Demant Hldg U/Adr

Good afternoon, everyone, and welcome to the conference call for Demand's interim management statement for Q3 2026. My name is Peter Pudselykke, and I'm heading up the investor relations activities here in Demand. With me here today, I have the usual Demand representatives, our president and CEO, Søren Nielsen, our CFO, René Schneider, as well as one of my good colleagues in the IR team, Gustav Hoegh. As you should have seen by now, we released the full management statement last evening, and we'll be discussing that during today's call. You should now also be able to find the presentation on our website. The plan for the session is to kick off with the presentation and we'll follow that up by a Q&A session. We do expect the total session to last no more than one hour, including Q&A. As always, please do pay notice to the disclaimer on slide number two. And just before we kick off the presentation, please allow me to remind you that we are hosting our Capital Markets Day here in a couple of weeks time in Copenhagen on November 24th. If you have not signed up yet, please do reach out to Kristine or myself and we'll be happy to help you out. And with that, on to slide number four, and I'll leave that to Søren to kick off the presentation with the agenda.

Thank you very much, Peter, and welcome everybody. I'll go through business highlight and key financial takeaways. I will elaborate a bit more on the individual business areas. I will reiterate with nothing new our outlook for 2026, and then we'll go into Q&A. Q3 and you have had most of the numbers already but still let's repeat that the demand in Q3 26 delivered revenue growth of 21%. This was fueled by very strong organic growth in the hearing aid business of 17% and supported by a hearing aid market that grew 7% in value in Q2. It of course also comes from the acquisitive element of Kind, as we are also going to get back to. As announced on October 9, we upgraded our financial outlook for 2026 based on the strong sales numbers in Q3 to an expected full-year organic growth of 7-8% and an EBIT before special items of 4.7-5.0 billion DKK. and we have resumed our share buyback program in Q4, expecting to buy a share worth of 3 billion Danish kroner by the end of 2027. The highly successful launch of Oticon Reel has further accelerated the positive momentum that Oticon Seal created This is the main driver for the strong results in hearing aids and it confirms the strength and relevance of our product portfolio to customers. And hearing care delivered solid organic growth with of course a significant acquisitive element and diagnostic also delivered in line with expectations. So key financial takeaways for Q3, very strong group organic growth of 11%, additional 10% from acquisitions, totaling 21% reported growth. We see, and does not disclose for the quarter, but see gross margin increase significantly year over year. and ahead of our expectations this is driven by a higher average selling price in the hearing aid business following the successful launch of Oticon Reveal and I would say also the growth in U.S. North America as well as the acquisition of Kind in hearing care. OPEX saw organic growth in line with expectations. As we continue to invest in the business while maintaining focus on cost management, then things are totally in line with expectations. Due to the strong organic growth, the group saw significant operating leverage and therefore improved EBIT before special items. When comparing to the third quarter of 2025, we continue to deliver Very strong cash flows and gearing multiples have therefore declined meaningfully compared to Q2 26 and as already iterated we upgraded our outlook for the year on October 9th. and Business Area Caller Review. Hearing aid market third quarter. We estimate that the total hearing aid market grew around 7% in value. We estimate the underlying unit growth to be 6% in the quarter and this is with the normal Data points meaning two-thirds of the market we have data for and the rest is an estimation. So a solid unit growth also if you include a Contribution from the mini product introductions we saw in Q3 we estimate to be around 1%. Of course not something we have exact insights into, but that's our best take. So underlying also healthy 5% unit growth. and therefore year to date we end at 4% unit growth and with a positive ASP component which brings us into the normal range for the hearing aid market of 4-6%. By geography, growth in Europe, as you can see also from the table, was strong and good, driven by Germany and France. Market growth in UK have improved in the third quarter after two quarters with negative growth. This is both the private and the NHS, but most importantly the NHS returning to growth. Growth in North America was driven primarily, as you can see, by the commercial market in the US, growing 8%, whereas VA is still at relatively low growth rates. In volume and this is and cover also a continued negative development to the managed care market. The rest of the world we estimate unit growth to be around 4% and that's relatively broad-based across several markets and we also estimate that China and Japan delivered some growth. Hearing aids daement in Q3 26. Again, a very strong growth driven by a very successful launch of Oticon Reveal. We are definitely strong out of the gate and around the world quite fast. That's a significant part of it, but it's also clear that we get a very favorable feedback from customers that have now fitted instruments and we see this as definitely a confirmation that we have released a strong product into the market not that it's potentially the only one but that there is a strong and competitive product we have brought in. So organic growth of 70%, significantly above expectations, even though we see a slight tougher comps than we did in the second quarter. And the unit growth is above underlying market growth and therefore we take significant market share both in units and value. and strong contributors to growth have been UK, Germany and France and Europe, three biggest markets, but also a number of medium-sized markets have also contributed. North America, we have seen double-digit organic growth in years coming from both the independent sector as well as VA, slightly positive growth in Canada, strong growth in Asia despite negative growth in China. and very strong growth in Australia as well as solid growth in the rest of the world region. Here in care, Q3, solid organic growth and significant contribution of course from KIND, broad-based organic growth of 6%, slightly ahead of our expectations, driven by both unit growth and also here some ASP effect also coming from a successful introduction of new technology. 29% reported growth, including 22% acquisitive growth, where Kind is the main contributor, but also other acquisitions, of course, is part of that. And then we have announced now internally and now also here today that we have started the process to unite all our hearing care activities in Germany into one organization and under one brand, the Kind brand. will create one hearing care organization in Germany just as we do in all other markets and the trusted kin name will be used but it will come into a demand virtual identity and a visual identity and you could say general brand position so it integrates well with all the business we drive. around the world. In growth across the world, solid organic growth in Europe driven by strong performance in Germany and solid contribution from a number of other medium-sized markets, strong organic growth driven by continued momentum in Canada and North America, and also solid growth in US supported by improved market conditions, but also a continued improvement of our own operating model. Solid broad-based organic growth in the Pacific region, slightly positive growth in Asia, however with China realizing negative growth. Diagnostic in Q3, organic growth in line with expectation, positive organic growth in Europe, positive organic growth driven by US and North America, negative growth in Canada following a very strong performance in first half. These are the natural swings we see, so nothing special to flag there. and strong growth in the Pacific region and in rest of the world driven by Australia and Latin America, whereas it has been more flattish in Asia.

Outlook for 2026.