GN ReSound EUHA 2009 - GN Store Nord

GN ReSound
EUHA 2009
CEO GN ReSound Mike van der Wallen
October 22, 2009

Safe Harbour Statement
The forward-looking statements in this presentation reflect
management's current expectations of certain future events and financial
results. Statements regarding 2009 are, of course, subject to risks and
uncertainties which may result in material deviations from the outlook
set forth. Furthermore, some of these expectations are based on
assumptions regarding future events which may prove incorrect.
Factors that may cause actual results to deviate materially from
expectations include – but are not limited to – general economic
developments and developments in the financial markets, technological
developments, changes and amendments to legislation and regulations
governing GN’s markets, changes in the demand for GN's products,
competition, fluctuations in sub-contractor supplies, developments in
class action and patent infringement litigation in the United States, and
the integration of company acquisitions.
This presentation should not be considered an offer to sell or buy
securities in GN Store Nord.
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Slide 2

GN Store Nord
GN Store Nord
• Listed company
• Supervisory Board
• Equally ranked
CEO’s GN Netcom
and GN ReSound
Outlook 2009:
EBITA DKK ~(30)m
GN Netcom GN ReSound
Contact Center &
Office Headsets,
Mobile Headsets
Outlook 2009:
Revenue DKK ~2bn
EBITA DKK ~(100)m
Hearing Instruments
and Audiologic
Diagnostics Equip.
Outlook 2009:
Revenue DKK ~3bn
EBITA DKK ~200m
3
Slide 3

Presentation Today
Hearing instrument market
• Drivers
• Growth
GN ReSound
• Structure and brands
• Transforming GN ReSound - changes and results
• Strategy – how we are living the strategy
Product introduction
• Portfolio – benefits for dispensers and users
• Products and technology
• Demo
Questions and answers
4
Slide 4

Attractive Hearing Instrument Industry
Market volume drivers
• Ageing population
• Higher prevalence
• Improving adoption rates
• Improving binaural fitting rates
• Additional replacements cycle
• Developing countries’ potential
Solid long-term
market growth
rates expected
Million
units
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10
9
8
7
6
5
World HI market
2008 2012
5
Slide 5

Current Growth Trends in the Industry
US growth H1 2009: 4.5% including VA Europe under pressure from
decline in key markets
North America
2.8 million units
Rest of World
1.6 million units
Europe
2.9 million units
APAC
1.7 million units
Emerging markets experience
solid growth rates
Long-term growth expectations remain solid, however, short-term market
conditions still remain soft:
• Overall hearing instrument unit growth is modest
• Customers currently trading down
• US growth driven by public sector (VA)
• Solid unit growth in emerging markets
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6

Presentation Today
Hearing instrument market
• Drivers
• Growth
GN ReSound
• Structure and brands
• Transforming GN ReSound - changes and results
• Strategy – how we are living the strategy
Product introduction
• Portfolio – benefits for dispensers and users
• Products and technology
• Demo
Questions and answers
7
Slide 7

GN ReSound Structure and Brands
• The GN ReSound Group is one of the world’s largest providers of hearing
instruments and diagnostic audiological instrumentation
• GN ReSound sales totaled DKK 3,178 million (EUR 427 million) in 2008
• With headquarters in Denmark, GN ReSound employs approximately 3,450
employees in 22 countries, and markets its products in more than 90 countries
Hearing aids Instrumentation
Premium full line
wholesale brand
World’s leading
retail brand
Wholesale guerrilla
World leading
brands
8
Slide 8

1
2
3
Restructuring Program Initiated Q1 2009
Optimize for
current business
Explore and exploit
efficiencies
Long term efficient
structure
Target Status
Re-align organization
to new economy and
save cash
Review of current
business procedures
with regards to cost
and terms
Transformation of
organization –
Rethinking structure
and competitive
levers
� Positions reduced by
more than 250
� Business reviewed
� Consolidation and focus
throughout value chain
� Subsidiaries focus on
sales
� HQ relocation
� Functions consolidated
� New more lean and
commercially oriented
organization defined
9

Transformation of Organization on Track
R&D Operations Marketing Sales
• Increased focus on
platforms means
faster time to
market at lower
development cost
• Increased focus on
end user as well as
dispenser needs
• New SVP and
global organization
• Consolidation of
operational
activities and cost
• Increased
efficiency and
leverage of China
capabilities
• New SVP and
organization
• Focus on life cycle
management
• Increased efficiency
in marketing
products
Finance, HR and IT
Resized and customer focused
• Reorganization to
increase sales and
customer focus
• Global Commercial
Excellence
• Transfer and
consolidation of
local manufacturing
10
Slide 10

First Results of Transformation Showing
• Cash impact from working capital reductions H1 > DKK 100 million
• Headcount reduced from ~ 3,775 end of 2008 to ~3,450 end Q209
• Annual cost base in 2010 reduced by > DKK 200 million vs. 2008
• Increased efficiency in R&D
• Global launch of two new product families on track
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Slide 11

Current Strategic Focus
Customer focused
Market innovation – Regain position in top end
– Launch effectiveness
– Meeting needs for end-users and dispensers
Efficient
Culture
– Key accounts & tenders
– Emerging markets
– Germany and France
– Execution excellence / Reducing costs
– End to end supply chain
– Performance driven culture
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Slide 12

Recent Results of Strategic Focus
Customer focused
• Key accounts
• Emerging markets
• Germany and France
Market innovation
• Regain position in top end
• Launch effectiveness
• Meeting needs of end users
• Expanded strategic partnership with
Amplifon
• New partnership with KIND Hörgeräte
• Complete ReSound portfolio on VA
contract
• New management with more cost
efficient and customer focused sales
force setup in Germany and France
• Current launch the most complete so far
• Positive initial results and feedback
Head of KIND Hörgeräte: “GN has a convincing product roadmap and a full-line
product offering. Furthermore the 3-brand strategy includes suitable product
lines for all markets in which KIND is present with its more than 550 retail
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shops. ”
Slide 13

The Outlook for GN ReSound
Key value drivers Challenging environment
• Solid long term market growth
• Company transformation on track to
harvest profitability upside
• Reduced headcount, working capital
and cost base
• Improved cash flow, efficiency and
market focus
• Significant new partnerships and
tenders won
• Innovative pipeline focused on
regaining position in top end and with
key accounts
• Leading position in emerging markets,
which are growing double digit
• Customers trading down
during economic downturn
• Short term negative volume
growth in some markets
• Competitors and chains
buying retail aggressively
• Shorter product life cycles
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Slide 14

Presentation Today
Hearing instrument market
• Drivers
• Growth
GN ReSound
• Structure and brands
• Transforming GN ReSound - changes and results
• Strategy – how we are living the strategy
Product introduction
• Portfolio – benefits for dispensers and users
• Products and technology
• Demo
Questions and answers
15
Slide 15

Comprehensive Renewal of the ReSound
Portfolio
16

What Do Users Want?
Speech in noise
Better sound quality
Less whistle/buzzing
Lower price
More soft sounds
Longer lasting batteries
Work better on telephone
Loud sounds less painful
Speech in quiet
Better fit & comfort
Should have VC
Longer money back guarantee
Less costly to repair
95
88
85
84
83
82
82
81
81
79
77
74
73
0 10 20 30 40 50 60 70 80 90 100
% highly desirable
Source: Kochkin, MarkeTrak VI, 2005: “Incremental improvements in these areas will drive
improvements in overall user satisfaction.”
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Two Families Based on the Same Platform
For users that primarily values
options, flexibility and control – the
solution that covers all hearing needs
and losses
For users who primarily value invisibility
and complete automization – the wear
and forget solution
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Own hearing aid
ReSound Live
Market Responds Well to ReSound Live
* Source : Market test survey by ReSound
• High user satisfaction with Live
vs own hearing aid
• Good scores on key features;
Improved Hearing, Reduced
Feedback and Clarity of sound *
• Initial market response from US
in line with expectations
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Slide 19

Introduction of John Nelson
• Vice President & Head of Brand Audiology
• PhD in Speech and Hearing Sciences from the
University of Iowa
• Responsible for input to products, audiological training
materials and audiological communications
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Speech Understanding and Sound Quality
Trade Off with Current Solutions
• Directionality programs are the only proven
method to provide better speech
understanding in noise
• Still, 2 of 3 users prefer omni programs over
directionality programs, because*:
• Loss of awareness and localization cues
• Loss of full / natural sound quality
• Over-amplification of wind and internal noise
• Unfamiliar with programs and confusions when
to switch or
• Automatic program changes doesn’t always shift
correctly
Loss
of low
frequencies
Loss of
localization
cues
More
wind
noise
• Surround sound by ReSound delivers speech understanding in noise
without these drawbacks!
Source: *Walden et al (2004). “Predicting hearing aid microphone preference in everyday listening”. J Am Acad
Audiol 15:365-396.
More
microphone
noise
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Tinny,
weak
sound
quality

INTRODUCING
SURROUND SOUND
BY RESOUND
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Why Do You Go to the Movies?
Film makers use state of the art microphones to capture
environmental sounds and speech signals independently.
For the final sound track they blend these independent
inputs together in the perfect mix to create a full, rich sound
quality, that gives you a spatial awareness and sense of direction
without compromising intelligibility.
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How Does Surround Sound Apply to Hearing
Aids?
• Traditional directionality eliminates all
sounds outside the “beam”
• The result is a loss of low frequency
signals that contribute to richness,
vibrancy and a sense of awareness
• Surround Sound retains these low
frequency inputs both inside and
outside the directional beam and
blends them with the high frequency
speech cues
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Surround Sound Is Natural Sound Processing
Like with surround sound the normal unaided ear processes
bass and treble frequencies differently, because of the way
sound waves travels around the head
Right ear
Front
Bass (low frequencies) enters the human
ear directly, creating a full richness of
sounds.
The natural ear response pattern match
the omni-directional pattern of a hearing
instrument.
Treble (high frequencies) are shaped by
the outer ear, to produce a directional
effect that gives better speech
understanding and localization.
The natural ear responserate is the model
for directionality patterns in hearing aids
25

dB
The Unique Surround Sound Processors
Makes it Possible
• At the core of the surround sound by ReSound technology package is the
unique surround sound processor, that like the natural ear processes the
low frequencies with an omni-directional response and the high
frequencies with a directional response
Traditional directionality with bass roll off
Low frequency equalization or bass boost compensation
Separate omni processing for bass frequencies
Personalized
blending point
Omni Directional
The benefits:
• Superior sound richness and
awareness without
distortion, noise, and
feedback
• Combined with improved
speech understanding and
ability to locate sounds
Hz
Hz 26
...no trade off or compensation

Improved Sound Quality for Speech
Classic directionality
On the left you will notice the speech is
missing the low frequencies
On the right side you hear a much
fuller, richer and natural sound quality
Click on the spectrogram to hear the sound
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Improved Sound Quality for Music
Classic directionality
On the left you will notice the music is
missing the low frequencies
On the right side you hear a much
fuller, richer and natural sound quality
Click on the spectrogram to hear the sound
29

Clear User Preference for Surround Sound
Traditional
directionality with
low-frequency
equalization Omni
User preferences
Omni
Traditional
directionality with
low-frequency
equalization
35 % 65 % 41 % 59 % 30 % 70 %
Surround
sound
Source: Lessius University in Antwerp, Belgium, A double blind study of sound quality for different directional schemes
Surround
sound
30

Other Key Features of the Surround Sound
Package
Sound Quality
• Warp signal processing for fast and
distortion free sound
• NoiseTracker – the best noise reduction in
the industry
• Dual stabilizer DFS feedback cancellation
without gain reduction
• NEW: WhistleControl feedback emergency
brake
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Other Key Features of the Surround Sound
Package
Speech understanding
• Natural directionality II for optimal spatial
awareness without compromise in speech
understandign
or
• Adaptive directionality with Autoscope for best
speech understanding in noise when the speaker
is in front
32

ReSound Live – Fully Featured Elegant
Design
Available in 4 new exciting form factors!!
61 71 81
BTE Silhouette
Smallest power BTE on the market
Fully featured RIE RIE with telecoil,
program button and volume control
The innovative remote microphone
model now with surround sound by
ReSound inside
Custom
New smaller CIC
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dot 2 by ReSound
• Same successful small, light and invisible design
• Now with program button and surround sound by ReSound
inside for increased performance and flexibility
35

New Master Brand Identity – More Focus
on Long Term Brand Building
A very different animal
refering back to the successful ”can
you spot the dot” campaign
Give your hearing a
surround sound experience
37

Large-scale US Market Test of ReSound Live
6
300
2,500
38

So Far Very Positive Market Feedback
“The Surround Sound technology makes
complete sense and to have a blending
point suited to the loss is ideal”
UK customer
“The live 70 is the best looking RIC I
have seen, it’s so slim, it’s so slim, it’s so
slim........”
UK customer
“Oh god, I can’t remember half the
products on the market these days,
there are so many.
Families are defiantly the way forward,
your products are now simply dot, Live
and be.
UK customer
“My first impression was that they were
more comfortable to wear; maybe
thinner or lighter. But the important
thing was that the sound was so natural!
And the new directionality really works.”
US patient
”Our pre-launch event
went really well – we sold
more than expected”
General manager Italy
”On our San Francisco
Launch event we sold
70% more units than
we planned!”
SVP North America
39

Thank You
Q&A