AudiologyNOW! 2014 March 28, Orlando FL
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1 AudiologyNOW! 2014 March 28, Orlando FL Niels Jacobsen, President & CEO, William Demant Søren Nielsen, President, Oticon Jes Olsen, President, Oticon Medical
2 Agenda William Demant Group General update Diagnostic Instruments Hearing Instruments Oticon Bernafon Sonic Oticon Medical Outlook for 2014 Q&A 2
3 William Demant broad hearing health care focus The journey Long-term approach Three hearing aid brands, well-positioned in all price and product segments Implant market, strong positioning with high growth potential Six diagnostic instrument brands, world leading Strong distribution channels Synergies in knowledge sharing and R&D 3
4 Hearing-related product offerings William Demant has the widest product offering within hearing healthcare Offerings Hearing Instruments Cochlear Implants Bone Conducting Systems Diagnostic Instruments 4
5 William Demant Group offerings Strong brands within all business activities Offerings Hearing Instruments Cochlear Implants Bone Conducting Systems Diagnostic Instruments Related areas 5
6 General update
7 Product and channel mix impact Mainly serving a market niche Yearly unit growth of 3-4% Independents/ buying groups William Demant 1999 Public channels Retail chains Low-end Mid-priced High-end 7
8 Product and channel mix impact Full-line supplier in all channels and product categories Yearly unit growth of 3-4% Independents/ buying groups Public channels William Demant 2014 Retail chains Low-end Mid-priced High-end 8
9 Retail status Warming up after cold start Dispenser relations strengthen sales We support start-ups, expansions and succession of profitable distribution businesses Although dilutive, our retail business is highly value-adding Consolidation and integration projects in several countries e.g. in the USA Retail in North America hit by extreme weather conditions in January and February 9
10 Continuous cost savings Shared services, centralised activities Consolidating custom production in key locations e.g. in Poland New global distribution centre in Poland, on schedule, planned go-live end 2014 Roll-out of new ERP backbone in Wholesale Retail consolidation continues as planned Consolidation of US Retail activities progressing as planned 10
11 Diagnostic Instruments
12 Diagnostic instruments Consolidation Integration in of the many acquisitions in US nationwide multi-brand distribution structure in place Service and calibration business expands internationally Introduction of new products in 2013 makes way for sales in 2014 Corti and AudioStar Pro (Grason-Stadler) EyeSeeCam vhit (Interacoustics) 12
13 Hearing Instruments Søren Nielsen, President, Oticon
14 Hearing Instruments Agenda Oticon product update Completing the Inium platform Wireless and connectivity BrainHearing TM Bernafon Sonic 14
15 Inium platform in all three performance categories 15 Oticon completes the performance line in Q1 2014
16 Oticon product portfolio 16 Hearing aid technology that supports the way the brain works
17 Completing the new Inium platform 17 Oticon product portfolio
18 Oticon Paediatrics 18 Oticon Sensei The most value-packed, dedicated paediatric hearing instrument ever Premium audiological performance combined with specialised features that assist with the practicalities of fitting children A highly flexible instrument adaptable to all children in changing situations and environments Initial Market feedback: Extremely well received product family worldwide price/technology ratio very appropriate for paediatrics Several leading paediatric institutions are becoming Oticon customers Customers appreciate the clinical evidence supporting all major features in Sensei it provides a sense of security that the products truly help the children
19 Oticon Paediatrics 19 Oticon Sensei Clinical Evidence LAUNCH SEPTEMBER 2013 International Oticon Pediatric Symposium At COMO June 4 th, 2014 LONG TERM Sep Speech Guard Vanderbilt Uni. Pilot Study Oct Sensei Pro with Speech Guard Vanderbilt Uni. (Clinical trial) Nov Compression speed and children s ability to process linguistic information Uni. Of Arizona (Independent) Dec Validity of EasyRECD UWO (Independent) April 2014 VoicePriority Uni. Of Texas (Independent) 2014 SmartFit trainer Clinical Application Multi-site study run by Gina Angley at Vanderbilt Timing of study finalisation
20 Study example: Testing Speech Guard E on children and adults comparing with normal compression systems 20 Speech Guard E by Andrea Pittman: Results Word categorisation performance: Children and adults with hearing loss achieved optimal performance with adaptive compression i.e. Speech Guard E Performance level of listeners: Adults and children with hearing loss may derive significant benefit from hearing instruments that employ adaptive amplitude compression (i.e. Speech Guard E), especially in complex listening environments. Andrea Pittman et al. (2014), Fast, slow and Adaptive Amplitude Compression, University of Arizona, Approved JAAA.
21 Connectivity update
22 Oticon joins Apple s Made for iphone programme 22 Solution available for all current and future users at all price levels Oticon joins Apple s Made for iphone programme with its new connectivity solution for hearing instruments Available for all existing and future users of Oticon s wireless instruments Available for hearing instruments across the price spectrum Launch March 2014
23 Made for iphone advantages 23 Superior audiological benefits and low power consumption Superior audiological performance, true binaural signal processing and low power consumption Hands free streaming to the ear conversation or music Remote control app: Programme choice, volume control, input source control All styles, all price levels Available for existing base of approximately two million users Streamer Pro 1.2 App supports iphone 5s, iphone 5c, iphone 5, iphone 4s and iphone 4. Apple and iphone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.
24 EHIMA takes lead on common industry standard Bluetooth Smart 24 Wireless interaction with all multimedia devices Partnership between the world s largest association of hearing instrument manufacturers, EHIMA, and the group behind the largest wireless technology, Bluetooth SIG Advantages: One common standard so all new hearing instruments may connect to any mobile/smart device Bluetooth can work with an application on the smartphone or tablet you already own Low power consumption
25 TM BrainHearing
26 BrainHearingTM 26 It all starts with the brain Our audiological focus is to support the way the brain makes sense of sound We focus first on what the brain needs in order to make sense of the sound it receives from the ears Rather than focusing on sound or the ears, we think brain first
27 BrainHearing TM 27 Making sense of sound The brain needs to perform four key functions in order to be able to make sense of sound. Because the brain performs these functions simultaneously, we have to understand all of them and support them continuously. 1. Orient where does the sound come from? 2. Recognise who/what makes the sound? 3. Separate what sound is relevant? 4. Focus what can be omitted?
28 BrainHearing TM 28 Sound is just one thing, making sense is everything Through Inium, the Oticon BrainHearing TM technology combines four core audiological features - Spatial Sound, Speech Guard, Free Focus and YouMatic - enabling the individual to: Organise sounds and orient itself within its surroundings Hear better in challenging environments Understand speech over other noises, engage in conversation and switch focus when necessary Enjoy an enhanced, enriched listening experience according to its own sound preferences and tastes
29 Superior performance, Made for iphone, BrainHearing TM 29 Oticon summary Continued roll-out of Inium products Strong feedback and proof for benefit of audiological features Oticon joins Made for iphone programme Oticon supports EHIMA initiative on future platform for connectivity Oticon s BrainHearing TM approach: Links key features and how the brain makes sense of sound
30 Bernafon product portfolio 28
31 Carista 5 3: Now introducing in the USA Carista 5 3 comes in two complete families offering wireless connectivity to SoundGate 2 and accessories, placed in the high-volume midrange category, based on proprietary Bernafon Signal Processing features 29
32 30 Sonic product portfolio
33 Sonic product portfolio Flip 40 New technology level available. The Flip family now brings product options from Premium to Basic The new NanoRITE form factor available at all Bliss and Charm performance levels Built on Sonic s Speech Variable Processing platform including benefits like Speech Priority Noise Reduction and easy-to-use controls Available in the US market New connectivity accessories SoundGate 2, TV Adapter 2, Phone Adapter 2 A complete product offering based on the US legacy 31
34 AAA M a r c h, Oticon Medical J e s O l s e n, P r e s i d e n t
35 Agenda Oticon Medical, status and Ponto Plus first reactions Neurelec, status and integration activities BCI, new partnership to develop the next generation of transcutaneous bone conduction devices 33
36 Oticon Medical Status Increasing market share driven by new products and new countries Still expanding into new regions China and Hong Kong South America Australia and New Zealand New Ponto Plus BAHS sound processor system Best of hearing aid processing inside (Inium platform) Most powerful ear level processors with superior feedback suppression Only full family of wireless sound processor 2,4 GHz Bluetooth enabled to provide wireless access to whole new range of possibilities Preferred hearing performance in bone anchored hearing systems 34
37 Neurelec status and integration activities Follows integration plans and growing momentum in new markets due to sales focus and new products We are following the CI integration plans Heavily increased expenditures in R&D, product marketing and sales management Distributor set-up almost aligned with WDH Significant increase in local sales activities and support capacity Reorganised R&D to place tasks geographically so synergies can be harvested most efficiently Preparations to become a global CI manufacturer Strong positive feedback on new Saphyr NEO speech processor XDP sound processing and Voicetrack noise reduction provide patients with significantly better hearing outcome and make products easier to fit 35
38 BCI The right concept for next generation bone conduction device New partnership with Prof. Bo Håkansson, Chalmer University, Gothenburg the original inventor of the BAHA product system Access to +10 years of university research into bone conduction and technology Miniaturisation of vibrator Maximising efficiency of the wireless powerlink Finding the place of highest sensitivity on the skull in order to provide best amplification What s now A few years of industrialisation before launch under Oticon Medical brand 36
39 Bone Conduction Devices Direct drive - bone conduction Skin drive - bone conduction Percutaneous Transcutaneous active Implanted transducer Conventional Headband or Eyeglasses Transcutaneous passive Implanted magnet Baha Ponto BCI BoneBridge Sophono Baha Attract 37
40 Direct bone conduction provides more gain and output Increased low frequencies help to provide better loudness sensation and voice quality More high frequency gain delivers important speech cues for normal language development Wider bandwidth helps with speech perception, sound quality and understanding speech in noise MFO curves * The MFO curve from the BAHA 4 Connect official data sheet was corrected by the effect of skin dampening (Verstraeten et al., Otol & Neurotol; 2008:30) 38
41 Outlook for 2014
42 Outlook for 2014 Continued growth In 2014, we expect to continue to deliver growth in all our business activities Acquisitions are expected to contribute by 3-4% to Group revenue in 2014, mainly driven by acquisitions made in Based on foreign exchange levels in late February, more than half of the positive impact from acquisitions will be offset by changes in exchange rates Exchange rates are expected to negatively affect the Group s operating profit (EBIT) in 2014 by around DKK 100 million compared with 2013 We expect to be able to buy back Company shares worth more than DKK 500 million in 2014 We expect to see growth in EPS of 5-10% in
43 Q&A
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