Broad-based growth and continuous gain in market shares in first quarter
-- In line with the plans made, the Group's hearing aid business generated strong unit growth in the first quarter and continued to capture market shares and achieved organic revenue growth in all geographic regions. -- With the successful launch of Intigai, Oticon's Intiga family now offers the market's most appealing products for users who attach great importance to cosmetic attractiveness and are not willing to compromise on sound quality. -- Unit sales in the underlying market for hearing aids saw positive development in the first quarter of the year and are in line with our expectations. -- We maintain our previously announced expectations of 2012, with a rise in revenues of 5-9% and an expected increase in operating profits (EBIT).
Market trends
In line with our expectations of the year, we saw continued growth in unit sales in the global market for hearing aids in the first quarter of the year. This growth was driven by stable development in the increasing elderly population and is still only to a minor degree impacted by macro-economic trends.
The US hearing aid market saw unit growth of 4-5% in the first three months of the year, which is a slight increase on the historic growth rate. The demand by both the private sector and Veterans Affairs (VA) contributed to the positive trend. Also Europe saw positive unit growth in most major markets, even though the market was characterised by periodic fluctuations from country to country. This development is partly due to the fact that a number of countries in Southern and Central Europe were affected by harsh winter weather in February. In overall terms, growth in Europe was slightly below growth in the USA. Japanese market trends were exceedingly positive in the first quarter compared to the same period last year, when sales were impacted by the tragic earthquake and subsequent tsunami. These trends support our belief that despite fluctuations in a few markets, the market for hearing aids will see stable global unit growth rates of 2-4% for the year, which correspond to historic growth rates.
The general lack of official statistical data on prices makes it difficult to get a clear picture of the actual development in the average wholesale price. As several manufacturers are approaching the end of their respective product lifecycles, they are now focusing on enhancing their existing product portfolios by applying known technology, so the market is characterised by strong product offerings in the mid-priced and low-end segments. This development has resulted in keener competition in some markets, and we get the impression that in the first quarter, prices on the market for hearing aids have seen a slightly negative trend.
The recently held AudiologyNOW! convention in Boston, which is the world's largest audiology and hearing aid congress, did not cause us to change our view on the general competitive picture. We therefore still believe that 2012 as a whole will see flat to slightly negative development in the average selling price on the market and that, if measured in value, the global hearing aid market will show a low, single-digit growth rate.
Hearing Devices
In the first quarter, our core business - wholesale of hearing aids - succeeded in keeping good momentum with strong unit growth and once again captured market shares. The growth generated in the wholesale of hearing aids is broadly based, and all geographic regions and sales channels have contributed to the organic growth. Again, our very complete product portfolios from the Group's three hearing aid brands in combination with a high and consistent service level have ensured this positive development. In the first quarter, for instance, Oticon introduced Intigai, an IIC instrument (Invisible Inside the Canal) that fits deep in the ear canal and is therefore completely invisible. The dispensers have given Intigai a very good reception, and combined with the RITE version (Receiver In The Ear) of Intiga, Oticon now offers the market's most attractive products for users who want a discreet solution, but do not want to compromise on functionalities or sound quality. Since its introduction, the Intiga family has positively impacted the product mix, which is however still characterised by strong sales in the mid-priced and low-end segments. On the whole, Oticon offers solutions based on the latest RISE II technology in all product categories and since the beginning of April, Oticon Agil, Oticon Acto and Oticon Ino have been available in a very attractive miniBTE version, which may be fitted with either a hook or a thin tube.
Coming into 2012, Bernafon - our second hearing aid brand - got off to a very good start and generated significant sales growth in the first quarter, among other factors due to the successful launch of Bernafon Chronos in the second half-year 2011. Bernafon Chronos is a complete family of high-end and mid-priced products and is available in RITE, BTE and ITE variants. In spring, Bernafon has also launched its basic product Inizia in a RITE variant, thereby further enhancing its product offering and its position as a highly attractive and competitive business partner. Our third independent hearing aid brand, Sonic, has also done well in the first quarter, and the introduction of a competitive product portfolio and the establishment of the brand as a serious alternative to more well-established brands are proceeding according to plan.
Once again, our Hearing Devices business activity has succeeded in increasing sales to the National Health Service in the UK, thereby enhancing its already significant market position. Sales to VA in the USA also developed favourably and in line with growth rates in the underlying market. In the first quarter, our retail activities generated broad-based organic growth, thereby slightly exceeding market growth.
Oticon Medical, which sells and develops bone-anchored hearing systems, has seen very positive trends in the first quarter of the year and has continued to generate growth in existing and new markets alike. Furthermore, the first quarter saw positive operating profits (EBIT) despite the incurrence of start-up expenses in new markets. At the beginning of May, Oticon Medical introduced a new implant system, which is expected to further enhance this business unit.
Other business activities
In the first quarter, our business activity Diagnostic Instruments saw very satisfactory development in the form of both acquired and organic growth, with the latter exceeding underlying market growth. The integration of our distribution activities in the USA, which were mainly acquired in 2011, is proceeding according to plan.
Personal Communication has in the same period seen slightly negative trends, which is primarily due to continuously declining sales in Phonic Ear and FrontRow as a consequence of investment restraints in the US education sector as well as overall difficult market conditions for assistive listening devices. Development in Sennheiser Communications was stable in the first quarter, and the company still commands a strong position in the market.
Expectations
We maintain our expectations of 2012 as announced in our Annual Report 2011, with Group revenues forecast to grow by 5-9%, of which acquisitions are estimated to account for 1-3 percentage points, and with operating profits (EBIT) expected to grow compared with the level realised in 2011.
Other matters
In the first quarter, the Company acquired a total of 372,256 treasury shares worth DKK 184 million in total. Through our share buyback programme, we will continue to channel any excess cash flows back to our shareholders, while maintaining the level of consolidated net interest-bearing debt of DKK 1.5-2.0 billion.
Futher information: Other contacts:
Niels Jacobsen, President & CEO Stefan Ingildsen, SVP Finance
Phone +45 3917 7100 Soeren B. Andersson, VP IR
www.demant.com Morten Lehmann Nielsen, IR Manager
Attachment:
https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=392218
-- In line with the plans made, the Group's hearing aid business generated strong unit growth in the first quarter and continued to capture market shares and achieved organic revenue growth in all geographic regions. -- With the successful launch of Intigai, Oticon's Intiga family now offers the market's most appealing products for users who attach great importance to cosmetic attractiveness and are not willing to compromise on sound quality. -- Unit sales in the underlying market for hearing aids saw positive development in the first quarter of the year and are in line with our expectations. -- We maintain our previously announced expectations of 2012, with a rise in revenues of 5-9% and an expected increase in operating profits (EBIT).
Market trends
In line with our expectations of the year, we saw continued growth in unit sales in the global market for hearing aids in the first quarter of the year. This growth was driven by stable development in the increasing elderly population and is still only to a minor degree impacted by macro-economic trends.
The US hearing aid market saw unit growth of 4-5% in the first three months of the year, which is a slight increase on the historic growth rate. The demand by both the private sector and Veterans Affairs (VA) contributed to the positive trend. Also Europe saw positive unit growth in most major markets, even though the market was characterised by periodic fluctuations from country to country. This development is partly due to the fact that a number of countries in Southern and Central Europe were affected by harsh winter weather in February. In overall terms, growth in Europe was slightly below growth in the USA. Japanese market trends were exceedingly positive in the first quarter compared to the same period last year, when sales were impacted by the tragic earthquake and subsequent tsunami. These trends support our belief that despite fluctuations in a few markets, the market for hearing aids will see stable global unit growth rates of 2-4% for the year, which correspond to historic growth rates.
The general lack of official statistical data on prices makes it difficult to get a clear picture of the actual development in the average wholesale price. As several manufacturers are approaching the end of their respective product lifecycles, they are now focusing on enhancing their existing product portfolios by applying known technology, so the market is characterised by strong product offerings in the mid-priced and low-end segments. This development has resulted in keener competition in some markets, and we get the impression that in the first quarter, prices on the market for hearing aids have seen a slightly negative trend.
The recently held AudiologyNOW! convention in Boston, which is the world's largest audiology and hearing aid congress, did not cause us to change our view on the general competitive picture. We therefore still believe that 2012 as a whole will see flat to slightly negative development in the average selling price on the market and that, if measured in value, the global hearing aid market will show a low, single-digit growth rate.
Hearing Devices
In the first quarter, our core business - wholesale of hearing aids - succeeded in keeping good momentum with strong unit growth and once again captured market shares. The growth generated in the wholesale of hearing aids is broadly based, and all geographic regions and sales channels have contributed to the organic growth. Again, our very complete product portfolios from the Group's three hearing aid brands in combination with a high and consistent service level have ensured this positive development. In the first quarter, for instance, Oticon introduced Intigai, an IIC instrument (Invisible Inside the Canal) that fits deep in the ear canal and is therefore completely invisible. The dispensers have given Intigai a very good reception, and combined with the RITE version (Receiver In The Ear) of Intiga, Oticon now offers the market's most attractive products for users who want a discreet solution, but do not want to compromise on functionalities or sound quality. Since its introduction, the Intiga family has positively impacted the product mix, which is however still characterised by strong sales in the mid-priced and low-end segments. On the whole, Oticon offers solutions based on the latest RISE II technology in all product categories and since the beginning of April, Oticon Agil, Oticon Acto and Oticon Ino have been available in a very attractive miniBTE version, which may be fitted with either a hook or a thin tube.
Coming into 2012, Bernafon - our second hearing aid brand - got off to a very good start and generated significant sales growth in the first quarter, among other factors due to the successful launch of Bernafon Chronos in the second half-year 2011. Bernafon Chronos is a complete family of high-end and mid-priced products and is available in RITE, BTE and ITE variants. In spring, Bernafon has also launched its basic product Inizia in a RITE variant, thereby further enhancing its product offering and its position as a highly attractive and competitive business partner. Our third independent hearing aid brand, Sonic, has also done well in the first quarter, and the introduction of a competitive product portfolio and the establishment of the brand as a serious alternative to more well-established brands are proceeding according to plan.
Once again, our Hearing Devices business activity has succeeded in increasing sales to the National Health Service in the UK, thereby enhancing its already significant market position. Sales to VA in the USA also developed favourably and in line with growth rates in the underlying market. In the first quarter, our retail activities generated broad-based organic growth, thereby slightly exceeding market growth.
Oticon Medical, which sells and develops bone-anchored hearing systems, has seen very positive trends in the first quarter of the year and has continued to generate growth in existing and new markets alike. Furthermore, the first quarter saw positive operating profits (EBIT) despite the incurrence of start-up expenses in new markets. At the beginning of May, Oticon Medical introduced a new implant system, which is expected to further enhance this business unit.
Other business activities
In the first quarter, our business activity Diagnostic Instruments saw very satisfactory development in the form of both acquired and organic growth, with the latter exceeding underlying market growth. The integration of our distribution activities in the USA, which were mainly acquired in 2011, is proceeding according to plan.
Personal Communication has in the same period seen slightly negative trends, which is primarily due to continuously declining sales in Phonic Ear and FrontRow as a consequence of investment restraints in the US education sector as well as overall difficult market conditions for assistive listening devices. Development in Sennheiser Communications was stable in the first quarter, and the company still commands a strong position in the market.
Expectations
We maintain our expectations of 2012 as announced in our Annual Report 2011, with Group revenues forecast to grow by 5-9%, of which acquisitions are estimated to account for 1-3 percentage points, and with operating profits (EBIT) expected to grow compared with the level realised in 2011.
Other matters
In the first quarter, the Company acquired a total of 372,256 treasury shares worth DKK 184 million in total. Through our share buyback programme, we will continue to channel any excess cash flows back to our shareholders, while maintaining the level of consolidated net interest-bearing debt of DKK 1.5-2.0 billion.
Futher information: Other contacts:
Niels Jacobsen, President & CEO Stefan Ingildsen, SVP Finance
Phone +45 3917 7100 Soeren B. Andersson, VP IR
www.demant.com Morten Lehmann Nielsen, IR Manager
Attachment:
https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=392218
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