The Demant Group entered 2020 at a high pace, which we kept in the first months of the year. Then, in the unprecedented period from mid-March and a couple of months onwards, the coronavirus pandemic caused almost a complete halt to activities in the hearing healthcare market. Restrictions all over the world forced especially the elderly population to stay at home and consequently hearing aid clinics had to close. Conversely, EPOS experienced tailwind and benefitted from the surge in demand for virtual collaboration tools and entered the market under the best conditions for a company that is active in audio solutions.
Approaching the second half-year, we saw positive recovery in almost all our markets, and the trend continued until almost the end of the year, resulting in strong revenue growth in local currencies of 14% in the second half-year compared to -18% in the first half. Faced with a second wave of coronavirus, we closed 2020 with uncertainties about the hearing healthcare market but also with confidence that vaccines will pave the way for the release of pent-up demand for hearing care solutions from both current and first-time users who were put on hold in 2020.
The essential link confirmed
Our experience from the impact of coronavirus in 2020 is, however, not entirely discouraging. The crisis proved that hearing care and a person’s ability to be an active part of society matter more than ever. Remote service surely picked up during the most extensive restrictions, but as soon as hearing aid clinics started to reopen, we saw the need for access to both person-centred care and the latest technology, with users literally queuing up outside our clinics. This emphasises that what we do is essential not only for the individual user but indeed for society as a whole.
The need for personal hearing care also underlines Demant’s all-important engagement in hearing aid retail, and in 2021, we are happy to increase the transparency of reporting in this business area, renamed Hearing Care. Hearing care professionals are indeed frontline staff, and their ability and willingness to show flexibility in difficult times have been very important, most notably the impressive speed at which they managed to reopen clinics and offer their services while never compromising on safety and health.
Access to all sounds
The ability to hear is one of the finest senses we have, and audio stimulation is fundamental for all people. From our research in hearing and the brain, we have established that the brain needs access to all sounds in the environment to function optimally. By applying this knowledge to hearing technology, we enable the hearing aid users to enjoy more complete sound landscapes with less effort and simply get more out of life when they use our products. The new platforms recently launched in all our hearing aid brands are further testament to these claims, and with Oticon More, we took a giant leap forward by being the first manufacturer to apply new innovative technology in the form of an on-board deep neural network to a hearing aid. With these groundbreaking new products, we are in excellent shape to deliver on our ambition to becoming the biggest provider of hearing aids in a market with tough competition.
Shared opportunities
In Demant, we take advantage of our shared opportunities in the Group. Evidently, our market presence and shared functions can be leveraged across the Group, but equally important is it to harvest synergies across our core R&D activities. The BrainHearing paradigm used for the development of hearing aids is also used for sound processing in hearing implants. Keeping a high pace in our R&D activities and successfully introducing new products and services in Oticon Medical are key for us to be able to help more people with severe or profound hearing loss. So, in a difficult year, I am very pleased with Oticon Medical’s ability to take market shares, with our bone anchored hearing systems activities, and with the ability of our cochlear implants business to keep pace with the market. Furthermore, we have succeeded in submitting the final application to the FDA for approval of the Neuro system in the US, and we expect to get the approval in the second half of 2021.
A long tradition for creating business
The year turned out to be much more positive for our Diagnostics business area than we had feared when the market was hit the hardest. The fact that we take market shares and sustain almost neutral growth levels in a very difficult market proves the importance of diagnostics in hearing healthcare. From a modest market position in the mid-90s, Demant’s Diagnostics business has for more than a decade been global market leader thanks to the development of existing and addition of new business activities.
This ability to create business and expand the Group continues with EPOS. For transparency purposes, we have split our business into two financial segments, Hearing Healthcare and Communications. EPOS addresses a different market, but there is major technological overlap to hearing healthcare, and even though EPOS fundamentally provides very different products and solutions, the results we aim to achieve are similar: To enable people to connect through solutions that are free of noise or poor sound quality, which challenges dialogue.
I am extremely pleased that our audio solution activities have now been fully integrated into the Group and also with EPOS’s ability to meet the unforeseen surge in demand for headsets caused by coronavirus. Also in this business area, we have seen how a crisis can confirm that what we offer is essential, namely high-quality virtual meeting and collaboration tools, which – together with digital platforms – make up for the physical meetings we could not have, a trend that we believe will extend into the future.
Sustainable behaviour
I would like to extend my thanks to all Demant’s stakeholders: Users who show trust and loyalty, customers, suppliers and employees who are dedicated to making things work in difficult times as well as investors, banks, local authorities, politicians and society at large that have all supported hard hit businesses like ours, removed uncertainties and given us the confidence to maintain our investments in the future. To me, this is sustainability and brings me to our own responsibility, our own sustainable behaviour.
I am happy that we have launched a new strategic direction for our work with sustainability, and we have indeed made progress this year, especially in the area of business ethics with the launch of a new Code of Conduct and whistleblower scheme. The core of our sustainability efforts is life-changing hearing health and the quality of life that we bring to our users. In addition to focusing on our core contribution to society, we will also strengthen sustainability in our operational practices, and we have two main priorities in this regard: Diversity and inclusion, the fostering of an unbiased and inclusive culture with equal opportunities, and our climate footprint with focus on reducing our packaging and waste, on sourcing green energy and on ambitious CO2 reductions.
I take an optimistic view of 2021. Due to coronavirus, many people did unfortunately not have access to the high-quality hearing care they should have received in 2020, so we at Demant are ready to support them with our broad and unmatched portfolio of products and services.