Demant (DEMANT) Q1 2025 earnings summary

Executive summary

• Q1 2025 saw flat organic growth in the global hearing aid market, mainly due to macroeconomic uncertainties and significant US market weakness, prompting a downward revision of full-year guidance.

• Hearing Care delivered solid organic growth above market rates, while Hearing Aids underperformed expectations with external revenue down 4% organically.

• Diagnostics segment remained soft but maintained market share, with flat organic growth.

• Underlying business performance was in line with internal expectations, excluding market and FX headwinds.

• Acquisitions contributed to growth, especially in Hearing Care, with notable activity in Germany, Denmark, and Italy.

Financial highlights

• Group organic revenue growth was 0% in Q1 2025, below expectations due to market slowdown.

• Gross margin declined year-over-year, mainly from negative US market and ASP decline in Hearing Aids.

• EBIT was below expectations, impacted by global market slowdown and negative FX effects.

• Cash flow from operations and free cash flow were both higher than last year, supported by working capital improvements.

• Net interest-bearing debt increased due to acquisitions and share buy-backs, but gearing remains within 2.0-2.5 target range.

Outlook and guidance

• Organic growth guidance for 2025 revised to 1-5% (was 3-7%), and EBIT guidance lowered to DKK 4,100-4,500 million (was DKK 4,500-4,900 million).

• FX expected to reduce revenue growth by 2% and EBIT by DKK 125 million for the year.

• Share buy-backs for 2025 expected to exceed DKK 1,500 million; acquisitions expected to contribute 2% to revenue.

• Hearing aid market value growth for 2025 now expected at 2-4% (was 4-6%), with unit growth 3-5% and ASP down ~1%.

• Discontinued operations expected to contribute DKK 0-50 million net profit after tax in 2025.