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Good afternoon everyone and welcome to the conference call for Daemant's 2025 Annual Results. My name is Peter Pusselugge and I'm heading up the investor relations activities here in Daemant. With me here today, I have the usual team, our President and CEO, Søren Nielsen, our CFO, René Schneider, as well as Gustav Hög from the IR team. For the call, we will do a presentation which will be followed by a Q&A. We expect the session to last no more than one hour in total. As we get to the Q&A, we kindly remind you to limit yourselves to two questions at a time to allow as many as possible to ask a question. Before we dig into the presentation, please do pay notice to the disclaimer on slide number two. And with that, I will go to slide number three, where I'll pass the baton to Søren to kick off the presentation, please.

Thank you very much, Peter, and welcome everybody. The agenda for today is key events for 2025, financial takeaways, and then comment on sustainability advancement, more details on business area reviews, not the least the fourth quarter. Then René will do group financial and also take us through outlook and initiatives to improve profitability. And if we take 2025 in total at group level, we deliver 2% organic growth, 5% in local currencies. Of course, a significant element from acquisitions, headwind from currencies leaves us with 2% reported growth. And the biggest expansion is in hearing care, which now is the biggest business area, as you can see on the business mix split. Gross profit up 2%, but down on margin related to, I would say, hearing aids, to some extent diagnostic, but we'll get back to that. EBIT down 10% before special items, and free cash flow down 11%. Key events in 2025, we acquired the Kind Group in Germany, closed the deal in December, so have one month in the books, one of the world's leading retailers, and with that significantly expanding our position globally, but in particular in Germany to a number one in air and care. In October, we introduced Odecon Seal in selected markets, and a launch that so far have created a lot of excitement and a lot of good momentum to carry in to 26. During 2025 we signed agreement to divest both EPOS and Olicon Medical in line with our strategy to be a more focused hearing healthcare company. The hearing aid market in 2025 was softer than normal and particularly in the US where we saw flat market growth for 2025 in total. HearingCare delivered very solid performance, not the least in the view of the global hearing aid market, whereas hearing aids and diagnostic delivered softer growth. All three business areas showed an improved and strong performance in Q4. Key financial takeaways for the second half. Group organic growth of 4% for the second half in total. So a sequential improvement from the first half fueled by all three business areas. Gross margin decline versus second half 24%. due to ASP headwinds in hearing aids and increasing share of rechargeability. I'm going to get back to it, but the ASP headwind comes from channel and geography mix, so selling more in countries and channels with a lower ASP and less in higher priced markets like the US. Diagnostic was also a minor drag on the gross margin coming from their product mix and some geography. OPEX grew 5% organically, but as already guided for and expected, flat sequentially from H1, so still reflecting a cautious approach to cost expansion when we look at it sequentially, the 5% to some extent originates from a significant holdback at the end of 2024. Acquisitions added 5% point to growth compared to second half last year. EBIT before special items 2.1 billion negatively impacted by exchange rate effects and by lower operating leverage. EBIT margin therefore before special items contracted 2.6% point. Special items amounted to Danish kroner minus 128 million. Strong cash flow from operations of 2.3 billion and free cash flow of just around 2 billion Danish kroner. Outlook is going to elaborate further on it for 26. Organic growth of 3 to 6% and EBIT before special items of 4.1 to 4.5 billion Danish kroner and continue to pause on our share buyback to bring down group leverage. Sustainability means quickly we saw an increase as expected of improved lives by overcoming their hearing loss to 12 million and a growing number of tests in our own clinics following the expansion of that. And when we look at our three main sustainability goals, under the headline of respect for the planet, a planet decrease in our scope 1 and 2 greenhouse gas emissions. We have now achieved 16% reduction compared to baseline with a target of 46% by 2030. gender diversity in top-level management now at 33%, so 1 in 3, and with the aim of getting above 35% by 2030, and the number of people that have read and understood out of the People for whom it's relevant should be 100% by 2030 and you could say basically already tomorrow if at all possible and we are almost there. Business area review. Well, hearing aid market in 2025 have definitely been special and fourth quarter which is the new release is no different. We have seen a high unit growth and this is all units in Europe but it's all driven or mainly driven by NHS in UK, the National Health Service, that had strong growth, partly to expand the inventory levels, etc. And then France also showing high growth, as expected, due to the annualization of the reform. If we allow ourselves to exclude NHS and France, unit growth was 3% in Europe. In Germany, specifically, growth declined year over year. North America saw a sequential slowdown from two quarters with 2% growth to zero and leaving the year with one. Canada saw good growth, so it was offset by flat growth in the U.S. commercial and a slightly negative in the VA. The rest of the world delivered growth, Australia positive growth, while Japan saw minimal growth. China saw sequential improvement and we estimate that several emerging markets saw good growth. So again, the ASP, we normally believe in a flat ASP. But no doubt that with the geography mix and channel mix in the year and fourth quarter as much, then we estimate that we should see a negative impact on ASP in, you know, it's not the exact science, but in the area for percentage points at least. So a global hearing aid market that have assumably grown just around 2% in value for the year. Hearing aids fourth quarter, organic growth also in fourth quarter improved despite of the US market weakness and the loss of share in US. The main area in which we have lost share in US remains to be a large retailer where the number of providers or suppliers have been expanded. We introduced Oticon Seal in selected European markets which have created excitement and momentum change in these four countries. We have really seen Seal lift sales also in general in these markets. However, with limited impact on the total group level in fourth quarter simply by the size of these four countries and the potential, even though Germany is a big country, the premium market in Germany is not that big. So again, not something that financially impacts that much, if of course does some, but not that much in the fourth quarter. So unit growth was very solid representing overall market share gains in units across several key markets. I would say almost with the main exception being US. The ASP was negative as I said due to geography and channel exchanges. So France, UK, Germany, good growth in Europe, all big markets, strong performance in Canada, US growth was negative, as I said, good growth in Japan, South America, and also relatively broad-based growth in Asia, except for China, which I still would say is market-related. And the rollout of Odeconceal, just a few more comments to that. We launched it in Europe and in both Germany, Switzerland, UK and Denmark. The conclusion is the same. It is undisputed, seen as a new, very innovative concept by both hearing care professionals and end users. It does help in having end users take the choice to get going and see less obstacles. So very positively seen uptake with first-time users. It does also lift sales of our other portfolio, because it opens doors to new customers. And if an end-user has tried a seal and is happy with the sound quality and the quality of the instrument, but for some reason prefers to continue with an in-ear, there might be some comfort issues, the ear canal doesn't work, It's natural to then fit an intent because you will have more or less exactly the same sound quality and something you just like. So we do see additional sales to customers that did not work that much with us. And we have actually also seen limited cannibalization with customers that we already were doing business with and that have taken in seal products. So this is the conclusion from the four markets. We have also I think been open about that it's only in a premium price point and that we have lifted pricing in some markets significantly compared to intent and so far we have seen acceptance of the price. and it has not prevented us from creating excitement and private sales. That being said, it is a premium price point, it is a premium category type of products, but it definitely also makes some people spend more than they might have thought they would had they had to pick a receiver-in-the-air instrument where there are more options available at different price points. I also think we can say that you cannot really say, okay, what is the potential and what's the share and the in-ear market, because that's not how people, especially first-time users, think about hearing aids. They will look at what's available at the table and pick the one they find most attractive, and there's no doubt that by first-time users this is seen as much more attractive than carrying a traditional right instrument. So all in all, very good takeaways, and we bring this excitement into 26, where we have now launched in U.S., where we will in the coming weekend launch in Canada, and where we, early March, will launch in France, and then onwards with all remaining significant and major markets. Germany will also expand activity significantly here in Europe, first quarter to make sure they get to a full rollout, which was not the case in the initial launch. So we move on. And again, not to open the discussion already, when we then say we still have something ahead of us, it is because it remains to be a sequential launch, so we have to take it market by market to make sure we get off on the right foot. And, of course, with U.S. market have been the most muted and a big premium potential, then it also to some extent depends on how the market develops, but maybe SEAL can be part of creating renewed excitement and also interest from end users. So I would say there's still some uncertainty left around that, which I'm sure Vanier will come back to. We continue to expand our portfolio also in Q1. We release devices of our latest technology containing disposal batteries which in some channels and geographies are still important and then also a new offering in part of the pediatric portfolio and then all these new products offer latest and greatest sound quality and connectivity similar to Siegel where we also get very good feedback on the latest technology which is also a connectivity technology which is also available in Oticon Intent. Hearing care, MQ4, solid performance in a weaker than normal hearing aid market, of course strong tailwind from a month with Kint, so in the quarter doing 17% in local currencies, 5% organic. across the geography, strong performance in Poland and a number of other mid-sized European markets, continued solid growth in France, driven by the anniversary of the 21 reform, good organic growth in North America, driven by continued improved performance in US, very positively, However, some negative development in Canada. Australia saw good growth continuing improved momentum and China also delivered good organic growth driven by ASP tailwind from a continued better product mix. So all in all, well done in hearing care in the fourth quarter. And also diagnostic came in strong in the fourth quarter, delivered organic growth of 8% in local currencies. So clearly best performing quarter this year. and in general a good uptake. Strong growth in UK and Germany, good performance across several mid-sized markets. US and Canada saw strong growth, however, driven by service and consumable business, again back to cross-margin, which is a little bit lower in these areas. Australia delivered strong growth primarily on instrument sales, and China continued to be impacted by general weak markets, and there was some drag on growth in Asia in general. With that, over to you, Manin.

Thank you, John. So let's push through the financials, a little bit of repetition, so I will be quick on this. So the revenue for the second half here, we saw solid organic growth of 4%. Hearing aids and diagnostics saw good organic growth and especially diagnostics improved in the fourth quarter. Growth from acquisitions contributed 3% to growth and we had FX headwind of 4% predominantly due to the decline of the US dollars. Turning to gross profit, it increased by 3% to 8.8 billion. We saw a slight decline in the gross margin against second half of last year. And this decline was driven primarily by geography and channel mix changes in our hearing aids business. And we also saw some headwind in the diagnostics business, partly affected by tariffs. And last also a slight headwind on the gross margin from the FX development. On operating expenses and EBIT, so we increased the OPEX by 5% organically half year, over half year, partly due to very low comparative figures as we pulled back on cost significantly in 24. And we have seen a flat development sequentially from first half year into second half year, which is a reflection of our continued focus on cost management. Acquisitions added an additional 5% to growth to OPEX in the second half year of 2025. And again, also here we see an offset from a declining US dollar. When it comes to EBIT, we ended second half at 2.1 billion. negatively impacted by exchange rates and by lowering operating leverage in hearing aids. The decline in EBIT was due to weaker than normal growth in the overall hearing aid market as the main contributor and for us specifically a loss of market share in the US primarily due to lower sales to a large retailer. and this resulted in a contraction of the EBIT margin to 18 percentage point. Special items in the period was related to the acquisition of Kint and a non-Cash adjustment, all in all 128 million in H2. Cash flow continued to be very strong. Cash flow from operations in H2 of 2.3 billion and just shy of 2 billion of free cash flow. So again, continued very strong cash flow generation. Our capital expenditure of 409 million is an increase compared to same period last year, primarily driven by high investments in production facilities. Cash out to acquisitions amounted to 5.4 billion and this of course predominantly relates to the acquisition of Kim that closed beginning of December. We did not purchase any more shares under the share buyback program in second half year. So we end the year at a total of 582 million as previously disclosed. When it comes to the balance sheet items, our net debt increased significantly. Again, this is solely due to the acquisition of Kint and fully in line with our expectation, our gearing multiple at the end of the year. ended at 3.4, which is above our medium to long-term giving target of 2 to 2.5. We will prioritize deleveraging and expect to return to our medium to long-term giving target of 2 to 2.5 within 18 to 24 months after the 1st of December of 2025. And net working capital had a modest increase of 3%, and this again predominantly relates to the result of adding acquisitions to the balance sheet. So in good control here. Thus summing up the financial key takeaways for the full year as such, we ended up at 2% organic growth, again driven by the weak overall hearing aid market, a contraction of the gross margin by 0.6 percentage point, driven by weak market growth, particularly in the US, and ASP headwinds in hearing aids due to geography and channel exchanges. The operating expenses for the full year increased by only 3% organically due to our continued focus on cost management. EBIT, before special items, 3.96 billion, and an even margin of 17.2% and special items amounting to 128 million and as just reviewed strong cash flow of 3.85% of cash flow from operations for the full year and free cash flow of above 3 billion for the full year also and shadowback 582 million. So that was the quick review of the financials and that brings us into the outlook section and initiatives that we have taken there. So if we start on some of the assumptions that goes into our outlook and assumptions of course alluding to that we don't have certainty around these things but we go in with a starting hypothesis and of course the main hypothesis that goes or assumption that goes into our outlook for the year is our projection for the global hearing aid market to grow two to four percent in 2026 in value which obviously is a conservative assumption being temporarily below our medium to long-term assumption of four to six and also of course low seen in the light of the last decade of growing exactly in line with these four to six. So we believe it's prudent and in line with what we have seen in the last quarter to take a cautious stand on the market going into the year and that is what we do with the two to four percent for the market. We will come back to it, but we believe that demand in all scenarios will grow above the market in 26. Another key assumption on the right-hand side is that as part of our plans for 26, we have launched a company-wide initiative to exactly improve profitability and lower cost growth and specifically in some areas lead to cost reductions. These initiatives will positively impact EBIT before special items up around 250 million in 26. Since this is an initiative that is starting now, we foresee that the majority of this impact will be materialized in second half year, which is why we for 26 see an EBIT scoot more than usual towards the second half year. Also, product launches impact the phasing of EBIT for 26, so this is an important note. We have seen a significant decline in the US dollar in particular, but also other currencies, and we expect a negative impact on EBIT from FX of 200 million compared to 25, with the impact evenly split between H1 and H2. We expect the KIMT group to contribute with 300 million on EBIT before special items in 26. This is in line with our previous communication. And we expect a limited impact from tariffs on the group, 25 million in our diagnostics business. Also nothing new in that. So summing up on the special items where we see particular things to take into the account for 26 is now totaling 325 million of which 125 relates to the previously announced integration cost related to the Kint acquisition and then we do add to that an additional 200 million related to the foreseen restructuring and also adjustment to the organization and size as part of this cost reduction initiative. Here we see 200 million of one-off costs, so all in all 325. So these are some of the core assumptions and if we Based on that built up some of the components in a more visual schematic way on the graph on the right. The starting point is our EBIT for the full year 2025 or 3.96. From that we need to subtract the 200 million that is the FX headwind in 2026. That brings us to a FX adjusted EBIT for 25 of 3.76. To that, we would, in line with the guidance we give here, add a contribution from Kint, incremental contribution from Kint, which means 11 months of EBIT. As a reminder, we did have one month in 25. So this is 11 months of the 300 million, 275. And then we need to add the organic part of our business, which includes the before-mentioned cost savings initiatives that we are confident will bring 250 million of savings to the OPEX line and then adding to that whatever else we will see of organic impact from profitability in the remaining part of the group. And this builds up to an EBIT outlook of 4.1 to 4.5 billion and important to notice here The backdrop for this outlook is, of course, the starting point of a market assumption of 2 to 4%. And we have in our plans and we aim to grow above that 3 to 6%, so taking market share essentially in all scenarios. So in this light, you can say, of course, that the 4.1% which is the lower end of this guidance reflects a very very conservative scenario where the market of course is in the conservative end of the already conservative outlook here and also that our market share gain is modest but still there. But this is the starting point for the year and we feel comfortable with that. Lastly, just a few more comments on the initiatives to improve profitability. I did mention before the effect in 26 of 250 million, but this is a two-year program that will beginning 28 and onwards bring around 500 million of cost savings to the group. We also announced today that we estimate that this will affect approximately 700 people globally in demand in 2026, of which 150 are located in Denmark. The associated costs that we recognize under special items is 200 million in 2026 and an additional 100 million in 2020. 27, both of course of a one-off nature, whereas the expected cost savings will be structural and permanent. So summing up in total, this brings us to our outlook for 26, organic growth of 3-6%, EBIT of 4.1 to 4.5 billion, Share buyback is foreseen to be paused throughout 26 as we focus on deleveraging. And for modeling purpose, we estimate acquisitive growth of 8%, FX growth of minus 2, and special items minus 325 million and an effective tax rate of 23%. With this, we would hand over to Q&A. Please.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily. The first question today comes from Richard Felton with Goldman Sachs. Please go ahead.

Hi, thanks very much for taking the questions. Just two for me, please. The first question is on your guidance, and the midpoint of the organic growth guidance does imply growing ahead of the market in 2026. I think you said you expect to do that in all scenarios. So my question is what is giving you that confidence? in outperforming the market in 2026 in all scenarios. And then secondly, Rene, I just wanted to follow up on your comments on EBIT phasing linked to product launches. Is that due to the phasing of the Zeal rollout or anything else to consider as you think about EBIT phasing? Thank you.

I take the first one, René can comment on the other. This is, in hearing aids, market share gains, that is the main driver for that. We of course are also going to see share gain coming from lifting our share in the German market after the acquisition of Kind, but the predominant is the momentum that I'm sure Sihl will create once we get full rollout and all channels at the end are opened and also of course we continue to have a strong launch program for the remaining of this year's and next year so it's the comfort and all that that make us be firm on the market share gains in all scenarios.

On the facing of EBIT there are two factors to be aware of. One is the effect of our cost savings initiative that will obviously have a little effect in Q2, but predominantly in Q3 and Q4. That is the one. And the second one is the gradual launch of SEAL, that of course will have an effect here in the first half year, but a full half year effect in H2.

Got it. Thank you.

The next question comes from Martin Parkhoy with SEB. Please go ahead.

Yes, thank you very much. Just a couple of questions. Firstly, again back to the 3% to 6% organic growth guidance, can you elaborate a little bit about the organic growth assumption across divisions? Now we saw a little bit of a dream run for diagnostics in the fourth quarter. What are you assuming for diagnostics going into the to being in 26, and then, of course, also the split on wholesale and hearing care on our organic growth. I understand that Kent will add, of course, acquisitive growth. And then, secondly, just on the gross margin expectations segment, for 2026. It was not a pretty year in 2025. What have you assumed of cross-market development in 2026 on an underlying basis? And, of course, also say how much is the contribution from Kint in that context as well.

Martin, I will do the first one quick. At this stage, I would say it's equal organic growth opportunities for all businesses. So for modeling purposes, I would be relatively equally spread across the tree.

Yeah, and on gross margin, we have our, let's say, general guidance of being in the range of 76 to 77. on an underlying basis as you refer to, you are probably in the low end of that range, but with the contribution from Kint, we are likely to see a gross margin in the higher end of that range.

Just a follow-up, Søren, on organic growth. I appreciate that it's unknown yet if a seal will be included in VA from 1st of May, but have you included that scenario in the high end of your guidance?

You know, it's very specific with individual channels. We have estimates of, or we entail a growing business in VA during 26, and we do our outmost to ensure SEAL can also become available for veterans. We have not yet, you know, achieved that conclusion.

Thank you.

The next question comes from Hassan Alwakil with Barclays. Please go ahead.

Good afternoon. Thank you for taking my questions. Firstly, on your comments around intense competition, could you help quantify the impact in the quarter from Costco and how you're factoring this into your guidance for 2026? And how would you characterize share trends in the commercial market in the U.S.? ? and if there are any other adverse shared dynamics that you would flag. And then secondly, on margin guidance for the appreciated weaker market, can you help us understand from the building blocks for a margin which is down year over year despite a benefit from the restructuring program in the second half? And just your comment around launches and that, can you talk about how that would impact phasing and whether you're on track for a platform launch in 2026.

Thank you. Let me start with the first and the very last. We don't comment on any new launches before they're there. I think you all know the tradition for that. I can only repeat we have a strong program in front of us, we believe, for the coming year, including the second half of this year. Shared trends in US, you of course have visibility to VA where we after recent launches have seen a minor dip to Odecon but have held I think well to things. We year-over-year does see a declining share with large retailer after expanding the number of suppliers but relatively stable after that change. And then with the independent, I can only say it's a very intense fight. Whether some have been holding back a little bit in their wait for a seal, I can't rule out. And therefore, I would say sequentially a little bit softening towards the end of the year. But I'm sure and hopeful that we will pick up on that now a seal is out in the U.S. market. I think that's what I can speak to for now.

When it comes to the margin development in 2026, it is of course challenged by our starting assumption of a market growth of 2-4%, that is the fundamental margin headwind that we sit with and of course in this light our cost initiative becomes extremely important because this is what brings us at the midpoint of our guidance at least to a flat EBIT margin in local currency and then anything above that would be margin expansion but of course when we assume a market growth of 2-4% margin expansion which is not in line with our mid to long term then margin expansion per se is a challenge but at least in midpoint we are flat.

Thank you.

The next question comes from Julian Wador with Bank of America. Please go ahead.

Thank you very much for taking my questions. So I have two. The first one is on ZIL, where you said the feedback was pretty good. My understanding is that ZIL is the main working part for the Schengen N26, as you said. Could you tell us a little bit what What kind of market share assumptions have you embedded in the 26 guide for ZIL in the ITE category? I'm just asking because we see a competitive product working pretty well right now, and I think another offshore competitor just announced new ITE products this morning. And also on ZIL, could you confirm if it's already marginally accretive to the group and how the volume pickup could impact the profitability? And a very quick second question is on the ASP. It was down 2.25. I think it's below your midterm assumption. You're also feeling intense competitive pressure at the moment. So do you feel the need to have maybe some kind of price discounts in the REIT category until you have a new premium platform as intent gets old? So just what could it imply on the pricing for H1-26? Could it be down again? Thank you.

Let me start with the pricing and then return to Shield. ASP when we see it down is a channel and geography mix. We still uphold I think a strong ability to have significant better pricing than many and most in the independent sector. So, no, I don't see the call out for, you know, selling Intent because it should be not competitive. I would also like to stress maybe a little bit back to Hassan's question on product launches. We are very, very happy with the performance of Oticon Intent and Seal. This platform allows us to exactly do these very high performing products at now unprecedented small sizes. It is with full connectivity, it is with full AI-driven signal processing that we enable SEAL, and that's why SEAL gets such a good reputation. It's not the first product that you can do as an in-ear instant fit type of product, but you have never before seen it with such a feature list that is totally comparable to any rig. So back to my initial comments as well, when we open new doors with SEAL, the conclusion from the first four markets is we also see growing sales of intent because it's equally a very good product. So SEAL is a door opener to a broader sales and that's also why You know, you cannot measure SEAL's ASP effect. You cannot measure. SEAL comes in with very strong ASP and of course additional SEAL volume will lift ASP, everything else equal. It's higher price than anything else we sell. So yes, very positive for ASP. If we sell a lot in U.S. and the U.S. market growth, you know, ASP will go up. The ASP effect in 25 is geography and channel related. SEAL ITE category, we have no other products that offer same features. All new rechargeable with connectivity type of in-ear products are custom made. They are what's called in-canal, which are relatively big devices that don't offer the same discreteness and invisibility as SEAL. If they are to be near as... smaller SIEL connectivity is not there and typically also limited signal processing in order to accommodate for a much smaller battery. The core element of SIEL is that it offers a much larger battery than any competitor and therefore in this size and therefore we uphold the full functionality we know from RIGS and that's the strength And therefore, you cannot just miss your share in the in-year category. And I don't see any new releases that challenge the position of ZIL.

Thank you. Thank you, Soren. Just if I can very quickly follow up on your last point. So should we expect at least market share in line with the global average for ZIL in the IT category? I mean, given everything that you just said.

It will naturally go above because SEAL will capture share outside in your category. So you will see compared to, you of course have to look at a certain higher end of that market. There could be markets where there's a lot of relatively cheap in-ear products sold. If I allow myself to exclude those, SEAL would take significant share in the premium segment, both from existing in-ear solutions, which are typically only the smaller, more cosmetically attractive, or primarily, and also from rigged products, because that's the preference of the first-time user.

Appreciate that. Thank you, Simon.

The next question comes from Angelica Botanovic from BNP. Please go ahead.

Hi, good afternoon, and thank you for taking my questions. Maybe the first one, again, on the guidance, can you give us your assumptions on the competitive environment, and especially the competitive launches that are planned in H2, and more specifically in the ER category? Have you embedded the competitive launch that was announced this morning? And second question on the cost initiative. Can you please give us more details on the initiatives that you're implementing, which areas, which regions would be effective? Thank you very much.

Yeah. First of all, we, of course, expect competition to continue to try to innovate and bring new products to the market. anything special in and I would definitely see what I've seen today from a single competitor. Yes, it's an in-ear product but in a, as I understand, lower price category and nothing special when it comes to functionality. So I don't see anything changing the fundamental competitiveness and uniqueness and innovative level of SEAL. And I don't expect others to launch products down that alley. There is a very close relation between the production technology and the ability to make this small form factor with all the features and benefits as I just said. And no, I don't expect competition to be able to close that gap very short and not in this year. Cost initiatives, they are widespread across the group. They come basically in all geographies to various extent, of course, depending on our size and footprint. They come in all areas. It's not just operation. It's not just R&D. It's not just... Any of it is basically the entire company that we have looked at, but of course in selected areas, so we can be even more firm in our commitment to invest in R&D, in new products, in a continued expansion of our hearing clinic footprint, etc. All the things that matter to growth, but we will find areas where you could say inside the box we can find more cost-effective ways of doing things.

Perfect. And just to follow up on the first question, on the traditional RIC and behind the ear, do you embed any competitive launches into DIGUS?

I don't have a specific, you know, assumption on exactly who's going to introduce what, except that in the last 12 months we have seen a high number of launches from our competitors. So, you know, new premium launches I would find less likely.

Thank you.

The next question comes from Martin Bruneau with Nordia. Please go ahead.

Hi, John. Hi, John and Renee. Thank you for taking my questions. I just have two relatively simple questions. The first is on the cost program, which will affect a lot of people in the organization. I would just like to hear about the timing of the cost reduction and the reduction in the number of employees. I guess that we should expect this to be relatively quickly announced and the cost program to be more of a Q1 and Q2 program rather than back and to avoid unnecessary uncertainty. That's the first question and then I'll save the second one afterwards.

I'll do it quickly. Yes, when it comes to staff and organizational changes, of course, as quickly as possible to make sure we can move on with the business, it always takes up time and energy. But on the other hand, there's also part of this program which is centered around cost of goods sold, where we want to work against the more and more expensive types of hearing aids we have to do. That takes some effort from selected groups of R&D, etc., before they come in and before you have used existing parts if it entails a redesign. So there's also elements of the program which have a longer run, but the majority and most of what's related to people will happen here very soon.

Thank you. And then just the second question is on value growth. I think 2025 was growing around 2%. Some of that were driven by France, which has been benefiting from the replacement cycle. Also from the VA with a quite significant price increase, which will let in May some You can say that the market growth is maybe a little bit inflated by these two channels and markets. So I'm wondering, in your assumption, going from 2% to 2% to 4%, where do you see the sequential step-up happening if you look at the global market from here?

I would say that would be a more equal growth or different split in market growth between U.S. and rest of the world. U.S. was basically down to flat where the rest of the world grew more. And I would say that's in the assumption of the 2 to 4 that we see a slightly better U.S. market. Thank you very much.

The next question comes from Veronica Dubujova with Citi. Please go ahead.

Hi, guys. Good afternoon, and thank you for taking my questions. I have a few, and apologies. They're going to be slightly bigger picture. The first one, I just want to push you a little bit on sort of EBIT guidance. I think, you know, if we sort of built the bridge, I think, you know, adjusting for FX, adjusting for the cost savings, adjusting for, obviously, the contribution from CAINS, I think the guidance implies sort of EBIT that's year-on-year minus 4% to plus 5%, again, sort of revenue growth of 3% to 6%. even at the top end really isn't a huge amount of margin expansion. And I guess the big picture question is, is this the new normal? I mean, if we end up in a market where growth is continuously challenged, not just in 2026, but let's say maybe even in 2027, should we assume it's going to be quite difficult, not just for you, but for the industry as a whole to drive earnings growth? I think that's kind of the question that we've been having lots of discussions around. My second question, and I apologize for being forthright and blunt about this, but Intent is now two years old. You have normally followed two-year launch schedules. We are clearly not getting a platform in February this year. Can you reassure us that there is nothing wrong with the R&D process and that the delay is a deliberate tactic on your part? as opposed to something going wrong in the background. I think given the experience of the last year, it would be helpful to understand your thinking around that. Thank you guys so much.

Yeah, thank you very much, Ron. You know, you to some extent have to see the cost savings in combination with the remaining business. We would still like to continue to invest in R&D. We would still like to invest in further expanding our footprint. And that's why we in other areas take cost out. So you have to, in my book, see the two together. You can't just take the cost out and then look at the rest. So in all scenarios, when you take the two together, there is a growing EBIT and there is also improving margins, the better we are in the range, of course. On the more blunt question, no, I don't think there's anything wrong in the R&D. We have made a priority to bring out SEAL because SEAL is possible due to the platform we have, and we think it holds a big potential. Half of all users in the hearing aid industry are first-time users, around half. And this is a major opportunity there, and also for some, the product they really want, even if they already have one, it holds a significant innovative element, so our product roadmap is a conscious choice and not a broken bike.

Got it. Thank you guys so much.

The next question comes from Susanna Ludwig with Bernstein. Please go ahead.

Good afternoon. Thanks for taking my question. I have two, please. I guess first on the oil, you talked about it having a higher ASP and then sort of being a positive contribution to ASP. Could you just clarify in terms of the impact on margins, I guess, sort of whether the margin is also sort of higher than the rest of your portfolio, given that higher ASP or given sort of the different manufacturing process, if there's any sort of negative impacts on margins? And then second, I guess on the cost reduction program, are you able to share a little bit more in terms of which business areas you are targeting? Should we expect, for example, in retail, are there any closures of stores that you're expecting to do as part of this program?

Yeah, thank you very much. You know, selling all premium is super positive for profitability. And SEAL is intended and will grow our premium share and this way, yes, definitely. I think we have said before that the cost of producing SEAL is higher than a rig. So if it was just a substitution and the price was not significantly higher, it would not be. It's better than classic in-ear instruments and the price is set higher than rig. So all in all, good profitability. lifting premium sales, which we have seen so far in the markets we have launched, definitely good for profitability. On the cost saving program, it is for all business areas to deliver. Of course, a little bit different in form and shape. And yes, we would like to do the most on cost of goods sold because that helps everybody. We are very cautious on our retail footprint and network. but there are also optimization opportunities within a network where, you know, certain regions, geographies, areas, down to cities, you could find that you have stores that are not optimally placed and don't deliver the profit you expect. So we will look also at the network, but it's not the majority of things.

Great, thanks.

next question comes from neil's grand homely with bnb carnegie please go ahead thank you could you provide a little bit more color on the facing of your growth for this year so would you expect the year to to begin on a slightly weaker note and then end on a stronger one and also um Could you talk about for how long you would expect to maintain seal only available in your premium price version? Should we expect this to go on for the remainder of this year? Thank you.

Thank you very much. The facing of the growth is relatively normally faced and with a little uptake during the year as we see a full rollout of seal of course, but not very different from first half to second half if we keep it at that level. And ZIL only in premium, this is of course also a careful choice. We think it holds a very significant potential for value and as long as it's unique and that potential is, you could say, not fully tapped, then we will be cautious in adding more price points. Will it eventually happen? Yes, it will, but for now it's off the table.

The next question comes from Karsten Landborg Madsen with Danske Bank. Please go ahead.

Thank you very much. I only have one question left, and that's actually a high-level question, sort of a question you're being asked a lot about from investors is whether now that you're implementing AI in hearing aids across the sector, you, your competitors, And we've seen other AI players invest massively in CapEx. Are we seeing sort of a step change in R&D costs to develop the next hearing aid with AI capabilities? Or are you seeing more of a continuation of R&D bodies that you have seen historically? That's the question, I guess.

Yeah, and thank you for the question. I wouldn't say we see a step up, but yes, if you look relatively to years back, this is definitely where you put in more and more effort, and the complexity of what we have to develop increases. And that's also why a continued commitment to investment in R&D is key, and back to our structural changes. They are part of making sure we can continue to invest in R&D, and a lot of that is into AI-driven signal processing and benefiting from AI, you could say, in all aspects of running a modern hearing aid system.

Thank you. And a quick follow-up. So should we expect you longer term to sort of enter into more external collaboration in order to drive the AI agenda?

I would say we have an example of that at our research center where the William Dickman Foundation have given quite a significant grant to make sure further programs in the research community can be done under the umbrella of our Ericsson Research Center. So yes, we do more collaboration also with external parties to build on this agenda. Thank you.

The last question today comes from Jack Reynolds-Clark with RBC Capital Markets. Please go ahead.

Hi there. Thank you for taking the questions. Two, please. First, on Zeal Manufacturing, could you just remind us whether this is fully scaled or is this going to be a limiter for launch? globally, and how long until you're fully ramped and launched across all of your markets to deal? And the second question is, is the prosperity initiative a signal that you're more cautious around the timing of the recovery and market growth over the longer term versus where you were in the past, beyond 2026? Thank you.

Okay, I think I got your questions. I'm not really sure. But the first one, we have made a sequential launch to make sure we don't create demand we can't fulfill. That's why we take one market at a time and we feel comfortable about that and have a good production capacity and can also have plans to ramp up significantly. So all good. We're a little bit ahead of the curve, if anything. So I think that's the answer to that.

Just to make sure, Jack, to understand your second question, whether it relates to the fact that we have a different view on if and when the market returns back to the normal growth. That's the reason why we introduced profitability initiatives.

Yeah, you could say you should. We always do that. I would say we accelerate it to make sure we remain a strong company that can continue to invest in the things that matters the most to our customers. R&D, strong service, etc. So is there some link? Yes, there is. I would say the acceleration definitely has happened also as a reaction to a continued weak assumption of a continued weak market.

That's great. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to the company for any closing remarks.

Thank you, operator, and thank you so much to everybody for joining us here today. I see we still have a couple of people in line in the queue, so please do reach out after the call, and we'll be happy to follow up. As always, we expect to be on the road in the coming weeks and do look forward to see all of you when we could get there. Have a good rest of the day.