Company announcementno 2017-06 9 May 2017
Interim Management Statement covering the period year-to-date
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The report provides profiles of the companies in the market such as Wintriss Engineering, William Demant Holding A/S, Sonova, Permobil, Bausch & Lomb Incorporated, BLUE CHIP MEDICAL, Ai Squared, Freedom Scientific, Inc., Medical Depot, Inc., and GN Store Nord A/S. The Demant Group operates in a global market with companies in more than 30 countries, employs more than 16,000 employees and generates an annual revenue of DKK 14.5 billion. Our products are sold in more than 130 countries where we create life-changing differences through hearing health. The hearing aids market key players are Phonak, Benson Hearing, GN Store Nord A/S, Starkey, MED-EL, William Demant Holding A/S, Medtronic, Widex USA, Inc., and SivantosPte LTD. Cart Summary Single User License USD 4500. Export's channels targeted considered focus are the (wholesale, retail, intensely small and public) upcoming markets 10 William Demant Holding Strategy and position in emerging markets Channels in emerging markets. Present wherever there is a business opportunity – Distributors in more than 100 countries. Each distributor is assessed.
Strong organic growth for the Group
Market share gain in wholesale of hearing aids driven by Oticon Opn
2017 outlook maintained - realising an EBIT in the upper half of the range most likely
- Year-to-date, the Group has realised strong revenue growth in local currencies, mainly driven by organic growth. The positive momentum from the second half of 2016 has continued with Oticon Opn as a main growth driver.
- The Group's hearing aid wholesale business was the main contributor to our overall organic growth and delivered an organic growth rate significantly above the market growth rate. This development was mainly driven by high unit growth, but also by an increase in the ASP as a result of a better product mix, with Oticon Opn as the main driver. We have continued to gain market share with Veterans Affairs (VA).
- At the annual AudiologyNOW! convention in the US, the Group announced the further expansion of the OpenSound paradigm by presenting Oticon Opn in two new styles as well as a tinnitus solution and a rechargeable solution for both new and existing Opn hearing aids. Oticon Opn will be the first rechargeable solution offering 2.4 GHz radio technology and Made for iPhone with ultra-low power consumption. The rechargeable solution received very positive feedback at the convention.
- Year-to-date, our retail business has continued to deliver satisfactory organic growth in addition to growth from acquisitions, with Europe as the main organic growth driver. Compared to 2016, our US retail business has seen improved performance, however with growth rates still being below the market growth rate.
- In Hearing Implants, we have delivered strong growth rates year-to-date as a result of the launch of the Ponto 3 bone-anchored sound processor, especially the SuperPower version, and solid performance in our cochlear implants (CI) business. Diagnostic Instruments has seen satisfactory growth year-to-date.
- We maintain our outlook for 2017, i.e. to generate growth in sales in all the Group's three business activities, and we are guiding for an EBIT in the range of DKK 2.2-2.5 billion before restructuring costs of around DKK 200 million. With the strong start to the year, we consider it most likely that we will realise an EBIT in the upper half of the range.
'We've seen a very encouraging start to 2017, and I'm happy to see that all our business activities are in good shape and continue to launch new, innovative products. I'm very pleased to see the progress we've made, as it's our top priority to secure future growth through innovation and customer focus and to deliver on our hearing healthcare ambition,' says Søren Nielsen, President & CEO.
Market trend
In the US, the unit growth rate was only 1-2% year-to-date, mainly driven by growth in the commercial market of 2%. In the same period, sales to VA was relatively flat.
We believe that year-to-date, the overall unit growth rate in Europe has also been below our expectations.
We therefore believe that the unit growth rate on the global market for hearing aids has year-to-date been below the Group's general assumption of 4-6%. We estimate that the ASP have been relatively stable in the global market supported by recently launched new products, slightly exceeding our expectations. Market growth measured in value is thus estimated to have been in line with our expectations.
Discussions are ongoing regarding the potential introduction of an over-the-counter (OTC) hearing aid category in the US. Under the right regulatory framework, we support the FDA's governing of a potential future OTC category, with FDA-regulated products to be used for mild hearing losses.
Smsc driver download. Hearing Devices
The Group's core business - the wholesale of hearing aids - has year-to-date generated strong organic growth, significantly exceeding the market growth rate, continuing the momentum from the second half of 2016. This growth was mainly driven by a high unit growth, but also by an increase in the ASP as a result of a better product mix. Oticon Opn still receives outstanding feedback in the marketplace and remains a main positive driver of organic growth.
Bernafon and Sonic are experiencing some ASP pressure, as their current product portfolios are at the late stages of their life cycle, but we expect to launch new products in the second half of 2017. The combined unit growth for Bernafon and Sonic has been strong year-to-date, especially for Sonic driven by distributor sales.
Year-to-date, growth has been broadly based in all major markets. Especially North America generated high organic growth both in the commercial market and with VA where we have seen increasing sales and have continued to gain market share. Sales to NHS also experienced high unit growth, but at a lower ASP.
At the annual US hearing aid convention, AudiologyNOW!, which took place in Indianapolis, Indiana, at the beginning of April, Oticon announced the further expansion of its OpenSound paradigm by presenting Oticon Opn in two new styles: A new miniRITE-T with telecoil and a new and powerful BTE for severe to profound hearing losses.
Also at AudiologyNOW!, we presented rechargeability as a flexible option for both new and existing Oticon Opn users. The rechargeable solution can be retrofitted to existing Oticon Opn products, and the user has the possibility to change between rechargeable and disposable batteries. Oticon Opn will thus be the first hearing aid that combines rechargeabillity and Made for iPhone, enabled by low-power 2.4 GHz radio technology. We also launched a new tinnitus solution as well as a new Speech Rescue feature that spans all styles and price points.
Our retail activities continue to deliver solid organic growth in addition to growth from acquisitions. Europe remains the main driver of organic growth year-to-date. Our US retail business has seen improved performance, however with the growth rate still being below the market growth rate.
Hearing Implants
We estimate that the overall market is showing satisfactory growth rates year-to-date, and we believe that Oticon Medical has succeeded in gaining market share due to the successful launch of the Ponto 3 bone-anchored sound processor and solid performance in the CI area.
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Ponto 3 was off to a strong start and has continued its positive momentum. Ponto 3 has thus been a main growth driver for the bone-anchored hearing systems (BAHS) business year-to-date, with the strongest growth rates obtained in Europe. Especially the new and first ever abutment level SuperPower processor has created significant growth, which is a clear indication of how receptive this market is to innovation.
The CI business has rebounded to very solid growth levels. This development is, among other factors, due to improved market conditions in oil-dependent markets, which adversely affected growth in 2016. The roll-out of Neuro continues at a positive pace with launches in countries such as France and Brazil where we enjoy high market shares. Data on patients fitted with Neuro gathered by leading CI centres are excellent and clearly beyond what could be expected. In late 2017, we plan to initiate the second phase of the Neuro launch, which will focus on a very small and cosmetically attractive BTE platform and a new generation of fitting software.
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Diagnostic Instruments
Diagnostic Instruments has generated satisfactory growth rates year-to-date. Growth has been broadly based, with solid contributions to growth from the US, Asia and from some of the oil-dependent markets that negatively impacted growth in 2016.
Like the hearing aid business, Diagnostic Instruments also introduced new products at the AudiologyNow! convention. The new products consist of a new audiometer, Pello, from Grason-Stadler, a VNG system with an innovative touch interface from Interacoustics and a new tinnometer for diagnosing tinnitus from MedRx.
Other business areas
Year-to-date, sales and order intake in Sennheiser Communications, our joint venture with Sennheiser electronic GmbH & Co. KG, have developed satisfactorily. Especially the CC&O segment has delivered strong growth, and we are also seeing positive momentum in the Mobile segment where we have introduced new products.
Other matters
Management change
The Management changes announced in connection with publication of our Annual Report 2016 have now been implemented, and Søren Nielsen replaced Niels Jacobsen as President & CEO of William Demant Holding on 1 April 2017. After the annual general meeting on 27 March, Niels Jacobsen was elected Deputy Chairman of the Company's Board of Directors, and Niels B. Christiansen was elected new Chairman, replacing Lars Nørby Johansen.
Share buy-back
Year-to-date, the Company has bought back shares worth DKK 308 million in total. The Company's portfolio of treasury shares corresponds to 0.75% of the share capital. This portfolio does not include the shares that were cancelled following the authorisation granted at the annual general meeting in March 2017.
We will continue to prioritise value-adding investment opportunities and acquisitions, and any additional cash will be spent on buying back shares. We aim at a target gearing multiple of 1.5-2.0 measured as net interest-bearing debt (NIBD) relative to EBITDA.
Outlook for 2017
We maintain our 2017 outlook as stated in our Annual Report 2016, including our expectation to generate growth in sales in all the Group's three business activities: Hearing Devices, Hearing Implants and Diagnostic Instruments.
William Demant Annual Report
In 2017, we are guiding for an EBIT of DKK 2.2-2.5 billion before the announced restructuring costs of around DKK 200 million. With the strong start to the year, we consider it most likely that we will realise an EBIT in the upper half of the range.
*******
Further information: Søren Nielsen, President & CEO Phone +45 3917 7300 www.demant.com | Other contacts: René Schneider, CFO Søren B. Andersson, VP IR Mathias Holten Møller, IR Officer Trine Kromann-Mikkelsen, Media |
Company announcementno 2017-09 9 November 2017
Interim Management Statement covering the period year-to-date
Continued strong performance in line with our expectations
Hearing aid wholesale business continues to deliver strong organic growth driven by Opn
2017 outlook maintained: EBIT of DKK 2.3-2.6 billion
- The strong performance by the Group in the first half of the year has continued into the second half, and we have seen strong revenue growth year-to-date, although we are also seeing the effect of comparative figures becoming somewhat tougher during the second half-year.
- Year-to-date, Hearing Devices has performed strongly, the main driver of organic growth being our wholesale business, which has delivered market share gains based on solid growth in both volumes and the average selling price (ASP), mainly driven by Oticon Opn. The growth trajectory into the second half-year has become increasingly ASP-driven due to positive geographical, product and channel mix shifts, whereas volume growth rates were below volume growth rates in the first half-year. Our retail business has year-to-date delivered an organic growth rate in line with the estimated market growth rate with additional revenue growth from acquisitions.
- Hearing Implants has continued its strong momentum from the first half-year, with particularly strong performance by our cochlear implants business sparked by a combination of some large tender orders for our previous product generation and an increased uptake of the Neuro system. Also our bone-anchored hearing systems business has succeeded in continuing its growth trajectory into the second half of the year.
- In Diagnostic Instruments, growth in the second half-year has continued in line with growth in the first half-year. This is mainly due to strong organic growth in North America, South America and Asia.
- The strong performance by the Group has translated into a continuation of the strong free cash flow generation from the first half-year into the second.
- We maintain our outlook for growth in sales in 2017 in all the Group's three business activities, and we continue to guide for an EBIT of DKK 2.3-2.6 billion before restructuring costs of around DKK 175 million.
'2017 is set out to be a very good year for the William Demant Group, and I'm pleased to see that we continue our strong performance. We keep seeing positive effects of our continued roll-out of Opn and the open sound paradigm, and we now offer high-quality stereo streaming to Opn hearing aids from any device without compromising on audiology, rechargeability or size. It remains on top of our hearing healthcare agenda to continue to offer innovative solutions and to drive new technological advances,' says Søren Nielsen, President & CEO.
Hearing Devices
Market trends
In the US hearing aid market, the unit growth rate was approx. 3-4% in the first ten months of the year, mainly driven by growth in the commercial market of almost 4% according to statistics from the Hearing Industries Association (HIA). In the same period, sales to the large public channel, Veterans Affairs (VA), grew by a little more than 1%. In Europe, we estimate that the average unit growth rate for the first nine months of the year was approx. 2% with an only marginally positive unit growth rate in the UK and a roughly flat unit growth rate in Germany. For Japan and Australia, we estimate that unit growth year-to-date has been slightly negative. Driver download nvidia. Overall, we continue to see the global unit growth rate for this year slightly below the Group's general expectations of a 4-6% unit growth rate per year.
We still estimate that the average selling price (ASP) on the global hearing aid wholesale market has been relatively stable, with the positive effect from new high-end product launches counterbalancing the slight pressure caused by channel mix shifts and a highly competitive business environment. We consider the overall retail pricing environment to be stable despite significant regional and local differences.
Wholesale
Our hearing aid wholesale business has continued its strong performance from the first half-year, resulting in a strong organic growth rate above the market growth rate, although we are also seeing the effect of comparative figures becoming somewhat tougher during the second half-year. While growth in the first half-year was primarily driven by higher volumes, growth in the second half-year is becoming more the result of a higher ASP due to a number of positive mix shifts. Volume growth rates into the second half-year were below volume growth rates in the first half-year. Year-to-date, we have seen solid growth in both volumes and the ASP, and we have succeeded in gaining market share throughout the year.
We have seen a continued positive product mix shift, which is mainly attributable to Oticon Opn continuing to perform very well. We continue to successfully drive our audiological agenda with the open sound paradigm, which resonates well with customers and end-users and is underpinned by new evidence of improved speech understanding and reduced listening effort. End-user feedback remains very positive, and the expansion in June of our Opn product portfolio with rechargeability, new styles and new features has helped widen and deepen the segments that we can address. With our recent announcement at EUHA of the introduction of the new ConnectClip, we now enable end-users to stream phone calls and music in high quality to both ears from any modern smartphone (including Android devices). Based on Bluetooth Low Energy (BLE), this improved connectivity comes without any compromises on audiology, rechargeability or hearing aid size and thus helps us expand our open sound paradigm to a wider audience.
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The new product families, Zerena from Bernafon and Enchant from Sonic, which were launched in early summer and introduced 2.4 GHz connectivity in these brands, also help improve product mixes for both brands.
We have also seen positive ASP effects from geographical and channel mix shifts, with particularly strong organic growth rates in North America. This trend has been driven by strong growth in sales to both independents and VA. As far as the latter is concerned, our market share almost doubled to 13.8% in September compared to 7.0% in the same period last year measured in hearing aid units. With effect from the beginning of November this year, we introduced our Opn 1 miniRITE-T and BTE13PP styles to this channel along with our tinnitus feature, which has further strengthened our offering.
In Europe, we have experienced some headwind from the acquisition by a competitor of a large retail chain, which has led to reduced volumes in certain regions, although the effect on revenue has been less significant. So far, the timing of orders from the NHS in the UK has also had a negative effect on volumes in the second half-year, but a positive effect on the overall ASP. Meanwhile, we continue to grow our wholesale volumes to our own retail business and independents and overall, our volume growth in Europe has so far been moderate in the second half. Organic growth in Asia has been strong year-to-date, with China as a main growth driver.
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Retail
The organic growth rate of our retail business has year-to-date been in line with the estimated market growth rate, while we also continue to add revenue from acquisitions made primarily in North America. While we have seen the impact of the slight softening of market unit growth, we see no reason why this trend should not reverse to the growth levels dictated by structural trends. Australia, where we operate a sizeable retail business, is one of the markets that have seen negative growth during the year.
William Demant Holding Stock
Generally speaking, performance tends to be stronger in markets where we operate consolidated retail chains than in those markets where our retail activities are more fragmented. Canada, the UK and France are all examples of mature retail operations with strong growth momentum, whereas the US is an example of a more fragmented market where the consolidation of acquired activities into a coherent operational set-up remains a complex task.
Hearing Implants
Overall, Hearing Implants has succeeded in continuing its strong organic growth from the first half of the year based on a strong product offering and new approvals.
Particularly our cochlear implants business has seen strong growth in the second half-year where we have delivered some large tender orders placed by export markets for our previous product generation, which has negatively impacted the overall ASP. Furthermore, we have seen an increased uptake of the Neuro system due to launches in new markets in combination with a dedicated sales effort in more established markets. We recently released our first reliability report for the Neuro Zti implant with excellent results, and with the Neuro 2 external processor and the new Genie Medical fitting software to be launched around year-end, we will have a highly compelling product offering.
Also our bone-anchored hearing systems business has succeeded in carrying its strong momentum into the second half of the year driven by Ponto 3. The Ponto 3 SuperPower, in particular, is performing strongly, and we continue to see positive clinical results in terms of improved speech understanding.
Diagnostic Instruments
In Diagnostic Instruments, growth generated in the second half-year has so far been in line with the strong growth delivered in the first half-year, mainly driven by North America, South America and Asia. Although the comparative figures for the same period last year are fairly favourable, the strong performance year-to-date reflects a combination of healthy markets, solid sales execution and strong product portfolios. The latter were further strengthened by the presentation of new products from several of our brands at the recently held EUHA congress in Nuremberg, Germany.
Personal Communication
Sennheiser Communications, our joint venture with Sennheiser KG, has seen the positive momentum in its underlying business (excluding inventory effects) continue from the first half of the year into the second half-year with positive contributions from all three segments, i.e. CC&O, Mobile and Gaming. However, growth has been negatively impacted by inventory reductions in the second half-year.
Other matters
Strategic initiatives
We are still executing on our strategic initiatives and based on the cost base for 2016, we maintain our expectation of total annual cost savings of DKK 200 million, once the initiatives are fully implemented. Expected restructuring costs for 2017 remain unchanged at DKK 175 million of which DKK 83 million was spent in the first half-year.
William Demant Holding A S
Share buy-back
Year-to-date, the Company has bought back shares worth DKK 661 million in total. As of today, the Company's holding of treasury shares corresponds to approx. 1.56% of the share capital.
We aim at a target gearing multiple of 1.5-2.0 measured as NIBD (net interest-bearing debt) relative to EBITDA, and as indicated in our Interim Report 2017, we expect the level of share buy-back to be higher in the second half of 2017 than in the first.
Outlook for 2017
We maintain our 2017 outlook as stated in our Interim Report 2017, including our expectation to generate growth in sales in all the Group's three business activities: Hearing Devices, Hearing Implants and Diagnostic Instruments.
For 2017, we continue to guide for an EBIT of DKK 2.3-2.6 billion before restructuring costs of around DKK 175 million.
*******
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Ponto 3 was off to a strong start and has continued its positive momentum. Ponto 3 has thus been a main growth driver for the bone-anchored hearing systems (BAHS) business year-to-date, with the strongest growth rates obtained in Europe. Especially the new and first ever abutment level SuperPower processor has created significant growth, which is a clear indication of how receptive this market is to innovation.
The CI business has rebounded to very solid growth levels. This development is, among other factors, due to improved market conditions in oil-dependent markets, which adversely affected growth in 2016. The roll-out of Neuro continues at a positive pace with launches in countries such as France and Brazil where we enjoy high market shares. Data on patients fitted with Neuro gathered by leading CI centres are excellent and clearly beyond what could be expected. In late 2017, we plan to initiate the second phase of the Neuro launch, which will focus on a very small and cosmetically attractive BTE platform and a new generation of fitting software.
Demant A S Stock Price
Diagnostic Instruments
Diagnostic Instruments has generated satisfactory growth rates year-to-date. Growth has been broadly based, with solid contributions to growth from the US, Asia and from some of the oil-dependent markets that negatively impacted growth in 2016.
Like the hearing aid business, Diagnostic Instruments also introduced new products at the AudiologyNow! convention. The new products consist of a new audiometer, Pello, from Grason-Stadler, a VNG system with an innovative touch interface from Interacoustics and a new tinnometer for diagnosing tinnitus from MedRx.
Other business areas
Year-to-date, sales and order intake in Sennheiser Communications, our joint venture with Sennheiser electronic GmbH & Co. KG, have developed satisfactorily. Especially the CC&O segment has delivered strong growth, and we are also seeing positive momentum in the Mobile segment where we have introduced new products.
Other matters
Management change
The Management changes announced in connection with publication of our Annual Report 2016 have now been implemented, and Søren Nielsen replaced Niels Jacobsen as President & CEO of William Demant Holding on 1 April 2017. After the annual general meeting on 27 March, Niels Jacobsen was elected Deputy Chairman of the Company's Board of Directors, and Niels B. Christiansen was elected new Chairman, replacing Lars Nørby Johansen.
Share buy-back
Year-to-date, the Company has bought back shares worth DKK 308 million in total. The Company's portfolio of treasury shares corresponds to 0.75% of the share capital. This portfolio does not include the shares that were cancelled following the authorisation granted at the annual general meeting in March 2017.
We will continue to prioritise value-adding investment opportunities and acquisitions, and any additional cash will be spent on buying back shares. We aim at a target gearing multiple of 1.5-2.0 measured as net interest-bearing debt (NIBD) relative to EBITDA.
Outlook for 2017
We maintain our 2017 outlook as stated in our Annual Report 2016, including our expectation to generate growth in sales in all the Group's three business activities: Hearing Devices, Hearing Implants and Diagnostic Instruments.
William Demant Annual Report
In 2017, we are guiding for an EBIT of DKK 2.2-2.5 billion before the announced restructuring costs of around DKK 200 million. With the strong start to the year, we consider it most likely that we will realise an EBIT in the upper half of the range.
*******
Further information: Søren Nielsen, President & CEO Phone +45 3917 7300 www.demant.com | Other contacts: René Schneider, CFO Søren B. Andersson, VP IR Mathias Holten Møller, IR Officer Trine Kromann-Mikkelsen, Media |
Company announcementno 2017-09 9 November 2017
Interim Management Statement covering the period year-to-date
Continued strong performance in line with our expectations
Hearing aid wholesale business continues to deliver strong organic growth driven by Opn
2017 outlook maintained: EBIT of DKK 2.3-2.6 billion
- The strong performance by the Group in the first half of the year has continued into the second half, and we have seen strong revenue growth year-to-date, although we are also seeing the effect of comparative figures becoming somewhat tougher during the second half-year.
- Year-to-date, Hearing Devices has performed strongly, the main driver of organic growth being our wholesale business, which has delivered market share gains based on solid growth in both volumes and the average selling price (ASP), mainly driven by Oticon Opn. The growth trajectory into the second half-year has become increasingly ASP-driven due to positive geographical, product and channel mix shifts, whereas volume growth rates were below volume growth rates in the first half-year. Our retail business has year-to-date delivered an organic growth rate in line with the estimated market growth rate with additional revenue growth from acquisitions.
- Hearing Implants has continued its strong momentum from the first half-year, with particularly strong performance by our cochlear implants business sparked by a combination of some large tender orders for our previous product generation and an increased uptake of the Neuro system. Also our bone-anchored hearing systems business has succeeded in continuing its growth trajectory into the second half of the year.
- In Diagnostic Instruments, growth in the second half-year has continued in line with growth in the first half-year. This is mainly due to strong organic growth in North America, South America and Asia.
- The strong performance by the Group has translated into a continuation of the strong free cash flow generation from the first half-year into the second.
- We maintain our outlook for growth in sales in 2017 in all the Group's three business activities, and we continue to guide for an EBIT of DKK 2.3-2.6 billion before restructuring costs of around DKK 175 million.
'2017 is set out to be a very good year for the William Demant Group, and I'm pleased to see that we continue our strong performance. We keep seeing positive effects of our continued roll-out of Opn and the open sound paradigm, and we now offer high-quality stereo streaming to Opn hearing aids from any device without compromising on audiology, rechargeability or size. It remains on top of our hearing healthcare agenda to continue to offer innovative solutions and to drive new technological advances,' says Søren Nielsen, President & CEO.
Hearing Devices
Market trends
In the US hearing aid market, the unit growth rate was approx. 3-4% in the first ten months of the year, mainly driven by growth in the commercial market of almost 4% according to statistics from the Hearing Industries Association (HIA). In the same period, sales to the large public channel, Veterans Affairs (VA), grew by a little more than 1%. In Europe, we estimate that the average unit growth rate for the first nine months of the year was approx. 2% with an only marginally positive unit growth rate in the UK and a roughly flat unit growth rate in Germany. For Japan and Australia, we estimate that unit growth year-to-date has been slightly negative. Driver download nvidia. Overall, we continue to see the global unit growth rate for this year slightly below the Group's general expectations of a 4-6% unit growth rate per year.
We still estimate that the average selling price (ASP) on the global hearing aid wholesale market has been relatively stable, with the positive effect from new high-end product launches counterbalancing the slight pressure caused by channel mix shifts and a highly competitive business environment. We consider the overall retail pricing environment to be stable despite significant regional and local differences.
Wholesale
Our hearing aid wholesale business has continued its strong performance from the first half-year, resulting in a strong organic growth rate above the market growth rate, although we are also seeing the effect of comparative figures becoming somewhat tougher during the second half-year. While growth in the first half-year was primarily driven by higher volumes, growth in the second half-year is becoming more the result of a higher ASP due to a number of positive mix shifts. Volume growth rates into the second half-year were below volume growth rates in the first half-year. Year-to-date, we have seen solid growth in both volumes and the ASP, and we have succeeded in gaining market share throughout the year.
We have seen a continued positive product mix shift, which is mainly attributable to Oticon Opn continuing to perform very well. We continue to successfully drive our audiological agenda with the open sound paradigm, which resonates well with customers and end-users and is underpinned by new evidence of improved speech understanding and reduced listening effort. End-user feedback remains very positive, and the expansion in June of our Opn product portfolio with rechargeability, new styles and new features has helped widen and deepen the segments that we can address. With our recent announcement at EUHA of the introduction of the new ConnectClip, we now enable end-users to stream phone calls and music in high quality to both ears from any modern smartphone (including Android devices). Based on Bluetooth Low Energy (BLE), this improved connectivity comes without any compromises on audiology, rechargeability or hearing aid size and thus helps us expand our open sound paradigm to a wider audience.
Download William Demant Holding A/s Driver Free
The new product families, Zerena from Bernafon and Enchant from Sonic, which were launched in early summer and introduced 2.4 GHz connectivity in these brands, also help improve product mixes for both brands.
We have also seen positive ASP effects from geographical and channel mix shifts, with particularly strong organic growth rates in North America. This trend has been driven by strong growth in sales to both independents and VA. As far as the latter is concerned, our market share almost doubled to 13.8% in September compared to 7.0% in the same period last year measured in hearing aid units. With effect from the beginning of November this year, we introduced our Opn 1 miniRITE-T and BTE13PP styles to this channel along with our tinnitus feature, which has further strengthened our offering.
In Europe, we have experienced some headwind from the acquisition by a competitor of a large retail chain, which has led to reduced volumes in certain regions, although the effect on revenue has been less significant. So far, the timing of orders from the NHS in the UK has also had a negative effect on volumes in the second half-year, but a positive effect on the overall ASP. Meanwhile, we continue to grow our wholesale volumes to our own retail business and independents and overall, our volume growth in Europe has so far been moderate in the second half. Organic growth in Asia has been strong year-to-date, with China as a main growth driver.
Retail
The organic growth rate of our retail business has year-to-date been in line with the estimated market growth rate, while we also continue to add revenue from acquisitions made primarily in North America. While we have seen the impact of the slight softening of market unit growth, we see no reason why this trend should not reverse to the growth levels dictated by structural trends. Australia, where we operate a sizeable retail business, is one of the markets that have seen negative growth during the year.
William Demant Holding Stock
Generally speaking, performance tends to be stronger in markets where we operate consolidated retail chains than in those markets where our retail activities are more fragmented. Canada, the UK and France are all examples of mature retail operations with strong growth momentum, whereas the US is an example of a more fragmented market where the consolidation of acquired activities into a coherent operational set-up remains a complex task.
Hearing Implants
Overall, Hearing Implants has succeeded in continuing its strong organic growth from the first half of the year based on a strong product offering and new approvals.
Particularly our cochlear implants business has seen strong growth in the second half-year where we have delivered some large tender orders placed by export markets for our previous product generation, which has negatively impacted the overall ASP. Furthermore, we have seen an increased uptake of the Neuro system due to launches in new markets in combination with a dedicated sales effort in more established markets. We recently released our first reliability report for the Neuro Zti implant with excellent results, and with the Neuro 2 external processor and the new Genie Medical fitting software to be launched around year-end, we will have a highly compelling product offering.
Also our bone-anchored hearing systems business has succeeded in carrying its strong momentum into the second half of the year driven by Ponto 3. The Ponto 3 SuperPower, in particular, is performing strongly, and we continue to see positive clinical results in terms of improved speech understanding.
Diagnostic Instruments
In Diagnostic Instruments, growth generated in the second half-year has so far been in line with the strong growth delivered in the first half-year, mainly driven by North America, South America and Asia. Although the comparative figures for the same period last year are fairly favourable, the strong performance year-to-date reflects a combination of healthy markets, solid sales execution and strong product portfolios. The latter were further strengthened by the presentation of new products from several of our brands at the recently held EUHA congress in Nuremberg, Germany.
Personal Communication
Sennheiser Communications, our joint venture with Sennheiser KG, has seen the positive momentum in its underlying business (excluding inventory effects) continue from the first half of the year into the second half-year with positive contributions from all three segments, i.e. CC&O, Mobile and Gaming. However, growth has been negatively impacted by inventory reductions in the second half-year.
Other matters
Strategic initiatives
We are still executing on our strategic initiatives and based on the cost base for 2016, we maintain our expectation of total annual cost savings of DKK 200 million, once the initiatives are fully implemented. Expected restructuring costs for 2017 remain unchanged at DKK 175 million of which DKK 83 million was spent in the first half-year.
William Demant Holding A S
Share buy-back
Year-to-date, the Company has bought back shares worth DKK 661 million in total. As of today, the Company's holding of treasury shares corresponds to approx. 1.56% of the share capital.
We aim at a target gearing multiple of 1.5-2.0 measured as NIBD (net interest-bearing debt) relative to EBITDA, and as indicated in our Interim Report 2017, we expect the level of share buy-back to be higher in the second half of 2017 than in the first.
Outlook for 2017
We maintain our 2017 outlook as stated in our Interim Report 2017, including our expectation to generate growth in sales in all the Group's three business activities: Hearing Devices, Hearing Implants and Diagnostic Instruments.
For 2017, we continue to guide for an EBIT of DKK 2.3-2.6 billion before restructuring costs of around DKK 175 million.
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Further information: Søren Nielsen, President & CEO Phone +45 3917 7300 www.demant.com | Other contacts: René Schneider, CFO Søren B. Andersson, VP IR Mathias Holten Møller, IR Officer Trine Kromann-Mikkelsen, Media |