Company announcement no 2017-01 23 February 2017
Publication of Annual Report 2016
Strong revenue growth of 13% driven by successful Oticon OpnTM and retail activities
Record-high EBIT of DKK 2,130 million supported by a strong finish to the year
This announcement includes the highlights from the Annual Report 2016:
- Consolidated revenue totalled DKK 12,002 million, matching a growth rate of 13% in local currencies of which organic and acquisitive growth accounted for 6 and 7 percentage points, respectively. Exchange rates had a minor negative impact on revenue of less than 1%.
- Driven by the very successful launch of the Oticon OpnTM hearing aid, the Group saw 6% organic growth in the wholesale of hearing aids. Our retail business saw very satisfactory revenue growth of 30% in local currencies of which 8 percentage points can be attributed to organic growth. While Europe was the main contributor to growth, which consists of a combination of organic growth and growth due to the acquisition of Audika, our US retail activities delivered below expectations.
- Our hearing implants business delivered 7% organic growth, despite a slower-than-expected uptake of the Neuro cochlear implant and adverse market conditions in several oil-dependent markets. Performance by the hearing implants business in the second half-year was significantly better than in the first half-year, as momentum improved.
- Even though our Diagnostic Instruments business activity delivered modest 3% growth in local currencies - mainly due to an economic slowdown in a number of oil-dependent markets - we cemented our leading position in the market for diagnostic equipment.
- Supported by a strong finish to the year, operating profit (EBIT) increased by 12% to a record-high DKK 2,130 million before restructuring costs of DKK 188 million, which compares favourably to our expectations of an EBIT in the lower half of the EBIT range of DKK 2-2,300 million. EBIT in the second half-year amounted to DKK 1,238 million before restructuring costs, corresponding to an EBIT margin of 20.0% (full-year EBIT margin of 17.7%). The reported EBIT in 2016 was DKK 1,942 million.
- Cash flow from operating activities (CFFO) increased by a solid 10% to DKK 1,756 million before restructuring costs (reported CFFO of DKK 1,679 million).
- In 2017, we expect to generate solid growth in our three business activities, and we are guiding for an EBIT in the range of DKK 2.2-2.5 billion before the announced restructuring costs of around DKK 200 million. Free cash flow after acquisitions will be spent on buying back shares, and we aim at a target gearing multiple of 1.5-2.0 measured as net interest-bearing debt (NIBD) relative to EBITDA.
Comments by the President & CEO
"2016 was a strong year for William Demant where Oticon's game changer Opn and increased retail activities drove our very satisfactory growth. Overall, our activities resulted in a record year for our Group, and I am pleased that we continue to deliver consistently and at a steady pace on our hearing healthcare strategy. William Demant's presence in all product segments of hearing healthcare enables us to harvest synergies and obtain economies of scale. Leveraging on our R&D, global infrastructure and distribution network across the Group gives us a truly competitive edge. Furthermore, our long-term and extremely valuable relationship with our customers has once again proven to be essential for us in our endeavours to continue to develop our position and not least make a positive difference for people who live with a hearing loss," says Niels Jacobsen, President & CEO of William Demant Holding.
Lars Nørby Johansen Niels Jacobsen
Chairman of the Board President & CEO
The full Annual Report 2016 for William Demant Holding A/S totalling 132 pages is attached to this announcement.
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| Further information: Niels Jacobsen, President & CEO Phone +45 3917 7300 www.demant.com | Other contacts: René Schneider, CFO Søren B. Andersson, VP IR Mathias Holten Møller, IR Officer Trine Kromann-Mikkelsen, Media Relations |
| 2016 | 2015 | 2014 | 2013 | 2012 | Development 2015-2016 | |
| Key figures, DKK million | ||||||
| Revenue | 12,002 | 10,665 | 9,346 | 8,959 | 8,555 | 13% |
| Gross profit | 9,030 | 7,895 | 6,813 | 6,518 | 6,127 | 14% |
| Adjusted gross profit* | 9,102 | 7,895 | - | - | - | 15% |
| Operating profit (EBIT) | 1,942 | 1,878 | 1,761 | 1,736 | 1,653 | 3% |
| Adjusted operating profit (EBIT)* | 2,130 | 1,902 | - | - | - | 12% |
| Net financial items | -101 | -69 | -70 | -72 | -132 | 46% |
| Profit before tax | 1,841 | 1,809 | 1,691 | 1,664 | 1,521 | 2% |
| Profit for the year | 1,464 | 1,439 | 1,327 | 1,286 | 1,151 | 2% |
| Assets | 15,548 | 14,390 | 11,219 | 10,318 | 8,777 | 8% |
| Equity | 6,966 | 6,500 | 5,584 | 5,056 | 4,059 | 7% |
| Cash flow from operating activities (CFFO) | 1,679 | 1,592 | 1,495 | 1,282 | 1,272 | 5% |
| Adjusted cash flow from operating activities (CFFO)* | 1,756 | 1,602 | - | - | - | 10% |
| Financial ratios | ||||||
| Gross profit margin | 75.2% | 74.0% | 72.9% | 72.8% | 71.6% | - |
| Adjusted gross profit margin* | 75.8% | 74.0% | - | - | - | - |
| Profit margin (EBIT margin) | 16.2% | 17.6% | 18.8% | 19.4% | 19.3% | - |
| Adjusted profit margin (EBIT margin)* | 17.7% | 17.8% | - | - | - | - |
| Earnings per share (EPS), DKK | 5.5 | 5.3 | 4.8 | 4.5 | 4.0 | 4% |
| Return on equity | 21.5% | 23.7% | 24.7% | 28.0% | 31.8% | - |
Key figures and financial ratios for 2012 have not been adjusted to the changes in accounting policies from 2014. Earnings per share (EPS) is per share of nominally DKK 0.20.
* Adjusted for one-off costs related to restructuring activities.
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