SHERIDAN, WYOMING – May 8, 2025 – GN Store Nord A/S has reported its Q1 2025 financial results, highlighting a mix of challenges and opportunities. The company's growth was impacted by market uncertainties, including global macroeconomic pressures and changes in consumer sentiment, particularly in the U.S. Despite these hurdles, GN has initiated proactive cost mitigation strategies aimed at ensuring long-term profitability and supporting margin growth.
Hearing Division Performance: Launch Success Amid Market Challenges
GN's Hearing division experienced a slight decline in organic revenue growth of -1%. While the strong initial uptake of the ReSound Vivia was encouraging, the division faced challenges in the U.S. market and a slowdown in sales from existing products as customers awaited the new launch. Despite these challenges, the positive reception of ReSound Vivia continued into April, positioning the company for expected market share gains.
Key points include:
- ReSound Vivia's successful uptake: Strong initial sales and continued growth into Q2.
- Challenges in the U.S. market: Constrained sales due to market factors and anticipation for the new product.
- Profit margin: The Hearing division ended Q1 with a margin of 28.4%.
Enterprise Division Faces Market Headwinds
The Enterprise division saw a -9% decline in organic revenue growth, primarily due to a difficult comparison base from large deals in Q1 2024 and ongoing global uncertainty. Despite the challenging environment, sell-out growth was only down by -5%, indicating strong demand in certain segments. The division's margin for Q1 was 32.9%, supported by disciplined pricing strategies and a focus on cost management.
- Strong pricing discipline: The division maintained profitability despite external market pressures.
- Macroeconomic uncertainty: A delayed recovery in IT projects, particularly in the U.S.
- Profit margin: The Enterprise division finished the quarter with a margin of 32.9%.
Gaming Division Shows Resilience Despite U.S. Market Decline
GN's Gaming division reported an 11% organic revenue growth, excluding the impact of winding down the Talk and Elite product lines. The gaming gear market faced significant challenges, particularly in the U.S., due to a sharp decline in consumer sentiment in the latter half of the quarter. Despite these obstacles, the division maintained strong pricing discipline and benefited from its one-company supply chain model, achieving a profit margin of 12.9%.
Highlights include:
- Exclusion of Talk and Elite product lines: The division's growth rate remained strong despite product transitions.
- Consumer sentiment decline: A downturn in U.S. consumer sentiment affected sales.
- Profit margin: The Gaming division's margin stood at 12.9% for Q1.
Financial Overview and Strategic Response
GN's overall EBITA for Q1 2025 stood at DKK 300 million, reflecting an EBITA margin of 8%. The company experienced a negative free cash flow of DKK -395 million, primarily due to seasonality in working capital and higher interest payments. However, GN's proactive measures are aimed at improving future margins, including accelerating manufacturing footprint diversification, implementing price increases in the U.S., and executing group-wide cost-saving initiatives.
- Financial guidance update: GN now expects group organic revenue growth to range from -3% to +3%, with an EBITA margin of 11% to 13% and free cash flow (excluding M&A) of approximately DKK 800 million.
- Diversification of manufacturing footprint: The company has accelerated efforts to reduce reliance on certain geographies and minimize tariff impacts.
- Targeted pricing actions: Price increases are being implemented in the U.S. across Enterprise and Gaming divisions.
Executive Commentary
Peter Karlstromer, CEO of GN Store Nord, commented on the company’s Q1 2025 results: “While we are not pleased with our Q1 financial results that are impacted by a variety of short-term effects, we are confident in the underlying strength of our business and the actions we are taking to navigate the uncertain global trade environment.”
He continued, “The launch of ReSound Vivia is progressing very well and is even exceeding the launch metrics from prior successful product introductions. We remain confident in the attractiveness of our markets and our ability to drive profitable growth over time.”
Looking Ahead
GN Store Nord’s outlook for the rest of 2025 remains cautiously optimistic. The company expects continued market share gains in the Hearing division, although macroeconomic uncertainties may persist in the Enterprise and Gaming sectors. The ongoing diversification efforts and cost mitigation strategies are expected to support the company’s long-term growth trajectory.