GN to gradually wind-down its Elite and Talk product lines. Strong
performance in the Hearing division to partly off-set the
extraordinary impact from the gradual wind-down
Today, GN has decided to gradually wind-down its Elite and Talk
product lines to further increase focus and resources on more
attractive parts of GN’s business.
As communicated at the Capital Market Day in May 2024, GN is
striving to build leading businesses in attractive markets and by
this grow with healthy margins and ensure good returns on the
invested capital.
The re-focusing of the Elite product line towards the premium
segment, which was initiated in 2023, has resulted in a stronger
profitability level than before. However, the investment required
for future innovation and growth in this very competitive space is
deemed unjustified in the long-term given associated risks. The
Talk product line follows a similar logic and is positioned in the
declining mono Bluetooth market. Consequently, following a thorough
business review the decision has been taken to gradually wind-down
both the Elite and Talk product lines.
Peter Karlstromer, CEO of GN Store Nord, comments: “The
decision to gradually wind down the Elite and Talk product lines is
part of our commitment to focus on attractive markets where we can
deliver profitable growth and strong returns.
We have demonstrated that we can compete in even the most
challenging categories with our leading technology and go-to-market
strengths. We did this with our Elite line by delivering multiple
worlds-first innovations for consumers, especially in true wireless
earbuds, driving global market share gains. The markets, though,
have changed over time, and it is today our assessment that we
cannot generate a fair return on investment compared to the many
other opportunities we have within our Hearing, Enterprise, and
Gaming businesses.
I am very grateful to our retail partners, who have supported
us on the Elite and Talk product lines, as well as to the consumers
who made us a part of their lives. We remain committed to working
closely together to make this a successful wind down, including
continuing with the launch of our final Elite products - the second
generation of the highly acclaimed Elite 8 Active and Elite 10 -
which are the best earbuds we ever made.”
GN will reduce the inventory of the affected products, of which
most is expected to be completed by the end of 2024. GN will,
however, continue to service and support customers for several
years. This commitment to retail customers is underlined by the
global announcement of two next-generation editions of the popular
Elite 8 Active and Elite 10 premium earbuds. The Elite 8 Active Gen
2 and Elite 10 Gen 2, which will be the last two product
introductions in this product line, will be announced today and
available from later this month.
In 2023, the consumer business delivered revenue of DKK 1,253
million with the following split on sub-products: Elite product
line (~70%), Talk product line (~10%), BlueParrott product line
(~20%). The BlueParrott product line (DKK 269 million in 2023)
will, financial reporting wise, be moved to the Enterprise division
from 2025 as part of the effort to drive growth in the front-line
worker opportunity.
Impact on financial guidance 2024
The decision to gradually wind-down the Elite and Talk product
lines will negatively impact the revenue in the Gaming &
Consumer division. As a consequence of the gradual wind-down
including extraordinary promotional activities to reduce
inventories, the 2024 revenue in the Consumer business is assumed
to be impacted by around DKK -450 million compared to 2023.
Following strong execution in the first five months of the year,
the Hearing division is assumed to partly off-set the negative
impact from the gradual wind-down, supported by continued strong
uptake of ReSound Nexia. The development in the Gaming business and
in the Enterprise division in the first five months of the year has
been in line with the original assumptions. For the Enterprise
market specifically, it is still assumed that the market will turn
into positive growth sometime in the second half of the year.
As a result of the strong performance in the Hearing division
and the gradual wind-down, the group organic revenue growth
guidance is narrowed from “2% to 8%” to now “2% to 6%”.
The gradual wind-down will include extraordinary promotional
activities, which is expected to have a negative impact on the
profitability in the affected product lines for the rest of the
year. In addition to this, the group will incur extraordinary costs
of around DKK -200 million in the remainder of 2024 (the majority
is expected in Q2 2024) related to the gradual wind-down, including
severance payments, write-down of prior development projects and
inventories, of which the majority is expected to be non-cash.
Following the gradual wind-down and the strong performance in
the Hearing division, GN is narrowing the EBITA margin
guidance from “12% to 14%” to now “12% to 13%”.
As a result of a positive net working capital development, which
will be further fueled by the gradual wind-down, GN now expects
free cash flow excl. M&A of “more than DKK 900 million” for
2024 compared to “more than DKK 700 million” earlier.
Impact on long-term targets
GN introduced new long-term targets at its Capital Markets Day in
May 2024, including an ambition to drive a CAGR organic revenue
growth of 5-8%.
The wind-down will further support GN’s targeted margin
expansion towards the 2028 target of 16-17%, and allowing to focus
future investments and leadership efforts towards more attractive
opportunities.
For further information, please contact:
Investor Relations
Rune Sandager +45 45 75 92 57
Media Relations
Steen Frentz Laursen +45 20 65 34 20
Forward-looking statements
The forward-looking statements in this report reflect the
management's current expectations of certain future events and
financial results. Statements regarding the future are, naturally,
subject to risks and uncertainties, which may result in
considerable deviations from the outlook set forth. Furthermore,
some of these expectations are based on assumptions regarding
future events, which may prove incorrect. Changes to such
expectations and assumptions will not be disclosed on an ongoing
basis, unless required pursuant to general disclosure obligations
to which GN is subject.
Factors that may cause actual results to deviate materially from
expectations include – but are not limited to – general economic
developments and developments in the financial markets as well as
foreign exchange rates, technological developments, changes and
amendments to legislation and regulations governing GN’s markets,
changes in the demand for GN's products, competition, fluctuations
in sub-contractor supplies, and developments in ongoing litigation
(including but not limited to class action and patent infringement
litigation in the United States).
For more information, please see the "Management's report" and
"Risk management” sections in the Annual Report. This Report should
not be considered an offer to sell securities in GN.
About GN
GN brings people closer through our leading intelligent hearing,
audio, video, and gaming solutions. Inspired by people and driven
by innovation, we deliver technologies that enhance the senses of
hearing and sight. We help people with hearing loss overcome
real-life challenges, improve communication and collaboration for
businesses, and provide great experiences for audio and gaming
enthusiasts. GN was founded more than 150 years ago with a vision
to connect the world. Today, inspired by our strong heritage, GN
touches more lives than ever with our unique expertise and the
broadest portfolio of products and services in our history –
bringing people closer to what is important to them.
We market our solutions with the brands Jabra, ReSound,
SteelSeries, Beltone, Interton, BlueParrott, Danavox, and FalCom in
100 countries. Founded in 1869, GN Group employs more than 7,000
people and is listed on Nasdaq Copenhagen (GN.CO).
Visit our homepage GN.com and connect with us on LinkedIn,
Facebook and X.
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