The Year 2010
GN’s full-year revenue was DKK 5,145 million representing organic growth of 5% and in the upper end of the outlook of "positive organic growth of 3-5%" provided in the Q1 Interim Report 2010. The year ended on a strong note with 10% organic revenue growth in Q4 2010 compared to Q4 2009.
GN’s full-year consolidated EBITA was DKK 2,595 million in line with the updated and higher full-year outlook provided in the Q3 Interim Report 2010. The consolidated EBITA for the two operating businesses (excluding TPSA) was the highest since 2005.
Following the comprehensive restructuring in 2009, the key for GN in 2010 was to improve the top-line development with a strong focus on managing the cost base. We have delivered on this with organic growth accelerating quarter by quarter during 2010 and ending at 10% in Q4. At the same time earnings have improved significantly in the operating entities and both businesses raised their earnings outlook during the year. We have delivered on our innovation objectives and have re-established GN as a leading innovator in the hearing aid industry.
In December, GN regained its position in the OMXC20 index of the 20 largest and most traded shares on NASDAQ OMX Copenhagen, cementing the successful development.
Fuelled by UC, GN Netcom experienced accelerating growth during the year and is expected to face a period of significant market-driven growth in revenue and earnings. Excluding the OEM business in Mobile Headsets, organic growth in 2010 was 18%. Driven by the operational leverage resulting from revenue growth and the continued cost focus, GN Netcom saw significant margin expansion during 2010 and achieved a double-digit EBITA margin of 11.4% – a ten-year high. A major milestone was also reached in Mobile Headsets as the division generated a small, but positive EBITA in 2010 after years of losses.
Following the successful restructuring in 2009, GN ReSound delivered on its promises by generating positive organic growth and significantly improved earnings. This performance was driven by providing groundbreaking products and technology to the marketplace in the form of ReSound Alera™ and other Surround Sound by ReSound™ featured products. The ongoing fundamental transformation of GN ReSound’s supply chain is a major step in improving the future profitability of GN ReSound. The transformation is on track towards generating annual cost reductions of up to DKK 200 million on a run rate basis by the end of 2011.
GN Otometrics continued the positive development and showed double- digit organic revenue growth.
Total GN revenue was DKK 5,145 million representing organic growth of 5% compared to (16)% in 2009. GN Netcom achieved organic growth of 9% (18% excluding Mobile OEM) whereas organic growth in GN ReSound was 2%.
Gross profit was DKK 2,934 million equivalent to a gross margin of
EBITA was DKK 2,595 million including DKK 2,126 million related to the award for phase 1 in the DPTG/TPSA arbitration case. Excluding the TPSA award, EBITA was DKK 469 million, up from DKK 8 million in 2009.
The effective tax rate was 27% and net profit amounted to DKK 1,855 million against DKK (70) million in 2009.
The free cash flow was DKK 196 million versus DKK 566 million in
Net interest-bearing debt ended at DKK 960 million (DKK 1,029 million at December 31, 2009) after having conducted a DKK 88 million share buyback program.
At the general meeting the Board of Directors will propose to the shareholders that a dividend of 15% of the net result (excluding TPSA) or DKK 40 million (DKK 0.19 per share) be paid for the financial year 2010.
Based on the 2010 financial results and the outlook for 2011, GN will initiate a share buyback program of around DKK 200 million to be executed during 2011, if authorized to do so by the shareholders.
In November 2010, GN announced that its long-term financial targets are to generate an EBITA margin in line with the top-tier competitors and to generate above-market organic growth. GN’s financial target for 2013 is to double the Group EBITA margin to around
In September 2010, the Austrian Arbitration Tribunal awarded DPTG DKK 2.9 billion for phase 1 of the arbitration case between DPTG and TPSA. TPSA has however chosen to disrespect the ruling. To ensure that the proceeds are paid in accordance with the ruling, DPTG has initiated enforcement proceedings against TPSA in Poland in November 2010 and subsequently in several other countries. In early 2011, DPTG filed a new claim amounting to DKK 2.4 billion for phase 2 (mid-2004 to 2009) in the arbitration case.
In the appeal case regarding the prohibition of the sale of GN ReSound to Sonova, the German Federal Supreme Court ruled in favor of GN in April 2010, stating that the prohibition of the sale was unlawful. In light of the ruling, GN decided to consider all legal opportunities in order to claim compensation for the significant loss imposed on GN and its shareholders and in December 2010 GN filed a claim of around DKK 8.2 billion against the German Federal Cartel Office at the District Court (Landgericht) in Bonn, Germany.
|Full year 2010||Full year 2009|
|DKK million||GN Netcom||GN ReSound||Other||GN Total||GN Netcom||GN ReSound||Other||GN Total|
|Free cash flow||244||(4)||(44)||196||167||329||70||566|