GN Store Nord (GN) Q2 2024 earnings summary

Executive summary

• Achieved 5% organic revenue growth and margin expansion in Q2 2024, driven by strong execution across all divisions and continued transformation initiatives.

• Hearing division led with 10% organic growth and significant margin improvement, supported by successful product launches and software updates.

• Enterprise division saw -3% organic growth as market stabilizes, but profit margin improved by 1.3 percentage points due to operational synergies.

• Gaming & Consumer division posted 12% organic growth, with margin gains excluding extraordinary wind-down costs, driven by new product launches and market share gains.

• One-GN transformation on track, delivering DKK 100 million in synergies in Q2.

Financial highlights

• Q2 2024 revenue: DKK 4,499 million, up 2% year-over-year; organic growth 5%.

• Gross margin improved to 51.9% (53.2% excluding extraordinary write-downs), supported by synergies and business mix.

• Adjusted EBITA margin rose to 11.8% (up 2.6 p.p.), with adjusted EBITA at DKK 529 million.

• Free cash flow (excluding M&A) reached DKK 155 million in Q2, with adjusted leverage reduced to 3.9x.

• R&D investments increased year-over-year, including a DKK 95 million extraordinary write-down in consumer product lines.

Outlook and guidance

• 2024 group organic revenue growth expected at 2%-6%, with hearing trending towards upper end of 8%-12% growth assumption and enterprise at lower end of -3% to +5%.

• Gaming & Consumer division revised to -10% to -2% due to wind-down impact; extraordinary costs of ~DKK 200 million expected in 2024.

• Reported EBITA/EBITDA margin guidance for 2024 maintained at 12%-13%.

• Free cash flow (excluding M&A) expected to exceed DKK 900 million for the year.