Interim Report Q3 2020

GN Audio +72%, GN Hearing -11%, GN +29% organic growth and EBITA at DKK 795 million

• During Q3 2020, GN was affected in two ways by COVID-19: (i) GN Audio experienced strong demand as enterprises continued to invest in employees working from home, and (ii) GN Hearing experienced emerging recovery with continued impact from local restrictions
• Leverage of 2.2 times net interest-bearing debt to EBITDA
• Operating in both the hearing aid and audio space, and with no forward integration, is beneficial for GN during these challenging times. GN delivered an EPS growth of 84% in Q3 2020 reaching DKK 4.78, including gain from legal settlements and litigation

- - GN Store Nord

• GN delivered strong 29% organic revenue growth in Q3 2020
• Free cash flow excl. M&A was DKK 612 million in Q3, reflecting the strong growth
• The financial guidance for 2020, upgraded on October 9, 2020, is confirmed. Due to the COVID-19 situation, it must be stressed that the basic assumptions behind the guidance remain significantly more uncertain than normal

- - GN Hearing

• GN Hearing experienced emerging recovery with organic revenue growth of ­‑11%, compared to an organic revenue growth of -54% in Q2 2020
• Encouraging initial reception of ReSound ONE across all key markets with positive launch feedback in a world still impacted by COVID-19
• EBITA was DKK 169 million in Q3 2020 compared to DKK 283 million in Q3 2019 due to the decline in revenue more than offsetting OPEX reductions
• Free cash flow excl. M&A was DKK 47 million in Q3 2020 compared to DKK 289 million in Q3 2019, reflecting the lower revenue level and channel investments

- - GN Audio

• GN Audio experienced outstanding 72% organic revenue growth in Q3 2020, driven by continued very strong demand for enterprise products combined with significant increase in production capacity. Furthermore, the consumer segment returned to strong double-digit growth in the quarter
• EBITA increased by 129% to DKK 664 million (including gain from legal settlements and litigation of DKK 114 million) in Q3 2020 corresponding to an EBITA margin of 27.4%. The EBITA margin development reflects the gain from legal settlements and litigations and continuous leverage in the business offset by increased freight and production costs as a result of COVID-19, and investments in future growth opportunities
• Free cash flow excl. M&A was DKK 592 million in Q3 2020 compared to DKK 329 million in Q3 2019, reflecting the strong earnings growth and gain from legal settlements and litigation

Quotes from executive management