Gn Store Nord A/S Adr

Hello everyone, and welcome to GN's conference call in relation to a Q2 report announced this morning. Participating in today's call is Group CEO Peter Karlstrømmer, Group CFO Søren Jelert, and myself, Rune Saner, Head of Investor Relations. The presentation is expected to last about 20 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 Q2, we executed well and successfully navigated a challenged market environment with uncertain trade policies. We controlled our revenue and margin and have set us up successfully for delivering on our year in line with our guidance. Importantly, we also executed significant changes in our supply chain that will support the margin expansion towards our strategic ambitions. In hearing, the launch of ReSound Vivya is progressing well. With the help of Vivya's strong value proposition and our strong market execution, we gained market share and grew 8% organically. We are very pleased with its performance in markets that are growing below the structural trends. We are also excited by our recently announced new superpower hearing aid, ReSound Enso IA, which will help us to build on the strong launch momentum from Vivya. In enterprise, we continue to see positive seller growth across North America and the rest of the world, in line with what we also saw in Q4-24 and Q1. In Europe, the market continues to be challenged by a weak macro environment and the indirect effects of the global trade uncertainty. Despite the challenges, enterprise has successfully maintained a strong market-leading position, making us prepared to benefit when the market turns. Furthermore, Falcom is continuing to build its pipeline, setting them up for a good year. And in Q2 alone, they contributed positively to the enterprise division with almost 100 million Danish kroner. In gaming, we continue to take market share and deliver 0% organic growth in a gaming gear market challenged by tariffs and lower consumer sentiments. In summary, this was a quarter with strong execution, navigating an uncertain environment and a quarter where we will further have increased flexibility and agility in our supply chain, enabling us to respond more quickly to future uncertainties. While we are not fully there, we are gradually leaving the difficulties behind us and look forward to working with our customers, partners and employees to build a strong future together. And with that, I'm handing it over to Søren for group numbers in the quarter.

Thank you, Peter, and thank you all for being here with us today. As Peter mentioned, Q2 was challenged by the direct and indirect effects of the global trade situation. However, by concentrating on the business factors within our control, GN executed well under these circumstances. Our tariff mitigation plan is well underway and we are confident that it will enable us to ensure a continued strong performance while protecting our margins. In summary, our organic revenue growth ended at 0%, excluding the wind down. Driven by the very strong performance in hearing leading to 8% growth, offset by a negative 7% in enterprise due to the global trade uncertainty. Gaming performed well in a challenged market, achieving a 0% organic growth and taking share. Including the wind down, our organic growth rate was negative 5%. Driven by a combination of broad-based growth, margin improvements and prudent cost management, the EBITDA margin came in strongly at 13%. Our cash flow was solid, coming in at 353 million Danish kroner, excluding M&A, reflecting our earnings profile as well as our favorable development in inventories. Now, let's move to the P&L and cash flow details on slide 6. Despite a flat top line, our gross margin continues to improve, which in the second quarter amounted to an improvement of 3.7 percentage points compared to Q2 of last year. The positive result was achieved despite direct tariff costs in two out of our three divisions, and can be attributed to our strong pricing discipline, favorable business mix, and group-wide synergies from the 1GN integration. Reported EBITDA reached 546 million DKK, equivalent to a 46% increase over Q2 of last year, reflecting our strong gross margins, prudent cost management and no extraordinary costs. Moving to the cash flow, our strong earnings profile combined with our favorable development in working capital resulted in a positive cash flow of 353 million DKK in the quarter. Driven by a positive cash flow and our solid earnings level, our leverage decreased from 4.0 compared to 4.9 in Q2 of 24. Moving to the next slide and our refinancing process. Driven by our strong fundamental operational improvements in recent years, we started to discuss the next refinancing opportunity with our core banking group earlier this year. Following these discussions, we are happy to announce that we have agreed on key terms for a new facility agreement. The agreement is still subject to customary, long-form documentation which is expected to be concluded during Q3 of 2025. This new agreement effectively allows us to refinance up to €1 billion and push relevant maturities to €28 billion with optionality for further two years. On top of this, we have also been able to push maturity of our current undrawn revolving credit facility. The new agreement will provide GN with improved terms and conditions as well as lower interest rates compared to existing loans. As a consequence of the refinancing and the lower general arrival level, this would lead to a significant reduction in net financial items already by 2026. Assuming constant FX and interest rates, we are currently assuming net finances for 2026 in the region of 450 million DKK. With that recap of our group performance, I'm pleased to hand you back to Peter for additional insights across the three divisions.