Slide 1: Amplifon Q1 2014
Amplifon Q1 2014 Milan - April 29th, 2014
Slide 2: Disclaimer
Disclaimer The information contained herein and other material discussed during the analysts’ presentation, particularly the ones regarding any possible or assumed future performance of the Amplifon Group, are or may be forward looking statements and in this respect they involve some risks and uncer
Slide 3: Q1-2014 Financial Results
Q1--2014 Financial Results Q1
Slide 4: Harsh weather and FX impact but signs of recovery in Europe
Harsh weather and FX impact but signs of recovery in Europe Q1-2014 Group revenue: up +2.4% on PY at constant forex (€ 188.3 mln or -0.5% as reported): signs of recovery in Europe (+1.8% at constant FX) strong organic growth rates in the rest of EMEA region (+28.8% at constant FX) slow start in Amer
Slide 5: Solid Balance Sheet sustains our growth strategy
Solid Balance Sheet sustains our growth strategy Expansion of the international presence and footprint speeds up: entrance in the Israeli market by acquiring 60% of MedOrt (April 9th) acquisition of the retail chain Audika Italia Srl (April 28th) increased the stake in Amplifon Poland from 49% to 63
Slide 6: Q1-2014 Financial Results
Q1 Q1--2014 Financial Results € millions Q1 2014 Q1 2013* ∆% Revenue 188,3 100,0% 189,4 100,0% -0,5% EBITDA 18,6 9,9% 17,8 9,4% 5,0% EBITA 11,5 6,1% 10,2 5,4% 12,4% EBIT 7,9 4,2% 6,2 3,2% 28,6% PBT 2,2 1,2% 0,3 0,2% 551,3% Group Net Income 10,0 5,3% -2,1 -1,1% 585,9% € millions 31/03/2014 31/03/2013
Slide 7: Good cruising speed, few markets slowed by the bad weather
Good cruising speed, few markets slowed by the bad weather Europe: Revenue +2.0% YoY EMEA (+1.8% at constant FX) ME & A: Revenue +9.1% YoY (+28.8% at constant FX) AMERICAS NA Revenue -0.7% in APAC USD YoY Revenue +11.6% in APAC AUD YoY 7
Slide 8: Signs of recovery in Europe, floodings impacted Italy
Signs of recovery in Europe, floodings impacted Italy Q1 2014 Q1 2014 % of Q1 2014 vs vs Group sales Q1 2013* Q1 2013* Slow start to the year due to floodings and sluggish development of trials portfolio in the first part of the quarter; Italy -6,9% strong improvement in the second part of the quart
Slide 9: Harsh winter in US and unfavorable FX in APAC
Harsh winter in US and unfavorable FX in APAC Q1 2014 Q1 2014 % of Q1 2014 vs vs Group sales Q1 2013 Q1 2013 Slow start to the year mainly due to the particularly harsh winter. Impact on sales further AMERICAS -4,3% Usa & Canada -4,3% penalized by the negative FX effect (OG: -0,8% in Q1) . 17,5% Ano
Slide 10: EMEA: signs of recovery in Europe & strong organic growth in the rest of the region
EMEA: signs of recovery in Europe & strong organic growth in the rest of the region € millions Q1-2014 Q1-2013 * ∆% REVENUE 127,9 100,0% 125,4 100,0% 2,0% EBITDA 6,0 4,7% 5,0 4,0% 20,7% EBIT -1,2 -0,9% -2,6 -2,1% 55,1% EBITDA adj ** 6,0 4,7% 5,7 4,5% 5,2% * 2013 restated according to IFRS11, impacti
Slide 11: AMERICAS: slow start due to harsh winter & FX, nevertheless protecting profitability
AMERICAS: slow start due to harsh winter & FX, nevertheless protecting profitability € millions Q1-2014 Q1-2013 ∆% $ millions Q1-2014 Q1-2013 ∆% REVENUE 33,0 100,0% 34,4 100,0% -4,3% REVENUE 45,2 100,0% 45,5 100,0% -0,7% EBITDA 6,2 18,7% 6,5 18,8% -4,6% EBITDA 8,4 18,7% 8,5 18,8% -1,1% EBIT 5,2 15,8
Slide 12: APAC: robust & profitable organic growth despite strongly adverse FX impact
APAC: robust & profitable organic growth despite strongly adverse FX impact € millions Q1-2014 Q1-2013 ∆% AUS$ millions Q1-2014 Q1-2013 ∆% REVENUE 27,4 100,0% 29,5 100,0% -7,1% REVENUE 41,9 100,0% 37,6 100,0% 11,6% EBITDA 6,5 23,6% 6,3 21,4% 2,4% EBITDA 10,0 23,9% 8,0 21,4% 24,8% EBIT 3,9 14,1% 3,3
Slide 13: Cash flow in line with historical seasonal trend
Cash flow in line with historical seasonal trend Q1 2014 Q1 2013 € thousands restated* EBIT 7.913 6.153 1. Careful management D&A 10.734 11.613 of working capital. Other non cash adjustments and gains/losses on sale 3.762 4.024 Net financials -5.064 -4.715 2. Net Capital Taxes paid -7.418 -8.343 Exp
Slide 14: Strong capital structure to sustain expansion plans
Strong capital structure to sustain expansion plans Net Debt to Equity Net Debt € millions 435,9 € millions 287,9 287,9 Net Debt As of 31/03/2014, Total Equity 16,9 403,0 maturities covered until Long-term Short-term Cash Net debt 2018 by the current debt debt 31/03/2014 cash position – this -164,9
Slide 15: Q1-2014 Amplifon Revenue Breakdown
Q1 Q1--2014 Amplifon Revenue Breakdown € millions Q1-2014 Q1-2013* ∆% ∆ FX OG% Italy 43,7 23,2% 47,0 24,8% -6,9% -6,9% France 24,1 12,8% 23,0 12,1% 5,0% 3,3% The Netherlands 13,4 7,1% 15,1 8,0% -11,4% -11,4% Germany 12,9 6,8% 9,1 4,8% 41,7% 34,7% UK & Ireland 9,1 4,8% 9,9 5,2% -7,7% 0,2 -10,2% Iberi
Slide 16: Q1-2014 Income Statement
Q1 Q1--2014 Income Statement Q1 2014 Q1 2013 € thousands ∆% restated* 1.ASP pressure in NL Revenue 188.349 100,0% 189.368 100,0% -0,5% bearing on COGS%. COGS (46.193) -24,5% 1 (45.896) -24,2% 0,6% 2.Labour costs down y-o-y Labour Costs (62.351) -33,1% 2 (64.360) -34,0% -3,1% 3 as a result of the Cos
Slide 17: Balance Sheet: heavy currency impact
Balance Sheet: heavy currency impact 31/03/2014 31/12/2013 31/03/2014 31/12/2013 € thousands € thousands restated* restated* Trade payables -90.301 -96.241 Goodwill 512.298 500.680 Other payables -108.708 -115.552 Cust. lists, non-compet. agreem., Provisions for contingency and 93.035 92.875 -372 -4
Slide 18: FY-2013 Financial Results
FY--2013 Financial Results FY
Slide 19: Short-term challenges in 2013 but fundamentals remain intact
Short--term challenges in 2013 but fundamentals remain intact Short MANAGING LEVERAGING SHORT-TERM CHALLENGES ON-GOING STRUCTURAL GROWTH DRIVERS Regulatory change in The Netherlands Solid & intact industry fundamentals Weak European macroeconomic environment Resilient business in a weak economic env
Slide 20: FY-2013 Financial Results
FY- FY-2013 Financial Results FY-2013 FY-2012 € millions Recurring % on Non- Total % on Recurring % on Non- Total % on ∆ % on Recurring Recurring Total Recurring Recurring Total Recurring REVENUE 828,6 100,0% - 828,6 100,0% 846,6 100,0% - 846,6 100,0% -2,1% EBITDA 123,2 14,9% (5,8) 117,4 14,2% 145,2
Slide 21: Global player outperforming the market growth
Global player outperforming the market growth Europe ex. NL: Revenue -0.1% YoY EUROPE (+0.5% at constant FX) EU NL: Revenue -25.6% YoY USA NA A Revenue Revenue P +8.7% +9.9% in Emerging Market A in AUD USD YoY (ET, IN, TK) C APAC YoY Revenue organic growth +45% YoY - representing less than 1% of Tot
Slide 22: Revenue Breakdown: resilient business with increased volatility Q-o-Q
Revenue Breakdown: resilient business with increased volatility Q- Q- o - Q FY 2013 Q4 2013 FY 2013 Q4 2013 % of FY 2013 vs vs vs vs Group sales FY 2012 Q4 2012 FY 2012 Q4 2012 The business remained resilient despite the slowdown of the economic Italy 0,4% -0,3% environment; Q4 sales were almost in
Slide 23: Revenue Breakdown: resilient business with increased volatility Q-o-Q
Revenue Breakdown: resilient business with increased volatility Q- Q- o - Q FY 2013 Q4 2013 FY 2013 Q4 2013 % of FY 2013 vs vs vs vs Group sales FY 2012 Q4 2012 FY 2012 Q4 2012 NORTH A year of remarkable and profitable growth jeopardized by negative FX 6,3% 1,3% Usa & Canada 6,3% 1,3% impact (OG: +1
Slide 24: Europe: resilient business & signs of recovery but challenging Dutch market
Europe: resilient business & signs of recovery but challenging Dutch market € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 559,6 100,0% 582,9 100,0% -4,0% 175,2 100,0% 184,6 100,0% -5,1% EBITDA 57,9 10,3% 83,9 14,4% -31,0% 32,0 18,3% 42,1 22,8% -23,9% EBIT 25,8 4,6% 53,5 9,2% -51,8% 23,4 1
Slide 25: North America: sound & profitable growth outperforming the market
North America: sound & profitable growth outperforming the market € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 138,7 100,0% 130,4 100,0% 6,3% 33,3 100,0% 32,9 100,0% 1,3% EBITDA 25,6 18,5% 24,7 18,9% 3,7% 4,8 14,4% 7,2 21,9% -33,4% EBIT 21,1 15,2% 19,1 14,6% 10,8% 3,3 9,9% 5,3 16,2% -38,
Slide 26: APAC: solid organic growth and strong finish to the year
APAC: solid organic growth and strong finish to the year € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 128,0 100,0% 130,8 100,0% -2,1% 32,3 100,0% 32,2 100,0% 0,4% EBITDA 33,5 26,2% 36,2 27,7% -7,6% 10,0 30,9% 7,5 23,3% 32,9% EBIT 21,2 16,6% 25,0 19,1% -15,2% 6,7 20,8% 4,6 14,4% 44,2% EBI
Slide 27: Steady Cash Generation also in FY 2013
Steady Cash Generation also in FY 2013 € thousands FY 2013 FY 2012 1. Heavy impact from EBIT 68.518 97.886 taxes payment due to D&A 48.896 47.286 Country mix. Other non cash adjustments and gains/losses on sale 16.348 15.339 2. Careful management of Net financials -21.874 -22.072 working capital. Ta
Slide 28: Strengthened capital structure to sustain expansion plans
Strengthened capital structure to sustain expansion plans Net Debt to Equity Net Debt Two transactions € millions € millions successfully 435,4 negotiated on the 275,3 275,3 debt capital market: Net Debt a $ 130 mln USPP 10,3 (€100.9 mln at Total Equity 382,6 hedged rate) – 7, Long-term Short-term C
Slide 29: FY-2013 Amplifon Revenue Breakdown
FY- FY-2013 Amplifon Revenue Breakdown € millions FY-2013 FY-2012 ∆% ∆ FX OG% Q4-2013 Q4-2012 ∆% ∆ FX OG% Italy 225,5 27,2% 224,5 26,5% 0,4% 0,4% 75,2 75,4 -0,3% -0,3% France 98,3 11,9% 98,3 11,6% 0,0% -1,6% 29,2 27,6 5,7% 4,6% The Netherlands 66,8 8,1% 89,8 10,6% -25,6% -25,6% 23,8 36,1 -34,2% -34,
Slide 30: FY-2013 Income Statement
FY- FY-2013 Income Statement FY- 2013 FY-2012 € thousands Recurring Non- Total % on Recurring Non- Total % on ∆ % on 1.Higher contribution of Recurring Recurring Recurring Recurring Recurring US B2B business and Revenue 828.632 - 828.632 100,0% 846.611 - 846.611 100,0% -2,1% ASP pressure in NL COGS
Slide 31: FY-2013 Performance by Region
FY- FY-2013 Performance by Region € millions FY-2013 FY-2012 ∆% Q4-2013 Q4-2012 ∆% REVENUE 559,6 100,0% 582,9 100,0% -4,0% 175,2 100,0% 184,6 100,0% -5,1% EUROPE EBITDA 57,9 10,3% 83,9 14,4% -31,0% 32,0 18,3% 42,1 22,8% -23,9% EBIT 25,8 4,6% 53,5 9,2% -51,8% 23,4 13,3% 34,1 18,5% -31,4% EBITDA adj *
Slide 32: Balance Sheet: heavy currency impact
Balance Sheet: heavy currency impact € thousands 31/12/2013 31/12/2012 € thousands 31/12/2013 31/12/2012 Goodwill 500.680 551.853 Trade payables -96.297 -98.016 Other payables -115.690 -113.515 Cust. lists, non-compet. agreem., 92.875 119.096 Provisions for contingency and trademarks and location ri
Slide 33: Equity Story
Equity Story
Slide 34: A global leading presence
A global leading presence Worldwide leader in distribution and fitting of hearing solutions Only global player with 9% of global market share 21 Countries 2,000 Corporate POS 2,500 Amplifon points 3,000 Franchisee & EHN affiliates in US 5,200 professionals worldwide on payroll 5,200 franchisee & age
Slide 35: European Leadership
European Leadership Undisputed European leader in Fairly mature Still low penetration rate: a highly fragmented market market around 20% 35
Slide 36: Multi-continental Leadership
Multi--continental Leadership Multi Highly Largest branded franchise Still low penetration rate: fragmented network around 25% market 36
Slide 37: Global Leadership
Global Leadership AUSTRALIA: NEW ZEALAND: INDIA: 25% market share Undisputed leader Presence to set leadership relatively young business over 50% market and develop the country’s with in-built growth share highly underpenetrated market 37
Slide 38: Balancing medical and retail core competencies
Balancing medical and retail core competencies Solid Consumer medical specialty retail background approach Medical Retail Business Market Resilience penetration MEDICAL APPROACH RETAIL APPROACH End users come to stores following End users come to stores driven by GP/ENT’s advice Advertisement /Marke
Slide 39: Specific solutions to all types of hearing loss & needs
Specific solutions to all types of hearing loss & needs Middle Ear implants Behind-The-Ear hearing instruments (BTE) Cochlear implants Standard/Custom Invisible in the canal In-The-Ear hearing instruments (CIC) (ITE) 39
Slide 40: Personalization is crucial
Personalization is crucial The sale of hearing aids is completely inseparable from the fitting process: The success of a product largely depends on accurate diagnosis, technical specification and personalized adaptation of device to customer’s needs; The personalized fitting procedure is carried out
Slide 41: A long-lasting relationship based on trust and dialogue
A long- long-lasting relationship based on trust and dialogue Specialized, high quality comprehensive A KEY PRINCIPLE: THE PERSONALISATION IS CRUCIAL audiological assessment, otoscopy & detailed patient history analysis The hearing solution life-cycle 1 2 REPURCHASE Avg life-cycle: 5 years Audiologi
Slide 42: Personalized pathways for each customer
Personalized pathways for each customer The average life-cycle of a solution is 5 years: Follow-up , maintenance, cleaning, Steps: Getting ready Information Education on Product Product use Planning next batteries, for the visit and transference hearing loss presentation demonstration steps and RE-B
Slide 43: Best positioned within the Hearing Aids Universe
Best positioned within the Hearing Aids Universe In a highly fragmented H.A. retail market, Amplifon is well positioned to lead consolidation and market growth due to: ENT Doctors G.P. Doctors Unrivalled leadership position MANUFACTURERS Six major players Governments / in terms of volumes, revenues,
Slide 44: Leader in the largest segment of the value chain
Leader in the largest segment of the value chain Amplifon operates in the retail and wholesale segments. RETAIL GROSS MARGIN Components Hearing Aid Wholesale Retail End Users Manufacturers Manufactures Distributors ASP/ 200 - 700 € 400 - 1200 € 600 – 3.000 € 10 - 50 € Unit WHOLESALE GROSS MARGIN MAN
Slide 45: A sizeable, untapped and growing market
A sizeable, untapped and growing market profound 5% 90% A sizeable market 70% 30% Over 650 million people in the world suffer with severe 10% some degree of hearing impairment (source: WHO) 50% 50% 15% of population in industrialized countries moderately severe 15% Estimated global market size 11 ml
Slide 46: Facts and numbers underpin our potential
Facts and numbers underpin our potential Current average customer age is 72 years old BABY BOOMERS Demographic trends BB lower first buy age: 55 years old Population Growth BB new customers’ expectations: Longer life expectancy Technology savvy Increasing noise pollution (youngsters – iPods) Expert
Slide 47: Amplifon history & performance
Amplifon history & performance Sales CAGR (2003/2013): +6.5% Ebitda CAGR (2003/2013): +6.9% 900 846,6 20% 827,4 828,6 800 17,1% 17,1% 708,1 17,5% 17,1% 14,5% 667,9 700 13,6% 657,0 13,7% 641,4 15% 613,1 14,2% 600 13,8% 11,6% 13,7% 547,1 499,9 500 443,4 10% 400 300 5% 200 144,5 145,2 117,4 93,5 105,1
Slide 48: Consistent cash generation & proven deleveraging track record
Consistent cash generation & proven deleveraging track record Historic FCF Margin % Historic Net Debt/Ebitda: 2009 - 2013 10% 4,0 8,8% 9% 8,2% 7,9% 3,5 3,5 8% 3,0 3,0 6,1% * Net Debt / Ebitda 7% 5,9% * 2,4 6% 2,5 2,1 2,2 5% 2,0 1,7 4% 1,5 3% 1,0 2% 1% 0,5 0% 0,0 2009 2010 2011 2012 2013 2009 2010 20
Slide 49: Amplifon Group Strategy
Amplifon Group Strategy Emerging Markets < 1% of Group revenue Create long-lasting Rank Develop the Market/ competitive advantage Network expansion Consolidate global market leadership Leader Roll out distinctive positioning of “consumer specialty retailer” Cluster 1 leveraging on: ∼ 50% of Group re
Slide 50: Annexes
Annexes
Slide 51: Strong competitive position across Countries
Strong competitive position across Countries Country Brand Market Share Position Competitors Italy Amplifon 41% #1 Independents, Maico, Audionova, Audika, Audibel Global leading player France Amplifon 11% #1 Audika, Audition Santè, Independents in the highly fragmented The Netherlands BeterHoren 34%
Slide 52: Unrivalled Distribution Network
Unrivalled Distribution Network DIRECT POS INDIRECT POS Country Brand Corporate Amplifon Franchisee/ Network POS points Service Centers Affiliates The Group operates through two main Italy Amplifon 486 2.096 distribution channels: France Amplifon 312 74 1 The Netherlands Beter Horen 187 65 Direct po
Slide 53: Brand simplification – praising local excellence
Brand simplification – praising local excellence Market Segment: medical and retail Model: corporate POS Flagship brand, founded in 1950 Countries: Italy, France, Germany, Spain, Portugal, Switzerland, Belgium, Luxembourg, Hungary, Poland, UK, Ireland, India, Egypt 1,527 owned stores, 2,373 Amplifon
Slide 54: Brand simplification – praising local excellence
Brand simplification – praising local excellence Elite Hearing Network is one of the largest independent networks in North America Market Segment: medical and retail Model: independent businesses Acquired in 2002 Countries: US Network of 1,709 independent stores National Hearing Care is a widely rec
Slide 55: Regulatory Environment 1/2
Regulatory Environment 1/2 % of Amplifon Country Sales Force Qualification Medical Prescription System of reimbursement and fiscal deduction Eligibility revenues from reimbursement Average reimbursement of € 600 per hearing aid which covers the basic device cost. Eligible individuals are entitled to
Slide 56: Regulatory Environment 2/2
Regulatory Environment 2/2 % of Amplifon COUNTRY Sales Force Qualification Medical Prescription System of reimbursement and fiscal deduction Eligibility revenues from reimbursement Audiologists / Mandatory only for public Partial reimbursement provided by public health service (150 € for each POLAND
Slide 57: US Value Proposition: Franchise & Wholesale
US Value Proposition Proposition:: Franchise & Wholesale Territory: Marketing: Exclusive territory Members marketing fund Minimum Performance Target Broad-reach media plan + TV Referrals: Physician Marketing: HearPO prioritizes Amplifon CRS model to implement stores Research/ Clinical partnership Pr
Slide 58: NHC: a young business with in-built growth
NHC: a young business with in- in-built growth Relatively young business with in-built growth through clients re-purchasing after 4 to 5 years as a greater number of NHC clinics starts to mature. Clinics > 4 years 58
Slide 59: Consumer Specialty Retailer, the Amplifon Experience
Consumer Specialty Retailer, the “A “Amplifon Experience” Amplifon, Worldwide Head Quarters Store, Milan, Italy: Opened 2009 59 59