Earnings call transcript: GN Store Nord sees Q1 2025 revenue decline, stock falls 8.6%

GN Store Nord’s earnings call for the first quarter of 2025 revealed a mixed bag of results, with the company reporting a decline in organic revenue and a subsequent drop in stock price. The company’s earnings per share of $0.94 and revenue of $2.5 billion did not meet market expectations, leading to an 8.6% decrease in stock value. According to InvestingPro analysis, GN maintains a "Fair" financial health score of 2.36, suggesting stable fundamentals despite current challenges. The company remains optimistic about future growth, supported by new product launches and strategic initiatives.

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Key Takeaways

• GN Store Nord’s Q1 organic revenue declined by 3%.
• Stock price fell 8.6% following the earnings announcement.
• The company launched the VIVIA hearing aid, showing promising initial results.
• GN’s gaming division experienced 11% organic growth.
• GN plans to diversify manufacturing away from China.

Company Performance

In the first quarter of 2025, GN Store Nord experienced a 3% decline in organic revenue, driven by a 1% decrease in the hearing division and a 9% drop in the enterprise division. However, the gaming division showed resilience with an 11% increase in organic growth. The company maintains a strong gross profit margin of 53.2% and reported an EBITA of DKK 300 million. InvestingPro data shows the company generated $361.9 million in levered free cash flow over the last twelve months, demonstrating solid operational efficiency despite challenges.

Financial Highlights

• Revenue: Down 3% year-over-year.
• Earnings per share: Not provided in detail, but missed market expectations.
• Gross Margin: Improved by 2 percentage points.
• Reported EBITA: DKK 300 million.
• Negative Cash Flow: DKK 395 million (excluding M&A).

Market Reaction

GN Store Nord’s stock price dropped by 8.6% following the earnings announcement, reflecting investor disappointment with the revenue decline and missed earnings expectations. The stock currently trades at $13.64, down 47.1% over the past year and significantly below its 52-week high of $34.51. InvestingPro analysis indicates the stock is currently undervalued, with a P/E ratio of 13.4x and strong free cash flow yield. This movement contrasts with broader market trends, indicating specific concerns about GN’s performance.

Outlook & Guidance

GN Store Nord provided a cautious outlook for the year, forecasting full-year organic revenue growth between -3% and +3% and an EBITA margin of 11% to 13%. The company expects free cash flow around DKK 800 million, with varying growth expectations across its divisions. According to InvestingPro, analysts maintain a consensus "Buy" recommendation, with revenue growth forecast at 2% for FY2025. The company’s divisions show mixed expectations: 5% to 9% for hearing, -8% to 0% for enterprise, and -6% to +2% for gaming.

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Executive Commentary

Peter Carlstrommer, Group CEO, expressed optimism about GN’s future despite short-term challenges, stating, "While we acknowledge our Q1 financial results were influenced by very short-term factors, we are optimistic about the underlying strength of our business." Group CFO Sjerdot highlighted the company’s proactive measures to navigate uncertainties, saying, "We are actively implementing initiatives that enable us to navigate through a world filled with significant uncertainties."

Risks and Challenges

• Supply Chain Diversification: Moving production out of China could pose challenges and costs in the short term.
• Economic Uncertainty: Global economic conditions could impact the enterprise division’s performance.
• Market Competition: Maintaining leadership in competitive markets like gaming and enterprise requires continuous innovation.
• Tariff Impacts: Changes in tariffs could affect GN’s cost structure and pricing strategies.
• Consumer Sentiment: Fluctuations in consumer demand, especially in gaming, could impact revenue growth.

GN Store Nord’s Q1 2025 earnings call highlighted the challenges it faces in a volatile market environment. However, with strategic initiatives and new product launches, the company remains committed to achieving its growth objectives.

Full transcript - GN Store Nord (GN) Q1 2025:

Rune Senne, Head of Investor Relations, GN Store Nord A/S: Hello, everyone, and welcome to GN’s conference call in relation to our Q1 report announced last night. Participating in today’s call is Group CEO, Peter Carlstrommer Group CFO, Sjerdot and myself, Rune Senne, Head of Investor Relations. The presentation is expected to last about twenty five minutes, after which we’ll turn to the Q and A session. The presentation is already uploaded on gn.com. And with that, I’m happy to hand over to Peter for some opening remarks.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Thank you, Rune, and thank you all for joining us here today. This is a special call at special time given the elevated uncertainty we experience around the world. Today, we will start our presentation with our Q1 highlights and then we will spend some time at the end of the presentation on how we are approaching the challenges we are facing from the fast evolving global trade environment. Hopefully, this will provide you with an increased level of understanding and clarity, as well as better visibility on the actions we are taking to navigate the situation well. Let me start with the highlights on Slide four.

While we acknowledge our Q1 financial results were influenced by very short term factors, we are optimistic about the underlying strength of our business and we are confident in the proactive steps we are taking to navigate uncertain global trade environment. In hearing the launch of recent Vivya is progressing well, even surpassing the launch metrics of our previous successful product introductions. We have experienced healthy market share gains in all the markets where Vivya have been launched, which bodes well for our business in the coming quarters. In Q1, we experienced a weak U. S.

Market and also relatively weak international markets. We also had some slowdown of our business due to the ongoing Vivea launch. We see a stronger momentum in the market in April and we remain confident in our ability to have a strong year in Hearing, thanks to our promising launches and good execution. In Enterprise, we did see positive sellout growth across North America and rest of the world in line with what we also saw in Q4 last year. In Europe, we experienced a slowdown in the market likely related to the global uncertainty.

We experienced a somewhat weaker sell in than sell out and also had a challenge in comparison base as we successfully executed several large deals last year. Despite the challenges, Enterprise has successfully maintained a strong market leading position by holding share across segments. Thanks to our strong pricing discipline, our margins also have remained robust. In gaming, we continued a strong momentum from Q4, achieving double digit organic revenue growth once again and gaining market share in a competitive gaming gear market. Furthermore, our strong execution was reflected in our margins as we delivered a double digit divisional profit margin during the quarter that typically sees low revenue and margins.

Overall, this was a very encouraging development for gaming. On a group level, lean is taking a prudent approach implementing the necessary actions to safeguard our business from both the direct and indirect tariffs from the global trade situation. We will cover this further later in our presentation. And with that, I’m happy to hand it over to for group numbers during the quarter.

Sjerdot, Group CFO, GN Store Nord A/S: Thank you, Peter, and thank you all for being here with us today. As Peter mentioned, Q1 presented some challenges and introduced uncertainties on global trade. However, by concentrating on the business factors within our control, DN executed well under these circumstances. We are actively implementing initiatives that enables us to navigate through a world filled with significant uncertainties. In summary, our organic revenue growth ended at minus 3%, excluding the wind down, influenced by a slight decline of minus one in Hearing and a minus 9% in Enterprise due to the sell in pressures and the high comparison base.

This was partly offset by a strong performance in gaming, which achieved 11% organic growth, including the wind down. Our organic growth was minus 8%. While Q1 showed strong improvement in our gross margin and the combination of a challenging top line and launch driven investments resulted in an EBITA margin of 8%. Our cash flow was affected by the traditional seasonality of working capital in Q1, leading to a negative cash flow of minus DKK395 million, excluding M and A. Now let’s move to the P and L details on Slide six.

As previously mentioned, the three divisions faced some challenging market conditions, resulting in an organic revenue growth of minus 3%, excluding the wind down effect. Despite the mixed top line performance across our divisions, our gross margin remained strong, showing an improvement of two percentage points compared to quarter one of last year. This positive result was achieved even with the negative business mix and a slight impact from the tariffs. Our success can be attributed to our strong pricing discipline and the anticipated benefits from the One GN integration. Reported EBITA reached DKK300 million, reflecting the top line developments and some negative operating leverage.

Now let’s move to the Slide seven to explore the cash flow performance. As a result of the revenue impact, our operational cash flow experienced a slight decrease compared to Q1 of last year. As anticipated, we faced a negative impact from the working capital due to traditional seasonality, leading to a negative cash flow of minus DKK395 million, excluding M and A. Given the seasonality in cash flow and the lower absolute profitability in Q1 of ’twenty five, our adjusted leverage concluded at 4.1 times. With that recap of our group performance, I’m pleased to hand you back to Peter for additional insights across the three divisions.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Thank you, sir. Let me start with our Hearing division. In Q1, we executed strongly in the flat market. The VIVIA launch is progressing very well, which I will come back to soon. However, as you would normally see, we did also experience some slowdown of existing products in anticipation of the upcoming product introductions.

In total, our organic revenue growth ended at negative 1% in the quarter. Our gross margin came in a little lower than last year, which is primarily due to a country mix and the disposal of Danske Horse Center, which we executed last year. Sales and marketing costs increased by 12% compared to last year to support the launch activities related to Risanvivya and Risan Savvy. As a result of the gross margin development and our launch activities, our divisional profit margin ended at 28.4%. Let me move to Slide 10 for an overview in the initial phase of the Vivya launch.

Just over eight weeks into the launch, we’re excited to share the initial success of recent Vivya. At this point, we have got a valuable data, particularly for our ReSound commercial business in The U. S, where we also can compare the data with earlier product introductions. Since launch, we have seen a double digit increase in the amount of customers who have been trained compared to the similar time period with Resonnexia. This increase in awareness has also translated into the growth of more than 20% in customers who placed at least one order for Vibya.

Also encouragingly, observed an increase of more than 30% in repeat customers compared to what we experienced with Nexia at the same time of the launch. We also see this success translates into market share gains where we have launched, which is great to see. Although VIVIA was launched in only a few countries during the first quarter, now have multiple launches planned for the coming months. VIVIA will be available globally by the end of Q2 when under a few exceptions. Additionally, we are pleased to confirm that Vivya will be available at VA as well, part of the new five year contract, which we have been awarded.

With this, let me move to Slide 11 and Enterprise. During the quarter, the Enterprise division delivered a negative 9% organic revenue growth due to challenged European markets. While we did experience some pressure on sell in, the sell out growth was somewhat stronger in the quarter. Despite the negative top line development, the gross margin improved around 56%, reflecting strong pricing discipline and a limited negative impact from tariffs in the quarter. Sales and distribution costs in the division increased by 8% compared to last year, a channel investments we initiated in the beginning of the quarter to enable revenue growth in assumed recovering enterprise market.

Divisional profit margin ended at 33%, positively impacted by gross margin improvement, but offset by development in top line and sales and distribution costs. Moving to the next slide. To provide some additional insights into the enterprise revenue development in Q1, let’s examine the dynamics of sell in and sell out as well as historical seasonality. Sell out growth was positive across North America and the rest of the world. However, Europe continues to face challenges due to the economic downturn in some major European economies.

Due to increasing global uncertainty, sell in experienced significant pressure, particularly in Europe as well as in North America, while the rest of the world delivered slightly positive growth. It’s also important to consider the comparison base from last year as Q1 of ’twenty four reflecting several larger deals that positively impacted our revenue. Over the past ten years in enterprise, we typically observe a slightly lower absolute revenue in Q1 compared to the rest of the year, which is normal. So while Q1 started a bit softer than we had anticipated, we are generally in line with some of our historical trends. Despite the current downturn, we firmly believe that the long term attractiveness of the enterprise market remains strong, driven by hybrid working and ongoing upgrade of collaboration tools to create a seamless and efficient meeting experience.

Now let’s move to Slide 13 for more details on our Gaming division. The Gaming division delivered strong results in Q1 with 11% organic growth compared to last year, reflecting market share gains in a challenged gaming gear market, which sharply declined in consumer sentiment, in particular in The U. S. With a successful wind down of the consumer business, overall revenue growth of the division was negative 18%. Our gross margin for gaming improved significantly to almost 36%, supported by strong pricing discipline and benefits from continuous synergy realization from the one g and integration.

Sales and distribution costs decreased 10%, reflecting structural savings from the wind down, partly offset by channel investment to support the current strong momentum. Altogether, the divisional profit margin ended at 12.9 enabled by strong sales momentum, gross margin improvements and positive operating leverage. And with that overview of the Q1 performance, let’s move to the next section of the presentation to discuss the trade environment, mitigation actions and assumptions behind our guidance. Let me start with recognizing that uncertainty is higher than normal and the policies around trade are changing at a rapid pace. We have approached this with a focus on flexibility, speed and execution.

The key initiatives we’re taking at this time include, firstly, we’re accelerating the diversification of our manufacturing footprint to ensure we can produce our products in different locations and if needed in locations outside of China to The U. S. Market. Secondly, we’re responding swiftly from a commercial perspective as we just announced price increases across enterprise and gaming for The U. S.

Market. And thirdly, we’ve taken several cost and cash flow initiatives to protect our financials as we’ve gone through this period of change. While the short term market and business outlook is uncertain, we remain confident in attractiveness of our markets and our ability to drive profitable growth over time. Moving to Slide 16 and our diversification strategy. Towards the end of last year in enterprise, most of our manufacturing activities took place in China.

However, due to the great work of our operations team during the last eighteen months, we’re currently executing a fairly quick diversification strategy, meaning towards at the end of the year, we will be in a situation where we can manufacture most of our product variants across countries like Malaysia, Vietnam and a small part of Europe. In gaming, we had a similar exposure towards the end of ’twenty four as an enterprise. Although we started diversification later in enterprise, we will also be able to manufacture most of our products variants outside of China towards the end of ’twenty five. In gaming, we’re also benefiting from some of the recently announced electronics exceptions when important to The U. S, which help us to some extent also.

Finally, we’re fairly well diversified already today in hearing, which we have been for ten years now. All products in U. S. Can be manufactured as a combination of Denmark and Malaysia. Moreover, it’s still our assumption that the hearing aids remain exempted from tariffs.

Moving to Slide 17 and assumptions behind the impact across our divisions from a revenue point of view. We are fundamentally basing our forward looking guidance on an assumption that the current tariff rates will stay constant throughout the year. On the hearing business, the global markets, especially The U. S. Have started a little bit slower than what we had expected due to the sudden decline in consumer sentiment.

We are encouraged though by the April market behavior and our base case is that the market will strengthen in the coming months and for the year grow between 35%. As I mentioned earlier in the presentation, recent Vibya has also had a strong start and we do expect this momentum to continue allowing us to take further market shares in ’twenty five. As a result, we continue to believe that Hearing will contribute with an organic revenue growth of 5% to 9%. As for enterprise, we need to recognize the uncertainties our customers are facing. The impact from the evolving trade environment is naturally very difficult for us to quantify.

Our forward looking statements are coming with great uncertainty than the normal. However, due to an uncertainty, we do take a cautious assumption behind the market development and believe that the market recovery that’s been underway for a while likely will stall in the coming periods. We are focusing on what we can control. As earlier mentioned, accelerating our supply chain diversification. And on top of this, we have announced price increases for U.

S. Customers to further mitigate the tariff impact. All in all, we believe that our Enterprise division will contribute organic revenue growth between negative 80%. As for gaming, we’re also experiencing uncertainty. With the ripple effects from the global trade situation and the muted global consumer sentiment, we believe that the market will grow less than normal this year.

As was also the case with enterprise, we are proactively accelerating our diversification efforts of our supply chain and have also announced price increases for The U. S. Market. All in all, we’re therefore believing that gaming will contribute with an organic revenue growth of negative 6% to positive 2% growth. And with that, I’m happy to hand it back to for an overview of the actions we take on the cost side and the related impact on our guidance.

Sjerdot, Group CFO, GN Store Nord A/S: Thank you, Peter. We are executing a wide range of cost containment initiatives to mitigate the direct and indirect effects of the tariff situation. As Peter mentioned earlier, we have now accelerated our supply chain initiatives, including our general diversification. In addition, we will share part of that direct tariff cost with our suppliers. We’ve also implemented certain cost avoidance initiatives, including hiring freeze and certain global travel reductions.

Moreover, we’re also limiting the use of external consultants to reduce other OpEx across the divisions and functions. Finally, we’re also pausing certain noncritical projects and activities. Some of these initiatives will have an OpEx impact, while some will have a CapEx impact. This leads me to Slide 19 and the impact across our headwinds and tailwinds compared to our guidance from February. In February, we assumed an EBITA margin of 12% to 14% for the year.

As a consequence of the assumed negative demand impact across Enterprise and Gaming, following the global uncertainty, we expect a negative impact from operating leverage due to the lower revenue assumption. On top of this, there will be a direct tariff impact following the tariff rates as of today that we assume will stay throughout the year. This combined impact is simplified with the red box. As is illustrated in green, we expect to be able to mitigate the majority of the negative impact. Firstly, it is important to remember that we have been preparing for the supply chain diversification during the last eighteen months, and now we are even accelerating this project.

Secondly, we are increasing prices across enterprises and gaming, as Peter mentioned earlier. Thirdly, we are executing the cost reduction initiatives, as I mentioned on the prior slide. And finally, The U. S. Has weakened in the last three months.

So what we assumed in February would be a headwind is now likely turned into a small tailwind instead. So to conclude, despite the quite significant direct and indirect impact from the tariff, we will be able to mitigate the majority within the financial year of 2025. We are continuously assessing the developments and additional prudent and diligent actions will be taken as needed going forward if deemed necessary. Moving to Slide 20 and the financial guidance. Applying the divisional assumptions Peter mentioned earlier leads us to a group organic revenue growth of minus three percent to plus 3%, excluding the wind down impact.

As mentioned in the previous slide, we are essentially able to mitigate the majority of the direct and indirect impacts from the trade situation leading to an EBITA margin guidance of 11% to 13%, assuming that current tariff level stays constant throughout the year. Finally, with the CapEx initiatives we are temporarily pausing, we can mitigate the total absolute cash flow impact as we are continuing to expect a free cash flow excluding M and A of around DKK800 million for the year. And with that recap, I’m happy to hand you back to Thank

Rune Senne, Head of Investor Relations, GN Store Nord A/S: you, Peter and for the updates. And with that, I’ll hand over to the operator for the Q and A. Please limit your questions to two at a time, please.

Conference Operator: Thank you. We will now begin the question and answer session. Your first question comes from Martin Renaud from Nordea. Please go ahead.

Martin Renaud, Analyst, Nordea: Hi. Thank you very much for taking my questions, John and Peter. And thank you for providing so many details with this report. I think it’s highly appreciated that you’re being this transparent. I have two questions.

I might sneak in one more. But the first question is enterprise. I just really want to understand the dynamics going on in enterprise right now because if we take the enterprise performance in Q1, I guess we still have the speakerphones dragging down with around two percentage points or 2% on enterprise. And as far

Analyst: as I can recall, you also had

Martin Renaud, Analyst, Nordea: Germany hitting in June, being quite sluggish and never really rebounded, which I guess is also pulling you down, which will annualize in around June or July. And then you mentioned some large deals in Q1 last year, which I guess is also making the comps more difficult. So when I adjust for all of this, is it fair to assume that the underlying performance was more like 5% negative organic sales growth? Or would you correct me on that?

Peter Carlstrommer, Group CEO, GN Store Nord A/S: So thank you, Martin. And I think you lay out several of the ongoing dynamics here. Perhaps the easiest way to give some confidence, which points to a similar number is that the sellout growth in the quarter here Q1 was negative 5%. And we also I mean, that was essentially some level of sellout growth in The U. S.

And APAC, where we did see pressure in Europe essentially. I think there’s a lot of ongoing ups and downs as you speak to some of them. But I think the broader themes still are that The U. S. And APAC markets are still exhibiting some level of recovery.

And unfortunately, Europe is seeing a bit more of a muted development with declines even in the sellout. And then as we mentioned here in the report, it tends to vary a between quarters. But in this quarter, we saw quite a difference between the sell in and the sell out and the sell out being a bit stronger, which is of course positive for the rest of the year.

Martin Renaud, Analyst, Nordea: It makes a ton of sense. And then the second question is the cash flow guidance and to some extent the margin guidance. How much of that is within your own control? And how much of the guidance is depending on external headwinds potentially easing or not easing? And is there any upside to your guidance as it is right now if the tariffs are improving between The especially U.

S. And China? Or is that embedded in the high end of your current guidance?

Sjerdot, Group CFO, GN Store Nord A/S: Yes. Thank you for the question. I think to start off with the last, I think it’s, of course, in our opinion, we have given to the best of our ability the outlook for what we believe is a robust guidance essentially that takes some of the things that you mentioned into consideration. And it actually the midpoint assumes that tariffs, as we said, stays at current levels. I think what is in terms of your margin question first, it is so that, of course, the 7.5% EBITDA margin that we had now, given that we, on the full year, guide the 11% to 13%, it is our opinion that it is the lowest margin that we have seen here in quarter one, and we will see subsequently improvements and actually also absolute improvements in the quarters to come.

And as you would say normally, we will also see a quarter four where we are the highest because that’s where we normally have the highest profitability levels. So I think with the mitigating actions we have put in place where we will, on average, reduce or have a lower spend than what we’ve seen in quarter one and with the growth anticipated still with a strong growth in Hearing, this is why we believe margin profile is so that we can land between the 1113% and that it takes into consideration some of the uncertainties that’s out in the world today. When it comes to the cash flow, a, of course, part of what we see in the reduced top line has, in this case, a positive impact on the net working capital. That’s one of the swings positive in our favor of cash flow. And then secondarily, we are taking CapEx mitigating actions, postponing initiatives that we likely will do long term, but where we with the situation we’re in now, we can protect our cash flow.

And that’s why we can keep it at the 800,000,000 So it’s a combination of the mitigating actions and how the top line will project throughout the year that enables us to have a solid cash flow for the year.

Conference Operator: Your next question comes from Hassan Al Wakeel from Barclays.

Hassan Al Wakeel, Analyst, Barclays: Good morning. Thank you for taking my questions. Two for me, please. Firstly, on the quarter and specifically the cost profile in Q1. Could you talk to some of the moving parts there and how you think about that over the course of the year as well as potential for cost savings?

I ask given the significant miss at the EBIT level and how you square the assumed margin improvement over the course of the year in guidance with the potential for more persistent uncertainty. Secondly, could you please talk about The U. S. Hearing market in Q1 and what you’ve observed as you’ve exited the quarter and really into Q2? I guess the question is, is the recovery to more normalized U.

Growth needed to hit the growth ambition for this year? Or do you see the strong reception of the driving the improvement from here? Thank you.

Sjerdot, Group CFO, GN Store Nord A/S: I will address and I partly addressed it also before on the spending levels as we see them coming forward into the subsequent quarters. I think what we’ve seen coming out of quarter one is, I think, two things that we have seen, sales and marketing costs that’s been supporting our endeavor to launch. And as such, that’s especially true for Hearing, have seen also that impacting the divisional profit in Hearing for the quarter isolated. We do anticipate that, that levels will come somewhat down during the quarters to come. And that is actually also true when it comes to the other functional cost lines that you spoke to, that we do anticipate that the mitigation plan we are actions we are taking actually will lead to an absolute lower cost spend in the quarters to come.

And it will actually also be split on lines, whether it’s R and D, it’s sales and marketing or, for that matter, the administration line. So this is how we expect it to unfold. And I think here, we are in control of that line, whereas, of course, the top line is not only us controlling that, but for the OpEx line, this is our assumption. So you should see absolute levels come down as a consequence of the mitigating plan we are putting in place.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: And if I take the question on the Q1 in The U. S. Hearing market. As I mentioned in my opening, it was a weak U. S.

Market in Q1. And we, of course, do not know exactly what was driving it, but likely related to the overall uncertainty and the consumer sentiment. What’s encouraging is that we saw some improvements towards the end of Q1 and have seen a better April. And that goes both for the market as well as our sales numbers. So that’s why we do believe that the market will continue to recover.

And as I shared, the base assumptions for the year is a fairly normal market. We also have VIVIA. We believe strongly in VIVIA. We’re getting very good feedback, as I mentioned, and we have every reason to believe we should be able to gain market share. But still, the market environment will impact us somehow.

We’re not insulated from it, of course, even if the VIZI is strong. So I think you should also see our guidance range, the 5% to 9% growth here to factor in some of the uncertainty in the market development. I would say though that for Q2, we are confident in our ability to drive a very healthy growth in Q2 and believe we should be able to drive us towards high single digit growth in Q2 for our own business in the current market environment.

Hassan Al Wakeel, Analyst, Barclays: Very helpful. If I can just follow-up on tariffs. What is embedded in the guidance this year, if at all, from the recouping of enterprise and gaming sales as manufacturing moves outside

Robert Davies, Analyst, Morgan Stanley: of China?

Peter Carlstrommer, Group CEO, GN Store Nord A/S: The approach we have taken for tariff is that we have assumed that everything that is in place today in terms of tariffs and possible exemptions will stay in place for the rest of the year. That gives you fairly high blended tariff rate if you put it like that. So we think it’s a good base assumption. Then we don’t know exactly, of course, if there will be evolution around that. The impact for gaming and enterprise, as we guided, it’s quite a lot on top line impact.

And you will see the majority of that impact now take place in Q2 and Q3 towards the end of the year as we are making more and more movements into manufacturing locations where we can supply The U. S. Markets from other markets. China, we will see some recovery of our businesses that The U. S.

Business, I should say. That is how we think about it. Generally, we have looked on many different scenarios when we have put out this guidance because there’s so much uncertainty, of course, around the trade environment. And we believe that the guidance which we have shared yesterday afternoon is robust for the majority of the scenarios we see basically.

Rune Senne, Head of Investor Relations, GN Store Nord A/S: I guess there is some kind of interruptions in the call right now. I don’t know if you can hear me on the call. Think it’s on the moderator side. There is some problems maybe. So please hang on for a minute, and we’ll just look into that.

Veronika, Analyst: Hilarious.

Rune Senne, Head of Investor Relations, GN Store Nord A/S: I think we can hear the moderator now. Moderator, maybe if you can give it to the next one in the queue. Maybe I heard also you, Veronika, at some point. Maybe you’re still on somewhere. I guess you’re the next up in line.

So I don’t know, Veronika, if you can try to say something.

Veronika, Analyst: I’m not sure if you can hear me.

Rune Senne, Head of Investor Relations, GN Store Nord A/S: Veronika, we can hear you. So please take a long question because then everything else is fixed in between.

Veronika, Analyst: Very good. All right. Excellent. Brilliant. I’m going since I need a long one, I’m going to ask.

Great. That’s okay. The first one is just, if you can comment on the new VA contract and the likely price increases that you expect to see across your portfolio? And then specifically, can you confirm that Vidya will be launched in a separate category for dual chip hearing aids? And what kind of price premium should we be anticipating for that category?

That’s my first question. My second question is on the launch costs, the general SG and A or really selling and marketing run rate for the hearing business was substantially higher certainly than we expected. Just if you can maybe split out what the contribution of the VIZIYA launch cost was in Q1 and what you think Zorin is the right run rate for selling and marketing costs for Hearing through the remainder of the year? And then my third question is just a clarification on your tariff commentary. When you say the guidance assumes tariffs as they are today, is your assumption that in the second half of the year, the pause that is currently there on the tariff regime when it comes to the rest of the tariffs that are not implemented right now is in place?

Or do we revert to the higher rates of tariffs that were proposed on April? Thank you, guys.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Thanks, Veronika. Let me start on the VA question. First, we are pleased, of course, to confirm that we have a new five year contract in place, which we, I mean, are very happy about, of course. And Vivya will be sold into VA. And the way we have priced into the contract and be awarded is that we have a smaller price increase across the portfolio, which we think is balanced and a good outcome.

When it comes to VIVIA, there is now, as you most of you know, a dual ship category. VIVIA will be sold into that category. And as such, we’re able to get a bit of a higher price increase in VIVIA. The exact levels, Veronika, we have decided to not disclose like this, but we do think it will allow us to sell into VA in a sustainable way with, I would say, healthy margins in a fair pricing basically. Then if I when I’m talking, take your third question also and then I hand it over to for your second one.

For the tariffs, you’re right, there’s so much uncertainty. At this point in time, we have a very elevated tariff on China goods going into The U. S. Of 145%. Then we have 10% on many other countries due to the pause that was announced.

And then you have some exemptions in place in different ways. We have taken a fairly simplistic approach and say, we do believe that this will stay in place for the rest of the year. Not at all pretending we know more than anyone else on the outcome of this, of course, but there are many scenarios. And one scenario could be that some countries perhaps getting a slightly higher tariff than 10%. On the other hand, I mean, China could perhaps get a somewhat lower tariff than 145%.

And when we are modeling different scenarios, we do believe that the guidance we have given is robust in the majority of them. That’s the way we think about it.

Sjerdot, Group CFO, GN Store Nord A/S: Yes. And then to the third question sorry, the second question was on the launch cost within the hearing space. The way we look at it is that the first quarter was, as you also stated, Veronica, linked to the VIVIA launch, and that’s also how we look at it. And you should expect that the subsequent quarters, we’ll see a lower sales and marketing spend within Hearing. So I think that’s probably also what you hinted to, but that’s also how we expect it to play out.

Veronika, Analyst: Thanks, Zoran. And can you quantify, I guess, the contribution from the launch costs? Or what should be the run rate as we move for the rest of the year?

Sjerdot, Group CFO, GN Store Nord A/S: I think it’s we wouldn’t quantify it, but just I mean, look towards that we are expecting a lower level for the subsequent three quarters. And then I think that should be guidance enough that you should see it come down.

Conference Operator: Your next question comes from Martin Fakari from SEB.

Martin Fakari, Analyst, SEB: Martin Falkoway, SEB. First question on the long term outlook on margins. You say this year, you’re struggling or fighting to keep your head above water and taking all initiatives to hold back costs, you are not really coming closer to the 16% to 17 you’re promising in ’twenty eight percent for good reasons. But how can we see a credible path from here when you already have taken a lot of initiatives to cut costs, still reach this long term target given the environment we are in right now? And then second question on price increases.

Can you maybe comment a little bit on what you have seen in competition? Of course, we heard Logitech increasing prices, which is, I guess, relevant on the gaming side. But what are you seeing in the enterprise market with price changes for competition? Maybe you can comment on that.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Thanks, Martin, for your questions here. Starting with the long term margin targets of 16 to 17%, which we announced at the Capital Market Day, I mean, made a very healthy step forward on margin expansion in ’twenty four and we set out to do another step this year. And then I think we have previously communicated that it will be a steady increase over the years to reach that target. Undoubtedly, this year has thrown us a few unexpected challenges with the global trade environment. So as you recognize, this year, we will likely not be able to make the same level of margin improvement as we anticipated.

We do see though that many of the effects that negatively impact our margin now are temporary in nature. We are I mean, you’re right, we’ve taken some cost savings that we’ve taken now, but we’re also taking quite some cost increases due to this temporary nature environment and costs. And when we have moved our manufacturing to more balanced global manufacturing footprint, that in combination with the right level of price increases, we believe we will be able to climb back some of the margins. Then also some of the margins should get support from top line growth and operating leverage also over time. So we recognize it’s, of course, not moving in the right direction this year, but we do think it’s a very special year and we do think it’s more of a temporary nature, several of the effects we’re working through at this point in time.

Then on the price increases, both for gaming and enterprise, it is for The U. S. Market and the blended increases we have made both for gaming and enterprise are around 10%. You commented on some gaming. I think we’ve seen some competitors doing similar actions to us in gaming.

And when it comes to enterprise, the same there. Some competitors are also taking similar actions as we are doing pricing wise. We’re, of course, monitoring this carefully because we don’t want to price ourselves out of the market or, what should we say, upset any customers or distributor by doing the wrong things here. But I think we’re getting a good level of support from both customers and distributor for the actions we’re taking. And I believe they are found balanced, so to say, and also comparable to what we see some competitors are doing.

Robert Davies, Analyst, Morgan Stanley: You.

Conference Operator: Thank you. Your next question comes from Richard Feldman from Goldman Sachs. Please go ahead.

Peter Carlstrommer, Group CEO, GN Store Nord A/S0: Thanks very much. Good morning. Two questions from me, please. So the first one, just sort of digging into the tariff impact in a bit more detail. Could you perhaps quantify what the direct tariff impact is that you expect this year before any of the sort of the mitigations?

That would be really helpful starting point to understand the scale of the challenge this year. And then the second one, as you look to diversify your manufacturing footprint outside of China, can you sort of tell us a little bit more about what that process actually looks like? Is it a case of finding manufacturing partners? Are you expanding your own facilities? Anything you can share to help us understand what that process is actually looking like would be great and how much visibility you have on your ability to execute on that before the end of the year?

Thank you.

Sjerdot, Group CFO, GN Store Nord A/S: Hi, this is speaking on your question number one. And I think to many in many aspects, your question, I think we’ve addressed it with the slide we have up on the margin where we have actually illustrated that it is, of course, a significant impact directly from the tariffs. And that’s also how we monitor and mitigate it. So I think we wouldn’t give out a precise number, but you can see there that this is, of course, material. And as such, we are also working with a material mitigation plan where we believe that it’s quite balanced as we have three actions actually mitigating the impact from the tariffs.

So we wouldn’t give a specific one, but you can see that it is actually material in the way we’ve illustrated on the slides.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Then if I take the evolution of Okay. And if I take the evolution here of the manufacturing footprint, we brought back this slide here. Hopefully, you can see it on how we believe that this will play out over the coming periods. And if we take it from, I mean, a year ago, I would say that predominantly, we manufactured for both enterprise and gaming out of China. And already a year ago, we started to take the initiatives to create a more diversified manufacturing footprint.

We, of course, didn’t know anything about what we experience now. We did it more from a general point of flexibility and resilience. And we’re benefiting to some extent from that today because several other things and conversations have been ongoing for a longer period of time. From a practical point of view, all manufacturing, both enterprise and gaming are outsourced. So when we say we’re moving to different countries, it is about either moving with an existing partner that help us to set up manufacturing in another country or finding a new partner.

And we’re trying to do that in a way where we’re maintaining a fairly consolidated set of partners that are significant partners to us in terms of volume. So that is how we do it. And then it is quite practical work. You need to find a good manufacturing facility. You need to find local operators that can operate the manufacturers.

And then you need the manufacturing equipment. For several of our products, we actually own that ourselves. So then in some cases, we’re actually moving this manufacturing equipment from one country to another. We have fairly good line of sight of this. While it will take some time, the agreements with partners are essentially signed, and it’s all about the practical work of making this happen together.

So we are quite well advanced in locking in this transition and as such, feel quite confident on the timeline on our ability to drive this successfully also.

Peter Carlstrommer, Group CEO, GN Store Nord A/S0: Great. Thank you very much.

Conference Operator: Thank you. Your next question comes from Meyer Stefani Capasse from Kepler Cheuvreux. Please go ahead.

Peter Carlstrommer, Group CEO, GN Store Nord A/S1: Yes, hi. I think it’s my turn, but the line was really bad. Thanks for taking my questions. I have three. And I would like to start with the statement that you made about the sellout for enterprise in The U.

S, where you said like that was holding up fairly well. How much of that do you think is going to be repeated in Q2? In other words, what are you seeing in April? Because a lot of headlines suggest that there seems to be like a standstill introduced in The U. S?

That’s the first question. The second question, just for clarification to understand the dynamics, please. You say that you expect the disruption for customers to be limited due to the fact that there is available channel inventory. I guess that is then related to the fact that you’re moving more and more out of China. And in June, you’re expecting only to have a small bit coming out of China.

But then I’m going back to Veronica’s question. What if by June, it’s not a 10% tariff for other countries like Malaysia, Vietnam? Is that going to would that change the picture? And then lastly, just to confirm, Peter, did I hear you right that you said that you expect to grow Hearing in Q2 in the high single digit? If yes, can you tell us where you take the confidence from after one month?

That will be very helpful. Thank you.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Thank you so much. So if I take the questions in the order you asked them here. So the we can confirm that in North America, we had sellout growth in Q1. We do not have the April data for sellout yet available. So cannot comment on that data specifically.

But we didn’t experience any slowdown towards the end of the quarter or anything like that. So we do believe that there still is a relatively healthy market in The U. S. We also appreciate, of course, that there is so much uncertainty around both global trade, but also global macroeconomic indicators. So if anything changed dramatically, this obviously can have an impact on this also, but it’s nothing we picked up today.

Then this about how can we reduce our sell in and have a limited customer impact. I think it is a bit, as I think you said in the question here, we, of course, have distributors and resellers in enterprise. We’re selling in two steps before it need reaching our end customers. And at this point in time, we do not think it’s so productive to import goods from China into U. S.

With the high tariff levels we have. But you also we should recognize it’s a quite limited part of The U. S. Enterprise portfolio that has such tariffs. So the majority of the enterprise products already today, we can import in The U.

S. From other locations. But for those part of the portfolio where we cannot, that’s where we believe we need to rely on available inventory in the channels or in some cases also have discussions with the customers to perhaps buy other similar products that we can provide at this point in time. So we do think we have a way to navigate this. The situation is, of course, a bit unusual.

But with the help of this, believe that the customer impact, we can keep it limited. Then the third question, yes, we believe in a strong quarter here for Q2 in Hearing. We believe it will be high single digit growth in Hearing. And it is due to the launch of VIVIA essentially. As I mentioned in Q1, we launched in part of The U.

S. Market and also part of global markets. In Q2, we will launch in many more markets. And we do know that there is quite an anticipated ordering coming into the quarter and we have good momentum, a very good feedback that’s what’s behind our confidence here essentially.

Peter Carlstrommer, Group CEO, GN Store Nord A/S1: Okay, great. Thank you very much.

Conference Operator: Thank you. Your next question comes from Robert Davies from Morgan Stanley. Please go ahead.

Robert Davies, Analyst, Morgan Stanley: Thanks so much for the ones I had have been covered. Just a couple left. One, just on the VIVID launch and sort of rollout. Just be interested in just getting some of the feedback from customers, how it compares from a technology standpoint compared to, obviously, the other AI enabled hearing aid in the market? And then the second one, just sort of following up on the sort of planned sort of manufacturing split,

Martin Renaud, Analyst, Nordea: I guess. I saw your slide,

Robert Davies, Analyst, Morgan Stanley: I think it was 16 showing the planned changes between where your manufacturing locations are. Just could you quantify the costs of making that transition from the sort of heavily China dominated sort of split to the more kind of diversified breakdown by the end of ’twenty five? And what’s the backup plan if the April 2 tariffs were to come back in those regions? Are there kind of secondary locations you’re looking at that you could switch out to those very high tariff rates? Because I know some of those regions are still in the sort of 30%, forty %, fifty % range.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: You so much. Vivya, in general, has been very well received. And I think it’s for a combination of factors. I mean, in terms of its AI capabilities, it really helps to hear very well in noise. And if I compare less to our competitors and more to our previous products, it’s a real step up from where we were with Nexia that was already very good in helping people with hearing impairment to hear in noise environments.

So it’s really adding a capability here, thanks to the AI and the neural networks the hearing aid. But it also is having all the great capabilities of Nexia, the small form factors, the long battery life as well as the good connectivities. So I think it’s perceived as a very complete hearing aid with very few compromises. And I think the appreciation comes from the combination of all these attributes basically. So the reception we are getting is very positive.

Then the final way I would say is that hearing is a lot, of course, in the end how you experience the help you get. And the feedback we’re getting from users is broadly, it’s a very natural experience helping them to hear like they remember hearing in a normal way, so to say. So I appreciate it’s hard to give on a call like this the full comparison and confidence there, but the feedback is universally very strong for these different set of reasons and factors. Then your second question, I mean, we like to recognize there is a lot of uncertainty in the global trade environment and we appreciate the question what if this changed and what if that changed. And we are asking exactly the type of questions ourselves and running a lot of different scenarios and trying to have the right level of preparedness.

I think the good things with having a more diversified setup is that it’s actually possible to move products between the locations. So in the event that one of these locations would get into a very elevated tariff environment, then I think that the reaction we need to do is likely to move to other places. To open up new locations is a little bit of a longer process, but can also be done. And we have increased our capability significantly now to produce outside of China and we have a good level of preparedness to navigate. But of course, we cannot do it overnight.

So we need to factor in some level of uncertainty here, which we believe we’re also doing in our guidance. The cost involved, we have not shared that and I don’t think we will share it more than in the guidance, but it is really the transition cost. It is about moving from one location to the others, training cost and everything related with opening up a new location. I mean, the kind of cost of operating is comparable across these different locations. So it’s not like one location have a much higher cost to produce the products than another one.

But I mean, there’s a lot of moving parts. We have factored into our best ability all of this into the guidance which we shared with you yesterday afternoon.

Robert Davies, Analyst, Morgan Stanley: Understood. Thank you very much.

Conference Operator: Thank you. Your next question comes from Neel Stalin West from Carnegie. Please go ahead.

Robert Davies, Analyst, Morgan Stanley: Thank you for taking my questions. On the price increases, will those price increases have an immediate effect as of June 1? Or will there be a run-in effect where a number of customers will first have to renew their contracts over the course of the coming quarters before it has an effect? And my second question would be on your net financial costs. Can you please provide an update as to how many how much financial costs we should expect for this fiscal year?

Thank you.

Peter Carlstrommer, Group CEO, GN Store Nord A/S: So on the price increase, Niels, the way they work is that we have an advanced notice, if you take gaming as an example with several of the large retailers where we need to announce price increases appeared in advance. And but then after that notice period has kind of lapsed, then the price increases are immediate. And it works in a similar way on the enterprise. The notice period is a little bit shorter. So in reality, the price increases will come in at slightly different point in time for the different retailers and channels.

So see the June more as a guidance for when the average has been fully implemented, so to say. But there will not be a long period after that we need to wait or anything like that.

Sjerdot, Group CFO, GN Store Nord A/S: And then the financial items, I think we are still of the opinion that the guidance we’ve given on these €150,000,000 a quarter is still a prudent estimate. We see interest rates coming down a little bit, but still the best estimate for you guys to work with is €150,000,000 a quarter. So that stands.

Robert Davies, Analyst, Morgan Stanley: You.

Conference Operator: You. Your next question comes from Karsten Londo of Management from Danske Bank. Please go ahead.

Peter Carlstrommer, Group CEO, GN Store Nord A/S2: Excellent. Thank you for taking my question. As you say, Peter and Stern, it’s quite clear that this year is especially in terms of margins, etcetera, and costs. But as you now move outside China, can you talk a little bit about the like for like production cost? Because all else equal, find it a little bit hard to see that things can be produced at the same price outside China as it can within China.

I guess that was the reason to be in China in the first place. And also, again, coming back to your long term margin target, so many things have changed since then. Top line has not really performed compared to your initial plans, and costs are trending up quite a lot, not only this year, but I will assume it’s also trending up next year, what we are talking about here. So can you talk a little bit more about how you plan to get to go with your longer term EBITA margin aspiration? And then a final question.

Net working capital, quite significantly negative impact this quarter. Is this because you’re filling up inventories around the world ahead of tariffs being implemented? Or how should we read this?

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Thanks a lot for your questions here. If we look on the production cost, I mean, naturally, there can be small variance between countries and so. But it is our planning assumption and belief that we can have comparable cost here across these different manufacturing locations. And when we say cost, we also need to say that, I mean, our product cost is, of course, a combination of components, I mean, and then logistics and, of course, assembly costs. It’s a see it also that the what should we say, the cost that could vary between countries is a relative small cost of the total product cost.

And as such, the difference becomes even smaller. So we think it’s fair to assume that we can have this comparable. So we are fairly confident on that. And I should just say also that the locations we’re moving to have built up a lot of capabilities, are significant manufacturing clusters and also good infrastructure. So it’s not like we’re starting from scratch in any way in these locations.

And we’re also moving together with very capable partners helping us to manage these transitions. So that’s what’s behind the assumptions. And then if I make a comment on the long term margins and then hand it to for the net working capital question. I think I mentioned it here earlier in the Q and A that we appreciate that this is a year where we are, I mean, thrown a lot of new challenges, which we are navigating, and we are taking measures to do that well. But still also we recognize, of course, we see some pressure on the top line and also not the year where we’re able to expand that margin towards our long term targets.

We do think that several of these effects are more of temporary nature. And after we’re through this transition, we should be able to get back into more, should we say, the normal kind of margins. We still have a bit of improvement work to do that need to come a combination of initiatives working to improve the gross margin, getting that back and also the operating leverage. It is still our belief that it’s at this point in time, we really are aiming to get to this target. If something would change, we will, of course, immediately update you.

But at this point in time, we still think this is the right target to hold on to.

Sjerdot, Group CFO, GN Store Nord A/S: And then as I spoke to earlier on the cash flow for the full year, part of it is actually that the net working capital will ease as we go through the year. And as for Q1, it is actually not the inventory levels that as such has changed the comparator. It is more working within the receivables and the payables. So that’s more where the mix is changing. And as I said, full year, we are expecting to have a better or improvement on net working capital as we move through the year.

Conference Operator: You. Your next question comes from David Adlington from JPMorgan. Please go ahead.

Robert Davies, Analyst, Morgan Stanley: Hey, guys.

Martin Renaud, Analyst, Nordea: Thanks for

Analyst: the questions. So first one, it’s difficult, but I was wondering what you’re expecting the price increases in Enterprise, how they might impact volumes? Secondly, just in terms

Sjerdot, Group CFO, GN Store Nord A/S: of

Analyst: your margin guidance for this year, that’s obviously only worth about a six month impact from tariffs. As we think about 2026, you’ve got the full year impact of tariffs, but also full year impact of mitigation. How should we be thinking about the trajectory of margins in ’twenty six relative to ’twenty five up, down, sideways? And then finally, just in terms of the challenges you’re facing, just wondered if you feel that the balance sheet needed any further support from your equity? Thank

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Thank you for your questions here. I mean, in the enterprise, we it’s difficult to know, of course, the elasticity here. What I would say is that it’s been a couple of occasions in the past where we made price increases in enterprise around 10% also. And we have not seen a significant impact on the volumes. There could be some, but it’s hard, of course, to exactly isolate in the cause and effect there.

And also here, I do think we will be helped, of course, with several of our competitors taking similar measures at the same point in time. So we do not factor in a significant drop in volume due to this. But I appreciate there is some level of uncertainty around it, but we do factor in that well within the guidance, I believe. Just one comment on the 26,000,000 margin before handing it to Soren to make further comments. The movement of our supply chain and our ability to manufacture in more locations and in particular to supply The U.

S. Market out through China in case the tariffs will remain elevated. I think that’s of course something where we are hurt this year, but we will see much less impact of that in ’twenty six. Then leave it to if you like to make more comments on that and the final question.

Sjerdot, Group CFO, GN Store Nord A/S: No, I think there would have been my comment reiterating that, again, the diversification we are doing now, we have been planning for quite some time. As Peter said, we are now accelerating that to be the vast majority of U. S. Suppliers, at least not being supplied out of China by the end of this year. So as such, that is what we also consider and Peter spoke to as temporary effects this year that we expect to go out in ’twenty six.

When it comes to your the equity, it is clear that the guidance we have laid out now still points towards a free cash flow of €800,000,000 As such, we do not see the equity as something that we are working with.

Conference Operator: Thank you. Your next question comes from Susana Ludwig from Bernstein. Please go ahead.

Peter Carlstrommer, Group CEO, GN Store Nord A/S3: Thanks for taking my questions. I have two, please. I guess just first, I wanted to follow-up on your outlook for sort of normal market growth this year and what gives you confidence that we can see that after The U. S. Private market was down mid single digit in Q1.

Can you confirm if The U. S. Private market saw growth in April? And then maybe could you talk a little bit about how European market performance was in Q1 and April? And then second question is just on the transition costs of moving your manufacturing.

Was sort of the total transitions costs, was that in your original free cash flow guidance? Or has the acceleration sort of increased the amount of transition costs that you’re going to see this year?

Peter Carlstrommer, Group CEO, GN Store Nord A/S: I can start here. So as I mentioned in the beginning, the market, assume it’s the hearing market we are discussing here, in Q1 was in The U. S. Quite under pressure and in a fairly unusual way. It is encouraging to see April being stronger.

And therefore, we remain of the view that we will see a fairly normal market in The U. S. This year unless something very unexpected happened to the global kind of macroeconomic environment or similar. In terms of the Europe and rest of the world, we saw a little bit pressure on the market in Q1, but not in the same dramatic way as we saw in The U. S.

And therefore, also, I mean, perhaps less of an outlier. And we do expect the market to continue to perform fairly normal also in Europe and the rest of the world during the year. Hopefully, that helps.

Sjerdot, Group CFO, GN Store Nord A/S: Then when it comes to the

Rune Senne, Head of Investor Relations, GN Store Nord A/S: please.

Peter Carlstrommer, Group CEO, GN Store Nord A/S3: Could I ask just quickly as a follow-up on The U. S. Hearing market in April? And when you say stronger, could you confirm that then that you mean positive in April? Or was it still negative, but just less negative than in Q1?

Peter Carlstrommer, Group CEO, GN Store Nord A/S: No, no, it was positive in April. I can confirm that.

Sjerdot, Group CFO, GN Store Nord A/S: Then when it comes to the transition costs, as Peter spoke about it, it is limited for us. And it’s also here, bear in mind that the transitions we are talking about is also we are using the CMOs basically in China and as part of the change of the diversification, and it is, as such, included in our cash flow.

Peter Carlstrommer, Group CEO, GN Store Nord A/S3: Your

Conference Operator: next question comes from Shivangi Gupta from HSBC. Go ahead.

Peter Carlstrommer, Group CEO, GN Store Nord A/S4: Hi, thanks for taking my question. So could you comment what was the growth you saw in Q1 for U. S. Commercial market? And on your EBIT margin guidance, how much of that is dependent on hearing going towards the upper end of your 5% to 9% organic growth guidance?

And second, just a small clarification on your tariff assumptions. So you’re assuming tariffs only on your enterprise and gaming segments? Or is it also in your hearing segment?

Rune Senne, Head of Investor Relations, GN Store Nord A/S: Sorry, we didn’t hear the first part of the first question. Can you repeat that, please?

Peter Carlstrommer, Group CEO, GN Store Nord A/S4: What was the growth in U. S. Commercial markets that you saw in Q1, the market growth?

Peter Carlstrommer, Group CEO, GN Store Nord A/S: Okay. Thank you, Herriman. The S. Market in the first quarter, we saw decline more mid single digit decline in the market, which is unusual and a bit of an outlier compared to what we’ve seen, of course, over many, many years.

And exactly what has been driving this, it’s hard to say, but it is probably driven by a high level of uncertainty in multiple dimensions. But as I recently mentioned, we are encouraged to see April being back in growth, and we do believe that the market will stabilize during the year and end up in a fairly normal way for the complete of ’25. And then if I just take the final question and then leave it over to Serum for the second question. You’re right. We have assumed tariff impact on enterprise and gaming.

When it comes to hearing, we have a manufacturing setup where we are manufacturing in Denmark and doing the chipsets and then in Malaysia, the hearing aid for The U. S. Market. But at this point in time, we are exempt from tariffs and we do assume in our planning that we will continue to be that. We have not heard anything else.

Sjerdot, Group CFO, GN Store Nord A/S: And to your question on the group guidance on margin, the 11% to 13%, we assume that the hearing there is in the midpoint of the hearing guidance.

Conference Operator: Thank you. Your next question pardon me, there are no further questions. This concludes our Q and A session. I would now like to turn the conference back over the company for any closing remarks.

Rune Senne, Head of Investor Relations, GN Store Nord A/S: Thank you very much, operator, and thank you, everybody, on the call today.

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