Demant Q4 2025 Demant A/S Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Demant A/S Earnings Call
Speaker #1: Good afternoon,
Peter Pudselykke: Good afternoon, everyone, and welcome to the conference call for Demant's 2025 annual results. My name is Peter Pudselykke, and I'm heading up the investor relations activities here in Demant. With me here today, I have the usual team: our president and CEO, Søren Nielsen; our CFO, René Schneider; as well as Gustav Høegh from the IR team. For the call, we will do a presentation, which will be followed by Q&A. We expect the session to last no more than one hour in total. As we get to the Q&A, we kindly remind you to limit yourselves to two questions at a time to allow as many as possible to ask a question. Before we dig into the presentation, please do pay notice to the disclaimer on slide number two.
Operator: Good afternoon, everyone, and welcome to the conference call for Demant's 2025 annual results. My name is Peter Pudselykke, and I'm heading up the investor relations activities here in Demant. With me here today, I have the usual team: our president and CEO, Søren Nielsen; our CFO, René Schneider; as well as Gustav Høegh from the IR team. For the call, we will do a presentation, which will be followed by Q&A.
Speaker #1: Everyone, and welcome to the conference call for Demant 2025 annual results. My name is Peter Pudselykke, and I'm heading up the investor relations activities here in Demant.
Speaker #1: With me here today, I have the usual team: our President and CEO, Sren Nielsen; our CFO, Ren Schneider; as well as Gustav Hoegh from the IR team.
Speaker #1: For the call, we will do a presentation, which will be followed by Q&A. We expect the session to last no more than one hour in total.
We expect the session to last no more than one hour in total. As we get to the Q&A, we kindly remind you to limit yourselves to two questions at a time to allow as many as possible to ask a question. Before we dig into the presentation, please do pay notice to the disclaimer on slide number two. And with that, I will go to slide number three while I pass the time to Søren to kick off the presentation. Please.
Speaker #1: As we get to the Q&A, we kindly remind you to limit yourselves to two questions at a time to allow as many as possible to ask a question.
Speaker #1: Before we dig into the presentation, please do pay notice to the disclaimer on slide number two. And with that, I will go to slide number three, where I'll pass the time to Søren to kick off the presentation.
Peter Pudselykke: And with that, I will go to slide number three while I pass the time to Søren to kick off the presentation. Please.
Speaker #2: Thank you very much, Peter, and welcome.
Søren Nielsen: Thank you very much, Peter, and welcome, everybody. The agenda for today is key events for 2025, financial takeaways, and then comment on sustainability advancement, more details on business area reviews, not the least the Q4. Then René, he will do group financial and also take us through Outlook and initiatives to improve profitability. And if we take 2025 in total, at group level, we deliver 2% organic growth, 5% in local currencies. Of course, a significant element from acquisitions, headwind from currencies, leaves us with 2% reported growth. And biggest, I would say, expansion is in hearing care, which now is the biggest business area, as you can see on the business mix split. Gross profit up 2% but down on margin related to, I would say, hearing aids, some extent diagnostic, but we'll get back to that.
Søren Nielsen: Thank you very much, Peter, and welcome, everybody. The agenda for today is key events for 2025, financial takeaways, and then comment on sustainability advancement, more details on business area reviews, not the least the Q4. Then René, he will do group financial and also take us through Outlook and initiatives to improve profitability. And if we take 2025 in total, at group level, we deliver 2% organic growth, 5% in local currencies. Of course, a significant element from acquisitions, headwind from currencies, leaves us with 2% reported growth. And biggest, I would say, expansion is in hearing care, which now is the biggest business area, as you can see on the business mix split. Gross profit up 2% but down on margin related to, I would say, hearing aids, some extent diagnostic, but we'll get back to that.
Speaker #2: Everybody, the agenda for today is key events for 2025, financial takeaways, and then comments on sustainability advancement. There will be more details on business area reviews, and not the least, the fourth quarter.
Speaker #2: Then René, he will do group financials and also take us through outlook and initiatives to improve profitability. And if we take 2025 in total, at group level, we deliver 2% organic growth, 5% in local currencies, of course a significant element from acquisitions, headwind from currencies, leaves us with 2% reported growth.
Speaker #2: And biggest expansion is in hearing care, which now is the biggest business area, as you can see on the business mix split. Gross profit up 2%, but down on margin, related to, I would say, hearing aids, some extent diagnostic, but get back to that.
Speaker #2: EBIT was down 10% before special items, and free cash flow was down 11%. Key events in 2025: we acquired the King Group in Germany and closed the deal in December, so we have one month in the books.
Søren Nielsen: EBIT down 10% before special items, and free cash flow down 11%. Key events in 2025: we acquired the KIND Group in Germany, closed the deal in December, so have one month in the books, one of the world's leading retailers, and with that, significantly expanding our position globally, but particularly in Germany to a number one in hearing care. In October, we introduced Oticon Zeal in selected markets and a launch that so far has created a lot of excitement and a lot of good momentum to carry into 2026. During 2025, we signed agreement to divest both EPOS and Oticon Medical in line with our overall strategy to be a more focused hearing healthcare company. The hearing aid market in 2025 was softer than normal, and particularly in the US, where we saw flat market growth for 2025 in total.
EBIT down 10% before special items, and free cash flow down 11%. Key events in 2025: we acquired the KIND Group in Germany, closed the deal in December, so have one month in the books, one of the world's leading retailers, and with that, significantly expanding our position globally, but particularly in Germany to a number one in hearing care. In October, we introduced Oticon Zeal in selected markets and a launch that so far has created a lot of excitement and a lot of good momentum to carry into 2026. During 2025, we signed agreement to divest both EPOS and Oticon Medical in line with our overall strategy to be a more focused hearing healthcare company. The hearing aid market in 2025 was softer than normal, and particularly in the US, where we saw flat market growth for 2025 in total.
Speaker #2: One of the world's leading retailers, and with that, significantly expanding our position globally— but in particular in Germany— to a number one in hearing care.
Speaker #2: In October, we introduced Oticon Seal in selected markets, and a launch that so far has created a lot of excitement and a lot of good momentum to carry into '26.
Speaker #2: During 2025, we signed agreements to divest both EPOS and Oticon Medical in line with our overall strategy to be a more focused hearing healthcare company.
Speaker #2: The hearing aid market in 2025 was softer than normal, and particularly in the US, where we saw flat market growth for 2025 in total.
Speaker #2: Hearing care delivered very solid performance, and solid performance not the least in the view of the global hearing aid market, whereas hearing aids and diagnostics delivered softer growth.
Søren Nielsen: Hearing care delivered very solid performance, not the least in the view of the global hearing aid market, whereas hearing aids and diagnostics delivered softer growth. All three business areas showed an improved and strong performance in Q4. Key financial takeaways for the second half: group organic growth of 4% for the second half in total, so a sequential improvement from the first half fueled by all three business areas. Gross margin decline versus second half 2024 due to ASP headwinds in hearing aids and increasing share of rechargeability. I'm going to get back to it, but the ASP headwind comes from channel and geography mix, so selling more in countries and channels with a lower ASP and less in higher-priced markets like the US. Diagnostics was also a minor drag on the gross margin coming from their product mix and some geography.
Hearing care delivered very solid performance, not the least in the view of the global hearing aid market, whereas hearing aids and diagnostics delivered softer growth. All three business areas showed an improved and strong performance in Q4. Key financial takeaways for the second half: group organic growth of 4% for the second half in total, so a sequential improvement from the first half fueled by all three business areas. Gross margin decline versus second half 2024 due to ASP headwinds in hearing aids and increasing share of rechargeability. I'm going to get back to it, but the ASP headwind comes from channel and geography mix, so selling more in countries and channels with a lower ASP and less in higher-priced markets like the US. Diagnostics was also a minor drag on the gross margin coming from their product mix and some geography.
Speaker #2: All three business areas showed improved and strong performance in Q4. Key financial takeaways for the second half: group organic growth of 4% for the second half in total.
Speaker #2: So, a sequential improvement from the first half, shown by all three business areas. Gross margin declined versus the second half of '24 due to ASP headwinds in hearing aids and increasing share of rechargeability.
Speaker #2: I'm going to get back to it, but the ASP headwind comes from channel and geography mix. So, selling more in countries and channels with a lower ASP and less in higher-priced markets like the US.
Speaker #2: Diagnostics was also a minor drag on the gross margin, coming from their product mix and some geography. OPEX grew 5% organically, but as already guided for and expected, was flat sequentially from H1, so still reflecting a cautious approach to cost expansion. When we look at the 5% sequentially, to some extent it originates from a significant holdback at the end of '24.
Søren Nielsen: OpEx grew 5% organically, but, as already guided for and expected, flat sequentially from H1, so still reflecting a cautious approach to cost expansion when we look at it sequentially. The 5%, to some extent, originates from a significant holdback at the end of 2024. Acquisitions added 5% this point to growth compared to second half last year. EBIT before special items: DKK 2.1 billion, negatively impacted by exchange rate effects and by lower operating leverage. EBIT margin, therefore, before special items contracted 2.6 percentage points. Special items amounted to DKK -128 million. Strong cash flow from operations of DKK 2.3 billion and free cash flow of just around DKK 2 billion.
OpEx grew 5% organically, but, as already guided for and expected, flat sequentially from H1, so still reflecting a cautious approach to cost expansion when we look at it sequentially. The 5%, to some extent, originates from a significant holdback at the end of 2024. Acquisitions added 5% this point to growth compared to second half last year. EBIT before special items: DKK 2.1 billion, negatively impacted by exchange rate effects and by lower operating leverage. EBIT margin, therefore, before special items contracted 2.6 percentage points. Special items amounted to DKK -128 million. Strong cash flow from operations of DKK 2.3 billion and free cash flow of just around DKK 2 billion.
Speaker #2: Acquisitions added 5% at this point to growth compared to the second half last year. EBIT before special items was $2.1 billion, negatively impacted by exchange rate effects and by lower operating leverage.
Speaker #2: EBIT margin, therefore, before special items, contracted 2.6 percentage points. Special items amounted to Danish kroner minus 128 million. Strong cash flow from operations of DKK 2.3 billion and free cash flow of just around DKK 2 billion.
Speaker #2: Outlook, Renè is going to elaborate further on it for '26. Organic growth of 3 to 6%, and EBIT before special items of DKK 4.1 to 4.5 billion, and continued pause on our share buyback to bring down group leverage.
Søren Nielsen: Outlook, René is going to elaborate further on it, for 2026: organic growth of 3% to 6% and EBIT before special items of DKK 4.1 to 4.5 billion and continued pause on our share buyback to bring down group leverage. Sustainability events quickly: we saw an increase, as expected, of improved lives by overcoming their hearing loss to 12 million and a growing number of tests in our own clinics following the expansion of that. When we look at our main or three main sustainability goals, under the headline of "Respect for the Planet," a planned decrease in our Scope 1 and 2 greenhouse gas emissions. We have now achieved 16% reduction compared to baseline, with a target of 46% by 2030. Gender diversity in top-level management now at 33%, so one in three, and with the aim of getting above 35% by 2030.
Outlook, René is going to elaborate further on it, for 2026: organic growth of 3% to 6% and EBIT before special items of DKK 4.1 to 4.5 billion and continued pause on our share buyback to bring down group leverage. Sustainability events quickly: we saw an increase, as expected, of improved lives by overcoming their hearing loss to 12 million and a growing number of tests in our own clinics following the expansion of that. When we look at our main or three main sustainability goals, under the headline of "Respect for the Planet," a planned decrease in our Scope 1 and 2 greenhouse gas emissions. We have now achieved 16% reduction compared to baseline, with a target of 46% by 2030. Gender diversity in top-level management now at 33%, so one in three, and with the aim of getting above 35% by 2030.
Speaker #2: Sustainability achievements, quickly. We saw an increase, as expected, of improved lives by overcoming their hearing loss—to 12 million—and a growing number of tests in our own clinics following the expansion of that.
Speaker #2: And when we look at our main, or three main, sustainability goals under the headline of respect for the planet, a decrease in our Scope 1 and 2 greenhouse gas emissions.
Speaker #2: We have now achieved a 16% reduction compared to baseline, with a target of 46% by 2030. Gender diversity in top-level management is now at 33%, so one in three.
Speaker #2: And with the aim of getting above 35% by 2030. And the number of people that have read and understood, out of the people for whom it's relevant, should be 100% by 2030.
Søren Nielsen: And the number of people that have read and understood out of the people for whom it's relevant should be 100% by 2030, and you could say basically already tomorrow if at all possible, and we are almost there. Business area review: Well, the hearing aid market in 2025 has definitely been special, and the fourth quarter, which is the new release, is no different. We have seen a high unit growth, and this is all units in Europe, but it's all driven or mainly driven by NHS in the UK, the National Health Service, that have had strong growth, partly to expand the inventory levels, et cetera. And then France also showing high growth, as expected, due to the annualization of the reform. If we allow to exclude NHS and France, unit growth was 3% in Europe. In Germany specifically, growth declined year-over-year.
And the number of people that have read and understood out of the people for whom it's relevant should be 100% by 2030, and you could say basically already tomorrow if at all possible, and we are almost there. Business area review: Well, the hearing aid market in 2025 has definitely been special, and the fourth quarter, which is the new release, is no different. We have seen a high unit growth, and this is all units in Europe, but it's all driven or mainly driven by NHS in the UK, the National Health Service, that have had strong growth, partly to expand the inventory levels, et cetera. And then France also showing high growth, as expected, due to the annualization of the reform. If we allow to exclude NHS and France, unit growth was 3% in Europe. In Germany specifically, growth declined year-over-year.
Speaker #2: And you could say basically already tomorrow, if at all possible. And we are almost there. Business area review. Well, hearing aid market in '25 have definitely been special.
Speaker #2: And fourth quarter, which is the new release, is no different. We have seen a high unit growth, and this is all units in Europe, but it's all driven, or mainly driven, by NHS in the UK, the National Health Service, that have had strong growth, partly to expand the inventory levels, etc.
Speaker #2: And then France also showing high growth as expected, due to the annualization of the reform. If we allow to exclude NHS and France, unit growth was 3% in Europe. In Germany specifically, growth declined year over year.
Speaker #2: North America saw a sequential slowdown, from two quarters with 2% growth to zero, and leaving the year with one. US or Canada saw good growth.
Søren Nielsen: North America saw a sequential slowdown from two quarters with 2% growth to 0% and leaving the year with 1%. The US and Canada saw good growth, so it was offset by flat growth in the US commercial and a slightly negative in the VA. The rest of the world delivered growth. Australia [saw] positive growth, while Japan saw minimal growth. China saw sequential improvement, and we estimate that several emerging markets saw good growth. So again, the ASP, we normally believe in a flat ASP, but no doubt that with the geography mix and channel mix in the year and Q4 as much, then we estimate that we should see a negative impact on ASP. It's not the exact science, but in the area of percentage points, at least. So, a global hearing aid market that has presumably grown just around 2% in value for the year.
North America saw a sequential slowdown from two quarters with 2% growth to 0% and leaving the year with 1%. The US and Canada saw good growth, so it was offset by flat growth in the US commercial and a slightly negative in the VA. The rest of the world delivered growth. Australia [saw] positive growth, while Japan saw minimal growth. China saw sequential improvement, and we estimate that several emerging markets saw good growth. So again, the ASP, we normally believe in a flat ASP, but no doubt that with the geography mix and channel mix in the year and Q4 as much, then we estimate that we should see a negative impact on ASP. It's not the exact science, but in the area of percentage points, at least. So, a global hearing aid market that has presumably grown just around 2% in value for the year.
Speaker #2: So it was offset by flat growth in the US commercial and a slightly negative in the VA. Rest of the world delivered growth. Australia, positive growth, while Japan saw minimal growth.
Speaker #2: China saw sequential improvement. And we estimate that several emerging markets saw good growth. So again, the ASP we normally believe in a flat ASP.
Speaker #2: But no doubt that with the geography mix and channel mix in the year and fourth quarter as much, then we estimate that we should see a negative impact on ASP in—it's not an exact science—but in the area of four percentage points at least.
Speaker #2: So, our global hearing aid market had, assumably, grown just around 2% in value for the year. Hearing aids' fourth quarter organic growth also in the fourth quarter improved despite the US market weakness and loss of share in the US.
Søren Nielsen: Hearing aids Q4: organic growth also in Q4 improved despite the US market weakness and loss of share in the US. The main area in which we have lost share in the US remains to be a large retailer where the number of providers or suppliers have been expanded. We introduced Oticon Zeal in selected European markets, which have created excitement and momentum change in these 4 countries. We have really seen Zeal lift sales also in general in these markets, however, with limited impact on the total group level in Q4 simply by the size of these 4 countries and the potential. Even though Germany is a big country, the premium market in Germany is not that big, so again, not something that financially impacts that much, it, of course, does some, but not that much in the Q4.
Hearing aids Q4: organic growth also in Q4 improved despite the US market weakness and loss of share in the US. The main area in which we have lost share in the US remains to be a large retailer where the number of providers or suppliers have been expanded. We introduced Oticon Zeal in selected European markets, which have created excitement and momentum change in these 4 countries. We have really seen Zeal lift sales also in general in these markets, however, with limited impact on the total group level in Q4 simply by the size of these 4 countries and the potential. Even though Germany is a big country, the premium market in Germany is not that big, so again, not something that financially impacts that much, it, of course, does some, but not that much in the Q4.
Speaker #2: The main area in which we have lost share in the US remains to be a large retailer, where the number of providers or suppliers have been expanded.
Speaker #2: We introduced Only Conceal in selected European markets, which has created excitement and momentum change in these four countries. We have really seen seal lift sales also in general in these markets.
Speaker #2: However, with limited impact on the total group level in the fourth quarter simply by the size of these four countries and their potential—even though Germany is a big country, the premium market in Germany is not that big.
Speaker #2: So again, not something that financially impacts that much—of course, there are some—but not that much in the fourth quarter. So unit growth was very solid.
Søren Nielsen: So unit growth was very solid, representing overall market share gains in units across several key markets, I would say, almost with the main exception being the US. The ASP was negative, as I said, due to geography and channel mix changes. So France, UK, Germany, good growth in Europe, all big markets. Strong performance in Canada. US growth was negative, as I said. Good growth in Japan, South America, and also relatively broad-based growth in Asia, except for China, which I still would say is market-related. And the rollout of Oticon Zeal, just a few more comments to that. We launched it in Europe, and in both Germany, Switzerland, UK, and Denmark, the conclusion is the same. It is undisputed seen as a new, very innovative concept by both hearing care professionals and end users.
So unit growth was very solid, representing overall market share gains in units across several key markets, I would say, almost with the main exception being the US. The ASP was negative, as I said, due to geography and channel mix changes. So France, UK, Germany, good growth in Europe, all big markets. Strong performance in Canada. US growth was negative, as I said. Good growth in Japan, South America, and also relatively broad-based growth in Asia, except for China, which I still would say is market-related. And the rollout of Oticon Zeal, just a few more comments to that. We launched it in Europe, and in both Germany, Switzerland, UK, and Denmark, the conclusion is the same. It is undisputed seen as a new, very innovative concept by both hearing care professionals and end users.
Speaker #2: Representing overall market share gains in units across several key markets—I would say almost, with the main exception being the US. The ASP was negative, as I said, due to geography and channel mix changes.
Speaker #2: So, France, UK, Germany—good growth in Europe, all big markets, strong performance in Canada. US growth was negative, as I said. Good growth in Japan, South America, and also relatively broad-based growth in Asia, except for China, which I still would say is market-related.
Speaker #2: And the rollout of all the Conceal—just a few more comments to that. We launched it in Europe, in Germany, Switzerland, the UK, and Denmark.
Speaker #2: The conclusion is the same. It is undisputed seen as a new, very innovative concept by both hearing care professional and end users. It does help in having end users take the choice to get going and see less obstacles.
Søren Nielsen: It does help in having end users take the choice to get going and see less obstacles, so very positively seen uptake with first-time users. It does also lift sales of our other portfolio because it opens the door to new customers. And if an end user has tried a Zeal and is happy with the sound quality and the quality of the instrument but for some reason don't continue with a or prefers to continue with an in-ear, there might be some comfort issue as the ear canal doesn't work; it's natural to then fit an Intent because you will have more or less exactly the same sound quality and something you just liked.
It does help in having end users take the choice to get going and see less obstacles, so very positively seen uptake with first-time users. It does also lift sales of our other portfolio because it opens the door to new customers. And if an end user has tried a Zeal and is happy with the sound quality and the quality of the instrument but for some reason don't continue with a or prefers to continue with an in-ear, there might be some comfort issue as the ear canal doesn't work; it's natural to then fit an Intent because you will have more or less exactly the same sound quality and something you just liked.
Speaker #2: So, very positively seen uptake with first-time users. It does also lift sales of our other portfolio because it opens doors to new customers. And if an end user has tried a seal and is happy with the sound quality and the quality of the instrument, but for some reason doesn't continue with it, or prefers to continue with an in-ear, there might be some comfort issues.
Speaker #2: The ear canal doesn’t work. It’s natural to then fit an Intend, because you’ll have more or less exactly the same sound quality as something you just liked.
Speaker #2: So, we do see additional sales to customers that did not work that much with us. And we have actually also seen limited cannibalization with customers that we already were doing business with and that have taken in Seal.
Søren Nielsen: So we do see additional sales to customers that did not work that much with us, and we have actually also seen limited cannibalization with customers that we already were doing business with and that have taken in Zeal. So this is the conclusion from the four markets. We have also, I think, been open about that it's only in a premium price point and that we have lifted pricing in some markets significantly compared to Intent. And so far, we have seen acceptance of the price, and it has not prevented us from creating excitement and driving sales. That being said, it is a premium price point.
So we do see additional sales to customers that did not work that much with us, and we have actually also seen limited cannibalization with customers that we already were doing business with and that have taken in Zeal. So this is the conclusion from the four markets. We have also, I think, been open about that it's only in a premium price point and that we have lifted pricing in some markets significantly compared to Intent. And so far, we have seen acceptance of the price, and it has not prevented us from creating excitement and driving sales. That being said, it is a premium price point.
Speaker #2: So, this is the conclusion from the four markets. We have also, I think, been open about the fact that it's only in a premium price point and that we have lifted pricing.
Speaker #2: In some markets, significantly compared to intent. And so far, we have seen acceptance of the price, and it has not prevented us from creating excitement and driving sales.
Speaker #2: That being said, it is a premium price point. It is a premium category type of products, but it definitely also makes some people spend more than they might have thought they would, had they had to pick a receiver-in-the-ear instrument, where there are more options available at different price points.
Søren Nielsen: It is a premium category type of products, but it definitely also makes some people spend more than they might have thought they would had they had to pick a receiver-in-the-ear instrument where there are more options available at different price points. I also think we can say that you cannot really say, "Okay, what is the potential and what's the share in the in-the-ear market?" because that's not how people, especially first-time users, think about hearing aids. They will look at what's available at the table and pick the one they find most attractive. And there's no doubt that by first-time users, this is seen as much more attractive than carrying a traditional RITE instrument.
It is a premium category type of products, but it definitely also makes some people spend more than they might have thought they would had they had to pick a receiver-in-the-ear instrument where there are more options available at different price points. I also think we can say that you cannot really say, "Okay, what is the potential and what's the share in the in-the-ear market?" because that's not how people, especially first-time users, think about hearing aids. They will look at what's available at the table and pick the one they find most attractive. And there's no doubt that by first-time users, this is seen as much more attractive than carrying a traditional RITE instrument.
Speaker #2: I also think we can say that you cannot really say, 'Okay, what is the potential and what's the share?'—and the in-ear market—because that's not how people, especially first-time users, think about hearing aids.
Speaker #2: They will look at what's available at the table and pick the one they find most attractive. And there's no doubt that by first-time users this is seen as much more attractive than carrying a traditional right instrument.
Speaker #2: So, all in all, very good takeaways. And we bring this excitement into '26, where we have now launched in the US, and where we will, in the coming weekend, launch in Canada.
Søren Nielsen: So all in all, very good takeaways, and we bring this excitement into 2026, where we have now launched in the US, where we will, in the coming weekend, launch in Canada, and where we early March will launch in France. And then onwards with all remaining significant and major markets, Germany will also expand activity significantly here in Q1 to make sure they get to a full rollout, which was not the case in the initial launch. So we move on. And again, not to open the discussion already, when we then say we still have something ahead of us, it is because it remains to be a sequential launch, so we have to take it market by market to make sure we get off on the right foot.
So all in all, very good takeaways, and we bring this excitement into 2026, where we have now launched in the US, where we will, in the coming weekend, launch in Canada, and where we early March will launch in France. And then onwards with all remaining significant and major markets, Germany will also expand activity significantly here in Q1 to make sure they get to a full rollout, which was not the case in the initial launch. So we move on. And again, not to open the discussion already, when we then say we still have something ahead of us, it is because it remains to be a sequential launch, so we have to take it market by market to make sure we get off on the right foot.
Speaker #2: And where we, early March, will launch in France. And then onwards with all remaining significant and major markets. Germany will also expand activity significantly here in the first quarter.
Speaker #2: To make sure they get to a full rollout, which was not the case in the initial launch. So, we move on. And again, not to open the discussion already.
Speaker #2: When we then say we still have something ahead of us, it is because it remains to be a sequential launch. So we have to take it market by market to make sure we get off on the right foot.
Speaker #2: And of course, with the US market having been the most muted and a big premium potential. Then, it also to some extent depends on how the market develops.
Søren Nielsen: Of course, with the US market having been the most muted and a big premium potential, then it also, to some extent, depends on how the market develops. But maybe Zeal can be part of creating renewed excitement and also interest from end users. So I would say there's still some uncertainty left around that, which I'm sure René will come back to. We continue to expand our portfolio, also in Q1. We release devices of our latest technology containing disposable batteries, which in some channels and geographies are still important, and then also a new offering in part of the pediatric portfolio. And then all these new products offer latest and greatest sound quality and connectivity similar to Zeal, where we also get very good feedback on the latest technology, which is also connectivity technology, which is also available in Oticon Intent.
Of course, with the US market having been the most muted and a big premium potential, then it also, to some extent, depends on how the market develops. But maybe Zeal can be part of creating renewed excitement and also interest from end users. So I would say there's still some uncertainty left around that, which I'm sure René will come back to. We continue to expand our portfolio, also in Q1. We release devices of our latest technology containing disposable batteries, which in some channels and geographies are still important, and then also a new offering in part of the pediatric portfolio. And then all these new products offer latest and greatest sound quality and connectivity similar to Zeal, where we also get very good feedback on the latest technology, which is also connectivity technology, which is also available in Oticon Intent.
Speaker #2: But maybe seal can be part of creating renewed excitement and also interest from end users. So I would say there's still some uncertainty left around that, which I'm sure that they will come back to.
Speaker #2: We continue to expand our portfolio, also in Q1. We release devices of our latest technology containing disposable batteries, which in some channels and geographies are still important.
Speaker #2: And then also a new offering as part of the pediatric portfolio. And then all these new products offer latest and greatest sound quality and connectivity, similar to SEAL, where we also get very good feedback on the latest technology, which is also connectivity technology, which is also available in Oticon Intent.
Speaker #2: Hearing care in Q4: solid performance in a weaker-than-normal hearing aid market. Of course, strong tailwind from a month with the kids. So in the quarter, doing 17% in local currencies.
Søren Nielsen: Hearing care in Q4: solid performance in a weaker-than-normal hearing aid market. Of course, strong tailwind from a month with the KIND Group. So in the quarter, doing 17% in local currencies, 5% organic. Across the geographies, strong performance in Poland and a number of other midsized European markets. Continued solid growth in France, driven by the anniversary of the 2021 reform. Good organic growth in North America, driven by continued improved performance in the US, very positively. However, some negative development in Canada. Australia saw good growth, continuing improved momentum, and China also delivered good organic growth, driven by ASP, tailwind from a continued better product mix. So all in all, well done in hearing care in the fourth quarter. And also, Diagnostics came in strong in the fourth quarter, delivered organic growth of 8% in local currencies.
Hearing care in Q4: solid performance in a weaker-than-normal hearing aid market. Of course, strong tailwind from a month with the KIND Group. So in the quarter, doing 17% in local currencies, 5% organic. Across the geographies, strong performance in Poland and a number of other midsized European markets. Continued solid growth in France, driven by the anniversary of the 2021 reform. Good organic growth in North America, driven by continued improved performance in the US, very positively. However, some negative development in Canada. Australia saw good growth, continuing improved momentum, and China also delivered good organic growth, driven by ASP, tailwind from a continued better product mix. So all in all, well done in hearing care in the fourth quarter. And also, Diagnostics came in strong in the fourth quarter, delivered organic growth of 8% in local currencies.
Speaker #2: 5% organic. Across the geography, strong performance in Poland and a number of other mid-sized European markets. Continued solid growth in France driven by the anniversary of the '21 reform.
Speaker #2: Good organic growth in North America, driven by continued improved performance in the US—very positively. However, there was some negative development in Canada. Australia saw good growth, continuing improved momentum.
Speaker #2: And China also delivered good organic growth driven by ASP tailwind from a continued better product mix. So all in all, well done in hearing care in the fourth quarter.
Speaker #2: And also diagnostic came in strong in the fourth quarter. Delivered organic growth of 8% in local currencies. So clearly best performing quarter this year.
Søren Nielsen: So clearly best-performing quarter this year, and in general, a good uptake. Strong growth in the UK and Germany. Good performance across several midsized markets. US and Canada saw strong growth, however, driven by service and consumable business. Again, back to cross-marketing, which is a little bit lower in these areas. Australia delivered strong growth primarily on instrument sales, and China continued to be impacted by general weak markets, and there was some drag on growth in Asia in general. With that, over to you, René. Thank you, Søren. So let's push through the financials. A little bit of repetition, so I will be quick on this. So the revenue for second half year, we saw solid organic growth of 4%. Hearing aids and diagnostics saw good organic growth, and especially diagnostics improved in the fourth quarter.
So clearly best-performing quarter this year, and in general, a good uptake. Strong growth in the UK and Germany. Good performance across several midsized markets. US and Canada saw strong growth, however, driven by service and consumable business. Again, back to cross-marketing, which is a little bit lower in these areas. Australia delivered strong growth primarily on instrument sales, and China continued to be impacted by general weak markets, and there was some drag on growth in Asia in general. With that, over to you, René. Thank you, Søren. So let's push through the financials. A little bit of repetition, so I will be quick on this. So the revenue for second half year, we saw solid organic growth of 4%. Hearing aids and diagnostics saw good organic growth, and especially diagnostics improved in the fourth quarter.
Speaker #2: And, in general, a good uptake. Strong growth in the UK and Germany. Good performance across several mid-sized markets. US and Canada saw strong growth; however, this was driven by service and consumable business.
Speaker #2: Again, back to cross-marketing, which is a little bit lower in these areas. Australia delivered strong growth, primarily on instrument sales. And China continued to be impacted by generally weak markets, and there was some drag on growth in Asia in general.
Speaker #2: With that, over to you, René. Thank you, John. So let's push through the financials—a little bit of repetition, so I will be quick on this.
Speaker #2: So, the revenue for the second half of the year—we saw solid organic growth of 4%. Hearing Aids and Diagnostics saw good organic growth, and especially Diagnostics improved in the fourth quarter.
Speaker #2: Growth from acquisitions contributed 3 percentage points to growth, and we had an FX headwind of 4%, predominantly due to the decline of the US dollar.
Søren Nielsen: Growth from acquisitions contributed 3 percentage points to growth, and we had an FX headwind of 4%, predominantly due to the decline of the US dollar. Turning to gross profit, it increased by 3% to DKK 8.8 billion. We saw a slight decline in the gross margin against second half of last year, and this decline was driven primarily by geography and channel mix changes in our hearing aids business. We also saw some headwind in the diagnostics business, partly affected by tariffs. Last, also a slight headwind on the gross margin from the FX development. On operating expenses and EBIT, we increased OPEX by 5% organically, half year over half year, partly due to very low comparative figures as we pulled back on cost significantly in 2024.
Growth from acquisitions contributed 3 percentage points to growth, and we had an FX headwind of 4%, predominantly due to the decline of the US dollar. Turning to gross profit, it increased by 3% to DKK 8.8 billion. We saw a slight decline in the gross margin against second half of last year, and this decline was driven primarily by geography and channel mix changes in our hearing aids business. We also saw some headwind in the diagnostics business, partly affected by tariffs. Last, also a slight headwind on the gross margin from the FX development. On operating expenses and EBIT, we increased OPEX by 5% organically, half year over half year, partly due to very low comparative figures as we pulled back on cost significantly in 2024.
Speaker #2: Turning to gross profit, it increased by 3% to 8.8 billion. We saw a slight decline in the gross margin against second half of last year.
Speaker #2: And this decline was driven primarily by geography and channel mix changes in our hearing aids business. We also saw some headwind in the diagnostics business.
Speaker #2: Partly affected by tariffs, and lastly also a slight headwind on the gross margin from the FX development. On operating expenses and EBIT, we increased OPEX by 5% organically, half year over half year.
Speaker #2: Partly due to very low comparative figures as we pulled back on cost significantly in '24. And we have seen a flat development sequentially from first half year into second half year which is a reflection of our continued focus on cost management.
Søren Nielsen: We have seen a flat development sequentially from first half year into second half year, which is a reflection of our continued focus on cost management. Acquisitions added an additional 5 percentage point to growth, to OPEX, in the second half year of 2025. Again, also here, we see an offset from a declining US dollar. When it comes to EBIT, we ended second half at DKK 2.1 billion, negatively impacted by exchange rates and by lowering operating leverage in hearing aids. The decline in EBIT was due to weaker-than-normal growth in the overall hearing aid market as the main contributor, and for us specifically, a loss of market share in the US, primarily due to lower sales to a large retailer. This resulted in a contraction of the EBIT margin to 18 percentage points.
We have seen a flat development sequentially from first half year into second half year, which is a reflection of our continued focus on cost management. Acquisitions added an additional 5 percentage point to growth, to OPEX, in the second half year of 2025. Again, also here, we see an offset from a declining US dollar. When it comes to EBIT, we ended second half at DKK 2.1 billion, negatively impacted by exchange rates and by lowering operating leverage in hearing aids. The decline in EBIT was due to weaker-than-normal growth in the overall hearing aid market as the main contributor, and for us specifically, a loss of market share in the US, primarily due to lower sales to a large retailer. This resulted in a contraction of the EBIT margin to 18 percentage points.
Speaker #2: Acquisitions added an additional 5 percentage points to growth in OPEX in the second half of '25. And again, also here we see an offset from a declining US dollar.
Speaker #2: When it comes to EBIT, we ended the second half at $2.1 billion, negatively impacted by exchange rates and by lowering operating leverage in hearing aids.
Speaker #2: The decline in EBIT was due to weaker-than-normal growth in the overall hearing aid market as the main contributor, and for us specifically, a loss of market share in the US.
Speaker #2: Primarily due to lower sales to a large retailer, and this resulted in a contraction of the EBIT margin to 18 percentage points. Special items in the period were related to the acquisition of KINT and a non-CAS adjustment.
Søren Nielsen: Special items in the period was relating to the acquisition of KIND and a non-cash adjustment. All in all, DKK 128 million in H2. Cash flow continued to be very strong. Cash flow from operations in H2 of DKK 2.3 billion and just shy of DKK 2 billion of free cash flow. So again, continue very strong cash flow generation. Our capital expenditure of DKK 409 million is an increase compared to same period last year, primarily driven by higher investments in production facilities. Cash out to acquisitions amounted to DKK 5.4 billion, and this, of course, predominantly relates to the acquisition of KIND that closed beginning of December. We did not purchase any more shares under the share buyback program in second half year, so we ended the year at a total of DKK 582 million as previously disclosed. When it comes to the balance sheet items, our net debt increased significantly.
Special items in the period was relating to the acquisition of KIND and a non-cash adjustment. All in all, DKK 128 million in H2. Cash flow continued to be very strong. Cash flow from operations in H2 of DKK 2.3 billion and just shy of DKK 2 billion of free cash flow. So again, continue very strong cash flow generation. Our capital expenditure of DKK 409 million is an increase compared to same period last year, primarily driven by higher investments in production facilities. Cash out to acquisitions amounted to DKK 5.4 billion, and this, of course, predominantly relates to the acquisition of KIND that closed beginning of December. We did not purchase any more shares under the share buyback program in second half year, so we ended the year at a total of DKK 582 million as previously disclosed.
Speaker #2: All in all, 128 million in H2. Cash flow continued to be very strong. Cash flow from operations in H2 of $2.3 billion, and just shy of $2 billion of free cash flow.
Speaker #2: So again, continued very strong cash flow generation. Our capital expenditure of 409 million is an increase compared to the same period last year, primarily driven by higher investments in production facilities.
Speaker #2: Cash out to acquisitions amounted to $5.4 billion. And this, of course, predominantly relates to the acquisition of KINT that closed at the beginning of December. We did not purchase any more shares under the share buyback program in the second half-year.
Speaker #2: So, we end the year at a total of 582 million, as previously disclosed. When it comes to the balance sheet items, our net debt increased significantly.
When it comes to the balance sheet items, our net debt increased significantly. Again, this is solely due to the acquisition of KIND Group. Fully in line with our expectation, our gearing multiple at the end of the year ended at 3.4, which is above our medium to long-term gearing target of 2 to 2.5. We will prioritize deleveraging and expect to return to our medium to long-term gearing target of 2 to 2.5 within 18 to 24 months after 1 December 2025. Net working capital had a modest increase of 3%, and this, again, predominantly relates to the result of adding acquisitions to the balance sheet. So in good control here.
Speaker #2: Again, this is solely due to the acquisition of KINT. And, fully in line with our expectation, our hearing multiple at the end of the year ended at 3.4, which is above our medium- to long-term hearing target of 2 to 2.5.
Søren Nielsen: Again, this is solely due to the acquisition of KIND Group. Fully in line with our expectation, our gearing multiple at the end of the year ended at 3.4, which is above our medium to long-term gearing target of 2 to 2.5. We will prioritize deleveraging and expect to return to our medium to long-term gearing target of 2 to 2.5 within 18 to 24 months after 1 December 2025. Net working capital had a modest increase of 3%, and this, again, predominantly relates to the result of adding acquisitions to the balance sheet. So in good control here.
Speaker #2: We will prioritize deleveraging and expect to return to our medium to long term hearing target of 2 to 2 and a half. Within 18 to 24 months after the first of December of '25.
Speaker #2: And net working capital had a modest increase of 3%. And this, again, predominantly relates to the result of adding acquisitions to the balance sheet. So, in good control here.
Speaker #2: Thus, summing up the financial key takeaways for the full year: as such, we ended up at 2% organic growth. Again, driven by the weak overall hearing aid market.
Søren Nielsen: Thus, summing up the financial key takeaways for the full year as such, we ended up at 2% organic growth, again, driven by the weak overall hearing aid market, a contraction of the gross margin by 0.6 percentage points, driven by weak market growth, particularly in the US, and ASP headwinds in hearing aids due to geography and channel mix changes. The operating expenses for the full year increased by only 3% organically due to our continued focus on cost management. EBIT before special items, DKK 3.96 billion, and an EBIT margin of 17.2%, and special items amounting to DKK 128 million. And as just reviewed, strong cash flow of DKK 3.85 billion of cash flow from operations for the full year and free cash flow of above DKK 3 billion for the full year also, and share buyback DKK 582 million.
Thus, summing up the financial key takeaways for the full year as such, we ended up at 2% organic growth, again, driven by the weak overall hearing aid market, a contraction of the gross margin by 0.6 percentage points, driven by weak market growth, particularly in the US, and ASP headwinds in hearing aids due to geography and channel mix changes. The operating expenses for the full year increased by only 3% organically due to our continued focus on cost management. EBIT before special items, DKK 3.96 billion, and an EBIT margin of 17.2%, and special items amounting to DKK 128 million. And as just reviewed, strong cash flow of DKK 3.85 billion of cash flow from operations for the full year and free cash flow of above DKK 3 billion for the full year also, and share buyback DKK 582 million.
Speaker #2: A contraction of the gross margin by 0.6 percentage point, driven by weak market growth, particularly in the US, and ASP headwinds in hearing aids due to geography and channel mix changes.
Speaker #2: The operating expenses for the full year increased by only 3% organically, due to our continued focus on cost management. EBIT before special items was DKK 3.96 billion.
Speaker #2: And an EBIT margin of 17.2%. And special items amounting to €128 million. And as just reviewed, strong cash flow of €3.85 billion of cash flow from operations for the full year.
Speaker #2: And free cash flow of above $3 billion for the full year also. And share buybacks of $582 million. So that was the quick review of the financials.
Søren Nielsen: So that was the quick review of the financials, and that brings us into the outlook section and initiatives that we have taken there. So if we start on some of the assumptions that go into our outlook and assumptions, of course, alluding to that we don't have certainty around these things, but we go in with a starting hypothesis. And of course, the main hypothesis that goes or assumption that goes into our outlook for the year is our projection for the global hearing aid market to grow 2% to 4% in 2026 in value, which obviously is a conservative assumption being temporarily below our medium- to long-term assumption of 4% to 6% and also, of course, low seen in the light of the last decade of growing exactly in line with these 4% to 6%.
So that was the quick review of the financials, and that brings us into the outlook section and initiatives that we have taken there. So if we start on some of the assumptions that go into our outlook and assumptions, of course, alluding to that we don't have certainty around these things, but we go in with a starting hypothesis. And of course, the main hypothesis that goes or assumption that goes into our outlook for the year is our projection for the global hearing aid market to grow 2% to 4% in 2026 in value, which obviously is a conservative assumption being temporarily below our medium- to long-term assumption of 4% to 6% and also, of course, low seen in the light of the last decade of growing exactly in line with these 4% to 6%.
Speaker #2: And that brings us into the outlook section, and initiatives that we have taken there. So, if we start on some of the assumptions that go into our outlook.
Speaker #2: And assumptions, of course, alluding to the fact that we don't have certainty around these things. But we go in with a starting hypothesis. And, of course, the main hypothesis—or assumption—that goes into our outlook for the year is our projection for the global hearing aid market to grow 2% to 4% in 2026 in value.
Speaker #2: Which, obviously, is a conservative assumption—being temporarily below our medium- to long-term assumption of 4 to 6. And also, of course, low seen in the light of the last decade of growing exactly in line with these 4 to 6.
Speaker #2: So, we believe it's prudent, and in line with what we have seen in the last quarter, to take a cautious stand on the market going into the year.
Søren Nielsen: So we believe it's proven and in line with what we have seen in the last quarter to take a cautious stand on the market going into the year, and that is what we do with the 2 to 4% for the market. We will come back to it, but we believe that demand in all scenarios will grow above the market in 2026. Another key assumption on the right-hand side is that as part of our plans for 2026, we have launched a company-wide initiative to exactly improve profitability and lower cost growth, and specifically in some areas, lead to cost reductions. These initiatives will positively impact EBIT before Special Items of around DKK 250 million in 2026.
So we believe it's proven and in line with what we have seen in the last quarter to take a cautious stand on the market going into the year, and that is what we do with the 2 to 4% for the market. We will come back to it, but we believe that demand in all scenarios will grow above the market in 2026. Another key assumption on the right-hand side is that as part of our plans for 2026, we have launched a company-wide initiative to exactly improve profitability and lower cost growth, and specifically in some areas, lead to cost reductions. These initiatives will positively impact EBIT before Special Items of around DKK 250 million in 2026.
Speaker #2: And that is what we do. With the 2% to 4% for the market, we will come back to it. But we believe that demand in all scenarios will grow above the market in '26.
Speaker #2: Another key assumption on the right-hand side is that, as part of our plans for '26, we have launched a company-wide initiative to exactly improve profitability and lower cost growth.
Speaker #2: And specifically, in some areas, lead to cost reductions. These initiatives will positively impact EBIT before special items by around €250 million in '26. Since this is an initiative that is starting now, we foresee that the majority of this impact will be materialized in the second half of the year.
Søren Nielsen: Since this is an initiative that is starting now, we foresee that the majority of this impact will be materialized in second half year, which is why we for 2026 see an EBIT skewed more than usual towards the second half year. Also, product launches impact the phasing of EBIT for 2026, so this is an important note. We have seen a significant decline in the US dollar in particular, but also other currencies, and we expect a negative impact on EBIT from FX of DKK 200 million compared to 2025, with the impact evenly split between H1 and H2. We expect the KIND Group to contribute with DKK 300 million on EBIT before special items in 2026. This is in line with our previous communication, and we expect a limited impact from tariffs on the group, DKK 25 million in our diagnostics business. Also, nothing new in that.
Since this is an initiative that is starting now, we foresee that the majority of this impact will be materialized in second half year, which is why we for 2026 see an EBIT skewed more than usual towards the second half year. Also, product launches impact the phasing of EBIT for 2026, so this is an important note. We have seen a significant decline in the US dollar in particular, but also other currencies, and we expect a negative impact on EBIT from FX of DKK 200 million compared to 2025, with the impact evenly split between H1 and H2. We expect the KIND Group to contribute with DKK 300 million on EBIT before special items in 2026. This is in line with our previous communication, and we expect a limited impact from tariffs on the group, DKK 25 million in our diagnostics business. Also, nothing new in that.
Speaker #2: Which is why we, for '26, see EBIT scoot more than usual towards the second half of the year. Also, product launches impact the phasing of EBIT for '26.
Speaker #2: So, this is an important note. We have seen a significant decline in the US dollar in particular, but also other currencies. And we expect a negative impact on EBIT from FX of $200 million compared to '25.
Speaker #2: With the impact evenly split between H1 and H2, we expect the KINT group to contribute with DKK 300 million on EBIT before special items in '26.
Speaker #2: This is in line with our previous communication, and we expect a limited impact on tariffs on the group from tariffs on the group—25 million in our Diagnostics business.
Speaker #2: Also, nothing new in that. So, summing up on the special items where we see particular things to take into account for '26, it's now totaling $325 million.
Søren Nielsen: So, summing up on the special items, where we see particular things to take into the accounts for 2026, is now totaling DKK 325 million, of which DKK 125 million relates to the previously announced integration cost related to the KIND's acquisition. And then we do add to that an additional DKK 200 million related to the foreseen restructuring and also adjustment to the organization and size as part of this cost reduction initiative. Here, we see DKK 200 million of one-off costs, so all in all, DKK 325 million. So these are some of the core assumptions. And if we, based on that, build up and say some of the components in a more, you can say, visual, schematic way on the graph on the right, the starting point is our EBIT for the full year of 2025 of DKK 3.96. From that, we need to subtract the DKK 200 million that is the FX headwind in 2026.
So, summing up on the special items, where we see particular things to take into the accounts for 2026, is now totaling DKK 325 million, of which DKK 125 million relates to the previously announced integration cost related to the KIND's acquisition. And then we do add to that an additional DKK 200 million related to the foreseen restructuring and also adjustment to the organization and size as part of this cost reduction initiative. Here, we see DKK 200 million of one-off costs, so all in all, DKK 325 million. So these are some of the core assumptions. And if we, based on that, build up and say some of the components in a more, you can say, visual, schematic way on the graph on the right, the starting point is our EBIT for the full year of 2025 of DKK 3.96.
Speaker #2: Of which 125 relates to the previously announced integration cost related to the KINT acquisition. And then we do add to that an additional 200 million related to the foreseen restructuring and also adjustment to the organization and size as part of this cost reduction initiative.
Speaker #2: Here we see €200 million of one-off costs. So all in all, €325 million. So these are some of the core assumptions. And if we, based on that, build up and say some of the components in a more visual, schematic way.
Speaker #2: On the graph on the right. The starting point is our EBIT for the full year '25 of 3.96. From that we need to subtract the 200 million that is the FX headwind in '26.
From that, we need to subtract the DKK 200 million that is the FX headwind in 2026. That brings us to an FX-adjusted EBIT for 2025 of DKK 3.76 billion. To that, we would, in line with the guidance we give here, add a contribution from KIND's, incremental contribution from KIND's, which means 11 months of EBIT. As a reminder, we did have one month in 2025, so this is 11 months of the DKK 300 million, DKK 275 million. And then we need to add the organic part of our business, which includes the before-mentioned cost savings initiatives that we are confident will bring DKK 250 million of savings to the OpEx line. And then adding to that whatever else we will see of organic impact from profitability in the remaining part of the group. And this builds up to an EBIT outlook of DKK 4.1 to 4.5 billion.
Speaker #2: That brings us to an FX-adjusted EBIT for '25 of 3.76. To that, we would, in line with the guidance we give here, add a contribution from KINT—an incremental contribution from KINT—which means 11 months of EBIT.
Søren Nielsen: That brings us to an FX-adjusted EBIT for 2025 of DKK 3.76 billion. To that, we would, in line with the guidance we give here, add a contribution from KIND's, incremental contribution from KIND's, which means 11 months of EBIT. As a reminder, we did have one month in 2025, so this is 11 months of the DKK 300 million, DKK 275 million. And then we need to add the organic part of our business, which includes the before-mentioned cost savings initiatives that we are confident will bring DKK 250 million of savings to the OpEx line. And then adding to that whatever else we will see of organic impact from profitability in the remaining part of the group. And this builds up to an EBIT outlook of DKK 4.1 to 4.5 billion.
Speaker #2: As a reminder, we did have one month in '25. So this is 11 months of the $300 million—$275 million. And then we need to add the organic part of our business.
Speaker #2: Which includes the aforementioned cost savings initiatives that we are confident will bring DKK 250 million of savings to the OPEX line. And then adding to that whatever else we will see of organic impact from profitability in the remaining part of the Group.
Speaker #2: And this builds up to an EBIT outlook of DKK 4.1 to 4.5 billion. And important to notice here, the backdrop for this outlook is of course the starting point of a market assumption of 2% to 4%.
Søren Nielsen: Important to notice here, the backdrop for this outlook is, of course, the starting point of a market assumption of 2% to 4%. We have in our plans, and we aim to grow above that 3% to 6%, so taking market share essentially in all scenarios. In this light, you can say, of course, that the 4.1, which is the lower end of this guidance, reflects a very, very conservative scenario where the market, of course, is in the conservative end of the already conservative outlook here, and also that our market share gain is modest but still there. This is the starting point for the year, and we feel comfortable with that. Lastly, just a few more comments on the initiatives to improve profitability.
Important to notice here, the backdrop for this outlook is, of course, the starting point of a market assumption of 2% to 4%. We have in our plans, and we aim to grow above that 3% to 6%, so taking market share essentially in all scenarios. In this light, you can say, of course, that the 4.1, which is the lower end of this guidance, reflects a very, very conservative scenario where the market, of course, is in the conservative end of the already conservative outlook here, and also that our market share gain is modest but still there. This is the starting point for the year, and we feel comfortable with that. Lastly, just a few more comments on the initiatives to improve profitability.
Speaker #2: And we have in our plans, and we aim to grow above that 3% to 6%. So, taking market share, essentially, in all scenarios. So in this light, you can say, of course, that the 4.1, which is the lower end of this guidance, reflects a very, very conservative scenario where the market, of course, is in the conservative end of the already conservative outlook here.
Speaker #2: And also, our market share gain is modest, but it's still there. But this is the starting point for the year, and we feel comfortable with that.
Speaker #2: Lastly just a few more comments on the initiatives to improve profitability. I did mention before the effect in '26 of 250 million. But this is a two year program that will beginning '28 and onwards bring around 500 million of cost savings to the group.
Søren Nielsen: I did mention before the effect in 2026 of DKK 250 million, but this is a two-year program that will, beginning 2028 and onwards, bring around DKK 500 million of cost savings to the group. We also announced today that we estimate that this will affect approximately 700 people globally in Demant in 2026, of which 150 are located in Denmark. The associated costs that we recognize under special items is DKK 200 million in 2026 and an additional DKK 100 million in 2027, both, of course, of a one-off nature, whereas the expected cost savings will be structural and permanent. So summing up, in total, this brings us to our outlook for 2026: organic growth of 3% to 6%, EBIT of DKK 4.1 to 4.5 billion. Share buyback is foreseen to be paused throughout 2026 as we focus on deleveraging.
I did mention before the effect in 2026 of DKK 250 million, but this is a two-year program that will, beginning 2028 and onwards, bring around DKK 500 million of cost savings to the group. We also announced today that we estimate that this will affect approximately 700 people globally in Demant in 2026, of which 150 are located in Denmark. The associated costs that we recognize under special items is DKK 200 million in 2026 and an additional DKK 100 million in 2027, both, of course, of a one-off nature, whereas the expected cost savings will be structural and permanent.
Speaker #2: We also announced today that we estimate that this will affect approximately 700 people globally in Demant in '26, of which 150 are located in Denmark.
Speaker #2: The associated costs that we recognize under special items is $200 million in '26, and an additional $100 million in '27. Both, of course, are of a one-off nature.
Speaker #2: Whereas the expected cost savings will be structural and permanent. So, summing up, in total this brings us to our outlook for '26: organic growth of 3% to 6%.
So summing up, in total, this brings us to our outlook for 2026: organic growth of 3% to 6%, EBIT of DKK 4.1 to 4.5 billion. Share buyback is foreseen to be paused throughout 2026 as we focus on deleveraging. And for modeling purposes, we estimate acquisition growth of 8%, FX growth of -2%, and special items -DKK 325 million, and an effective tax rate of 23%. With this, we would hand over to Q&A. Please.
Speaker #2: EBIT of 4.1 to 4.5 billion. Share buyback is foreseen to be paused throughout '26. As we focus on delivering. And for modeling purpose we estimate acquisitive growth of 8%.
Søren Nielsen: And for modeling purposes, we estimate acquisition growth of 8%, FX growth of -2%, and special items -DKK 325 million, and an effective tax rate of 23%. With this, we would hand over to Q&A. Please. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily. The first question today comes from Richard Felton with Goldman Sachs. Please go ahead. Hi. Thank you very much for taking the questions. Just tea for me, please.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily. The first question today comes from Richard Felton with Goldman Sachs. Please go ahead. Hi. Thank you very much for taking the questions. Just tea for me, please.
Speaker #2: FX growth of minus 2. And special items minus 325 million. And an effective tax rate of 23%. With this we would hand over to Q&A.
Speaker #2: Please, we will now begin the question and answer session. To ask a question, you may press star, then one, on your touch-tone phone.
Speaker #2: If you are using a speakerphone please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question please press star then two.
Speaker #2: At this time we will pause momentarily. The first question today comes from Richard Felton with Goldman Sachs. Please go
Speaker #2: ahead. Hi.
Speaker #3: Thank you very much for taking the questions. Just to tease for me, please. The first question is on your guidance, and the midpoint of the organic growth guidance does imply growing ahead of the market in 2026.
Søren Nielsen: The first question is on your guidance, and the midpoint of the organic growth guidance does imply growing ahead of the market in 2026. And I think you said you expect to do that in all scenarios. So my question is, sort of, what is giving you that confidence in outperforming the market in 2026 in all scenarios? And then secondly, René Schneider, I wanted to follow up on your comments on EBIT phasing linked to product launches. Is that due to the phasing of the Zeal rollout or anything else to consider as we think about EBIT phasing? Thank you. Yeah. I'll take the first one, René Schneider, and comment on the other. This is in hearing aids. Market share gains, that is the main driver for that.
Søren Nielsen: The first question is on your guidance, and the midpoint of the organic growth guidance does imply growing ahead of the market in 2026. And I think you said you expect to do that in all scenarios. So my question is, sort of, what is giving you that confidence in outperforming the market in 2026 in all scenarios? And then secondly, René Schneider, I wanted to follow up on your comments on EBIT phasing linked to product launches. Is that due to the phasing of the Zeal rollout or anything else to consider as we think about EBIT phasing? Thank you. Yeah. I'll take the first one, René Schneider, and comment on the other. This is in hearing aids. Market share gains, that is the main driver for that.
Speaker #3: And I think you said you expect to do that in all scenarios. So my question is sort of what is giving you that confidence in outperforming the market in 2026 in all scenarios?
Speaker #3: And then secondly René I just wanted to follow up on your comments on EBIT phasing linked to product launches. Is that due to the phasing of the Zero rollout or anything else to consider as we think about EBIT phasing?
Speaker #3: Thank you.
Speaker #4: Yeah. I'll take the first one; René can comment on the other. This is in hearing aids—market share gains are the main driver for that.
Speaker #4: We, of course, are also going to see share gain coming from lifting our share in the German market after the acquisition of KINT. But the predominant factor is the momentum that I'm sure Zero will create once we get full rollout and all channels at the end are opened.
Søren Nielsen: We're, of course, also going to see share gain coming from lifting our share in the German market after the acquisition of KIND's. But the predominant is the momentum that I'm sure Zeal will create once we get full rollout and all channels at the end are opened. And also, of course, we continue to have a strong launch program for the remaining of this year and next year. So it's the comfort and all that that make us be firm on the market share gains in all scenarios. Yeah. On the phasing of EBIT, there are two factors to be aware of. One is the effect of our cost savings initiative that will obviously have a little effect in Q2, but predominantly in Q3 and Q4. That is the one.
Søren Nielsen: We're, of course, also going to see share gain coming from lifting our share in the German market after the acquisition of KIND's. But the predominant is the momentum that I'm sure Zeal will create once we get full rollout and all channels at the end are opened. And also, of course, we continue to have a strong launch program for the remaining of this year and next year. So it's the comfort and all that that make us be firm on the market share gains in all scenarios. Yeah. On the phasing of EBIT, there are two factors to be aware of. One is the effect of our cost savings initiative that will obviously have a little effect in Q2, but predominantly in Q3 and Q4. That is the one.
Speaker #4: And also of course we continue to have a strong launch program for the remaining of this year and next year. So it's the comfort in all that that make us be firm on the market share gains in all
Speaker #4: scenarios. Yeah.
Speaker #5: On the phasing of EBIT there are two factors to be aware of. One is the effect of our cost savings initiative. That will obviously have a little effect in Q2.
Speaker #5: But predominantly in Q3 and Q4. That is the one. And the second one is the gradual launch of Zero that of course will have an effect here in the first half year.
Søren Nielsen: And the second one is the gradual launch of Zeal that, of course, will have an effect here in the first half year, but a full half-year effect in H2. Got it. Thank you. The next question comes from Martin Parkhøi with SEB. Please go ahead. Yes. Thank you very much. Just a couple of questions. Firstly, again, back to the 3% to 6% organic growth guidance. Can you elaborate a little bit about the organic growth assumption across divisions? Now, we saw a little bit of a dream run for diagnostic in Q4. What are you assuming for diagnostics going into 2026? And then, of course, also, you would split on wholesale and hearing care, on organic growth. I understand that KIND's will add, of course, acquisitive growth. And then secondly, just on, René Schneider, on the gross margin expectations for 2026.
Søren Nielsen: And the second one is the gradual launch of Zeal that, of course, will have an effect here in the first half year, but a full half-year effect in H2. Got it. Thank you. The next question comes from Martin Parkhøi with SEB. Please go ahead. Yes. Thank you very much. Just a couple of questions. Firstly, again, back to the 3% to 6% organic growth guidance. Can you elaborate a little bit about the organic growth assumption across divisions? Now, we saw a little bit of a dream run for diagnostic in Q4. What are you assuming for diagnostics going into 2026? And then, of course, also, you would split on wholesale and hearing care, on organic growth. I understand that KIND's will add, of course, acquisitive growth. And then secondly, just on, René Schneider, on the gross margin expectations for 2026.
Speaker #5: But a full half-year effect in H2.
Speaker #3: Got it. Thank
Speaker #3: you. The next
Speaker #2: The question comes from Martin Parkoy with SEB. Please go ahead.
Speaker #6: Yes, thank you very much. I just have a couple of questions. Firstly, again back to the 3% to 6% organic growth guidance—can you elaborate a little bit about the organic growth assumption across divisions?
Speaker #6: Now we saw a little bit of a dream run for diagnostic in the fourth quarter. What are you assuming for diagnostics going into being in '26?
Speaker #6: And then, of course, you would also split wholesale and hearing care on organic growth. I understand that KINT will, of course, add acquisitive growth.
Speaker #6: And then secondly, just on René, on the gross margin expectations. For 2026—it was not a pretty year in 2025—what have you assumed for gross margin development in 2026 on an underlying basis?
Søren Nielsen: It was not a pretty year in 2025. What have you assumed of gross margin development in 2026 on an underlying basis? And of course, also say how much is the contribution from KIND's in that context as well. Yeah. Martin, I will do the first one quick. At this stage, I would say it's equal organic growth opportunities for all businesses. So for modeling purposes, I would be relatively equally spread across the three. Yeah. And on gross margin, we have our, you can say, general guidance of being in the range of 76 to 77. On an underlying basis, as you referred to, you are probably in the low end of that range. But with the contribution from KIND's, we are likely to see a gross margin in the higher end of that range. Okay. Just a follow-up, Søren, on organic growth.
Søren Nielsen: It was not a pretty year in 2025. What have you assumed of gross margin development in 2026 on an underlying basis? And of course, also say how much is the contribution from KIND's in that context as well. Yeah. Martin, I will do the first one quick. At this stage, I would say it's equal organic growth opportunities for all businesses. So for modeling purposes, I would be relatively equally spread across the three. Yeah. And on gross margin, we have our, you can say, general guidance of being in the range of 76 to 77. On an underlying basis, as you referred to, you are probably in the low end of that range. But with the contribution from KIND's, we are likely to see a gross margin in the higher end of that range. Okay. Just a follow-up, Søren, on organic growth.
Speaker #6: And of course also say how much is the contribution from KINT in that context as well?
Speaker #4: Yeah. Martin, I will do the first one quick. At this stage I would say it's equal organic growth opportunities for all businesses. So for modeling purposes I would be relatively equally spread across the
Speaker #4: tree. Yeah.
Speaker #5: And on gross margin, we have our, you can say, general guidance of being in the range of 76 to 77%. On an underlying basis, as you referred to, you are probably in the low end of that range.
Speaker #5: But with the contribution from KINT, we are likely to see a gross margin in the higher end of that range.
Speaker #6: Just a follow up Sern on organic growth. I appreciate that it's unknown yet if Zero will be included in VA from 1st of May.
Søren Nielsen: I appreciate that it's unknown yet if Zeal will be included in VA from 1 May. But have you included that scenario in the high end of your guidance? It's very specific with individual channels. We have estimates that we entail a growing business in VA during 2026, and we do our utmost to ensure Zeal can also become available for veterans. We have not yet achieved that conclusion. Thank you. Thank you. The next question comes from Hassan Al-Wakeel with Barclays. Please go ahead. Good afternoon. Thank you for taking my questions. Firstly, on your comments around intense competition, could you help quantify the impact in the quarter from Costco and how you're factoring this into your guidance for 2026? And how would you characterize share trends in the commercial market in the US, and if there are any other adverse share dynamics that you would flag?
Søren Nielsen: I appreciate that it's unknown yet if Zeal will be included in VA from 1 May. But have you included that scenario in the high end of your guidance? It's very specific with individual channels. We have estimates that we entail a growing business in VA during 2026, and we do our utmost to ensure Zeal can also become available for veterans. We have not yet achieved that conclusion. Thank you. Thank you. The next question comes from Hassan Al-Wakeel with Barclays. Please go ahead. Good afternoon. Thank you for taking my questions. Firstly, on your comments around intense competition, could you help quantify the impact in the quarter from Costco and how you're factoring this into your guidance for 2026? And how would you characterize share trends in the commercial market in the US, and if there are any other adverse share dynamics that you would flag?
Speaker #6: But have you included that scenario in the high end of your—
Speaker #4: You know, it's very specific with individual channels. We have estimates if we entail a growing business in VA during '26. And we do our utmost to ensure Zero can also become available for veterans.
Speaker #4: We have not yet achieved that.
Speaker #4: conclusion. Thank
Speaker #5: Thank you. you.
Speaker #2: The next question comes from Hassan Al-Waqil with Barclays. Please go ahead.
Speaker #2: ahead. Good
Speaker #7: Good afternoon. Thank you for taking my questions. Firstly, on your comments around intense competition, could you help quantify the impact in the quarter from Costco?
Speaker #7: And how are you factoring this into your guidance for 2026? And how would you characterize share trends in the commercial market in the US? And are there any other adverse share dynamics that you would flag?
Speaker #7: And then secondly on margin guidance for the appreciated weaker market. But can you help us understand some of the building blocks for a margin which is down year over year despite a benefit from the restructuring program in the second half?
Søren Nielsen: And then secondly, on margin guidance for the year, I appreciate a weaker market, but can you help us understand some of the building blocks for a margin which is down year over year despite a benefit from the restructuring program in the second half? And just your comment around launches and that, can you talk about how that would impact phasing and whether you're on track for a platform launch in 2026? Thank you. Yeah. Let me start with the first and the very last. We don't comment on any new launches before they're there. I think you all know the tradition for that. I can only repeat, we have a strong program in front of us, we believe, for the coming year, including the second half of this year.
Søren Nielsen: And then secondly, on margin guidance for the year, I appreciate a weaker market, but can you help us understand some of the building blocks for a margin which is down year over year despite a benefit from the restructuring program in the second half? And just your comment around launches and that, can you talk about how that would impact phasing and whether you're on track for a platform launch in 2026? Thank you. Yeah. Let me start with the first and the very last. We don't comment on any new launches before they're there. I think you all know the tradition for that. I can only repeat, we have a strong program in front of us, we believe, for the coming year, including the second half of this year.
Speaker #7: And just your comment around launches and that. Could you talk about how that would impact phasing, and whether you're on track for a platform launch in 2026?
Speaker #7: Thank you.
Speaker #4: Yeah. Let me start with the first and the very last. We don't comment on any new launches before they're there. I think you all know the tradition for that.
Speaker #4: I can only repeat we have a strong program in front of us we believe for the coming year including the second half of this year.
Speaker #4: You know share trends in US—you of course have visibility to VA, where we are after recent launches. Have seen a minor dip totally, but have held, I think, well to things.
Søren Nielsen: Share trends in the US. You, of course, have visibility to the VA, where we, after recent launches, have seen a minor dip at Oticon but have held, I think, well to things. We year over year do see a declining share with large retailer after expanding the number of suppliers, but relatively stable after that change. And then with the independent, I can only say it's a very intense fight. Whether some have been holding back a little bit in their wait for Zeal, I can't rule out. And therefore, I would say sequentially a little bit softening towards the end of the year. But I'm sure and hopeful that we will pick up on that now Zeal is out in the US market. I think that's what I can speak to for now. Yeah.
Søren Nielsen: Share trends in the US. You, of course, have visibility to the VA, where we, after recent launches, have seen a minor dip at Oticon but have held, I think, well to things. We year over year do see a declining share with large retailer after expanding the number of suppliers, but relatively stable after that change. And then with the independent, I can only say it's a very intense fight. Whether some have been holding back a little bit in their wait for Zeal, I can't rule out. And therefore, I would say sequentially a little bit softening towards the end of the year. But I'm sure and hopeful that we will pick up on that now Zeal is out in the US market. I think that's what I can speak to for now. Yeah.
Speaker #4: We year over year do see a declining share with large retailers after expanding the number of suppliers, but it's relatively stable after that change. And then with the independents, I can only say it's a very intense fight; whether some have been holding that a little bit in their weight for zero, I can't rule out.
Speaker #4: And therefore, I would say, sequentially, a little bit softening towards the end of the year. But I'm sure and hopeful that we will pick up on that now Zero is out in the US market.
Speaker #4: I think that's what I can speak to.
Speaker #5: Yeah. And when it comes to the margin development in 2026 it is of course challenged by our starting assumption of a market growth of 2 to 4%.
Søren Nielsen: And when it comes to the margin, you can say, development in 2026, it is, of course, challenged by our starting assumption of a market growth of 2% to 4%. That is these, you can say, fundamental margin headwind that we sit with. And of course, in this light, our cost initiative becomes extremely important because this is what brings us, you can say, at the midpoint of our guidance at least to a flat EBIT margin in local currency. And then anything above that would be margin expansion. But of course, when we assume a market growth of 2% to 4%, margin expansion, which is not in line with our mid- to long-term, then margin expansion per se is a challenge. But at least in midpoint, we are flat. Thank you. The next question comes from Julien Ouaddour with Bank of America. Please go ahead.
Søren Nielsen: And when it comes to the margin, you can say, development in 2026, it is, of course, challenged by our starting assumption of a market growth of 2% to 4%. That is these, you can say, fundamental margin headwind that we sit with. And of course, in this light, our cost initiative becomes extremely important because this is what brings us, you can say, at the midpoint of our guidance at least to a flat EBIT margin in local currency. And then anything above that would be margin expansion. But of course, when we assume a market growth of 2% to 4%, margin expansion, which is not in line with our mid- to long-term, then margin expansion per se is a challenge. But at least in midpoint, we are flat. Thank you. The next question comes from Julien Ouaddour with Bank of America. Please go ahead.
Speaker #5: That is these you can say fundamental margin headwinds that we sit with. And of course in this light our cost initiative becomes extremely important because this is what brings us you can say at the midpoint of our guidance at least to a flat EBIT margin in local currency.
Speaker #5: And then anything above that would be margin expansion. But of course when we assume a market growth of 2 to 4% margin expansion which is not in line with our mid to long term then margin expansion per se is a challenge.
Speaker #5: But at least at midpoint, we are.
Speaker #5: flat. Thank
Speaker #5: flat. Thank
Speaker #7: you. The next question comes from
Speaker #2: Julian Oador with Bank of America. Please go ahead.
Speaker #7: Thank you very much for taking my questions. So, I have two. The first one is on Zero, where—I mean, you said the feedback was pretty good.
Søren Nielsen: Thank you very much for taking my questions. So I have two. The first one is on Zeal where, I mean, you said the feedback was pretty good. My understanding is that Zeal is the main moving part for the share gains in 2026, as you said. Just could you tell us a little bit what kind of market share assumptions have you embedded in the 2026 guide for Zeal in the ITE category? I'm just asking because we see a competitive product working pretty well right now. And I think another of your competitors just announced new ITE products this morning. And also on Zeal, could you confirm if it's already marginally accretive to the group and how the volume pickup could impact the profitability? And a very quick second question is on the ASP. It was down 2.25. I think it's below your midterm assumption.
Søren Nielsen: Thank you very much for taking my questions. So I have two. The first one is on Zeal where, I mean, you said the feedback was pretty good. My understanding is that Zeal is the main moving part for the share gains in 2026, as you said. Just could you tell us a little bit what kind of market share assumptions have you embedded in the 2026 guide for Zeal in the ITE category? I'm just asking because we see a competitive product working pretty well right now. And I think another of your competitors just announced new ITE products this morning. And also on Zeal, could you confirm if it's already marginally accretive to the group and how the volume pickup could impact the profitability? And a very quick second question is on the ASP. It was down 2.25. I think it's below your midterm assumption.
Speaker #7: My understanding is that Zero is the main moving part for the Schengen in ’26, as you said. Just could you tell us a little bit what kind of market share assumptions you have embedded in the ’26 guide for Zero in the ITE category?
Speaker #7: I'm just asking because we see a competitive project working pretty well right now, and I think another one of your competitors just announced a new ITE product this morning.
Speaker #7: And also, on Zero, could you confirm if it's already marginally creative to the group, and how the volume pickup could impact the profitability? And a very quick second question is on the ASP—it was down 2% in '25.
Speaker #7: I think it's below your midterm assumption. You're also sitting in tense competitive pressure at the moment. So do you feel the need to have maybe some kind of price discounts in the REIT category until you have a new premium platform, as Intend gets old?
Søren Nielsen: You're also facing intense competitive pressure at the moment. So do you feel the need to have maybe some kind of price discounts in the RITE category until you have a new premium platform as Intent gets old? So just what could it imply on the pricing for H1 2026? Could it be down again? Thank you. Let me start with the pricing and then return to Zeal. ASP, when we see it down, is a channel and geography mix. We still uphold, I think, a strong ability to have significant better pricing than many and most in the independent sector. So no, I don't see the call out for selling Intent because it should be not competitive. I would also like to stress maybe a little bit back to Hassan's question on product launches. We are very, very happy with the performance of Oticon, Intent, and Zeal.
Søren Nielsen: You're also facing intense competitive pressure at the moment. So do you feel the need to have maybe some kind of price discounts in the RITE category until you have a new premium platform as Intent gets old? So just what could it imply on the pricing for H1 2026? Could it be down again? Thank you. Let me start with the pricing and then return to Zeal. ASP, when we see it down, is a channel and geography mix. We still uphold, I think, a strong ability to have significant better pricing than many and most in the independent sector. So no, I don't see the call out for selling Intent because it should be not competitive. I would also like to stress maybe a little bit back to Hassan's question on product launches. We are very, very happy with the performance of Oticon, Intent, and Zeal.
Speaker #7: So just what could it imply on the pricing for H1 '26? Could it be down again? Thank
Speaker #7: you.
Speaker #4: Let me
Speaker #4: start with the pricing and then return to Zero. ASP when we see it down is a channel and geography mix. We still uphold I think a strong ability to have significant better pricing than many and most in the independent sector.
Speaker #4: So no I don't see the call out for selling intent because it should be not competitive. I would also like to stress maybe a little bit back to Hassan's question on a product launches.
Speaker #4: We have very very happy with the performance of Oticon intent and Zero this platform allows us to exactly do these very high performing products at now unprecedented small sizes.
Søren Nielsen: This platform allows us to exactly do these very high-performing products at now unprecedented small sizes. It is with full connectivity. It is with full AI-driven signal processing that we enable Zeal. And that's why Zeal gets such a good reputation. It's not the first product that you can do as an in-ear, instant-fit type of product. But you have never before seen it with such a feature list that is totally comparable to any RITE. So back to my initial comments as well. When we open new doors with Zeal, the conclusion from the first four markets is we also see growing sales of Intent because it's equally a very good product. So Zeal is a door opener to broader sales. And that's also why you cannot measure Zeal's ASP effect. You cannot measure. Zeal comes in with very strong ASP.
Søren Nielsen: This platform allows us to exactly do these very high-performing products at now unprecedented small sizes. It is with full connectivity. It is with full AI-driven signal processing that we enable Zeal. And that's why Zeal gets such a good reputation. It's not the first product that you can do as an in-ear, instant-fit type of product. But you have never before seen it with such a feature list that is totally comparable to any RITE. So back to my initial comments as well. When we open new doors with Zeal, the conclusion from the first four markets is we also see growing sales of Intent because it's equally a very good product. So Zeal is a door opener to broader sales. And that's also why you cannot measure Zeal's ASP effect. You cannot measure. Zeal comes in with very strong ASP.
Speaker #4: It is with full connectivity it is with full AI driven signal processing that we enable Zero and that's why Zero gets such a good reputation.
Speaker #4: It's not the first product that you can do as an in-ear, instant-fit type of product. But you have never before seen it with such a feature list that is totally comparable to any RIE.
Speaker #4: So back to my initial comments as well, when we open new doors with Zero, the conclusion from the first four markets is we also see growing sales of Intent because it's equally a very good product.
Speaker #4: So Zero is a door opener to a broader sales, and that's also why you cannot measure Zero's ASP effect. You cannot measure—Zero comes in with very strong ASP, and of course, additional Zero volume will lift ASP. Everything else equal, it's a higher price than anything else we sell.
Søren Nielsen: And of course, additional Zeal volume will lift ASP, everything else equal. It's higher priced than anything else we sell. So yes, very positive for ASP. If we sell a lot in the US and the US market grows, our ASP will go up. The ASP effect in 2025 is geography and channel-related. Zeal ITE category, we have no other products that offer same features. All new rechargeable RITE connectivity type of in-ear products are custom-made. They are what's called in-canal, which are relatively big devices that don't offer the same discreteness and invisibility as Zeal. If they are to be near as small as Zeal, connectivity is not there and typically also limited signal processing in order to accommodate for a much smaller battery. The core element of Zeal is that it offers a much larger battery than any competitor and therefore in this size.
Søren Nielsen: And of course, additional Zeal volume will lift ASP, everything else equal. It's higher priced than anything else we sell. So yes, very positive for ASP. If we sell a lot in the US and the US market grows, our ASP will go up. The ASP effect in 2025 is geography and channel-related. Zeal ITE category, we have no other products that offer same features. All new rechargeable RITE connectivity type of in-ear products are custom-made. They are what's called in-canal, which are relatively big devices that don't offer the same discreteness and invisibility as Zeal. If they are to be near as small as Zeal, connectivity is not there and typically also limited signal processing in order to accommodate for a much smaller battery. The core element of Zeal is that it offers a much larger battery than any competitor and therefore in this size.
Speaker #4: So yes, very positive for ASP. If we sell a lot in the US and the US market grows, our ASP will go up. The ASP effect in '25 is geography- and channel-related.
Speaker #4: Zero ITE category we have no other products that offer same features all new rechargeable with connectivity type of in-ear products are custom made. They are what's called in canal which are relatively big devices that don't offer the same discreteness and invisibility as Zero.
Speaker #4: If they are to be near as small as zero, connectivity is not there. And typically also limited signal processing, in order to accommodate for a much smaller battery.
Speaker #4: The core element of Zero is that it offers a much larger battery than any competitor, and therefore in the size, and therefore we uphold the full functionality we know from REITs.
Søren Nielsen: Therefore, we uphold the full functionality we know from RITEs. That's the strength. Therefore, you cannot just measure share in the in-ear category. I don't see any new releases that challenge the position of Zeal. Thank you. Thank you, Søren. Just if I could very quickly follow up on your last point. So should we expect at least market share in line with your global average for Zeal in the ITE category? I mean, given everything that you just said for 2026, I mean. For 2026, I mean. Because Zeal will capture share outside in-ear category. So you will see compared to you, of course, have to look at a certain higher end of that market. There could be markets where there's a lot of relatively cheap in-ear products sold.
Søren Nielsen: Therefore, we uphold the full functionality we know from RITEs. That's the strength. Therefore, you cannot just measure share in the in-ear category. I don't see any new releases that challenge the position of Zeal. Thank you. Thank you, Søren. Just if I could very quickly follow up on your last point. So should we expect at least market share in line with your global average for Zeal in the ITE category? I mean, given everything that you just said for 2026, I mean. For 2026, I mean. Because Zeal will capture share outside in-ear category. So you will see compared to you, of course, have to look at a certain higher end of that market. There could be markets where there's a lot of relatively cheap in-ear products sold.
Speaker #4: And that's the strength. And therefore, you cannot just measure share in the in-ear category, and I don't see any new releases that challenge the position of Zero.
Speaker #4: And that's the strength. And therefore, you cannot just measure share in the in-ear category, and I don't see any new releases that challenge the position of Zero.
Speaker #7: Thank you. Thank you so much. Just if I can very quickly follow up on your last point. So should we expect at least market share in line with your global average for Zero in the ITE category?
Speaker #7: I mean given everything that you just said.
Speaker #4: In a nutshell. Because Zero will capture share outside in-ear category. So you will see compared to you of course have to look at certain higher end of that market.
Speaker #4: That could be markets where there's a lot of relatively cheap in-ear products sold. If I allow myself to exclude those, Zero will take significant share in the premium segment both from existing in-ear solutions, which are typically only the smaller, more cosmetically attractive or primarily, and also from RITE products, because that's the preference of the first-time user.
Søren Nielsen: If I allow myself to exclude those, Zeal will take significant share in the premium segment, both from existing in-the-ear solutions, which are typically only the smaller, more cosmetically attractive or primarily, and also from RITE products because that's the preference of the first-time user. Appreciate that. Thank you, Søren. The next question comes from Andjela Bozinovic from BNP. Please go ahead. Hi. Good afternoon. And thank you for taking my questions. Maybe the first one, again, on the guidance. Can you give us your assumptions on the competitive environment and especially the competitor launches that are planned in H2 and more specifically in the in-the-ear category? Have you embedded the competitor launch that was announced this morning? And second question on the cost initiative. Can you please give us more details on the initiatives that you're implementing? Which areas, which regions would be affected? Thank you very much. Yeah.
Søren Nielsen: If I allow myself to exclude those, Zeal will take significant share in the premium segment, both from existing in-the-ear solutions, which are typically only the smaller, more cosmetically attractive or primarily, and also from RITE products because that's the preference of the first-time user. Appreciate that. Thank you, Søren. The next question comes from Andjela Bozinovic from BNP. Please go ahead. Hi. Good afternoon. And thank you for taking my questions. Maybe the first one, again, on the guidance. Can you give us your assumptions on the competitive environment and especially the competitor launches that are planned in H2 and more specifically in the in-the-ear category? Have you embedded the competitor launch that was announced this morning? And second question on the cost initiative. Can you please give us more details on the initiatives that you're implementing? Which areas, which regions would be affected? Thank you very much. Yeah.
Speaker #7: I appreciate that. Thank you
Speaker #7: sorry. The next
Speaker #2: The question comes from Angelica Bazanovich from BNP. Please go ahead.
Speaker #8: Hi, good afternoon, and thank you for taking my questions. Maybe the first one, again, on the guidance. Can you give us your assumptions on the competitive environment, and especially the competitor launches that are planned in H2, and more specifically in the in-ear category?
Speaker #8: Have you embedded the competitor launch that was announced this morning? And second question on the cost initiative can you please give us more details on the initiatives that you're implementing which areas which regions would be affected?
Speaker #8: Thank you very
Speaker #8: much. Yeah first of
Søren Nielsen: First of all, we, of course, expect competition to continue to try to innovate and bring new products to the market. We don't have anything special in. And I would definitely see what I've seen today from a single competitor. Yes, it's an in-ear product, but in a, as I understand, lower-price category and nothing special when it comes to functionality. So I don't see anything changing the fundamental competitiveness, uniqueness, and innovative level of Zeal. And I don't expect others to launch products down that alley. There is a very close relation between the production technology and the ability to make this small form factor with all the features and benefits, as I just said. And no, I don't expect competition to be able to close that gap very short and not in this year. Cost initiatives, they are widespread across the group.
Søren Nielsen: First of all, we, of course, expect competition to continue to try to innovate and bring new products to the market. We don't have anything special in. And I would definitely see what I've seen today from a single competitor. Yes, it's an in-ear product, but in a, as I understand, lower-price category and nothing special when it comes to functionality. So I don't see anything changing the fundamental competitiveness, uniqueness, and innovative level of Zeal. And I don't expect others to launch products down that alley. There is a very close relation between the production technology and the ability to make this small form factor with all the features and benefits, as I just said. And no, I don't expect competition to be able to close that gap very short and not in this year. Cost initiatives, they are widespread across the group.
Speaker #4: We, of course, expect competition to continue to try to innovate and bring new products to the market. We don't have anything special in, and I would definitely say that I haven't seen today from a single competitor what I've seen.
Speaker #4: Yes, it's an in-ear product, but in, as I understand, a lower price category and nothing special when it comes to functionality. So I don't see anything changing the fundamental competitiveness and uniqueness and innovative level of Zero, and I don't expect others to launch products down that alley.
Speaker #4: There is a very close relation between the production technology and the ability to make these small form factors with all the features and benefits, as I just said.
Speaker #4: And no I don't expect competition to be able to close that gap very short and not in this year. Cost initiatives they are widespread across the group.
Speaker #4: They come basically in all geographies, to various extents, of course, depending on our size and footprint. They come in all areas—it's not just operations, it's not just R&D, it's not just any of it. It is basically the entire company that we have looked at.
Søren Nielsen: They come basically in all geographies to various extent, of course, depending on our size and footprint. They come in all areas. It's not just operation. It's not just AHNDI. It's not just any of it. It's basically the entire company that we have looked at, but, of course, in selected areas so we can be even more firm in our commitment to invest in AHNDI, in new products, in a continued expansion of our hearing clinic footprint, etc., all the things that matter to growth. But we will find areas where you could say inside the box, we can find more cost-effective ways of doing things. Perfect. And just to follow up on the first question. So on the traditional RITE and behind-the-ear, do you embed any competitive launches in your guidance?
Søren Nielsen: They come basically in all geographies to various extent, of course, depending on our size and footprint. They come in all areas. It's not just operation. It's not just AHNDI. It's not just any of it. It's basically the entire company that we have looked at, but, of course, in selected areas so we can be even more firm in our commitment to invest in AHNDI, in new products, in a continued expansion of our hearing clinic footprint, etc., all the things that matter to growth. But we will find areas where you could say inside the box, we can find more cost-effective ways of doing things. Perfect. And just to follow up on the first question. So on the traditional RITE and behind-the-ear, do you embed any competitive launches in your guidance?
Speaker #4: But of course, in selected areas, so we can be even more firm in our commitment to invest in R&D, in new products, in a continued expansion of our hearing clinic footprint, etc.
Speaker #4: All the things that matter to growth. But we will find areas where you could say, inside the box, we can find more cost-effective ways of doing things.
Speaker #8: Perfect. And just to follow up on the first question, so on the traditional RIC and behind-the-ear, do you embed any competitive launches in your...
Speaker #8: guidance? I don't have a
Søren Nielsen: I don't have a specific assumption on exactly who's going to introduce what except that in the last 12 months, we have seen a high number of launches from our competitors. So new premium launches, I would find less likely. Thank you. The next question comes from Martin Bruneau with Nordea. Please go ahead. Hi, Søren. Hi, Søren, René. Thank you for taking my questions. I just have two relatively simple questions. The first is on the cost program, which will affect a lot of people in the organization. So I would just like to hear about the timing of the cost reduction and the reduction in the number of employees. I guess that we should expect this to be relatively quickly announced and the cost program to be more of a Q1 and Q2 program rather than back-and-loaded to avoid unnecessary uncertainty. That's the first question.
Søren Nielsen: I don't have a specific assumption on exactly who's going to introduce what except that in the last 12 months, we have seen a high number of launches from our competitors. So new premium launches, I would find less likely. Thank you. The next question comes from Martin Bruneau with Nordea. Please go ahead. Hi, Søren. Hi, Søren, René. Thank you for taking my questions. I just have two relatively simple questions. The first is on the cost program, which will affect a lot of people in the organization. So I would just like to hear about the timing of the cost reduction and the reduction in the number of employees. I guess that we should expect this to be relatively quickly announced and the cost program to be more of a Q1 and Q2 program rather than back-and-loaded to avoid unnecessary uncertainty. That's the first question.
Speaker #4: specific assumption on exactly who's going to introduce what except that in the last 12 months we have seen a high number of launches from our competitors so new premium launches I would find less
Speaker #4: We don't have a specific assumption on exactly who's going to introduce what, except that in the last 12 months we have seen a high number of launches from our competitors, so new premium launches I would find less likely.
Speaker #8: Thank you.
Speaker #2: The next question comes from Martin Bruneau with Nordia. Please go.
Speaker #9: Hi Son. Hi Son René. Thank you for taking my questions. I just have two relatively simple questions. The first is on the cost program which will affect a lot of people in the organization so I would just like to hear about the timing of the cost reduction and the reduction in the number of employees I guess that we should expect this to be a relatively quickly announced and the costs program to be more of a Q1 and Q2 program rather than back and loaded to avoid unnecessary uncertainty.
Speaker #9: That's the first question and then I'll save the second one
Søren Nielsen: I'll save the second one afterwards. I'll do that quickly. Yes, when it comes to staff and organizational changes, of course, as quickly as possible to make sure we can move on with the business. It always takes up time and energy. But on the other hand, there's also part of this program, which is centered around cost of goods sold where we want to work against the more and more expensive types of hearing aids we have to do. That takes some effort from selected groups of R&D, etc., before they come in and before you have used existing parts if it entails a redesign. So there's also elements of the program which have a longer run. But the majority and most of what's related to people will happen here very soon. Thank you. Then just the second question is on value growth.
Søren Nielsen: I'll save the second one afterwards. I'll do that quickly. Yes, when it comes to staff and organizational changes, of course, as quickly as possible to make sure we can move on with the business. It always takes up time and energy. But on the other hand, there's also part of this program, which is centered around cost of goods sold where we want to work against the more and more expensive types of hearing aids we have to do. That takes some effort from selected groups of R&D, etc., before they come in and before you have used existing parts if it entails a redesign. So there's also elements of the program which have a longer run. But the majority and most of what's related to people will happen here very soon. Thank you. Then just the second question is on value growth.
Speaker #9: afterwards. I'll do it
Speaker #4: Quickly. Yes, when it comes to staff and organizational changes, of course, as quickly as possible to make sure we can move on with the business.
Speaker #4: It always takes up time and energy. But on the other hand there's also part of this program which is centered around cost of goods sold where we want to work against the more and more expensive types of hearing aids we have to do.
Speaker #4: That takes some effort from selected groups of R&D etc. before they come in and before you have used existing parts if it entails a redesign.
Speaker #4: So there's also elements of the program which have a longer run, but the majority and most of what's related to people will happen here very soon.
Speaker #9: Thank you. And then just the second question is on value growth. I think 2025 was going around 2%. Some of that was driven by France, which has been benefiting from the replacement cycle.
Søren Nielsen: I think 2025 was growing around 2%. Some of that was driven by France, which has been benefiting from the replacement cycle, also from the VA with a quite significant price increase, which will lap in May. So you can say that the market growth is maybe a little bit inflated by these two channels and markets. So I'm wondering, in your assumption, going from 2% to 2% to 4%, where do you see the sequential step-up happening if you look at the global market from here? I would say that would be a more equal growth or different split in market growth between the US and rest of the world. The US was basically down to flat where the rest of the world grew more. And I would say that's in the assumption of the 2 to 4 that we see a slightly better US market.
Søren Nielsen: I think 2025 was growing around 2%. Some of that was driven by France, which has been benefiting from the replacement cycle, also from the VA with a quite significant price increase, which will lap in May. So you can say that the market growth is maybe a little bit inflated by these two channels and markets. So I'm wondering, in your assumption, going from 2% to 2% to 4%, where do you see the sequential step-up happening if you look at the global market from here? I would say that would be a more equal growth or different split in market growth between the US and rest of the world. The US was basically down to flat where the rest of the world grew more. And I would say that's in the assumption of the 2 to 4 that we see a slightly better US market.
Speaker #9: Also from the VA with the quite significant price increase which will lap in May. So you can say that the market growth is maybe a little bit inflated by these two channels and markets so I'm wondering in your assumption going from 2% to 2% to to 4% where do you see the sequential step up happening if you look at the global market from here?
Speaker #4: I would say that would be a more equal growth, or a different split in market growth, between the US and the rest of the world. The US was basically down to flat, while the rest of the world grew more.
Speaker #4: And I would say that's in the assumption of the 2% to 4% that we see a slightly better US
Speaker #4: market. Thank you very much for I hope our global
Søren Nielsen: Thank you very much for taking my questions. How about global ASP? The next question comes from Veronika Dubajova with Citi. Please go ahead. Hi, guys. Good afternoon. And thank you for taking my questions. I have two. And I apologize. They're going to be slightly bigger picture. The first one, I just want to push you a little bit on the sort of EBIT guidance. I think if we sort of build the bridge, I think adjusting for FX, adjusting for the cost savings, adjusting for, obviously, the contribution from KIND, I think the guidance implies sort of EBIT that's year-on-year -4% to +5% against sort of revenue growth of 3% to 6%. So even at the top end, really, isn't a huge amount of margin expansion. And I guess sort of my big picture question is, is this the new normal?
Søren Nielsen: Thank you very much for taking my questions. How about global ASP? The next question comes from Veronika Dubajova with Citi. Please go ahead. Hi, guys. Good afternoon. And thank you for taking my questions. I have two. And I apologize. They're going to be slightly bigger picture. The first one, I just want to push you a little bit on the sort of EBIT guidance. I think if we sort of build the bridge, I think adjusting for FX, adjusting for the cost savings, adjusting for, obviously, the contribution from KIND, I think the guidance implies sort of EBIT that's year-on-year -4% to +5% against sort of revenue growth of 3% to 6%. So even at the top end, really, isn't a huge amount of margin expansion. And I guess sort of my big picture question is, is this the new normal?
Speaker #9: taking my questions.
Speaker #2: The next question comes from ASP. Veronica Dubujova with City. Please go ahead.
Speaker #10: Hi, guys. Good afternoon, and thank you for taking my questions. I have two, and I apologize—they're going to be slightly bigger picture. The first one, I just want to push you a little bit on EBIT guidance.
Speaker #10: I think if we sort of build the bridge I think adjusting for FX adjusting for the cost savings adjusting for obviously the contribution from KIND I think the guidance implies sort of EBIT that's year on year minus 4 to plus 5% against sort of revenue growth of 3% to 6%.
Speaker #10: So even at the top end, there really isn't a huge amount of margin expansion, and I guess sort of my big picture question is: is this the new normal?
Speaker #10: I mean if we end up in a market where growth is continuously challenged not just in 2026 but let's say maybe even in 2027 should we assume it's going to be quite difficult not just for you but for the industry as a whole to drive earnings growth?
Søren Nielsen: I mean, if we end up in a market where growth is continuously challenged, not just in 2026 but let's say maybe even in 2027, should we assume it's going to be quite difficult, not just for you but for the industry as a whole, to drive earnings growth? I think that's kind of the question that we've been having lots of discussions around. My second question, and I apologize for being forthright and blunt about this, but Intent is now two years old. You have normally followed two-year launch schedules. We are clearly not getting a platform in February this year. Can you reassure us that there is nothing wrong with the R&D process and that the delay is a deliberate tactic on your part as opposed to something going wrong in the background?
Søren Nielsen: I mean, if we end up in a market where growth is continuously challenged, not just in 2026 but let's say maybe even in 2027, should we assume it's going to be quite difficult, not just for you but for the industry as a whole, to drive earnings growth? I think that's kind of the question that we've been having lots of discussions around. My second question, and I apologize for being forthright and blunt about this, but Intent is now two years old. You have normally followed two-year launch schedules. We are clearly not getting a platform in February this year. Can you reassure us that there is nothing wrong with the R&D process and that the delay is a deliberate tactic on your part as opposed to something going wrong in the background?
Speaker #10: I think that's kind of the question that we've been having lots of discussions around. My second question—and I apologize for being forthright and blunt about this—but Intent is now two years old.
Speaker #10: You have normally followed two-year launch schedules. We are clearly not getting a platform in February this year. Can you reassure us that there is nothing wrong with the R&D process, and that the delay is a deliberate tactic on your part as opposed to something going wrong in the background?
Speaker #10: I think given the experience with Z last year it'd be helpful to understand your thinking around that. Thank
Søren Nielsen: I think, given the experience with Zeal last year, it'd be helpful to understand your thinking around that. Thank you guys so much. Thanks so much. Yeah. Thank you very much, Veronika. And you, to some extent, have to see the cost savings in combination with the remaining business. We would still like to continue to invest in India. We would still like to invest in further expanding our footprint. And that's why we in other areas take cost out. So you have to, in my book, see the two together. You can't just take the cost out and then look at the rest. So in all scenarios, when you take the two together, there is a growing EBIT, and there is also improving margins. The better we are in the range, of course. On the more blunt question, no, I don't think there's anything wrong in India.
Søren Nielsen: I think, given the experience with Zeal last year, it'd be helpful to understand your thinking around that. Thank you guys so much. Thanks so much. Yeah. Thank you very much, Veronika. And you, to some extent, have to see the cost savings in combination with the remaining business. We would still like to continue to invest in India. We would still like to invest in further expanding our footprint. And that's why we in other areas take cost out. So you have to, in my book, see the two together. You can't just take the cost out and then look at the rest. So in all scenarios, when you take the two together, there is a growing EBIT, and there is also improving margins. The better we are in the range, of course. On the more blunt question, no, I don't think there's anything wrong in India.
Speaker #10: you guys so much. Yeah
Speaker #4: thank you very much Veronica. And to some extent have to see the cost savings in combination with the remaining business. We would still like to continue to invest in R&D.
Speaker #4: We would still like to invest in further expansioning our footprint and that's why we in other areas take cost out. So you have to in my book see the two together.
Speaker #4: You can't just take the cost out and then look at the rest. So in all scenarios when you take the two together there is a growing EBIT and there is also improving margins the better we are in the range of course.
Speaker #4: On the more blunt question: no, I don't think there's anything wrong in the R&D. We have made it a priority to bring out Z because Z is possible due to the platform we have, and we think it holds big potential.
Søren Nielsen: We have made a priority to bring out Zeal because Zeal is possible due to the platform we have. We think it holds a big potential. Half of all users in the hearing aid industry are first-time users, around half. This is a major opportunity there. Also for some, the product they really want, even if they already have one, it holds a significant innovative element. Our product roadmap is a conscious choice and not a broken bike. Got it. Thank you guys so much. The next question comes from Susannah Ludwig with Bernstein. Please go ahead. Good afternoon. Thanks for taking my questions. I have two, please. I guess first on Zeal, you talked about it having a higher ASP and then sort of being a positive contribution to ASP.
Søren Nielsen: We have made a priority to bring out Zeal because Zeal is possible due to the platform we have. We think it holds a big potential. Half of all users in the hearing aid industry are first-time users, around half. This is a major opportunity there. Also for some, the product they really want, even if they already have one, it holds a significant innovative element. Our product roadmap is a conscious choice and not a broken bike. Got it. Thank you guys so much. The next question comes from Susannah Ludwig with Bernstein. Please go ahead. Good afternoon. Thanks for taking my questions. I have two, please. I guess first on Zeal, you talked about it having a higher ASP and then sort of being a positive contribution to ASP.
Speaker #4: Half of all users in the hearing aid industry are first-time users around half and this is a major opportunity there and also for some the product they really want even if they already have one.
Speaker #4: It holds a significant innovative element so our product roadmap is a conscious choice and not a broken
Speaker #4: bike. Got it.
Speaker #10: Thank you guys so
Speaker #10: much. The
Speaker #2: Next question comes from Susanna Ludwig with Bernstein. Please go ahead.
Speaker #11: Good afternoon. Thanks for taking my questions. I have two pleas. I guess first on Z—you talked about it having a higher ASP, and then sort of being a positive contribution to ASP.
Speaker #11: Could you just clarify in terms of the impact on margins I guess sort of whether the margin is also sort of higher than the rest of your portfolio given that higher ASP or given sort of the different manufacturing process if there's any sort of negative impacts on margins?
Søren Nielsen: Could you just clarify in terms of the impact on margins, I guess, sort of whether the margin is also sort of higher than the rest of your portfolio given that higher ASP or given sort of the different manufacturing process if there's any sort of negative impacts on margins? And then second, I guess on the cost reduction program, are you able to share a little bit more in terms of which business areas you are targeting? Should we expect, for example, in retail, are there any closures of stores that you're expecting to do as part of this program? Yeah. Thank you very much. Selling more premium is super positive for profitability. And Zeal is intended and will grow our premium share. And this way, yes, definitely. I think we have said before that the cost of producing Zeal is higher than a RITE.
Søren Nielsen: Could you just clarify in terms of the impact on margins, I guess, sort of whether the margin is also sort of higher than the rest of your portfolio given that higher ASP or given sort of the different manufacturing process if there's any sort of negative impacts on margins? And then second, I guess on the cost reduction program, are you able to share a little bit more in terms of which business areas you are targeting? Should we expect, for example, in retail, are there any closures of stores that you're expecting to do as part of this program? Yeah. Thank you very much. Selling more premium is super positive for profitability. And Zeal is intended and will grow our premium share. And this way, yes, definitely. I think we have said before that the cost of producing Zeal is higher than a RITE.
Speaker #11: And then second, I guess on the cost reduction program, are you able to share a little bit more in terms of which business areas you are targeting?
Speaker #11: Should we expect for example in retail are there any closures of stores that you're expecting to do as part of this program?
Speaker #4: Yeah, thank you very much. Selling more premium is super positive for profitability, and Z is intended and will grow our premium share, and this way, yes, definitely.
Speaker #4: I think we have said before that the cost of producing Z is higher than a rig, so if it was just a substitution, and the price was not significantly higher, it would not be.
Søren Nielsen: So if it was just a substitution and the price was not significantly higher, it would not be. It's better than classic in-ear instruments. And the price is set higher than RITE. So all in all, good profitability, lifting premium sales, which we have seen so far in the markets we have launched, definitely good for profitability. On the cost-saving program, it is for all business areas to deliver, of course, a little bit different in form and shape. And yes, we would like to do the most on cost of goods sold because that helps everybody. We are very cautious on our retail footprint and network. But there are also optimization opportunities within a network where certain regions, geographies, areas down to cities, you could find you have stores that are not optimally placed and don't deliver the profit you expect.
Søren Nielsen: So if it was just a substitution and the price was not significantly higher, it would not be. It's better than classic in-ear instruments. And the price is set higher than RITE. So all in all, good profitability, lifting premium sales, which we have seen so far in the markets we have launched, definitely good for profitability. On the cost-saving program, it is for all business areas to deliver, of course, a little bit different in form and shape. And yes, we would like to do the most on cost of goods sold because that helps everybody. We are very cautious on our retail footprint and network. But there are also optimization opportunities within a network where certain regions, geographies, areas down to cities, you could find you have stores that are not optimally placed and don't deliver the profit you expect.
Speaker #4: It's better than classic in-ear instruments and the price is set higher than rig so all in all good profitability lifting premium sales which we have seen so far in the markets we have launched definitely good for profitability.
Speaker #4: On the cost-saving program, it is for all business areas to deliver—of course, a little bit different in form and shape—and yes, we would like to do the most on cost of goods sold because that helps everybody. We are very cautious on our retail footprint and network, but there are also optimization opportunities within a network, where certain regions, geographies, areas down to cities, you could find you have stores that are not optimally placed and don't deliver the profit you expect.
Speaker #4: So we will look also at the network, but it's not the majority of—
Søren Nielsen: So we will look also at the network, but it's not the majority of things. Great. Thanks. The next question comes from Niels Granholm-Leth with DNB Carnegie. Please go ahead. Thank you. Could you provide a little bit more color on the facing of your growth for this year? So would you expect the year to begin on a slightly weaker note and then end on a stronger one? Also, could you talk about for how long you would expect to maintain Zeal only available in your premium-priced version? Should we expect this to go on for the remainder of this year? Thank you. Yeah. Thank you very much. The facing of the growth is relatively normally faced.
Søren Nielsen: So we will look also at the network, but it's not the majority of things. Great. Thanks. The next question comes from Niels Granholm-Leth with DNB Carnegie. Please go ahead. Thank you. Could you provide a little bit more color on the facing of your growth for this year? So would you expect the year to begin on a slightly weaker note and then end on a stronger one? Also, could you talk about for how long you would expect to maintain Zeal only available in your premium-priced version? Should we expect this to go on for the remainder of this year? Thank you. Yeah. Thank you very much. The facing of the growth is relatively normally faced.
Speaker #4: things. Great.
Speaker #11: Thanks. The next question comes
Speaker #2: from Niels Granholm-Leith with DNB Carnegie. Please go
Speaker #2: ahead. Thank
Speaker #12: you. Could you provide a little bit more color on the phasing of your growth for this year so would you expect the year to begin on a slightly weaker note and then end on a stronger one?
Speaker #12: Also could you talk about for how long you would expect to maintain Z only available in your premium price version should we expect this to go on for the remainder of this year?
Speaker #12: Thank you.
Speaker #4: Yeah, thank you very much. The phasing of the growth is relatively normally phased and with a little uptake during the year as we see a full rollout of Z, of course, but not very different from first half to second half if we keep it at that level.
Søren Nielsen: And with a little uptake during the year as we see a full rollout of Zeal, of course, but not very different from first half to second half if we keep it at that level. And Zeal only in premium, this is, of course, also a careful choice. We think it holds a very significant potential for value. And as long as it's unique and that potential is, you could say, not fully tapped, then we will be cautious in adding more price points. Will it eventually happen? Yes, it will. But for now, it's off the table. The next question comes from Carsten Lønborg-Madsen with Danske Bank. Please go ahead. Thank you very much. I only have one question left.
Søren Nielsen: And with a little uptake during the year as we see a full rollout of Zeal, of course, but not very different from first half to second half if we keep it at that level. And Zeal only in premium, this is, of course, also a careful choice. We think it holds a very significant potential for value. And as long as it's unique and that potential is, you could say, not fully tapped, then we will be cautious in adding more price points. Will it eventually happen? Yes, it will. But for now, it's off the table. The next question comes from Carsten Lønborg-Madsen with Danske Bank. Please go ahead. Thank you very much. I only have one question left.
Speaker #4: And Z only in premium this is of course also a careful choice we think it holds a very significant potential for value and as long as it's unique and that potential is you could say not fully tapped then we will be cautious in adding more price points.
Speaker #4: Will it eventually happen? Yes, it will, but for now, it is off the table.
Speaker #12: Thank
Speaker #12: ank you. The next
Speaker #2: question comes from Karsten Lonborg Madsen with Danski Bank. Please go ahead.
Speaker #13: Thank you very much I only have one question left and that's actually sort of a bit of high-level question sort of a question we are being asked a lot about from investors is whether now that you are implementing AI in hearing aids across the sector your competitors and we are seeing other AI players invest massively in CAPEX.
Søren Nielsen: That's actually sort of a bit of a high-level question, sort of a question we are being asked a lot about from investors: is whether now that you're implementing AI in hearing aids across the sector, you, your competitors, and we are seeing other AI players invest massively in chips, are we seeing sort of a step change in R&D cost to develop the next hearing aid with AI capabilities? Or are we seeing more of a continuation of R&D budgets that you have seen historically? That's the question, I guess. Yeah. And thank you for the question. I wouldn't say we see a step-up. But yes, if you look relatively to years back, this is definitely where you put in more and more effort and the complexity of what we have to develop increases. And that's also why a continued commitment to investment in R&D is key.
Søren Nielsen: That's actually sort of a bit of a high-level question, sort of a question we are being asked a lot about from investors: is whether now that you're implementing AI in hearing aids across the sector, you, your competitors, and we are seeing other AI players invest massively in chips, are we seeing sort of a step change in R&D cost to develop the next hearing aid with AI capabilities? Or are we seeing more of a continuation of R&D budgets that you have seen historically? That's the question, I guess. Yeah. And thank you for the question. I wouldn't say we see a step-up. But yes, if you look relatively to years back, this is definitely where you put in more and more effort and the complexity of what we have to develop increases. And that's also why a continued commitment to investment in R&D is key.
Speaker #13: Are we seeing sort of a step change in how the cost to develop the next hearing aid with AI capabilities is evolving, or are you seeing more of a continuation of R&D budgets that you have seen historically? So that's the question, I guess.
Speaker #4: Yeah and thank you for the question. I wouldn't say we see a step up but yes if you look relatively to years back this is definitely where you put in more and more effort and the complexity of what we have to develop increases and that's also why I continued commitment to investment in R&D is key and back to our structural changes.
Søren Nielsen: And back to our structural changes, they are part of making sure we can continue to invest in AHNDI. And a lot of that is into AI-driven signal processing and benefiting from AI, you could say, in all aspects of running a modern hearing aid system. Thanks. And a quick follow-up. So should we expect you longer-term to sort of enter into more external collaboration in order to drive the AI agenda? Or do you have enough to have to allow? I would say we have an example of that at our research center where the William Demant Foundation have given quite a significant grant to make sure further programs in the research community can be done under the umbrella of our Eriksholm Research Centre. So yes, we do more collaboration also with external parties to build on this agenda. Thank you.
Søren Nielsen: And back to our structural changes, they are part of making sure we can continue to invest in AHNDI. And a lot of that is into AI-driven signal processing and benefiting from AI, you could say, in all aspects of running a modern hearing aid system. Thanks. And a quick follow-up. So should we expect you longer-term to sort of enter into more external collaboration in order to drive the AI agenda? Or do you have enough to have to allow? I would say we have an example of that at our research center where the William Demant Foundation have given quite a significant grant to make sure further programs in the research community can be done under the umbrella of our Eriksholm Research Centre. So yes, we do more collaboration also with external parties to build on this agenda. Thank you.
Speaker #4: They are part of making sure we can continue to invest in R&D, and a lot of that is into AI-driven signal processing and benefiting from AI, you could say, in all aspects of running a modern hearing aid system.
Speaker #13: Thanks. And a quick follow-up so should we expect you longer term to sort of enter into more external collaboration in order to drive the AI agenda or do you have enough?
Speaker #4: I would say we have an example of that at our research center where the William Damon Foundation have given quite a significant grant to make sure further programs in the research community can be done under the umbrella of our AXON research center so yes we do more collaboration also with external parties to build on this agenda.
Speaker #13: Thank
Speaker #13: You. The last question today comes
Søren Nielsen: The last question today comes from Jack Reynolds-Clark with RBC Capital Markets. Please go ahead. Hi there. Thank you for taking the questions. Two, please. First is on Zeal manufacturing. Could you just remind us whether this is fully scaled or is this going to be a limiter for launch globally? And then how long until you're fully ramped and launched across all of your markets for Zeal? And then the second question is, I mean, is the profitability initiative a signal that you're more cautious around the timing of the recovery and market growth kind of over the longer term versus where you were in the past, I guess, beyond 2026? Thank you. Okay. I think I got your questions. I'm not really sure. But the first one, though, we have made a sequential launch to make sure we don't create demand we can't fulfill.
Søren Nielsen: The last question today comes from Jack Reynolds-Clark with RBC Capital Markets. Please go ahead. Hi there. Thank you for taking the questions. Two, please. First is on Zeal manufacturing. Could you just remind us whether this is fully scaled or is this going to be a limiter for launch globally? And then how long until you're fully ramped and launched across all of your markets for Zeal? And then the second question is, I mean, is the profitability initiative a signal that you're more cautious around the timing of the recovery and market growth kind of over the longer term versus where you were in the past, I guess, beyond 2026? Thank you. Okay. I think I got your questions. I'm not really sure. But the first one, though, we have made a sequential launch to make sure we don't create demand we can't fulfill.
Speaker #2: from Jack Reynolds Clark with RBC Capital Markets. Please go
Speaker #14: Hi there thank you for taking the questions. Two please. First is on Z manufacturing. Could you just remind us whether this is fully scaled or is this going to be a limiter for launch globally and then how long until you're fully ramped and launched across all of your markets for Z?
Speaker #14: And then the second question is I mean is the profitability initiative signal that you're more cautious around the timing of the recovery and market growth kind of over the longer term versus where you were in the past?
Speaker #14: I guess beyond 2026. Thank you.
Speaker #4: Okay I think I got your questions I'm not really sure but the first one though we have made a sequential launch to make sure we don't create demand we can't fulfill that's why we take one market at a time and we feel comfortable about that and have a good production capacity and can also or have plans to ramp up significantly so all good we're a little bit of ahead of the curve if anything so I think that's the answer to that.
Søren Nielsen: That's why we take one market at a time. And we feel comfortable about that and have a good production capacity and can also or have plans to ramp up significantly. So all good. We're a little bit ahead of the curve, if anything. So I think that's the answer to that. Yes. Just to make sure, Jack, to understand your second question, whether it relates to the fact that we have a different view on if and when the market returns back to the normal growth, that's the reason why we introduce profitability initiatives. Yeah. You could say you should. We always do that. I would say we accelerate it to make sure we remain a strong company that can continue to invest in the things that matter the most to our customers, AHNDI, strong service, etc. So is there some link? Yes, there is.
Søren Nielsen: That's why we take one market at a time. And we feel comfortable about that and have a good production capacity and can also or have plans to ramp up significantly. So all good. We're a little bit ahead of the curve, if anything. So I think that's the answer to that. Yes. Just to make sure, Jack, to understand your second question, whether it relates to the fact that we have a different view on if and when the market returns back to the normal growth, that's the reason why we introduce profitability initiatives. Yeah. You could say you should. We always do that. I would say we accelerate it to make sure we remain a strong company that can continue to invest in the things that matter the most to our customers, AHNDI, strong service, etc. So is there some link? Yes, there is.
Speaker #15: Just to make sure, Jack, I understand your second question—whether it relates to the fact that we have a different view on if and when the market returns back to normal growth, and if that's the reason why we introduce profitability initiatives.
Speaker #4: Yeah you could say you should we always do that I would say we accelerate it to make sure we remain a strong company that can continue to invest in the things that matter the most to our customers R&D strong service etc.
Speaker #4: So, is there some link? Yes, there is. I would say the acceleration definitely has happened also as a reaction to a continued weak assumption of a continued weak—
Søren Nielsen: I would say the acceleration definitely has happened also as a reaction to a continued weak assumption of a continued weak market. That's great. Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to the company for any closing remarks. Thank you, Operator. And thank you so much to everybody for joining us here today. I see we still have a couple of people in line in the queue. So please do reach out after the call, and we'll be happy to follow up. As always, we expect to be on the road in the coming weeks and do look forward to see all of you when we could get there. Have a good rest of the day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Søren Nielsen: I would say the acceleration definitely has happened also as a reaction to a continued weak assumption of a continued weak market. That's great. Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to the company for any closing remarks. Thank you, Operator. And thank you so much to everybody for joining us here today. I see we still have a couple of people in line in the queue. So please do reach out after the call, and we'll be happy to follow up. As always, we expect to be on the road in the coming weeks and do look forward to see all of you when we could get there. Have a good rest of the day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker #4: market. That's great thank
Speaker #2: This concludes our question-and-answer session. I would like to turn the conference back over to the company for any closing remarks.
Speaker #4: Thank you operator and thank you so much to everybody for joining us here today. I see we still have a couple of people in line in the queue so please do reach out after the call and we'll be happy to follow up.
Speaker #4: As always, we expect to be on the road in the coming weeks and do look forward to seeing all of you when we can get there.
