GN Store Nord A/S · OMXCOP:GN
GN Store Nord A/S — Q2 2002 Earnings Presentation
21 slides from GN Store Nord A/S's earnings presentation, Aug 28, 2002
Slide 1: Q2 2002 Earnings Release
Q2 2002 Earnings Release August 28, 2002 President & CEO Jørn Kildegaard Executive VP & CFO Jens Due Olsen
Slide 2: Safe Harbor Statement
Safe Harbor Statement The forward-looking statements in this interim report reflect management's current expectations for certain future events and financial results. Statements regarding 2002 are, of course, subject to risks and uncertainties which may result in material deviations from the outlook
Slide 3: GN - Two Businesses - One Stock
GN - Two Businesses - One Stock Fully Committed to Separate NetTest GN is # 2 in headsets The GN stock and top tier in hearing aids • Strong balance sheet • 1H 2002 sales of DKK 2,308m • Top tier technology and production base in • 1H 2002 EBITA of DKK 178m global markets with strong fundamentals •
Slide 4: Q2 in Brief
Q2 in Brief • GN Netcom and GN ReSound performed as expected on a leaner cost base versus 2001 - Bluetooth mobile headsets spark 82% increase in sales in mobile segment Q-o-Q - Low priced digital Canta2 contributes to 4% overall organic growth in sales in flat markets Y-o-Y - “Closing the Margin Gap
Slide 5: The Headset Market
The Headset Market Q2 Further weakness in US call center and office market due to slowing economy Europe shows signs of weakness Further staff reductions Q3 Call center and office market weak in US and Europe Mobile headsets showing strong growth – legislation banning cell phone use while driving Fu
Slide 6: Headlines - Headsets
Headlines - Headsets • Revenue and earnings as expected • Bluetooth products spark 82% growth in mobile segment, Q-o-Q • American growth off set by European decline in CCO market • Hello Direct in black in 2002 • Lean cost base to be leveraged on 6
Slide 7: Bluetooth
Bluetooth • Motorola OEM agreement develops successfully • Production being ramped up to 100.000 units/month • 3 new Bluetooth headsets in 2002 confirm GN Netcom’s cordless leadership • BT100TM retails at EUR 209 • Product 2 expected retail at USD 99; to be released in Q3 2002 • Product 3 expected r
Slide 8: Q2 2002 - Financials (GN Netcom)
Q2 2002 - Financials DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 • Sales increased by 7% from Q1 Sales 506 456 471 497 406 433 Gross profit 265 231 247 249 210 223 Margin,% 52,4 50,7 52,4 50,1 51,7 51,5 • EBITA on par with Q1 EBITA 46 (4) 46 41 29 27 Margin,% 9,1 (0,9) 9,8 8,2 7,1 6,2 Margins in Q2 ref
Slide 9: The Hearing Aid Market
The Hearing Aid Market Q2 Industry slightly cyclical only, but US declined and little growth in Europe Beltone network stabilising Canta7 favorably received in the market Q3 US market declined in Q3 – Europe showing small growth The trend with further digital penetration continues Q4 US market retur
Slide 10: US Development in Digital Segments (units)
US Development in Digital Segments (units*) 10% 10% High Mid 17% Low 17% 22% 8% 2% 2000 Q1 2001 Q1 2002 Q2 10 * GN estimates
Slide 11: Headlines – Hearing Aids
Headlines – Hearing Aids • New products strengthen presence in growth segments • Beltone network continues to increase number of outlets • Organic growth 4% in overall sales EBITA margin • “Closing the Margin Gap” on track % 10 • Y-o-Y increase in EBITA margin 8 6 4 2 0 Q1/01 Q1/02 Q2/01 Q2/02 Q3/01
Slide 12: Producing on Fewer Sites with Fewer People
Producing on Fewer Sites with Fewer People From 6 to 2 BTE main plants in 2003 Consolidating local custom plants in 2002 Præstø Closed Vienna Cork From country to regional customized set up end Q2 Eindhoven Minnetonka Cork Eagan Bloomington China China Redwood City end Q3 Chicago Total Annual Saving
Slide 13: Focusing on Two Brands – GN ReSound and Beltone
Focusing on Two Brands – GN ReSound and Beltone 1999 2000 2001-2004 64% of sales is digital Danavox + 35% of sales from new products + + 35% of sales is on standard chip platform Viennatone ReSound ReSound + + ReSound Beltone + + Beltone Philips = + 80% of sales in Q2 13
Slide 14: Q2 2002 - Financials (GN ReSound)
Q2 2002 - Financials DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Sales 701 725 724 756 739 730 • Revenue on par with Q1 Gross profit 355 361 346 371 387 381 Margin,% 50.6 49.8 47.8 49.1 52.4 52,2 EBITA 43 38 55 67 60 62 Margin,% 6.1 5.2 7.6 8.9 8.1 8,5 • EBITA on par with Q1 Geo mix,% 2000 2001 YTD/02
Slide 15: The Test & Measurement Market
The Test & Measurement Market Q1 Best quarter ever with strong gross order intake of DKK 839m No signs of market slowdown Q2 Strong but slowing gross order intake of DKK 635m – few cancellations First signs of slowing market with struggling component manufacturers Q3 Weak market with order push-outs
Slide 16: Headlines - NetTest
Headlines - NetTest • Q2 as expected though in lower end of range • Additional cost reductions to lower EBITA breakeven to DKK 1.2bn in 2003 - staff reduction from 1,100 end Q2 2002 to approx. 850 early 2003; down from 1,850 Q1 2001 • Directing R&D from optical manufacturing towards network operatio
Slide 17: Q2 2002 - Financials (NetTest)
Q2 2001 - Financials • Gross order intake of DKK 256m on par with Q1 Optical - DKK 50m DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Networks - DKK 137m Sales 714 701 475 437 217 245 Systems - DKK 69m Gross profit 329 335 232 108 75 88 Margin,% 46.1 47.8 48.8 24.7 34.6 35,9 De-booking - DKK 60m EBITA 63
Slide 18: Key Financials – P&L and Cash Flow
Key Financials – P&L and Cash Flow DKKm Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Group sales 1,983 1,944 1,682 1,710 1,368 1,415 GN Netcom 506 456 471 497 406 433 GN ReSound 701 725 724 756 739 730 NetTest 714 701 475 437 217 245 Group EBITA 139 90 47 (78) (50) (31) GN Netcom 46 (4) 46 41 29 27 GN ReSoun
Slide 19: Cash and Liquidity
Cash and Liquidity • Negative cash flow of DKK 41m in Q2 • CFFO in H1 improved by more than DKK 600m Y-o-Y • Y-o-Y improvements in working capital reducing inventories and receivables Cash Flow From Operations, DKKm – DKK 3.8bn Q2/01 600 – DKK 2.8bn Q2/02 400 200 0 -200 -400 -600 Q1/01 Q1/02 Q2/01 Q
Slide 20: GN ex NetTest maintains EBITA Forecast for 2002
GN ex NetTest maintains EBITA Forecast for 2002 NetTest Lowers Break-Even to DKK 1.2bn in 2003 GN ex NetTest forecasts total sales of less Full year sales is forecasted to approx. DKK 900m than DKK 5bn with EBITA of min. DKK 350m: with EBITA of approx. DKK (400) m.* Headset sales forecasted to DKK 1
Slide 21: Summary
Summary •Q2 performance as forecasted •CFFO was improved by DKK 600m in H1 versus H12001 •Headsets •7% sequential growth in sales from successful launch of mobile Bluetooth products •Leveraging higher volume on lean cost base •Hearing Aids •Canta2 strengthens position in growing low-end market •”Clo