Gn Store Nord A/S Adr

Hello, everyone, and welcome to GN's conference call in relation to our Q2 results announced this morning. Participating in today's call is Group CEO Peter Carlstrømmer, Group CFO Søren Jelert, and myself, Rune Sander, Head of Investor Relations. The presentation is expected to last about 15 minutes, after which we'll turn to the Q&A session. The presentation is already uploaded on GN.com. And with that, I'm happy to hand over to Peter for some opening remarks.

Thank you, Rune, and thank you all for joining us today. In the second quarter, we have continued our strong execution across our company, and we're very pleased with the results we're reporting today. Hearing continues to deliver very strong performance. We continue double-digit organic revenue growth and further improve profit margins, even on top of an exceptionally strong quarter last year. We have also recently launched additions to our successful recent Nexian Belt and Serene portfolio. In addition, we have released software updates that make our fitting software even better. This will further strengthen our offering and help to continue adhering strong momentum. In enterprise, we have also executed very well. We defend our market leading position while improving our margins in a market that is undergoing a recovery. We have recently launched new software with the Jabra Plus application for admins, which is further strengthening our core enterprise offering. In gaming and consumer, we deliver strong organic revenue growth. We gain market share in gaming while improving margins in a slightly growing market. We also launched the Arctis Nova 5 headset that have been very well received in the market. While delivering strong results across our divisions, we have also continued to transform the group. The 1GN transformation continues well and delivered another 100 million Danish krona in the quarter. Furthermore, we have taken successful steps in the wind down of the Elite and Torque product lines in line with our plans earlier communicated. And as just announced, we have also divested our Danish hearing aid retail business, which lies outside of our hearing wholesale and partnering strategy. In summary, we are very pleased with the quarter. We continue to strengthen our results while transforming JN for a successful future. With this high-level introduction, I'm happy to hand it over to Søren for further details on the group performance in the quarter.

Thank you, Peter, and thank you all for joining us today. On a group level, we managed to deliver yet another quarter with 5% organic growth, which led to a reported EBITDA margin of 8.3%. If we exclude the extraordinary costs incurred during the quarter, the underlying EBITDA margin ended at 11.8%, which is two percentage points higher than last year. Finally, our solid earning levels led to a free cash flow of 155 million DKK. Moving into the financial details on slide 6. The solid 5% organic revenue growth was supported by a growth margin of 51.9%. This gross margin level was driven by a business mix and group synergies while being partly offset by retail disposals and extraordinary costs related to the gradual wind down. R&D investments were slightly up year over year, which was primarily a reflection of the timing effects of product roadmaps and the 95 million extraordinary write-down in relation to the consumer product lines. Management and admin costs as well as sales and marketing costs were essentially flat compared to Q2 of last year. Consequently, EBITDA, excluding extraordinary cost, increased by 31%, reflecting the healthy top-line development, the gross margin improvement, as well as stable development in OPEX. Our solid earnings levels led to a positive cash flow of 155 million, driving a further reduction of the adjusted leverage, which ended at 3.9. With that, let's move to slide 7 and more details on the free cash flow generation. As mentioned, the free cash flow ended at 155 million in the quarter, reflecting a solid earnings level. In the quarter, we saw limited change to net working capital. This is a large contrast to last year, where we managed to reduce net working capital significantly as a result of inventory reductions, as well as a one-time positive effect on trade payables from a new commercial agreement. With a solid cash flow generation, our adjusted leverage ended at 3.9 times, which marks the first time since 2021 that our leverage is below four times. We remain focused on a continued steady deleverage plan, which we shared on the Capital Markets Day. Moving on to slide eight and a very brief status on the 1GN integration. We remain on track to deliver around 800 million DKK in cost synergies by 2026, of which 400 million is expected in 2024. And during the quarter, we managed to realize synergies of around 100 million. Year to date, we have now realized total synergies of around 190 million. We remain confident about our ambition for 24 as well as for 26, which should further de-risk the company's profile over the coming years. And with those group highlights, I'm happy to hand you over to Peter for some additional callers on the three divisions.