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Demant A/S: Interim Management Statement

Company announcement no 2021-14                           2 November 2021

Interim Management Statement covering the period year-to-date


EBIT outlook upgraded to DKK 3,300-3,500 million before one-offs (previously DKK 3,150-3,450 million)

Higher-than-expected EBIT driven by strong performance in Hearing Aids, Hearing Care and Diagnostics

We now expect to realise profit of around DKK 160 million from two additional one-off items


In the following, all commentary is based on adjusted figures before one-offs, unless otherwise stated.


  • In H2, the Group has so far generated low double-digit organic revenue growth in line with our most recent expectations. Acquisitions have to a minor degree contributed positively to growth, while exchange rate effects have been more or less neutral. As the same period in 2019 was severely impacted by the IT incident, 2019 no longer serves as a relevant comparative base, so we only make comparisons to 2020.
  • Hearing Healthcare has seen very strong performance so far in H2 with double-digit organic growth. Hearing Care, in particular, has continued to benefit from the positive impact of the hearing healthcare reform in France and has also seen growth in most other markets. In Hearing Aids, our Oticon More and Philips HearLink flagship products are maintaining strong momentum, delivering further market share gains, particularly in the important US market. Diagnostics has continued to perform very well and to gain market share thanks to broad-based growth. Revenue in Hearing Implants has been impacted by the voluntary field corrective action announced by our cochlear implants business on 14 October, which has led to a temporary halt to sales of new cochlear implants. Compared to revenue generated in the months prior to the field corrective action, revenue in Hearing Implants (i.e. CI and BAHS) is currently at a run rate of around 65%.
  • In H2, Communications has so far seen negative growth in line with our most recent expectations, which reflects low exposure to the relatively high-growth US market and the ongoing establishment of the EPOS brand. For H2 as a whole, we still expect revenue to decline by more than 10% compared to H1, but we have seen an increase in the intake of new orders and in revenue in recent months.
  • In H2, the Group’s gross margin has so far improved compared to the gross margin of 74.5% realised in H1. The improvement is driven by Hearing Healthcare, which has seen an improved gross margin and has also accounted for a larger share of total revenue for the Group than in H1. The gross margin for Communications has declined compared to H1 due to the slowdown in revenue. Both segments have seen additional costs related to current supply chain dynamics.
  • In local currencies, OPEX has so far in H2 seen growth similar to the 18% realised in H1, which reflects coronavirus-related cost savings in the comparative period, including government support schemes. We consider our cost base largely normalised with no material element of temporary cost savings, and we still expect to see mid-single digit growth in OPEX in H2 relative to H1.
  • In H2, the Group’s profitability has so far remained very strong and exceeded our expectations. This development is driven by Hearing Healthcare, which has seen better-than-expected profitability, as strong momentum in Hearing Aids, Hearing Care and Diagnostics has more than offset the negative impact of the halt of sales of new cochlear implants. As expected, Communications has seen negative profitability.
  • Cash flows have remained strong so far in H2 thanks to the profit generated, and we have bought back shares worth DKK 958 million. Total share buy-backs year-to-date thus amount to DKK 2,771 million.


Outlook for 2021

Due to coronavirus, our outlook (summarised below) is still subject to greater uncertainty than usually. However, supported by the release of some pent-up demand, we still expect to see further gradual recovery in the global hearing healthcare market for the remainder of 2021, and we still expect growth for 2021 as a whole to be close to normal levels of 4-6% per year in developed markets, except in the large government channels, Veterans Affairs (VA) and the NHS. We still believe that the normalisation in emerging markets is likely to go beyond 2021. For Communications, we assume that the addressable market will grow at least in line with its structural trend of around 12%, despite strong comparative figures in 2020.


The current supply chain situation remains highly dynamic and has resulted in additional costs related to the sourcing of components and to freight. Such additional costs have increased in H2 compared to H1, and we assume in our outlook that this trend will continue for the remainder of the year. Due to our mitigating actions, we still expect no material impact on our sales.



Outlook for 2021

Organic growth

26-30%, with revenue in Communications declining by more than 10% in H2 relative to H1.

Acquisitive growth

1% based on revenue from acquisitions completed as of 1 November 2021.

FX growth

-1% based on exchange rates as of 1 November 2021 and including the impact of exchange rate hedging.


DKK 3,300-3,500 million (previously DKK 3,150-3,450 million) before one-offs, including a negative EBIT in Communications of DKK 50-100 million in H2.


Net positive impact on the Group’s reported EBIT of DKK 60-90 million

Effective tax rate

Around 23%.


Gearing multiple at the end of 2021 in line with our medium- to long-term target of 2.0-2.5 (NIBD relative to EBITDA).

Share buy-backs

More than DKK 3.0 billion.


Based on results so far in H2 and on our expectations for the remainder of the year, which include the negative impact of the halt of sales of new cochlear implants, we maintain our outlook for Group organic growth in 2021 of 26-30%. Despite the impact of additional component and freight costs, we increase our outlook for EBIT to DKK 3,300-3,500 million before one-offs (previously DKK 3,150-3,450 million) driven by strong profitability in Hearing Healthcare.


As previously announced, we expect to realise one-off costs of DKK 70-100 million in relation to the voluntary field corrective action by our cochlear implants business. We now also expect to realise two one-off gains in H2:


  • We now expect to realise a one-off gain of DKK 100 million due to the divestment of FrontRow Calypso LLC, a 75%-owned subsidiary focused specifically on audio systems for classrooms and schools, to Boxlight Corporation. Upon closing, the transaction will be effective as of 31 October 2021.
  • We now expect to reverse the rest of the provision for additional bad debt recognised in H1 2020, which will result in a net gain of DKK 60 million that is one-off by nature. Originally, the provision amounted to DKK 150 million, but DKK 40 million has been realised and DKK 50 million was reversed in H2 2020.


We thus expect one-off items to have an aggregate net positive impact of DKK 60-90 million on the Group’s reported EBIT in 2021.


As expected, the positive development that we saw in Hearing Healthcare in the first half-year has continued into the second half and even at such pace that we increase our expectations of profit for the year. Our Hearing Care business area continues to grow, and we have welcomed many new and existing users into our clinics where we offer important personalised counselling and care. To our great satisfaction, Diagnostics continues to see broadly based growth, and our flagship hearing aids are doing extremely well, with particularly Oticon More driving market share gains. Going forward, Hearing Implants will be negatively impacted after our voluntary field corrective action in cochlear implants, but we are happy to see our employees acting with great resolve to support patients and customers. All in all, I have great confidence in the Demant Group and our ability to exit 2021 on a high note,” says Søren Nielsen, President & CEO of Demant.

Demant will host a conference call on 2 November 2021 at 14:00 CEST. To attend this call, please use one of the following dial-ins: +45 3544 5577 (DK), +44 3333 000 804 (UK) or +1 6319 131 422 (US). The pin code is 46691538#. A presentation for the call will be uploaded to shortly before the call.


Further information:

Søren Nielsen, President & CEO

Phone +45 3917 7300

Other contacts:

René Schneider, CFO

Mathias Holten Møller, Head of Investor Relations

Trine Kromann-Mikkelsen, VP Corporate Communications and Relations

Hearing Healthcare

Market trends

Overall, the hearing healthcare market, which comprises the markets for hearing aids, hearing implants and diagnostic instruments and services, has year-to-date recovered well and at least in line with expectations, albeit with large differences between the three market segments and between regions.


Hearing aid market

Based on available market statistics, covering slightly less than two-thirds of the market, and on our own assumptions, we estimate that the global hearing aid market saw unit growth of around 14% in Q3 or around 33% in the first nine months of the year compared to 2020. Compared to 2019, we estimate that unit growth was around 10% in Q3 or around 8% in the first nine months of the year. This includes both government channels and emerging markets where growth, as expected, has lagged behind growth in the commercial channels in developed markets. Looking only at the latter – and even when excluding France, which has seen extraordinary growth due to the hearing healthcare reform – we estimate that growth in Q3 compared to Q3 2019 was at least in line with the structural level of 4-6% per year. This includes large differences between markets and between channels of which growth in some is below normal and in others above normal due to support from pent-up demand.


Estimated hearing aid market unit growth by region


2021 vs 2020











North America





Hereof US (commercial)