Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GN Store Nord AS (GGNDF, Financial) achieved a strong 10% organic growth in its hearing division, building on a 13% growth from the previous year.
- The company reported a 79% increase in EBITDA, resulting in a 12% EBITDA margin, up from 6.6% the previous year.
- The OneGN transformation initiative delivered company-wide synergies of around DKK430 million, slightly ahead of the original plan.
- The gaming division, particularly SteelSeries, experienced a strong finish to the year with a 16% organic revenue growth in Q4.
- GN Store Nord AS (GGNDF) successfully reduced its net interest-bearing debt, improving its leverage ratio from 4.5 times to 3.5 times.
Negative Points
- The enterprise division experienced a negative 3% organic revenue growth for the year, with a slight improvement to negative 2% in Q4.
- The consumer division saw a significant decline of 31% in organic growth due to the wind down of the Elite and Talk product lines.
- The company anticipates a 0.5-percentage-point negative margin impact from tariffs between China and the US, mainly affecting the gaming and enterprise divisions.
- GN Store Nord AS (GGNDF) faces potential headwinds from FX rates, particularly the appreciated US dollar, which could impact the EBITDA margin.
- The company expects continued costs related to service and warranty commitments from the wind down, estimated at around DKK50 million.
Q & A Highlights
Q: Can you provide insights into the assumptions behind the 12% to 14% EBITDA guidance, particularly regarding tariffs, competition in hearing, and recovery in audio?
A: The guidance reflects our trajectory towards a long-term EBITDA margin of 16% to 17%. The midpoint of 13% is our best estimate, considering FX and tariffs. The range is influenced by revenue performance, with synergies potentially offsetting some challenges. We aim for a balanced outlook, anchored in the midpoint.
Q: What is the timeline for shifting manufacturing for gaming and enterprise due to tariffs, and do you expect this to be completed this year?
A: We are diversifying our global operations from a China-centric model to a more diversified one. While some impact is expected on enterprise and gaming, we are mitigating this and will continue to do so. We do not foresee significant exposure in Europe, and our current setup already reflects some mitigation.
Q: Can you elaborate on the margin building blocks and quantify the investment plan for 2025?
A: We expect a firm midpoint in our guidance, supported by new product launches and portfolio modernization. The mix of profitability levels across businesses can affect margins. We are also investing in operations, supply chain, IT modernization, and cybersecurity to support long-term margin aspirations.
Q: How do you view the OTC category and Jabra enhance.com, and will you continue investing in this channel?
A: The OTC market size is not fully known, but our business is growing double-digit and trending towards breakeven. We saw healthy progress in growth and bottom-line improvement in 2024, and we expect these trends to continue, reducing the drag on profitability.
Q: Can you provide some commentary on the pricing premium expected for Vivia, considering its dedicated AI chip?
A: We aim to achieve a pricing premium with Vivia due to its strong innovation. While the dedicated AI chip adds some cost, it remains a cost-efficient platform. We do not anticipate a significant price increase to maintain margin levels, as the innovation is primarily in the algorithm.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
