GN Store Nord earnings below forecast on weak headset division

April 29
8:59 AM 2015

GN Store Nord reported first-quarter core profit a touch below forecasts on Wednesday and its shares fell as its headset division disappointed despite a strong performance by the larger hearing aid segment.

The Danish company said earnings before interest, taxation and amortization rose to 291 million Danish crowns ($43 million) from 253 million crowns a year earlier, below an average estimate of 303 million crowns in a Reuters poll.

The company, the third largest hearing aid maker in the world, still sees 2015 earnings before interest tax and amortization (EBITA) of more than 1.48 billion crowns and organic revenue growth of more than 8 pct.

Sydbank analyst Morten Imsgard described the two divisions as "night and day".

"The hearing aid division is performing really well, with new product launches helping from March and the lift in earnings. "But the headset division is struggling with weak markets, just as we saw with main competitor, Plantronics," he said.

Shares in the stock fell by as much as 2.7 percent in morning trade but had recovered to trade 1 percent lower at 144.60 Danish crowns each.

The Danish company wowed the market a year ago when it launched a hearing aid developed with Apple which connected directly to iPhones to stream voice and music from the devices.

On Wednesday, it said U.S. sales grew and it increased its market share. Its ties with Apple were strengthened when it developed a ReSound app for the Apple Watch, when the wearable device was launched by the U.S. tech giant.

But growth in the headset segment, where GN Store Nord produces the Jabra devices found in many offices and call centres around the world, were sluggish and results for the division were hurt by adverse foreign exchange movements.

"In general, the stronger dollar is positive for GN Store Nord and especially for ReSound. Looking into 2016, we expect a three-digit million contribution to the bottom line (in Danish crowns)," Chief Financial Officer Anders Boyer told Reuters.

"Netcom however, has more expenses in dollars than income, and therefore reacts negatively on the strengthened currency."

Boyer denied speculation that GN Store Nord was interested in buying the Danish luxury stereo and television set maker Bang & Olufsen but did say the company wanted to develop a third branch of its business.

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