the second generation of our Deep Neural Network with Oticon Intent 1 Recording sounds 2 Deep Neural Network training 3 Analysis and balancing 4 High-resolution amplification 68
Slide 69: The AI programme at Eriksholm
The AI programme at Eriksholm Computational audiology Hearing aid systems Helping the hearing care professional Giving the hearing aid user the right sound improve efficiency and quality at the right time Automating diagnostic decisions Single hearing aid algorithms AI-assisted hearing aid fitting B
Slide 70: How does Eriksholm support product innovation?
How does Eriksholm work to support product innovation? Product innovation (R&D) Understanding the user’s How can technology hearing loss and/or needs help? 70
Slide 71: Example: Using AI for speech enhancement
Example: Using AI for speech enhancement Noisy Enhanced speech speech 71 Kolbæk et al., ”On Loss Functions for Supervised Monaural Time-Domain Speech Enhancement”, IEEE Trans. Audio, Speech and Language Processing. 2020.
Slide 72: Opportunities for AI to solve hearing aid user challenges
Opportunities for AI to solve hearing aid user challenges Simple acoustic situations Complex acoustic situations Very complex communication situations AI can both transform the core and open new innovation directions New machine learning-based approaches for Deep learning-based single-microphone noi
Slide 73: Taking AI to the next level: What is required?
Taking AI to the next level: What is required? Focus and commitment 1 Committed investments in AI research to translate advances from 2 Focused research – a dedicated research facility like Eriksholm is Still at the very early stages of applying AI academia into product unique in our industry to its
Slide 74: Fuelling innovation and core technology development in Hearing Aids
Fuelling innovation and core technology development in Hearing Aids Taking Hearing Trends in Leading in Healthcare to Introducing hearing hearing aid Q&A next level with Oticon Intent healthcare innovation AI Ole Asboe Jørgensen President Hearing Instrument Group 74
Slide 75: Oticon Opn marked a paradigm shift
Oticon Opn marked a paradigm shift Launched in 2016 75
Slide 76: A sustainable competitive advantage
A sustainable competitive advantage Natural hearing Access to Open sound intended paradigm sounds Access to all sounds Access to all speech Traditional directionality Time 2016 2020 2024 360-degree Onboard 4D sensor soundscape Deep Neural technology 76 Network
Slide 77: Oticon Intent marks biggest performance lift since Oticon Opn
Oticon Intent marks biggest performance lift since Oticon Opn James Valentina Dave Until now, one size fits all: Hearing aids can New Oticon Intent detects the user’s only recognise the sound environment and listening needs and applies the support provide support accordingly needed 77
Slide 78: Conversation, Activity, Body
Conversation Activity Body Head Movement Movement Acoustic Environment 78
Slide 79: Outperforming previous generations
Outperforming previous generations Expanding base of clinical evidence 79 Source: Bianchi, Eskelund, Zapata-Rodríguez, Lopez, & Gade (2024). Oticon whitepaper – BrainHearing benefits of the 4D Sensor technology. *Compared to Oticon Real
Slide 80: Introducing Sirius
Introducing Sirius A brand-new platform powering our user-intent sensors 4D sensor technology Deep Neural Network 2.0 processing An embedded motion sensor detects head and body Sirius is a brand-new platform with a chipset that’s movements, and several acoustic sensors detect purpose-built for heari
Slide 81: Oticon Intent: Our smallest rechargeable miniRITE style ever
Oticon Intent Our smallest rechargeable miniRITE style ever New design • 1.7 mm shorter than any previous Oticon miniRITE rechargeable style • Features both a telecoil and a size 13 Launched in four price points lithium-ion battery New intelligent speaker unit • Transfer of calibration data for bett
Slide 82: Strong Brand Portfolio
Strong Brand Portfolio | a
Slide 83: New platform launched in 3 brands
New platform launched in 3 brands First products released for sale end of February 2024 83
Slide 84: Video: Oticon Intent
Video: Oticon Intent [1m 43s]
Slide 85: Fuelling innovation and core technology development in Hearing Aids
Fuelling innovation and core technology development in Hearing Aids Taking Hearing Trends in Leading in Healthcare to Introducing hearing hearing aid Q&A next level with Oticon Intent healthcare innovation AI 85
Slide 86: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 87: Break & Product demos
Break & Product demos Up next (14:55 CET): 87 Fundamentals of hearing aid distribution
Slide 88: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 89: Fundamentals of hearing aid distribution
Fundamentals of hearing aid distribution Søren Nielsen, Group President & CEO 89
Slide 90: Demant's strategic choices and enablers
Demant’s strategic choices and enablers CHOICES Fuel innovation and core technology Participate in consolidation Grow across geographies and development to ensure strong of distribution and leverage channels and in adjacent business customer value generation commercial position activities ENABLERS L
Slide 91: Distribution of hearing aids varies significantly by channel
Distribution of hearing aids varies significantly by channel Manufacturer-owned Government channels Independents Large chains retailers • Professional purchasers • Highly specialised care • Strong brand recognition • Vertically integrated retail • Work closely with manufacturers • Often owned by HCP
Slide 92: Hearing aid market largest in North America and Europe
The hearing aid market remains the largest in North America and Europe Differences in market dynamics across geographies: Global hearing aid market (units) • Penetration and growth rates Other • Reimbursement structure Pacific • Composition of distribution North America • Customer and patient requir
Slide 93: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 94: Succeeding in the US hearing aid market
Succeeding in the US hearing aid market 94
Slide 95: Speaker and agenda
Speaker Agenda 1 Company overview and organisation 2 US hearing aid market dynamics 3 Our approach and multi-brand strategy Ty Lee 4 US channel deep-dives President, Hearing Aids North America 95
Slide 96: North America is the largest geography for Demant
North America is the largest geography for Demant Demant Rev. Share Hearing Aids Hearing Care Diagnostics North America Revenue Revenue share Revenue share Revenue share DKK 9.1 billion ~60% ~25% ~15% Ambition: To improve as many lives as possible 96 Source: Revenue and revenue share for FY 2023
Slide 97: North America Leadership Team
North America Leadership Team Focused on driving synergies between business areas and economies of scale in the value chain Team responsibility … ... enabled by a strong cultural foundation • US Hearing Aids wholesale (Oticon, Philips, Bernafon) • US Buying Group (CQ Partners) • Canada Hearing Aids
Slide 98: US Hearing Aids wholesale approach
US 1 Continue our history of innovation in audiology with a commitment to the medical model Hearing Aids wholesale 2 Aligned to the needs of professionals and users now and in the future approach Committed to being the most collaborative and responsive 3 partner to our customers and earning the priv
Slide 99: Historical view of the US hearing aid market
Historical view of the US hearing aid market Over time, we have seen strong underlying hearing aids unit trends in the US market Total Market 6 CAGR: +6% 5.2 Units in million Key insights over the last decade 4 2 0 • Strong underlying growth in the 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2
Slide 100: Structure of the US hearing aids market
Structure of the US hearing aids market Over time, our expectation is the category stays consistent to the historic trend of 4-6% unit growth +10% Channel 2023 units % of hearing Market hearing aid units (million) 5.2 aid category Veterans Affairs 0.9MM 17% Independent 2.4MM 46% - Of which are 4.8 m
Slide 101: Our US Hearing Aids wholesale approach
Our US Hearing Aids wholesale approach 101
Slide 102: US approach to deliver a superior customer experience
US approach to deliver a superior customer experience Improve professional effectiveness and efficiency US Hearing Operational Aids and service excellence wholesale Innovative solutions
Slide 103: Strong momentum in recent years
Strong momentum in recent years Our Hearing Aids business is outpacing the US market driving unit share growth Demant US hearing aids Drivers of success: unit market share development Innovation leader with world-leading capabilities, dedicated in-house chipset design and core ~90 bps p.a. research
Slide 104: US go-to-market effectiveness & efficiency
US go-to-market effectiveness & efficiency US Demant Hearing Aids team anchored in optimizing commercial excellence best practices Commercial Excellence Illustrative Prioritized Keys to winning Commercial model Digital & analytics opportunities Sales Key Account Management Marketing Market Access &
Slide 105: Opportunity to maximize our multi-brand strategy
Opportunity to maximize our multi-brand strategy US Demant Hearing Aids team to leverage our new product launches across target channels Leader in audiology. Well-known and trustworthy. Empower HCPs to deliver The professionals preferred choice The consumers’ preferred choice excellence in hearing c
Slide 106: US channel deep dives
US channel deep dives 10 6
Slide 107: US independent channel performance
US independent channel performance Demant US Hearing Aids outpacing the market driving unit share growth fueled by our portfolio Demant US independent channel Drivers of success: Innovation leader with leading technologies and solutions Consistent business growth in Hearing Aids driven by strong seg
Slide 108: US independent channel: revenue potential
US independent channel performance Clear and quantified view on market opportunities, enabled by strong sales practices Segmentation & strategic priorities ... enabled by key pillars of success Based on internal data Revenue SOW 4 3 2 1 Revenue potential 1 2 3 Group 2 Group 1 Talent Segmentation Mar
Slide 109: Independent channel 'cash pay' business model
Independent channel ‘cash pay’ business model Independent providers can provide the best care when afforded the time to deliver counseling, return office-visit adjustments and long-term follow-up services Hearing aids and services (services incl. counseling, fitting, adjustments, follow-up and long-
Slide 110: Third Party Administration (TPA) business model
Third Party Administration (TPA) business model Demant’s US Managed Care team is actively navigating & optimising TPA contracting Consumer co-pay (instead of hearing aids ‘cash pay’) Managed Care Medicare Advantage Managed Care healthcare TPA companies insurance plans Independent provider Hearing ai
Slide 111: Third Party Administration (TPA) growth
Third Party Administration (TPA) growth Present and future expansion TPA volume (and provider fee) control TPA companies are contracting with Medicare Advantage TPA channel dynamics are prompting Demant to actively health insurance plans to control volume (and sometimes navigate and optimise TPA con
Slide 112: US Veterans Affairs (VA) channel performance
US Veterans Affairs (VA) channel performance Demant is focused on providing life-long audiology solutions to our military veterans Delivering Oticon VA Channel Growth By fully understanding the VA audiology service model Only top tier technology on a 5-year contract Oticon Opn S Oticon Real 22% 20%
Slide 113: US Veterans Affairs channel performance
US Veterans Affairs channel performance Clear view on how to deliver best services to the VA Audiologists that care for our military veterans Deep understanding of VA AuDs to Success will be enabled by the following drivers: deliver best services to veterans Innovation leader with leading technologi
Slide 114: Large retail chains performance
Large retail chains performance Demant is focused on providing leading hearing solutions to large chains Drivers of success: Innovation leader, including with the leading Philips technologies and solutions Consistent focus on strong global account partnership and collaboration to earn being the part
Slide 115: Over-the-counter (OTC) hearing aids penetration
Over-the-counter (OTC) hearing aids penetration Initial uptake has been limited but the category increases access to hearing technology Our view: OTC devices increases access to hearing OTC hearing aid sales technology but does not address stigma and 30 3% reluctance to act 25 Units in 000s 20 2% 15
Slide 116: US Hearing Aids wholesale approach
US 1 Continue our history of innovation in audiology with a commitment to the medical model Hearing Aids wholesale 2 Aligned to the needs of professionals and users now and in the future approach Committed to being the most collaborative & responsive 3 partner to our customers and earning the privil
Slide 117: Q&A
Q&A 117
Slide 118: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 119: Continuing our Hearing Care growth journey
Continuing our Hearing Care growth journey
Slide 120: Continuing our Hearing Care growth journey
Continuing our Hearing Care growth journey AGENDA Hearing Care journey Market and Our play Looking ahead Niels Wagner President, Hearing Care
Slide 121: Hearing Care journey
Hearing Care journey
Slide 122: Hearing Care is our global network of retail clinics
Hearing Care is our global network of retail clinics, supporting our customers through their hearing journey HEARING CARE HEARING AIDS DIAGNOSTICS 2023 REVENUE 2023 REVENUE 2023 REVENUE 42% 47% 11% 122 Data from 2023 Annual Report, with percentages excluding Communications
Slide 123: Hearing Care growth journey over 15 years
Over the past 15 years, Hearing Care has been on a significant growth journey THE AUDIKA GROWTH JOURNEY 2022 Acquires Sheng Wang 9.1 2015 Acquires Audika CAGR ~12% 2010 Acquires 2000 HearingLife Takes over distributor 3.8 1994 in BR, acquires Retail Takes over AU in UK, PT, IE, GR distributor 1994 1
Slide 124: Present in all key markets
Present in all key markets with Americas and Europe accounting for majority of our business OUR GLOBAL FOOTPRINT 25+ COUNTRIES NORTH AMERICA 3,500+ 800+ EUROPE ASIA FULL-TIME CLINICS PACIFIC 2,500+ 1,800+ 900+ 5,000+ 3,000+ 10,500+ EMPLOYEES 550+ ACQUISITIONS 124
Slide 125: Market & our play
Market & our play
Slide 126: Business model shaped by three key characteristics of hearing care
Our business model and activities are shaped by three key characteristics of the hearing care industry CUSTOMERS IN DENIAL SALES FUNNEL LEAKAGE AUDIOLOGIST CAPACITY WE SEE.. WE FIND.. WE FIND.. A prevalent stigma and That it is costly to move customers through That audiologist’s time is limited, rel
Slide 127: Customer mindset and complexity impact the customer journey
The mindset of customers and complexity of our products and services significantly impacts the customer journey Our customer journey is lengthy, costly and complex, We are constantly balancing our channel mix to optimize and starts with reaching the right audience and the volume and the quality of l
Slide 128: Our value proposition matches customer needs
Our value proposition matches the customers need for a skilled, personalized and high-touch experience CLINIC SELECTION – CONSUMER DRIVERS1 OUR VALUE PROPOSITION PROFESSIONAL, SKILLED AND FRIENDLY STAFF PERSONALIZED CARE, WITH SOLID AUDIOLOGICAL COUNSELLING COMPLIMENTARY AFTER-CARE AVAILABLE AND RES
Slide 129: Our strategy reflects the key characteristics of the market
Our strategy reflects our response to the key characteristics of the hearing care market Our STRATEGY to help more people hear better: PURPOSE We create life-changing differences through hearing health STRATEGIC CHOICES The role of the professional Consolidation & growth STRATEGIC PRIORITIES Brand &
Slide 130: Brand & Experience: customer satisfaction is high
Brand & Experience: Our customer satisfaction is high, but in the early part of the customer journey we have opportunities Brand awareness Brand consideration Customer satisfaction Share of people who knows about our brand The extent to which consumers are willing to consider a Net promoter score –
Slide 131: People & Expertise: increasing engagement and retention
People & Expertise: We are working to increase engagement and retention Attraction Engagement1 Retention Overall engagement and satisfaction with Attractiveness of Audika as a place to work Ability to retain employees in the company your place to work High Medium Medium Estimated performance Estimat
Slide 132: Global-local collaboration
Our approach to global-local collaboration is focused on leveraging global muscle-power and local flexibility GLOBAL MUSCLE LOCAL FLEXIBILITY Global functions providing added Local adaptation to specific value to markets country requirements Global data Localised customer-facing & IT systems operati
Slide 133: Looking ahead
Looking ahead
Slide 134: Audika's attractive portfolio of markets
udika’s attractive portfolio of markets – aimed at building market-leading positions OUR TOP MARKETS MAINTAIN AND DEVELOP POSITION LEADER ORGANIC GROWTH AND MARGIN EXPANSION MARKET POSITION CHALLENGER New market BUILD SCALE TO ACCELERATE PROFITABILITY BUILD-UP New market LOW MEDIUM HIGH PROFITABILIT
Slide 135: Leveraging leading market positions
Our focus will be on leveraging our leading market positions and lifting more of our markets to a leader position KEY MARKETS GROWTH GROWING ORGANICALLY THROUGH LEADER CHALLENGER NEW ENTRY FRANCE US CHINA Increase Increase Increase NUMBER OF TESTS UNITS CANADA AUSTRALIA GERMANY HCP’S PER HCP PER HCP
Slide 136: China is a growing market with a strong strategic roadmap
China is a growing market and we have a strong strategic roadmap in place to drive above-market growth WHY CHINA & SHENG WANG? OUR CLINIC ROADMAP GROWTH OPPORTUNITY: Ageing population and Illustrative increased life expectancy combined with increased income will increase market potential significant
Slide 137: China is different in customer behavior and appointment creation
China is different from other markets, in both customer behavior and appointment creation for our clinics MARKETING SPEND: CHINA VS. REST-OF-WORLD MAJOR DIFFERENCES MARKETING: Offline channels, CHINA1 Rest-of-World Example2 Illustrative especially walk-ins, referrals and Appointment generation Appoi
Slide 138: Stronger foothold in the German retail market
We have gained a stronger foothold in the German retail market during the past year WHY GERMANY? OUR CURRENT CLINIC FOOTPRINT (CLINICS - 2023) Main German retail players (~ Number of shops) MARKET SIZE: The German market accounts for Illustrative 1.6 m units annually INDEPENDENTS: Market holds large
Slide 139: Our strategic and financial aspirations going forward
Our strategic and financial aspirations going forward CUSTOMER REVENUE EMPLOYEE ENGAGEMENT GROWTH ENGAGEMENT • Brand awareness • Organic growth • Attraction • Brand consideration • Acquisitive growth • Engagement • Customer satisfaction • Retention
Slide 140: Q&A
Q&A
Slide 141: Break
Break Up next (16:40 CET): 14 Driving scale benefits to deliver long-term shareholder value 1
Slide 142: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 143: Driving scale benefits to deliver long-term shareholder value
Driving scale benefits to deliver long-term shareholder value René Schneider, CFO 143
Slide 144: Agenda
Agenda 1 Our strategic choices and commitment to shareholders 2 Updated view on medium- to long-term outlook 3 Hearing Healthcare in a historical perspective 4 Capital allocation 5 Our future aspirations 144
Slide 145: Our commitment to investors
Our ambition translates into a clear commitment to investors: Drive attractive growth and financial returns based on a resilient business model 145
Slide 146: Choices and enablers to unlock growth and profitability
We expect our choices and enablers to unlock continued strong growth and profitability CHOICES Fuel innovation and core technology Participate in consolidation Grow across geographies and development to ensure strong of distribution and leverage channels and in adjacent business customer value gener
Slide 147: Strong growth in recent years despite weakness in Communications
Strong growth in recent years despite weakness in Communications… Continuing operations Metric Medium- to long-term outlook Group HHC1 Key takeaways: (previous) 2018-2023 2018-2023 • Despite weaker than expected growth for Communications, Group has delivered growth 7-10% p.a. in local currencies 10%
Slide 148: Profitability impacted despite strong Hearing Healthcare development
… which also impacted profitability despite a strong development in Hearing Healthcare Continuing operations Metric Medium- to long-term outlook 2018-2023 HHC1 Key takeaways: (previous) (Group) 2018-2023 • Operational efficiency and scale Hearing Aids benefits in Hearing Aids and Aim to increase the
Slide 149: Strong growth but profitability impacted by Communications
Strong growth but profitability impacted by Communications in recent years Group revenue1 25,000 ~10% DKK million Despite unpredictable markets, Demant has been 20,000 CAGR 10% able to grow revenue strongly – both organically and through acquisitions 15,000 During this period, Hearing Healthcare pro
Slide 150: A more focused Demant
A more focused Demant Decision to discontinue Hearing Decision to undertake strategic Implants taken in 2022 review of Communications in 2024 • Still expect the divestment of our cochlear implants • The purpose of the review is to explore business to close in H1 2024 whether a different owner may be
Slide 151: Aspiration for continued market share gains
Aspiration for continued market share gains in a market with a more positive outlook Medium- to long-term Actual outlook (new) 2018-2023 Key takeaways: • Performance at high end of Hearing healthcare Value 4-6% 6% outlook since 2018 supported by market growth strong market growth • A more positive o
Slide 152: A focused hearing healthcare company
A focused hearing healthcare company 152
Slide 153: Demant is emerging as a focused hearing healthcare company
Demant is emerging as a focused hearing healthcare company Revenue 25,000 ~10%, HHC 20,000 CAGR Strong market share development in HHC1, where DKK million 7% 15,000 we have seen organic growth of ~7% p.a. 10,000 5,000 0 In line with our strategic ambitions, acquisitions 2013 2014 2015 2016 2017 2018
Slide 154: Strong cash generation
Strong cash generation allowing for reinvesting in the business and distribution to shareholders Cash flow from operating activities (CFFO) 6,000 ~13% Demant is a highly cash generative business, and CAGR 200% 4,335 DKK million as a result of our financial focus, we have 4,000 105% 103% continuously
Slide 155: Capital allocation priorities focused on shareholder returns
Capital allocation priorities remain focused on shareholder returns Investing in future organic growth Acquisitions Share buy-backs Invest in R&D to fuel CAPEX to build stronger Participate in the Use excess free cash flow innovation and core infrastructure consolidation after acquisitions for share
Slide 156: Strong commitment to innovation and investments in R&D
Strong commitment to innovation and investments in R&D HHC R&D costs and as percentage of revenue1 Innovation represents high return on investment as 1,500 30% new technology drives market shares gains, particularly among independents 1,250 25% ~9%, Core ~7%, Total CAGR Increasing complexity driven
Slide 157: Continued investments in scalable infrastructure
Continued investments in scalable infrastructure CAPEX and as a percentage of revenue 1,000 10% Greenfield openings in Hearing Care with a view to continuing to expand our distribution ~8% CAGR Clinic refurbishments to ensure continued DKK million excellence in consumer experience 500 5% 5% 5% 5% 5%
Slide 158: Continuous pursuit of value-adding acquisitions
Continuous pursuit of value-adding acquisitions Acquisitions Future acquisitive ambitions Cash spent on acquisitions Growth from acquisitions1 • Acquisitions remain an integral part of the Demant strategy in ~ DKK 900 million p.a. ~ 3% p.a. order to increase revenue and scale (2013-2023 average) (20
Slide 159: Higher profitability enabled through scale benefits
Higher profitability enabled through scale benefits HHC revenue1 ~8%, HA/Dia. 30,000 ~12%, HC Growth in Hearing Care has outpaced growth in CAGR Hearing Aids and Diagnostics, as we have DKK million 20,000 continuously acquired clinics over the last decade 10,000 42% Hearing Care is now accounting fo
Slide 160: Strategic rationale for retail acquisitions
Strategic rationale for retail acquisitions Independent audiologist Independent audiologist Independent audiologist Independent audiologist acquired by a chain acquired by another acquired by Demant manufacturer Illustrative Illustrative Illustrative Illustrative 5% 75% 75% 99% 95% 25% 25% 1% Share
Slide 161: Excess free cash flow returned to shareholders
Excess free cash flow returned to shareholders Gearing multiple1 2.9 3.0 2.8 2.6 EBITDA/NIBD 2.5 2.2 2.0 1.9 Target range 2.0 1.7 1.7 NIBD We target a gearing multiple (NIBD/EBITDA) of 1.5 EBITDA 1.5 1.2 2.0-2.5 (2.2 at the end of 2023) 1.1 1.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Slide 162: Summing up: Our aspirations for the future
Summing up: Our aspirations for the future What we choose to do: What we expect to deliver: Fuel innovation and core technology Metric Medium- to long-term outlook development to ensure strong customer value generation 8-10% p.a. in local currencies Revenue - of which organic growth of 6-8%1 - growt
Slide 163: Q&A
Q&A 163 1
Slide 164: Agenda
Agenda Time (CET) Topic Presenter 11:00 Welcome Peter Pudselykke 11:10 Sharpened focus on Hearing Healthcare Søren Nielsen 11:45 Q&A 12:00 Lunch break and product demos 13:00 Fuelling innovation and core technology development in Hearing Aids Ole Asboe Jørgensen, Patrik Hartvig, Kim Haldne, James Mi
Slide 165: Thank you
For those joining us for dinner, pre-dinner drinks are served at 18:45 at: Brasserie Nimb: Bernstorffsgade 5 Thank you 1577 København Bus departure: 18:00 Taxi: ~40 minutes 16 5 1