Demant (DEMANT) Status Update summary

Market conditions

• Hearing healthcare conditions improved as lockdown restrictions eased; revenue run rate incl. EPOS reached 50–60% of initial expectations, vs. 30% at the beginning of May.

• Pent-up demand for hearing healthcare products and services is expected to materialise, potentially extending into 2021; timing and magnitude remain uncertain.

Segment performance

• Hearing aid wholesale run rate reached 60–70% of initial expectations, vs. 20% at the beginning of May; recovery varied by country, with activity still very low in the UK and South America severely impacted.

• Hearing aid retail run rate reached 40–50% of initial expectations, vs. 20% at the beginning of May; clinics have reopened in almost all operating markets.

• Hearing Implants run rate was 30–40% of initial expectations, vs. 20% at the beginning of May; BAHS improved faster than cochlear implants.

• Diagnostics run rate was 60–70% of initial expectations, unchanged from the beginning of May; new orders increased, while sales in some emerging markets remained severely affected.

• EPOS run rate remained at 120% of original plan, supported by headset demand from virtual collaboration; short-term production limits kept backorders significant.

Operations and liquidity

• Gross profit margin improved from its early-May low as production output rose; headwinds are expected until output fully normalises.

• OPEX run rate reached 75–85% of initial plans, vs. 60% at the beginning of May; operating profit before EPOS consolidation one-offs is expected to be negative in H1.

• Some H1 receivables write-downs are expected; despite lower cash flow generation, no short- to medium-term liquidity challenges are foreseen.