GN Store Nord: Q3 2024 Interim Report - Margin Expansion and Cash Flow Strength

GN Store Nord's Q3 2024 interim report showcased a 29% increase in EBITA to DKK 553 million, driven by synergies and cost focus, despite mixed growth across divisions. The Hearing division's market share gains and improved profit margins significantly contributed to the overall margin expansion. Despite a 7% organic revenue decline, the Enterprise division's profit margin increased to 33.8%, indicating effective cost management. The Gaming & Consumer division's wind-down of certain product lines and extraordinary costs negatively impacted its profit margin, but the company-wide synergies and strict cost focus led to an overall EBITA increase and margin expansion. Free cash flow excl. M&A ended at DKK 786 million, reflecting solid earnings and a positive impact from working capital.
The Hearing division's 10% organic revenue growth and 34.8% profit margin were key drivers of the overall EBITA margin expansion of 3.6 percentage points to 13.3%. The division's strong momentum and market share gains with ReSound Nexia are expected to drive organic growth towards the upper half of the original 8% to 12% assumption in 2024. The division's EBITA margin is projected to reach around 20% in 2024, reflecting its strong performance.
The Enterprise division faced headwinds from challenged markets in major European countries, with an overall organic revenue growth of around -3% for 2024. However, the division's profit margin of 33.8% demonstrates effective cost management, and the company expects the addressable Enterprise market to continue to improve in 2025. The Gaming & Consumer division is gradually winding down the Elite and Talk product lines, which will impact organic revenue growth but also incur extraordinary costs. Despite these challenges, GN's strategic initiatives are positioning the company for long-term growth and margin expansion.
GN's cost focus and synergies across divisions played a crucial role in mitigating the impact of negative operating leverage in the Enterprise segment. Despite the mixed growth across divisions, the company generated strong cash flow from operations, which contributed to a significant decrease in net interest-bearing debt to DKK 9.7 billion, equal to adjusted leverage of 3.5x. This was achieved despite the mixed growth across divisions, demonstrating the company's financial discipline and efficient management of its balance sheet.
In conclusion, GN Store Nord's Q3 2024 interim report highlights the company's ability to drive margin expansion and generate strong cash flow despite mixed growth across divisions. The Hearing division's market share gains and improved profit margins, coupled with effective cost management in the Enterprise division, contributed to the overall EBITA margin expansion. The company's strategic initiatives and financial discipline position GN for long-term growth and margin expansion, making it an attractive investment opportunity for investors seeking undervalued opportunities with strong growth potential and solid fundamentals.