Demant A/S

Interim Report 2020 - Seite 2

After the reporting period, the strong recovery of the hearing healthcare market has continued. The current revenue level for the Group (including EPOS) represents growth in local currencies of -5% to 5% compared to last year, and the Group is profitable at this level.

Growth in local currencies*	H1 2020	Mid-August	H2 outlook
Group revenue:	-18%	-5% to 5%	5% to 15%
Hearing aid wholesale	-25%	-15% to -5%
Hearing aid retail	-31%	-10% to 0%
Hearing Implants	-18%	-20% to -10%
Diagnostics	-2%	-5% to 5%
Communications (EPOS)	-	-
Capacity costs (OPEX)	-4%	-5% to 5%

* Please note that we have previously disclosed revenue run rates compared to initial expectations.
However, growth rates shown above compare to the corresponding period last year.

However, we still see significant uncertainties about the normalisation of the hearing healthcare market and thus of our business. In the past few months, the strong recovery of the hearing aid market has primarily been driven by users that were not serviced during the period of widespread lockdowns, while uncertainties persist regarding new lead generation at retail level. Furthermore, the Group’s exposure to developments in large government systems and hospitals – not least VA in the US and the NHS in the UK – pose a risk due to slow recovery in these channels. Lastly, reinforced lockdown restrictions pose a risk, as local outbreaks continue to occur in a number of markets, including in our main market, the US, and in emerging markets. In contrast to the severe impact of coronavirus on our hearing healthcare businesses, EPOS continues to benefit from the surge in demand for virtual collaboration tools. While we intend to materially ramp up sales and marketing activities to drive sales, significant uncertainties persist when it comes to the actual sales and marketing costs and to the pace of new hirings in the second half-year. Additionally, there is high uncertainty on freight costs.