• Organic Revenue Growth: -4% overall; flat excluding wind down.
• EBITA Margin: 13.3%, up 3.6 percentage points from last year.
• Gross Margin: 54.8%, compared to 50.1% in Q3 2023.
• Free Cash Flow: 786 million Danish Kroner, excluding M&A.
• Adjusted Leverage: Ended at 3.5 times.
• Hearing Division Organic Growth: 10%.
• Hearing Division Profit Margin: 34.8%, up 6 percentage points from last year.
• Enterprise Division Organic Revenue Growth: -7%.
• Enterprise Division Profit Margin: 33.8%, down 0.7 percentage points from last year.
• Gaming and Consumer Division Organic Revenue Growth: -20%.
• Gaming and Consumer Division Profit Margin: 4%.
• Company-wide Synergies: 150 million Danish Kroner realized in the quarter.
• Updated Financial Guidance: Organic revenue growth of 1-2%; EBITA margin of 12-13%.

• Warning! GuruFocus has detected 10 Warning Signs with GGNDF.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GN Store Nord AS (GGNDF) achieved a 21% margin in its core business, indicating a return to historically healthy margin levels.
• The hearing division reported a strong 10% organic growth, driven by market share gains and successful product launches.
• The company delivered a substantial margin expansion, with EBITA growing by 29% and a margin increase to 13.3%.
• GN Store Nord AS (GGNDF) generated a record free cash flow of 786 million Danish Kroner in Q3, marking the strongest third-quarter cash flow ever for the group.
• The company realized 150 million Danish Kroner in company-wide synergies during the quarter, contributing to its ongoing transformation efforts.

Negative Points

• The enterprise division experienced a negative 7% organic revenue growth due to volume selling pressure in parts of Central Europe.
• The gaming and consumer division saw a 20% decline in organic revenue growth, primarily due to the wind down of certain product lines.
• The company faced a temporary slowdown in growth within its SteelSeries segment, attributed to a slightly declining market and order delivery delays.
• Despite strong performance in the US market, GN Store Nord AS (GGNDF) faced economic pressures in parts of Europe, impacting sales.
• The company reported a minus 4% organic growth at the group level, with flat growth when excluding the wind down effects.

Q & A Highlights

Q: Can you provide insights into the speakerphone category's performance and expectations for 2025? A: The speakerphone market is experiencing a structural decline, estimated at around 10% annually, due to changing behaviors in conference rooms. This decline is compounded by tough comparisons from last year's product launches. We anticipate that by March next year, these tougher comparisons will ease, potentially stabilizing the category. (Peter Karlstromer, CEO)

Q: How is GN Store Nord preparing for potential tariffs from the US-China trade tensions? A: We have diversified our manufacturing footprint significantly over the past year, with production now spread across various global locations. While it's too early to predict specific policy changes, we feel well-prepared to manage potential impacts, particularly in our hearing and enterprise divisions. (Peter Karlstromer, CEO)

Q: What is the outlook for the enterprise market, particularly for headsets and video categories? A: The enterprise market has shown signs of stabilization, with sellout data indicating flat growth for headsets and video. We expect the market to return to growth in 2025, supported by improving trends and customer feedback. (Peter Karlstromer, CEO)

Q: Can you elaborate on the strong profitability in Q3 and its sustainability? A: The profitability improvement is consistent with our trajectory of gross margin enhancements. While some temporary factors contributed, the underlying performance reflects ongoing synergy realization and cost management. We expect these improvements to continue. (Soeren Jelert, CFO)

Q: How is GN Store Nord addressing the competitive environment in the hearing division? A: We continue to see strong demand for our Nexia hearing aids, driven by their comprehensive features and user satisfaction. Despite competitive launches, we believe Nexia's value proposition will sustain our growth momentum. (Peter Karlstromer, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.