Finansanalytikerforeningens Virksomhedsdag 2009

Finansanalytikerforeningens
Virksomhedsdag 2009
William Demant Holding A/S
Stefan Ingildsen
VP, Finance and Investor Relations
Finansanalytikerforeningens
Virksomhedsdag
København
Den 3. juni 2009
Finansanalytikerforeningens
Virksomhedsdag 2009
2008 proved to be a challenging year for WDH
• Lack of growth in the non-public hearing aid market.
• Intensified competition in the hearing aid industry.
• Oticon Delta’s unique market position was challenged by
product launches in the segment for cosmetically attractive
hearing aids from basically all competitors.
• Fewer product launches in 2007 and in the beginning of 2008
due to significant development resources being put into
establishing and finalising the wireless RISE platform.
• Unfavourable currency situation for WDH due to cost base in
Denmark and Danish kroner as reporting currency.
• However, the cash flow was strong in 2008.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Massive product launch schedule at AAA
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Finansanalytikerforeningens
Virksomhedsdag 2009
Oticon Medical established to
target a new untapped market
• Bone-anchored hearing solutions – direct
stimulation of the inner ear.
• Technology addresses conductive and
mixed hearing losses as well as singlesided deafness, i.e. no cannibalisation of
existing hearing aid business.
• The market is expected to continue to
grow by +20% annually from a base of
currently USD 60-70 million.
• Today, the main markets include Scandinavia, the UK, the Netherlands and the
USA where reimbursement schemes are
already in place.
• Future market growth to be driven by
further penetration of these markets and
by adding new countries.
• Our entry into the market will strongly
support future market expansion.
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Finansanalytikerforeningens
Virksomhedsdag 2009
WDH’s Q1 review released on 12 May 2009
• No additional market deterioration – Q1 2009 could be seen as a
first sign of recovery in the HA market.
• Based on market volumes in Q1 2009, the US market apparently
bottomed out in Q4 2008.
• Year-to-date development for WDH in accordance with the plans
made.
• ASP for WDH’s wholesale of hearing aids is now back on par with
Q1/08.
• Customer reactions to our AAA introductions are encouraging.
• Diagnostic Instruments: positive development from 2008 has
continued, albeit at a slightly slower pace.
• Personal Communication: the various businesses have to a greater
extent been impacted by the financial crisis and the recession.
• We are on track to meet our full-year promise: WDH wholesale
revenue growth exceeding the market growth by 2-4%.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Appendices
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Finansanalytikerforeningens
Virksomhedsdag 2009
Group structure
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Finansanalytikerforeningens
Virksomhedsdag 2009
The hearing aid industry
– the value chain
Component
Component
suppliers
suppliers
4-7%
Research
Research
DevelopDevelopment
ment
Manufact.
Manufact. Wholesale
Wholesale
&
& logistics
logistics distribution
distribution
20-30%
Retail
Retail
End-users
End-users
60-75%
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Finansanalytikerforeningens
Virksomhedsdag 2009
Starting points
• The hearing aid market:
– Highly different market trends from market to market.
– Approx. 9 million hearing instruments per year – with a wholesale
value of USD 3.5-4.0 billion.
– 6 largest manufacturers hold approx. 90% of the market.
– 20,000-25,000 sales points world-wide – still highly fragmented retail
distribution.
• The end-users:
– 10% of population in OECD countries suffer from hearing loss.
– 35-40% of population above 65 are hearing-impaired.
– Low penetration (approx. 20%) mainly caused by stigmatization.
– Average age of first time user is 70 (in the US).
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Finansanalytikerforeningens
Virksomhedsdag 2009
Hearing aid market status 2008
• The financial crisis and the recession in the world economy resulted in
decreasing demand for hearing aids, especially in commercial
markets like the US.
• The global hearing aid market was flat in 2008 as a whole, but in
decline in the second-half of the year.
• This led to increased price competition amongst hearing aid
manufacturers.
• Long-term growth perspectives remain unchanged, driven by the
growing elderly population and an increasing number of binaural
fittings (outside the US).
• The technology race continues and the key to future success will be
the ability to provide end-users with true audiological and true
connectivity benefits by means of wireless technology.
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Finansanalytikerforeningens
Virksomhedsdag 2009
2008: Hearing Aids
• Accounted for 89% of Group revenues.
• Flat revenue growth measured in local currencies.
• 2% unit growth in Group-manufactured hearing aids.
• Oticon growth drivers were the two Vigo families.
• Bernafon growth drivers were Brite, Move, Avanti, Win and Xtreme.
• Solid growth in deliveries to the NHS in the UK and to a number of
international retail chains.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Net revenue by business area
Change in
local currency
DKK million
2008
2007
Change
Hearing Aids
4,784
4,920
-3%
2%
Diagnostic Instruments
348
303
15%
16%
Personal Communication
242
265
-9%
-6%
5,374
5,488
-2%
2%
Total
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Finansanalytikerforeningens
Virksomhedsdag 2009
Net revenue by region
DKK million
Europe
2,688
North America
Pacific Rim
Asia
Other countries
Total
2,804
Change in local
currency
2008
2007
1,758
385
296
247
1,783
404
291
206
5%
2%
-2%
22%
5,374
5,488
2%
-1%
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Finansanalytikerforeningens
Virksomhedsdag 2009
Income statement – full year
2008
2007
Change
Change in
local currency
5,374
3,725
69.3%
5,488
3,971
72.4%
-2%
-6%
2%
-4%
-533
-505
6%
5%
-1,798
-1,726
4%
9%
-354
-475
-25%
-23%
2
3
Operating profit (EBIT)
1,042
1,268
-18%
-18%
Profit margin
19.4%
23.1%
Net profit for the year
682
894
-24%
-24%
Earnings per share (EPS), DKK
11.6
14.8
-22%
-22%
DKK million
Net revenue
Gross profit
Gross profit ratio
Research and development costs
Distribution costs
Administrative expenses
Income from associated companies
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Finansanalytikerforeningens
Virksomhedsdag 2009
Cash flows
DKK million
2008 H1 2008 H2
2008
2007
Profit for the year
390
292
682
894
CFFO
354
474
828
848
CFFI, excl. acquisitions and special investments
-102
-138
-240
-214
Free cash flows, excl. special investments
252
336
588
634
Acquisitions
-85
-131
-216
-80
0
0
0
122
-319
-109
-428
-993
-20
-9
-29
-176
-172
87
-85
-493
Special investments
Buy-back of shares
Other financing activities
Net effect for the year
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Finansanalytikerforeningens
Investor Presentation
Virksomhedsdag
May 2009
The industry’s best
looking hearing device…
Also happens to deliver the
most impressive experience
Finansanalytikerforeningens
Virksomhedsdag 2009
Oticon Dual: a major launch
with two new product lines
• Oticon Dual represents a major improvement and expansion of the
Group’s product offering, especially in the high end of the market.
• By combining the best of Delta with the best of Epoq, the industry’s
most attractive design and most advanced technologies will now be
available in one single product.
• With Oticon Dual, new standards are set for what can be expected
from the most attractive and sophisticated products in the market.
• Oticon Dual is primarily a high-end product concept, however
numerous price/performance variants will appeal to a very wide
target group.
• The introduction of Oticon Dual has significantly strengthened Oticon’s
position in the global hearing aid market.
• Released for sale in the autumn 2008.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Connect series
Dual XW
Dual W
Dual V
Dual Pro
One brand
Small in size, big in range
Two series
Dual m5
Dual m7
Mini series
Dual m9
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Finansanalytikerforeningens
Virksomhedsdag 2009
Oticon: more price options
• Oticon Hit and Oticon Hit Pro are two new allstyle families in the lower mid-priced segment.
• ”RISE sound quality made affordable” –
8 Hz bandwidth and fast sound processing.
• Easy and straightforward fitting procedure based
on familiar software and well-known features.
• Fast end-user acceptance should be expected.
• The new Hit families will significantly improve
Oticon’s positioning in the segment – available
for sale at AAA.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Oticon: more power and fitting range
• New Power BTE launched at AAA – fitting
range up to 110 dB HL.
• Available in Epoq, Vigo and Hit – in a total
of seven price points.
• Based on a very compact 13-size battery
shell with a classic hook.
• Complements Oticon’s RITE Power solutions
already on the market (Epoq and Vigo).
• New ”BTE 13” style also launched (Epoq,
Vigo and Hit).
• ”BTE 13” instrument is the leading style
category in many markets.
• BTE 13 doubles battery life (compared with
BTE 312).
BTE 312
BTE 13
Previous
13 platform
• Corda2 as thin-tube solution.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Oticon: more connectivitiy
• Introducing Oticon ConnectLine as the brand umbrella
for all connectivity solutions.
• At AAA, Oticon significantly expanded its connectivity
offering:
 ConnectLine TV solution
 ConnectLine Landline solution
Addresses the
biggest end-user
requirements!
 Streamer ConnectLine
• ConnectLine TV streams sound to hearing instruments
in premium quality – ultra-fast transmission prevents
echo from acoustic sound from TV speakers.
• ConnectLine Landline provides incoming call
notification in hearing instruments.
• Unique for Oticon ConnectLine:
 TV, landline phones and mobile phones can be used at the
same time – hassle-free switching between applications
•
The expanded Oticon connectivity offerings will
increase the demand for Epoq and Dual.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Additional product launches at AAA
• Bernafon presented Vérité, a new
high-end device:
 Wireless binaural co-ordination
 RITE technology
 Award-winning design
• ChannelFree approach allows precise gain shaping without breaking
the signal into frequency bands.
• Interacoustics presented Titan, a new
portable middle-ear analyzer.
• Titan targets ENT doctors and hearing
care professionals.
• Can be used as a hand-held device
or operated via a PC.
• Is expected to gain status as the best
and most sought-after middle-ear
analyzer on the market.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Bone-anchored hearing solutions:
a unique long-term growth opportunity
• Oticon’s R&D organisation has spent a number
of years on this project.
• Product portfolio includes:





Implant parts (e.g. titanium screw)
Sound processor
Fitting software
Patient accessories: FM, telecoil, audio adaptor etc.
Tools for the surgical procedure
•
The wholesale price for a complete system is
around USD 4,000-6,000.
•
Additional costs associated with surgical
procedure, fitting and training.
•
Was showcased at AAA and will be released
for sale in H2 2009.
•
Represents a unique opportunity to lever
Oticon’s technology platform, brand, manufacturing and distribution infrastructure.
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Finansanalytikerforeningens
Virksomhedsdag 2009
Outlook for 2009
(as communicated 10 March 2009)
• The uncertainty related to the financial crisis and global recession
makes it difficult to forecast trends for 2009.
• The Group expects flat volume growth for the market with a slightly
negative H1 and a slightly positive H2.
• Average selling prices are expected to contribute neutrally or
negatively to market growth.
• The Group’s hearing aid wholesale activities are expected to
exceed market growth by 2-4%.
• Growth to be driven by strong, updated product portfolios and also
by the introductions scheduled for this spring and the remainder of
2009.
• The effective tax rate for 2009 is estimated at 25%, which is slightly
above the 2008 level.
• Expected CAPEX level of DKK 180-200 million.
• No share buy-back is expected.
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