- Published on 03 May 2022
May 3, 2022. An interim Q1 management statement from the Danish hearing group Demant reflects a 13.5m euro Ukraine war hit and the negative impact of divestment of Oticon Medical. Despite the turbulence, a 2022 outlook of 5-9% organic growth remains unchanged.
A strong first quarter for Demant was announced today, as post-pandemic normalisation comes to the hearing healthcare market, with the group's hearing aids and diagnostics business keeping the books bright despite an eventful three months. In Q1, Demant generated organic growth of 6% with additional growth of 1% from acquisitions and of 3% from exchange rate effects. Total reported revenue growth for the Group was 9%.
As a direct result of the war in Ukraine, Demant’s EBIT will be negatively impacted by around DKK 100 million (approx. 13.5m euros) in 2022. The Demant announcement explained: "This mostly comprises lost sales to the directly affected countries for the rest of the year, which account for less than 1% of the Group’s total revenue, with only small realisable cost savings. It also comprises a provision for expected losses on all trade receivables, which has been recognised in distribution costs in Q1. The negative EBIT impact is expected to have full cash flow effect."
However, in spite of the war impact, Demant says its Q1 EBIT profitability indicator was in line with expectations driven by its hearing aid and diagnostics business.
Plenty of other business
In March, Demant completed the acquisition of 20% of ShengWang, a leading hearing care network in China with around 500 clinics, and expects to to complete the acquisition by end of June of the remaining 80% of ShengWang, revealing the financial impact only on completion.
Just announced by Demant was its intention to divest its Hearing Implants business - Oticon Medical - to Cochlear Limited. The May 3 interim announcement recognises Hearing Implants separately as a discontinued operation and is, therefore, no longer reported as part of the Hearing Healthcare segment.
"During the quarter, we have demonstrated that we are very successful when it comes to bringing attractive products and services to market and constantly staying relevant to our customers and users. We will continue to do so, and despite expecting a negative impact of the halt in sales activities in Russia, we maintain our financial outlook for 2022, which reflects very solid growth and profit," says Søren Nielsen, President & CEO of Demant.
"Our constantly changing surroundings as well as our own strategic decisions, such as our recently announced intention to divest our Hearing Implants business, more than anything demonstrate that our ability to act dynamically is a prerequisite for success,” added Nielsen.
This latest financial optimism from Demant follows the group's celebration of a great" 2021".