Demant Hldg U/Adr

Good afternoon, everyone, and welcome to the conference call for Datemant's interim management statement for Q1 2026. My name is Peter Puselykke, and I'm heading up the investor relations activities here in Datemant. With me here today, I have the usual team. It's our president and CEO, Søren Nielsen, our CFO, René Schneider, as well as my good colleague in the IR team, Gustav Høgh. For the call today, we will follow the normal process. We kick off with a presentation. which will be followed up by a Q&A session. And we expect the total session to last no more than one hour. When we get to the Q&A, we kindly remind you to limit yourselves to two questions at a time, please, to allow as many as possible to ask a question. Before we dig into the presentation, please do pay notice to the disclaimer slide on slide two. And with that, on to slide three, we'll pass the microphone over to you, Søren, to kick off the presentation with the agenda. Please.

Thank you very much, Peter, and welcome everybody to today's call here. I'll take you through business highlight and key financial takeaways, dive a little bit more into the different business areas, comment on the outlook for 2026 and then open up the floor for questions. Highlights of first quarter 2026. Well, the all highlight is a strong start to the year for the group, delivering 6% organic growth, which is obviously in the higher end of our expectation. Growth was additionally supported by 10% growth from acquisitions. Hearing aids deliver a very strong organic growth of 9%, with growth momentum being fueled by Oticon Seal and our existing product portfolios. And we can only attribute it to the strength of our industry-leading AI hearing aid platform delivering fantastic performance at very low power consumption. The integration of Kint is progressing as planned, with Kint as, of course, a significant contributor to growth from acquisitions in the first quarter. Structural changes announced at the full year report in our business to ensure higher growth and improve profitability were announced and have been executed in line with plans for the quarter and maybe also worth giving a small comment to the market development. We're going to get back to it in more details, but we saw an estimated market growth of 4%, which was in the higher end of our expected 2-4% growth for the full year. Key financial takeaways from the first quarter, as already stated, organic growth of 6%, which is again in the higher end of our expectations. And then you can, of course, in the table to the right, see how it's composed of local currency growth, organic growth, acquired growth and also the negative FX impact. Gross margin increased primarily from two elements, high ASP in hearing aids and a positive mix effect, meaning when hearing care grows faster than hearing aids, then we'll see a natural uplift to the gross margin. OPEX saw organic growth in line with our expectations, and we continue to invest in the business, in particular, of course, in innovation, while maintaining a strong focus on cost management, including the already addressed structural changes to everything else equal, lower the cost growth. Acquisition contributed of course to OPEX due to the consolidation of KIND and of course also other acquisitions. EBITB4 special items improved compared to first quarter 25 driven by hearing aids and the consolidation of KIND and this being despite the negative effects from exchange rates. We continue to see solid cash flows, both from operation and free cash flow was positive, both were positive in the first quarter. And on the outlook, we maintain the outlook of organic growth of 3 to 6% and EBIT from 4.1 to 4.5 billion Danish kroner. However, with the comment that due to the strong receipt of Odecon seal in the market, this makes results in the lower end of the range less likely. Business areas, we start with the hearing aid market in the first quarter. We estimate that the overall unit growth was around 3%. As always, we have statistics from two-thirds, so this is relatively solid. Q1 was relatively broad-based, however, still below the structural unit growth rate of 4% to 6%, being 3%, you could say, very much in line with with what we saw during last year. The ASP is estimated to be up by 1%. This is steaming from geography mix, channel mixes, and certain price improvements in certain channels. And of course, also, by example, us selling more premium products into the market. This is 1%, so all in all, a 4% estimated growth rate. Growth in Europe was primarily driven by Germany and France. In the UK, growth was negative. This is back to NHS having a very strong fourth quarter and therefore buying less in the first quarter, so not really structural, more timing of ordering. Growth in North America was driven by the private pay channels, but overall growth was significantly impacted from negative growth in managed care. VA growth improved, partly supported by easy comparison figures. In Canada, we saw a unit growth remain solid. Rest of the world delivered growth driven by Japan and slight growth in China. We estimate that several emerging markets saw solid growth as well. Again, all in all, a market growth of 4%, meaning in the high end of our expectation for the full year of 2% to 4%. Hearing aids from our side, significant growth following the launch of Oticon Seal. With the Oticon Seal now being rolled out in all major markets here in the first quarter, we can confirm, and that's basically I would say today's main message, that once SEAL is introduced in the market, we see renewed momentum in the business. We both see a strong interest around SEAL and sales of SEAL, but also growth in our existing product portfolio, and it speaks to the strength of the entire portfolio. This has, in combination, led to an organic growth of 9%, driven by share gain in terms of value, but also in units, and both units and ASP supported the growth. We continue to invest in the business, including new products, and we can also confirm we will come with new products in the second half. We have no more comments to what exactly it is. But we will also be bringing new products to the market in the second half of the year, just like we did in addition to SEAL, by the way, in the beginning of this year. Europe growth was fueled by very solid performance in Germany and UK. France, we saw smaller growth and this is back to value versus units. There is a negative mix development since last year because more units are in the free-to-client driven by the upgrades. Strong double-digit growth in North America, organic growth in North America, very strong and positive feedback to SEAL. US is the market with the highest or biggest market for premium products, so both SEAL and our existing portfolio. experience a renewed momentum, a strong momentum, and this leads to very strong growth in the U.S. commercial market and also growth in VA, more driven by pricing. Flat organic growth in Japan and China slightly negative. Rest of the world, organic growth was strong. To the right, you can see the growth distribution. You can also see, of course, the strong and significant development in internal revenue steaming from the kind acquisition mostly and also the growing share of wallet there of demand products. And then I will spend a little more time commenting on Oticon Seal. We were also ourselves a little bit, of course, unsure until we have seen how things play out in the US. And therefore, I will comment to conclusions now on the product after being broadly introduced. Just to remind everybody, what is it that makes Sihl unique? It is very unique and unmatched to combine such a small instrument with the latest and greatest in AI signal processing, full connectivity, rechargeability and the ability to do a same day fitting. So an unmatched product in the market and therefore also a positive feedback from the market. And what we can now confirm and share, you see here kind of three sections. The first one is, who can actually use Zeal? And if all hearing impaired users are 100%, then there is around one third where the physics, meaning ear canal, something makes you not having this as the right form factor for you. Then out of the same 100, there is around 20% that don't have, you know, have a hearing loss bigger than what SEAL can support. And therefore, all in all, you end with 55% of all hearing impaired people that choose to get a hearing aid being candidates for SEAL. So a big potential, and there's been many discussions whether this is just an in-year category or not, then CIC Unglandshavn, we can say this has a broad appeal, and where the broad appeal is seen most clearly is of course first-time users that we know are more skeptical to the cosmetics and what we have seen so far in the data we have. is that around two-thirds of all Zeal users are first-time users. This is more than the normal, which is more like 50-50 or 60-40, a little different from market to market. And this means that there is an over-representation of first-time users, but it's not exclusively for first-time users. But this is exactly also the commercial angle, of course. When it's good for first-time users, it's also good to attract traffic to your business and interest. And this, I have no doubt, is part of why SEAL has broad appeal and why many customers would like to be able to offer SEAL. We also had questions, and some ourselves, how many will go with a dome? How many would need a custom dome? fitting to make it perform well. We can see that 95% of all fittings we have participated in so far, this is US data I believe, is 95% domed. So it is a same day fit concept and it gives very strong results this way. And then to talk about the momentum. What we have tried to illustrate here is the fundamental of what is happening. It does create a momentum, it does create interest, it opens doors to new customers and both to existing customers and new customers. It pulls in both sales of CEO, but also a significant uplift to the remaining portfolio. The graph to the lower left illustrate is a run rate illustrative before introduction of SEAL and then post-SEAL. You could say the distance between the dotted line and the full line is sales of SEAL and the below is the uplift to the existing portfolio. So we see both effects and they are both stronger than anticipated or at least in the highest, you know, most positive scenario. And that's what we see now. This is solid. This is maintained. We can see it both in the markets that introduced all the way back to OIA. So more than six months in the market, but also markets where we have been in two or three months. So we see this as a global effect. And again, why U.S. and North America ends up playing an even bigger role in this and which is now why we can reduce the uncertainty is, of course, that that's the market in the world where most premium products are being sold. And therefore, it was so important for us to see the effect in U.S. before we could sell. you could say increase our own comfort and also your comfort in the fact that Zeal is a very successful product concept that drives again both traffic in itself and sales also above what we had as a you could say middle of the road scenario but also pull in extra business of the remaining portfolio. Seal is available in all major markets. It's still only available in a premium price point, also priced above basically all other products in the market. And that, of course, also attributes to the value that it brings to clients and brings to our customers on the wholesale side. We have had a staggered launch to make sure we could supply the markets before opening the next one. We have full supply and operation is running well. We have launched in all major markets unless there is regulatory work outstanding. And we have also May 1st introduced Odecon Seal in VA and now look very much forward to the uptake in VA. So all in all, a strong launch, strong feedback from customers and end users that are very happy with the product and also a testament to our, I would say, industry-leading AI-based platform, again, which is based on a very low power consumption, still delivering all the benefits and therefore able to use a much smaller battery than competitors and also being on all the time. where in most other applications I've seen at least there is some kind of limits to how much you can actually use the AI system. Moving on to hearing care in the first quarter, we saw good performance with the integration of Kint progressing as planned. We saw a remarkable total growth in local currency of 26%, coming from 4% organic growth and 23% acquisitive growth, so a very big step up for that business, but also showing a mature and stable business that continues to deliver strong, solid organic growth rates. So a good start to the year as well for hearing care, despite of the many things going on. And it was both unit and ASP grown, and we have definitely also seen markets where our own retail have benefited from the introduction of AudioConcealed, similar to many other companies. In Europe, solid performance across regions driven by a strong performance in the UK. Performance in Germany was also solid. Good organic growth in general in North America with solid growth in Canada and good organic growth, solid organic growth in the US. Australia saw good growth, whereas China was slightly negative after several quarters of good performance. Diagnostics had a good start to the year, strong finish as you will remember, so despite of still facing certain headwinds in the US markets from the market still not growing as normal, then a good start delivering 4% organic growth across many markets. However, Europe being the primary driver of growth, good examples of that, UK and Poland. whereas U.S. had slightly negative growth, again still attributed to a lack of market growth in U.S. Canada was the primary, therefore the primary driver of growth in North America. China continued to be impacted by general market weakness and was a drag in Asia. Most other markets did well for diagnostic. two outlook and our outlook assumptions i would only highlight market we guided when we started the year for two to four percent growth in the market uh keeping a general macro economic uncertainty in mind we still think this is the the best take on the full year we can very quickly see a few percentages up and down but of course we have seen a good positive start And we could see that continue, of course. The rest, special items, et cetera, there are no changes. And therefore, I will not repeat all of them. So financial outlook is maintained. However, we find it less likely now that we will, in EBIT, before special items and organic growth will be in the lower end. And this is attributed to the reduced uncertainty around SEAL's ability to deliver growth and, of course, also having seen such a strong start to the year. And with that, let's go to Q&A.

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 the 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 to assemble our roster. Our first question comes from Niels Granholm-Leth with DNB Carnegie. Please go ahead.