GN Store Nord’s Q1 Results: Navigating Tariffs and Transitions in a Volatile Landscape
3min read The first quarter of 2025 has been a tale of resilience and reckoning for GN Store Nord A/S (GGNDF), the Danish audio technology giant. While the company’s financial results reflect the headwinds of macroeconomic uncertainty and escalating trade tensions, its strategic moves—particularly in tariff mitigation—hint at a path toward stabilization. The question now is whether GN can convert its long-term bets on innovation and supply chain agility into sustainable growth.
Ask Aime: "Will GN Store Nord's strategic moves mitigate trade tensions and drive long-term growth?"
The numbers tell a story of contraction. Revenue fell 7% year-on-year to DKK 6.3 billion, with EBITA plummeting 44% to DKK 300 million. The decline underscores the challenges GN faces across its three divisions: Hearing, Enterprise, and Gaming. Yet beneath the surface, the company’s outlook reveals a calculated optimism.
The Hearing Division: A Beacon of Hope
The Hearing division, which accounts for 63% of revenue, reported a 3% organic decline amid a sluggish U.S. market. However, the launch of the ReSound Vivia hearing aid—a product hailed by CEO Peter Karlstromer as “exceeding prior launch metrics”—offers a silver lining. The device’s strong initial sell-out momentum has positioned GN to capture market share in a sector projected to grow 3-5% annually. With pricing power intact and manufacturing already tariff-exempt due to its Denmark/Malaysia supply chain, this division is a pillar of stability.
Ask Aime: Can GN Store Nord rebound from a challenging year?
Enterprise and Gaming: Contending with Macro Stumbles
The Enterprise division, which includes Jabra’s communication and collaboration tools, saw revenue drop 9% as large deals in the prior-year period and delayed IT projects weighed. The Gaming division, meanwhile, grew 11% organically—excluding the wind-down of legacy products—thanks to supply chain efficiencies. But both face headwinds: the Enterprise division now expects 2025 organic growth of -8% to 0%, while Gaming anticipates a tepid -6% to +2% rise.
The Tariff Tightrope
GN’s most urgent challenge is navigating the global trade war. U.S. tariffs on Enterprise and Gaming products have forced the company to raise prices and accelerate manufacturing shifts from China. By year-end 2025, the U.S. supply chain will be fully diversified, but the transition has come at a cost. CFO Søren Jelert emphasized that these moves are “already accounted for” in guidance, but the negative free cash flow of DKK 395 million in Q1—driven by working capital and interest payments—hints at short-term pain.
Revised Guidance: Pragmatism Over Optimism
The company’s revised 2025 outlook reflects this pragmatism. Organic revenue growth is now expected to range from -3% to +3% (down from 3-7%), with EBITA margins trimmed to 11-13%. While the free cash flow target of ~DKK 800 million remains intact, investors will scrutinize execution.
The Bigger Picture: Markets and Margins
The hearing aid market’s favorable demographics—aging populations and rising disposable income—position GN for long-term gains. However, the company’s success hinges on two critical factors:
1. Supply Chain Resilience: The U.S. manufacturing shift must avoid delays, and prioritizing key product variants could limit customer disruption.
2. Margin Defense: Even with price hikes, sustaining margins in Enterprise and Gaming will test management’s cost discipline.
Conclusion: A Buy for the Long Game?
GN Store Nord is at a crossroads. Its Hearing division has the wind at its back, but Enterprise and Gaming divisions face a slog. The stock, down nearly 15% year-to-date, trades at just 12x 2025 consensus EBITDA—a valuation that may already reflect pessimism.
Investors should focus on two catalysts:
- Second-half revenue recovery in the U.S. hearing market, where April 2025 showed growth.
- Execution of tariff mitigation, which—if successful—could unlock a DKK 500 million+ annual savings, per management estimates.
While the path to profitability is narrow, GN’s dominance in premium audio segments and its focus on high-margin products like ReSound Vivia suggest a rebound is possible. For those with patience, the company’s valuation and strategic moves make it a compelling contrarian play—if macro risks subside.
In the end, GN’s story mirrors the broader tech sector’s struggle: innovation and agility can’t always outrun trade wars and weak demand, but they might just win in the end.
