Demant (DEMANT) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered 2% organic revenue growth, driven by strong Hearing Care performance that significantly outpaced the market.

• Hearing Aids experienced slightly negative organic growth to external customers due to tough prior-year comparables, increased competition, and US brand strategy adjustments.

• Diagnostics segment posted -4% organic growth, impacted by weak demand and market development in China, but gained market share in some areas.

• Cost-saving initiatives kept OPEX growth at a low to mid-single-digit rate as planned.

• EBIT before special items was slightly below expectations due to unfavorable FX movements and lower operating leverage.

Financial highlights

• Group revenue reached DKK 5,401 million in Q3 2024, up 4% reported and 2% organic year-over-year.

• Gross margin was flat year-over-year, supported by product mix improvements.

• OPEX grew at a low to mid-single-digit rate, reflecting cost control initiatives.

• Cash flow from operations and free cash flow were solid but lower than last year, mainly due to higher financial expenses.

• Net interest-bearing debt remained roughly flat sequentially, with gearing within the 2.0-2.5 target range.

Outlook and guidance

• 2024 outlook maintained: organic growth of 2-4% and EBIT before special items of DKK 4,300-4,600 million.

• Acquisitive growth expected at 2%, FX impact at -1%, and effective tax rate around 24%.

• Share buyback program of around DKK 2,300 million remains on track for 2024.

• Loss after tax from discontinued operations forecast at DKK 550 million, mainly from Communications and Hearing Implants.

• Management expects a stronger Q4, supported by year-end effects and a robust order book in diagnostics.