Demant Stock

Good afternoon, everyone, and welcome to the conference call for Demant's Interim Report for 2026. My name is Peter Pudselykke, and I'm heading up the Investor Relations activities here in Demant.

With me today, I have our usual crew, our President and CEO, Soren Nielsen; our CFO, Rene Schneider; as well as one of my good colleagues in the IR team, Gustav Hoegh. As you should have seen by now, there were a couple of announcements out from us last night, one relating to the interim report and one relating to the launch of our new premium hearing aid Oticon Reveal.

We will be discussing both during today's call, and we plan to kick off with a presentation, which will be followed up by a Q&A session. The total session is expected to last no more than 1 hour, and the presentation should be online by now. When we get to the Q&A [Operator Instructions]

Before we dig into the presentation, please do pay notice to the disclaimer slide on Slide 2. And with that, on to Slide 3, where I will leave it to Soren to start with the agenda, please.

Thank you very much, Peter, and welcome, everybody. Today's agenda, no surprise, highlights and financial takeaways, big business area review. Rene will take us through more details on the group financials. We'll discuss the outlook or present the revised outlook and take Q&A.

And first half in highlights for Demant 2026, strong momentum in all business areas, ahead of expectation with growth accelerating from first quarter into second. This is driven by strong performance in Hearing Aids, where we fueled by the success of Oticon Zeal have seen a further strengthening of the momentum.

Market growth remains to be in line with what we saw in the first quarter, but which is in the higher end of our -- I would say, lower-than-normal expectations. In Hearing Care, we have seen very solid execution and of course, also significant contribution from the acquisition of KIND, which in all in all, have delivered very strong performance, KIND not the least.

Cost-saving initiatives announced in February 2026 are progressing ahead of plans and supporting underlying margin improvements. Rene will go through that in more details. The divestment of the Implant and Communication business was completed in Q1, and we are now a fully focused hearing healthcare company.

Key financial takeaways from the first half, group reported growth of 15%, a strong momentum in all business areas and 10% of these are acquisitive growth primarily coming from KIND, but also other acquisitions.

A key highlight is the increased gross margin, increased by 1.1 percentage points, driven by a strong geography channel product mix in Hearing Aids, leading to a strong ASP and supported by the acquisition of KIND in Hearing Care. Hearing Care retail business structurally have a slightly lower -- or higher, sorry, gross margin than the wholesale business. And therefore, of course, the mix also pulls it up. But I would also say here, higher than we expected.

OpEx increased by 5% organically, partly supported by cost-saving initiatives announced in -- earlier in the year in February. Acquisitions, predominantly KIND, added 14% to group OpEx. And EBIT before special items was DKK 2.134 billion, corresponding to an EBIT margin of 16.5%. Below that, again, Rene will elaborate on that, strong underlying performance improvement and also underlying margin improvement. Strong cash flow, cash flow from operation of DKK 1.6 billion, corresponding to a 6% increase compared to first half '25.

And based on our performance in the first half and reassessment of the momentum and the outlook for second half, we have upgraded our financial outlook for 2026. The organic revenue growth is now expected to be 6% to 7% and EBIT before special items, DKK 4.4 billion to DKK 4.8 billion.

And for the business areas, starting with Hearing Aids, the hearing -- global hearing aid market in first half 2026, we estimate that it has in value grown 4%, 3% in units. The unit growth in the second quarter comes out a little bit different than the first quarter with U.S. commercial being 0 and U.S. VA being 1. This is less than first quarter, but the comps are also different.

So 30,000 feet, unchanged market conditions, still below the normal expectation of 4% to 6%, but a little more positive on the ASP development, where we normally anticipate flat, we have seen and estimate an improved pricing of 1% also in the second quarter.

In second quarter, highlights by geography. Growth in Europe was driven by Germany and France, whereas NHS was negative. This is purely due to phasing of purchase there, excluding U.K., Europe saw 6% growth, so quite solid. In North America, as I already spoke to, flat or modest growth in North America, depending on channel. Canada saw a strong growth.

Rest of the world, we estimate -- where we have no statistics, but we estimate that the Chinese -- China maintained some positive momentum despite continuously challenged market conditions. In Australia, growth has also returned to positive development following a soft Q1. But again, all these with a grain of salt depending on last year's phasing. All in all, we see the market conditions in line with what we saw in the first quarter.

Hearing Aids in second quarter, a further acceleration of growth driven by a full rollout of Oticon Zeal into all channels and geographies, and that has delivered a 10% growth. I would say it's broad-based. It is Zeal that, yes, in many ways, is the spearhead on the growth and changed the momentum.

But we have really seen a nice broad pickup, most predominantly in North America, where we deliver double-digit growth, which is obviously way ahead of the underlying market growth, also strong in Canada, solid in Germany and U.K., France and Spain also strong growth. And in Asia Pacific, highlights are Japan and to some extent, Australia, whereas China saw a negative growth primarily due to the challenging market conditions.

And we also, as Peter said, yesterday released the news that we will be introducing very shortly new flagship products, Oticon Reveal, our latest innovation, and I'll share a few highlights on the core technology that now takes performance of Hearing Aids to a new level.

We introduced the world's first Dual AI system. And what's the core of that? The core of that is that so far, most AI systems, if not all, have centered around trying to somehow detect noise and suppress this more or less depending on your philosophy.

We have now added a parallel AI system that focus on the speech and the content of the speech and the details of the speech. So you can say the contrast, the clarity of the speech is further enhanced. These 2 system work in parallel, but of course, synchronized and optimized towards one another. So all in all, working as one system in real time, all the time, very strong.

And this is powered by a brand-new Reveal AI platform. It is still built, as we have done things for a number of years now, to support the way the brain makes sense of things, the way we translate from what we get in to what it means, to what it is that's being said, to that we can give a response and enjoy what we hear.

And the world's first Dual AI system supports speed, precision, balancing of things. And a part of that is one thing is to know what you want to do very fast and be able to adjust the gain very precisely in the instrument. But in case you don't have a very strong anti-feedback system, meaning that the microphone end up hearing the speaker, then you can simply not deliver the gain.

We have significantly improved our feedback prevention system, so we can deliver much more gain at much faster and higher precision to a level we don't believe any competitors are near. And this is in reality also very important in delivering the benefits to the end user because this is often about providing a lot of gain for soft sounds. So you get, again, the more details out of things.

Then also a new connectivity platform that brings even stronger stability and longer range. So users again can enjoy the connection to the phone even if the phone is quite remotely placed and basically here training or enjoying music, whatever.

And with this Dual AI system, which is the core of it, this is created by a new platform, a platform that still based on our philosophy is based on a single chip. This is a major benefit to power consumption to size, integration level and the optimization of that allows us to do the 2 AI systems in parallel without destroying power consumption.

So things are still on all the time, working seamlessly for the end user, and there's no limitation to how much you can be in noise or how many hours or minutes you can use it. These things are always on and will help you getting an unmatched precision of speech and an unmatched guarantee in noise environments, but also while maintaining a level of contextual sound, so you actually know that you're in the restaurant or out in the traffic or wherever you are.

There is a very, very solid basis for documenting these benefits. Some would say in a slightly scientific way, but this is to make sure things actually work. We see a very significant improvement in the signal-to-noise ratio presented to the end user without taking things out, but balancing them differently.

We see a very significant improvement to the speech intelligibility index as it's called, meaning how can I actually understand and make sense of things. We see a very strong response to when the brain can actually see or hear the signal and make sense of it. That's something you can measure. And we see a very significant improvement, which is also confirmed in our trials of Oticon Intent, which I think everybody will admit is already a very strong hearing aid and platform.

So very strong comfort in Oticon Reveal, going to bring excitement to the market and significant benefit for end users, whether it's your first hearing aid or whether it's an upgrade from an already well-functioning premium product of latest technology, then you will see a significant benefit improvement.

In Hearing Care, second quarter, very strong performance with significant contribution from KIND in local currencies, impressive 31% growth, of which 23% comes from the acquisitions, mainly KIND, but also a larger acquisition in U.K. made in March. Strong 8% organic growth in the quarter, supported a little bit by the comps from last year, but also sequentially expressing an uplift to the momentum in the business and a strong execution broadly across geographies.

KIND itself delivered a strong performance, and we also explicitly comment on that. And that's super good for, of course, scale and profit, and also good to see after uncertainty related to the immediate takeover is gone. So we are very comfortable about the further benefit of having the KIND business in our group.

Looking at geographies, strong performance across the region, particularly in Germany, but also several other markets, a little less growth in France, but that's due to the way the distribution system continued to expand in France where a number of new players get into the field.

Strong or good organic growth in North America was driven -- it was strong and driven by both U.S. and Canada. In U.S., growth was supported by slightly easier comparison figures than we had in Q1. We all remember last year, all the uncertainty that came from, let's say, political uncertainty.

In Australia, strong organic growth, and we saw negative growth in China driven by tough market conditions, but also tough comparison figures. There was some release of reimbursement last year that's no longer there, which has definitely lowered both the product mix and also demand.

Diagnostics in second quarter, very strong performance. We're very happy to see return to solid growth rates now in the quarter, 9%. Again, last year, uncertainty in Q2, super high, and we saw a lot of holding back on the execution of orders, of course, partly also due to that.

But we also there definitely feel an improved momentum and that we gained share, and growth was coming both from instrument sales as well as service and consumable business. Growth was, yes, broad-based, but particularly strong in U.K., but also U.S., Canada, et cetera. So all in all, very good.

Over to you, Rene, for group financials.

Thank you, Soren. And we move on to revenue in the first half, which is a bit of repetition. We saw a broad-based organic growth of 7% in the first half, acquisitive growth of 10%, entirely related to acquisitions in Hearing Care, of course, predominantly KIND, but also a larger retail in the U.K. as well as some minor acquisitions. And we saw a negative effect from FX of 3%, driven by U.S. dollar. So all in all, 15% growth in reported revenue.

A highlight from the first half is the development in the gross profit. It increased by 17% to just shy of DKK 10 billion with a margin expansion of 1.1% point versus last year, which was above our expectation. And the primary drivers of that was a very healthy, solid development in ASP due to -- in Hearing Aids due to strong geography channel and product mix, but also equally supported by strong contribution from the acquisition of KIND and its performance in Hearing Care.

That brings us to operating expenses and EBIT. We saw a 5% organic growth in the first half year, which was, on the one hand, partly supported by the cost-saving initiatives, but also included one-offs related to -- negative one-offs related to the restructuring of retail in the U.K. that I will come back to. In acquisitions, predominantly KIND, added 14% to OpEx growth and exchange rate had a negative effect of 2%.

Looking at EBIT before special items, it was DKK 2.134 billion, corresponding to a margin of 16.5% or 19% growth in local currencies. Included in that result and in that margin, we have absorbed a number of negative effects, one of them being an estimated DKK 50 million negative effect from exchange rates, but also an additional DKK 30 million from the acquisition we did of a larger retail chain in the U.K. and the following restructuring that was executed in the first half year as part of our operating profit.

If we exclude that, the underlying EBIT margin expansion would have been 0.6 percentage point compared to last year. That's reflecting a strong underlying operating leverage.

Our special items in the first half was DKK 216 million, predominantly related to KIND. The strong result in the first half year also means that when we talked about outlook for the year previously, we highlighted a back-end loaded EBIT profile for the year. With this result, we now see a more normal phasing of EBIT between the 2 half years.

Cash flow was strong, both on cash flow from operations, but also free cash flow. I would highlight the net cash inflow from acquisitions and divestments. So whilst we have done acquisitions, the divestments we have also done in the same period actually results in a net cash inflow of DKK 91 million. And as you are likely aware, we have not done any share buybacks during the first half as we have had focus on reducing debt and leverage, which brings us to the balance sheet development and also net interest-bearing debt.

On the graph on the right-hand side, you see the spike in leverage after the acquisition of KIND, but you also see the strong deleveraging we have done since being actually ahead of plan on the deleveraging due to both strong cash generation as well as profit growth. So now we are at 3.0. And our updated view on gearing is that we, by end of 2026, expect to be slightly above the 2 to 2.5 range, which is our long-term guidance.

With that, let's move on to outlook. Brief comment on the market. So we, I would say, almost as normal, but we do base the market understanding on a competitive environment where we know competitors or expect competitors to launch new product in H2. That is built into our assumptions.

And we update based on the Hearing Aid market performance in H1, we update our full year assumptions to be 3% to 4%. This continues to be a conservative assumption below our medium- to long-term fundamental assumption around the market.

Things to highlight. Special items, we have adjusted special items to now total DKK 400 million, previously DKK 325 million. We have pushed hard on both the KIND integration and the cost savings initiatives. And as a result of that, we also see higher special items. KIND integration special items is now estimated at DKK 150 million, previously DKK 125 million as well as cost-saving initiatives now DKK 250 million, previously DKK 200 million, primarily all related to severance payments and implementation costs.

The other highlights on the outlook side is less negative effect on FX, as you have seen in the announcement, but also higher profit contribution from both CEI and KIND. The cost effectiveness program now is estimated to contribute DKK 300 million compared to DKK 250 million in the original outlook and the better performance in KIND with that, we expect a contribution to EBIT of DKK 325 million, previously DKK 300 million. Lastly, but more minor, we expect to get a refund of tariffs in H2 of DKK 25 million.

With that, summing up our outlook now being 6% to 7% organic growth and an EBIT before special items in the range of DKK 4.4 billion to DKK 4.8 billion.

So with that, we are ready to go to Q&A.

[Operator Instructions] The first question comes from Martin Parkhoi with SEB.

Two questions. Firstly, with respect to Hearing Care with the 8% organic growth in the second quarter, where I understand that there is a very good contribution from ASP lift in Hearing Care, of course, supported by the high price point of Zeal. How should we look at the ASP contribution for the remainder of the year in Hearing Care? Of course, Zeal will still benefit year-over-year, but can there be some impact from lower price points -- lower price points of Zeal also become available?

And then second question, also on pricing, but more on a wholesale level. Firstly, can you talk about -- you have a quite good success with the premium pricing of Zeal. What is your plans for Reveal versus Intent on each tier level? And how do you actually see the pricing risk of in an industry perspective in the second half in light of the quite crowded launch period we have from the industry and there is maybe some players which are more desperate than others to drive growth with these new products?

Thank you, Martin, for that. It's true that there is a significant ASP element in the growth in Hearing Care. It's both a mix, geography mix issue, but it is a product mix issue by most. So, yes, Oticon Zeal has been also a significant success in all retail, but it's of course, also in general, what we work on to help more people get a better solution. And that's a little bit different market for market depending on reimbursement and so on.

So into second half, yes, I think we should be able to maintain, and we always see also in own retail that when we bring new exciting technology out in a premium launch. Then the upgrade part of the business has a tendency to increase. And that's definitely going to be a focus with Reveal where you could say Oticon Zeal is more a first-time user focus. So the 2 will go hand-in-hand, and I think we'll both be able to be elements in supporting a continued good ASP development also in own retail.

On the Hearing Aid wholesale side, I think I would say the more that introduce premium, the more you tend to see a positive -- for the same reason with the upgrades, a positive product mix development in the industry. If there's then more or less discount on the new ones, well, it still ends up, I believe, net-net, leading to a better product mix that outbalance even if that effect is there. But at least as a beginning, I think everybody will try to get return on their R&D investments. So I would say, normally, even if we see a lot, it's good for the ASP in that period.

Our own assumption is definitely that we'll be able to see a -- not as big as with Zeal because the product was very unique and without competition, you could say, almost, but that Reveal also will enable a net price increase over Oticon Intent.

The next question comes from Veronika Dubajova with Citi.

I have 2, please. The first one is just -- sorry, I was hoping you could give us a little bit of a flavor for the run rate for Zeal and sort of how you're thinking about further opportunities for growth from here, either in terms of lower price points or geographies? And just how much more room there you feel there is for Zeal to continue to drive kind of meaningful contribution to growth? That seems to have been the case in the first and the second quarter of the year.

And then my second kind of question is really your thought process on Reveal and how it might position. Obviously, I know we are still waiting for 2 more product launches, but it'd be really helpful to understand from an AI perspective, from a size and battery and power perspective, what do you think Zeal brings to the table that you don't see in the market right now or you don't -- anticipating from folks as you look at the launch with that?

Thank you very much, Veronika. I would definitely say from a growth perspective, of course, we are comparing still to 0 when it comes to Zeal. So there is, of course, still a significant growth coming from Zeal, but also on a sequential basis, I definitely see further opportunities.

You mentioned the example with more price points also to address other segments of the market. I would say that might be more of a European opportunity. In North America, there are still channels that don't offer that type of technology could come in. There are definitely still in VA, I would highlight significant opportunities. We see a very good I think several of you asked if Zeal was a niche product for a niche. We have now seen clearly both expansion of the number of people that end up having an in-year rechargeable product.

We have also seen Oticon Zeal in that growing segment to take very significant share very fast and it has not come to an end. We also see it being the door opener to clinics we have not worked with because this is, obviously to everybody, a significantly different product, and it offers an opportunity to both have fantastic outcomes and also the opportunity for, you can say, instant fit because you can use it with a dome, which means you skip a number of revisits for impression taking and customer shell making, et cetera.

So far, after 3 months into VA, super positive outcome, and we have definitely believe in continued growth in that channel as an example, but also outside for Oticon Zeal. And Reveal position, I would say it's second to none. There is nobody else that managed to combine AI opportunities for both noise and speech being available all the time any given time in an ordinary minimized form factor, rechargeable, full connectivity and everything. So for now, for what we can see, and yes, I don't have transparency either to new launches, and that might change it. But with the current competitive situation, what we know and have seen being presented to the market, I think Oticon Reveal is second to none.

The next question comes from Martin Brenoe with Nordea.

I'll also start out with 2 questions. The first one would also be on Zeal as a beginning. Now you mentioned the new price points a couple of times on this call. And I'm just a bit curious whether you think you've benefited from having more or less the only new product launch here in H1, making it maybe a bit more tough to stand out here and heading into H2 with other launches coming. So can you maybe just put a few words on the toolbox that you have in terms of building on the momentum you have with Zeal? Is that the new price points that we're going to see or is it more that you're going to do a second phase marketing spend on Zeal? Or what opportunities that you actually have to build on this momentum as we are seeing the space get more crowded? That's the first question.

And the second question would be on the marketing side. When we adjust for the significant cost initiatives that you'll reap the benefits of here in H2, the underlying EBIT margin doesn't really imply any margin expansion despite the significant growth that you should be seeing and also guiding for here. So should we see this as a prudent assumption to your guide? Or are you actually investing back in the OpEx given the run rate you're seeing to be ready for 2027? That's my second question.

Yes. Thank you very much, Martin. I think I mentioned the new price points once. But if I may highlight a number of European markets, you simply have a limited premium segment, and we have penetrated very strongly there. We have even expanded it. We can see that in our own retail that there are more people that are willing to pay, but still it is a minor category. And if Zeal, which is our ambition, really have to grow to be a new way of producing and manufacturing in-ear instruments, we also want more volume into the technology and business and therefore, a discussion in selected market of more price points is relevant.

But the biggest benefit of Zeal is that it helps opening new doors. So it will still be a significant part of our sales efforts and salespeople's job to use both Oticon Reveal, but equally important Zeal to get in the dialogue with customers that today have Oticon as a third or fourth or not even supplier. To our existing customers, people that have had some business with Oticon, this is now, I think, to a large extent, known stuff. There are always training, you can do more and so on.

We will do a little more on the consumer side on media spend to also help make sure that we continue to see end users being aware of the concept and come into stores to ask for it. This is not big volumes, but it is very meaningful. So there are many levers for that, and to your margin, I will start and Rene can supplement. But the cost-saving initiatives is to improve margin on Demant, and it's working well towards that.

We have, of course, always also said we will continue to invest in the business. We believe it's a growth business, but it is clearly the ambition. And again, underlying also in first half, there is a meaningful improvement of the EBIT margin, as Rene just took you through. And I think there is good visibility to a further improvement in the second half for a number of reasons.

But maybe, Rene, you want to add a few words?

Yes, not much to supplement. I mean we do -- you can do the math in many ways, and we have a range in our outlook, which provides for many scenarios. I would say, our working hypothesis and definitely what we work strongly towards is a margin expansion, both sequentially and relative to last year reported and underlying in any way, you can imagine, and that's what we plan for. I would say we have an outlook that we are very confident in.

The next question comes from David Adlington with JPMorgan.

Maybe first up, just maybe a bit more conceptual one. You've narrowed your top line from 3 points from 3% to 6% now to 6% to 7%, still quite a wide margin range of DKK 400 million same as the start of the year. I just wonder why you haven't narrowed the EBIT range on what the deltas are between the bottom and the top end of that range, quite narrow revenue assumptions.

Yes. So generally speaking, we see a relatively high translation from revenue changes down to EBIT when markets or particular geographies are doing extremely well or extremely poor, we have seen that in the past. So it is a reflection that 6% to 7% is in reality5.5% to 7.5% and the translation to EBIT, we see similarly correspond to a DKK 400 million range. So the big swing factors, of course, are, as I mentioned, market and then relatively speaking, our own expected overperformance to that market. So, I think it's in line with how we have done things in the past.

And then just one quick follow-up. Was there any pre investments in the new launch in the first half?

Not in particular.

We expect in the second half?

Of course. But nothing out of the ordinary. Of course, if you compare to last year, that's also part of the maybe slightly higher OpEx for this year than you would imagine when you see cost initiatives and so on. It is an intensive launch year on the Hearing Aid wholesale side to do 2 big launches and a lot of news. Of course, that we also invest in that to make sure we get half of the benefits.

So I would say just to give some direction around the OpEx line. On the one hand, as Soren mentioned, we are putting significant resources behind a high-end launch and also you can say, marketing efforts in Hearing Care to support the growth and the gross profit drive. And -- but on the other hand, we're also executing on the cost effectiveness. So on balance, you would expect organic growth rate in OpEx maybe similar to what you saw in the first half year.

The next question comes from Niels Granholm-Leth with DNB Carnegie.

A couple of market-related questions. So in your view, what's needed to normalize the growth on the U.S. commercial market? And secondly, why do you think that we have seen a stronger pricing discipline in this first half, which have contained many kind of end-of-life products on the market, but still price -- the pricing discipline seems to have been pretty good.

Yes. Thank you, Niels. Yes, I can't tell when we expect it to normalize, but I think it's worth highlighting that underneath the flat growth -- flattish growth in U.S. commercial, we do still see the managed care segment declining, and we do see cash pay private independents have some growth, and then we see the strongest growth being in what we would call big box retail and large operators, including ourselves. And I think it will have to come with a new stand on managed care and it finding its new balance, and then we would see the total market return to growth.

There continue to be some dropout, people that are not eligible, whatever it is, to drive it leakings to the other channels. But at some stage, I would assume there is a rebalancing. But when that happened is very difficult to estimate, of course. There's no doubt we still see the expected growth in senior population, prevalence of hearing loss, et cetera. I don't think we have any other indication that this still relates to consumer confidence in general, fear of inflation or inflation for many and some managed care contracts not offering benefit to the same number of clients as they did in the past.

And the second one, pricing discipline. Well, I can turn it around and say at least 2 or 3 of the players have presented significant innovation where there also is a cost component to it. And therefore, I think the discipline have actually maybe this time started with realizing that to get return and also you would defend the continued growing cost of goods sold driven by technology, whether it's the production methodology or additional electronics or whatever it is, then you, at some stage, have to say that we have to install a stronger pricing discipline and also arguing for the benefit stronger for the end user. Otherwise, we have only done it for our own sake.

And I think at least I can talk for demand, but it seems like a number of competitors have similar trends and therefore, have been more firm that margin dilution cannot happen and therefore, have been more disciplined around pricing of the premium products, I would say, in particular.

The next question comes from Richard Felton with Goldman Sachs.

Two, please. The first one, it does seem like the in-ear category has been growing well ahead of the overall market. Can you maybe elaborate a little bit on the dynamics you're seeing between in-ear versus share gains from other form factors or anything that you're potentially seeing in terms of category expansion driven by in-ear?

And then second one, Soren, you mentioned that Zeal was the spearhead for growth, but the rest of the portfolio is doing well in addition to that. Can you maybe elaborate on why that is the case in practice? How is Zeal helping the rest of the portfolio?

Thank you very much. Yes, we don't -- in many markets, we don't have a lot of statistics for the different styles. But in some, we have. And it's very obvious that the lack of rechargeability in decent-sized instruments, I would say, have been a limitation for many years for why receiver in the ear have grown after they became popular for just the cosmetic benefit. The receiver in the ear was much more discreet than the old molds.

Then the next thing was connectivity, the next thing was rechargeability. But there are now some concepts in the field that actually, you would say, overcome that and then Zeal in particular, overcome also the cosmetic element and therefore, basically offer almost the same benefits as a behind-the-ear, which for some is more visible. And I think that's the natural evolution and swing back. No end users are, when they arrive as first-time users, very aware what is around. They might have seen an instrument like this or that. And therefore, cosmetics matters a lot whereas existing users might be a little more nuanced and balanced on whether they take one version or the other. Have you, for many years, used a miniRITE, I'm not sure you would go for a in-ear product, but for first-time users, it definitely is for many more attractive.

And spearhead for growth means that Zeal is a door opener. It's a new concept. You can see the idea, you see the benefit for first-time users. So as I think I've said before, there's simply more calls being booked to customers with whom you have little or no business. And based on that call, you actually -- once you then fit it, when you learn the fitting system, you see the qualities also in the signal processing, and there is a chance that you then also manage to open up for a broader part of the portfolio to these new customers. And that's what I mean when I talk about a spearhead for attention, a spearhead for new opportunities.

The next question comes from Kavya Deshpande with UBS.

My first is on the cadence with the launches obviously. This platform cycle has taken a little bit longer than previous ones we've seen. Other than the Dual AI software, would it be possible to highlight any other key improvements this extra time has allowed you to do, particularly around the hardware and the chip versus the Sirius chip on the Intent?

And my second question was, so Zeal was launched on the same chip and retaining many of the same features as Intent. The performance benefits you've delivered on the Reveal, would those have a home on a future Zeal model as well? Would this be possible? And should we expect something like this?

Yes. Thank you very much. Yes. There are 2 other significant contributions to improvements and innovation we highlight. I said this about the anti-feedback system, and one would maybe think that improved feedback prevention is something we solved many years ago because you don't hear the whistling in the hearing aid anymore. But in reality, the way to see it is if you live measure the gain you can actually present in the system in dynamic environment. And we can just see also in our own instruments in the past, but also in competitive products that we kind of put a line in for where the gain cannot grow above.

So you can see the instruments want to do more, but are prevented in doing it. And the new feedback system we have both allow for more gain because it can quicker eliminate the loop it creates and it's much more precise. So the real available gain is significantly higher, and that's also a key instrument to have these systems work together, so the AI system screams and calls for something. Then it's actually also available where most other systems are much slower. And then when the gain is maybe ready, then the need is gone.

So that's one very significant innovation and improvement. And the other is connectivity. It's fundamentally a new connectivity platform we have put in that ensures even stronger, you would say, perceived reliability of the connection. You lose it much more seldom. The quality of what comes through is higher, the distance by which you can be away from your phone without deterioration is much higher. So also a significant improvement.

And to your last question, yes, following this release in the coming period, it's, of course, natural that our -- the rest of our portfolio gets onto this new platform. And that's also the case for Oticon Zeal at some stage. Right now, we are very happy with the performance. It's a new instrument. And the main, again, breakthrough is, of course, what it does, but it's also how it looks. So it will not be a significant setback for Oticon Zeal that we now have a new miniRITE platform available.

The next question comes from Carsten Madsen with Danske Bank.

Question to Rene. This minus DKK 30 million you have on EBIT from integration of the U.K. retailer, is that the sort of full EBIT contribution? I mean it surely also have been running at a positive EBIT. Or was it only the integration cost and that also goes into the same part of the question, which is how much will it contribute in terms of EBIT in the second half of the year? Then I have another question after.

Yes. So the DKK 30 million I referred to is the total net contribution to EBIT, negative DKK 30 million. So not saying what is sales, what is cost of goods sold and OpEx. But the net effect on the bottom line is DKK 30 million. That's how it's understood, meaning that since it was announced in H1, it's behind us, and we expect the business to give a positive contribution to EBIT in H2.

Maybe if I can supplement, it's a classical scale issue that the lack of profitability in the business we acquired come from too little scale on the headquarter. And therefore, we get a little bit of collapse of the network, a stronger utilization of the audiologist, but most importantly, one headquarter for a significantly bigger network. And that brings it immediately very fast to profitability in our business.

Okay, great. Then the second question is the competitor of yours have today communicated a rather sizable loss of the managed care contract in the U.S. from January 2027. So the question I guess, is, do you expect this in any way can turn into a tailwind for both spanning in 2027 that this contract will be reallocated?

No, I think that's speculative at this stage, but you can say it moves from being a manufacturer-controlled contract, which always leads to a certain bias, of course, towards the owners own brands. Now it's as without -- I don't have all the details, but that is my best take that now it's an independent owner. And that, of course, always leads to opportunities for coming with a good offer. And is that our strongest place? No, not currently, but will we always seek opportunities.

The next question comes from Susannah Ludwig with Bernstein.

I have a couple on Oticon Reveal and in particular, around sort of what the hardware and software updates have been. So, I guess, first, could you confirm what's in the hardware of the device has been upgraded versus Oticon Intent and in particular, whether there's a new DSP chip? And then I guess in terms of the key innovations that you talked about in terms of the feedback and the gain as well as the connectivity, are those driven by hardware improvements or by software improvements?

Yes. Good question. I don't think we sit here and disclose exactly what chip we have in our hearing aids, but the system as such is basically reengineered to offer this new performance. We have and still have a highly energy-efficient system, and that's the key to success. It's a new modern, strong DSP and AI system that allows us to do all these great things without running crazy in power consumption. That's the reason for having one integrated chip. So that's, I think, so far, we can share that without helping competition too much.

There is a significant, of course, change in the algorithms on that. That's the real innovation. That's what how we innovate. Most of the signal processing today is not directly hardware driven, it is software driven, it is, yes, computer applications or program applications that run. In the case of the feedback system, that is very much the speed of the processor and the algorithms that does that, whereas the connectivity is more hardware related. That's, yes, a lot to do with antennas and strength of signals and so on. But that's typically more physical, but also they are improved algorithms.

Okay. And, again, just to make sure that I have this right. So in terms of your energy efficient chip, that is the same that was in the Intent, but now you've sort of reorganized that and improved the software update. Is that right?

I don't think I say either yes or no, I don't think we want to sit here and disclose those details.

The next question comes from Andjela Bozinovic with BNP Paribas.

The first one is maybe on the guidance. So earlier in the year, when you presented the guide, you emphasized that it was conservative. And now when you upgrade the guide, you emphasized that the market assumptions are conservative. Can you just explain how you're thinking of the upgraded guide, which indeed does imply significant market share gains on tougher comps and increased competitive pressure?

And the second question is just on trying to assess your level of excitement on Oticon Reveal versus Oticon Zeal. Can you maybe share some insights on how you're thinking on uptake of this product overall, not only in 2026, but more the medium-term aspect versus Oticon Zeal?

Yes. Happy to comment. I think, first of all, Oticon Zeal was launched softly into the second half last year towards the end of the year in selected countries. We started up U.S. during the year. We started VA up in May. So just the sequential full half year will lead to further market share gains, and as I explained before, with the example of VA, we definitely believe there is more to pick up for Oticon Zeal in front of us. And Reveal, of course, is going to build a renew or support the current momentum.

So yes, we believe in market share gains. And yes, we know we are likely to face more competitive launches as well. We don't know what they are. That's also why we mentioned that in our assumptions that that's, of course, built into the guidance that it, of course, ultimately depends a little bit also on what competition comes with, but it's in there and it spreads the momentum. It's also because the group today holds more than half is the Hearing Care business, which has another less sensitivity to competitive launches and therefore, a momentum stability in that, and that's the comfort.

We still have the same view on the market, and it's still, you would say, considered slightly conservative, but the political uncertainty remains. So second half, 2% to 4%, just like we assumed for first half, then turned out to be 4% and not the 2%. And that's still the biggest, I would say, swing element in second half in addition, of course, to getting lighter overall competition will come with, and we so far have only seen limited presentation of that, only 1 out of 3 assumed launches.

On the -- if I understood your question right, it was a little down the previous one. How will the technology come into the portfolio? Well, there is, of course, a plan for the coming period on how the Oticon Reveal platform will enter other form factors and styles and also for Oticon Zeal, how that product concept is going to continue to evolve. It was a first version, and we see a long journey for products built this way.

The next question comes from Martinien Rula with Jefferies.

I would have 2, if that's okay for you. So the first one would be on the potential contribution you would expect from the new platform. The question really being that it proved that you were conservative on Zeal's potential given the massive organic sales growth acceleration that we've had in the wholesale part of the business. So, I was wondering if this discrepancy between what you originally had in mind for Zeal and its effective contribution to the business has influenced in any way the way that you are thinking about the commercial potential for the new platform?

And the second question would be a question that relates to the group gross margin. Obviously, you now have the contribution from KIND. Historically, the gross margin of the business for the group was supposed to sit between 76% and 77%. I was wondering as such if the integration of KIND has changed in any way the way we should think about the group gross margin in the future or not?

Yes. Thank you very much. I'm not fully sure I fully got your first question. But the new platform will benefit from the momentum from Zeal for sure. Again, we have opened new doors. And we really look at it as a portfolio. It's the perfect match for first-time users. It's a good match for existing users. Some prefer the one over the other. So I think the 2 go well hand in hand. I think that's the simple answer. And on the gross margin, we are slightly above.

Rene?

Yes. So I would say our elevated gross margin in the first half year, we are super happy about both the contribution from KIND, as you mentioned yourself, but also a quite unique, you can say, ASP contribution. And whilst we also expect actually for the second half year of this year to see a high gross margin above 77% and maybe even slightly higher than H1, then it is slightly premature to fundamentally change our view on gross margin being in the high end of the 76% to 77% range. That's how we look at it today.

And our last questioner will be Falko Friedrichs with Deutsche Bank.

And I've got one last on the Diagnostics business. Could you provide a bit more color on this performance in the second quarter? And are you confident that you have seen a more sustainable turning point right now for this business in terms of the growth?

Yes. I would say, most importantly, it's -- if you look under the numbers, it's really the instrumentation sales that's growing. So of course, service and calibration is a more stable type of business. The calibration comes at a certain frequency. You need a certain number of disposables to run the business. But when do you decide to upgrade your instrument or expand your clinics? And that's the positive element that we see, you would say, some release of the many orders that somehow have piled up and the uncertainty.

So you can say it is back to the Q2 political change last year that kind of made investment goods stall a bit, I think, in many categories. So yes, we see there is a somewhat easing up of the market. Can things stall again? Yes, if things change. But right now, we feel that the momentum is good and solid. You, of course, have to look at last year's growth rates quarter-by-quarter when you estimate forward, they also changed quite or had certain dynamics last year.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you, operator, and thank you so much to everybody for joining us on this call. I know we do have a couple of people in the queue, but we'll reach out to you separately to take questions offline.

As always, we will be on the road in the coming weeks, and we look forward to seeing you there. Have a good rest of the day.

Good afternoon, everyone, and welcome to the Conference Call for Demant's Interim Management Statement for Q1 2026. My name is Peter Pudselykke, and I'm heading up the Investor Relations activities here in Demant. With me here today, I have the usual team. It's our President and CEO, Soren Nielsen; our CFO, Rene Schneider; as well as my good colleague in the IR team, Gustav Hoegh.

For the call today, we will follow the normal process. We kick off with the presentation, which will be followed up by a Q&A session. And we expect the total session to last no more than 1 hour. When we get to the Q&A, we kindly remind you to limit yourselves to 2 questions at a time, please, to allow as many as possible to ask a question.

Before we dig into the presentation, please do pay notice to the disclaimer on Slide 2. And with that, on to Slide 3, I'll pass the microphone over to you, Soren, to kick off the presentation with the agenda, please.

Thank you very much, Peter, and welcome, everybody, to today's call here. I'll take you through business highlights and key financial takeaways, dive a little more into the different business areas, comment on the outlook for 2026 and then open up the floor for questions.

Highlights of first quarter 2026. Well, the overall highlight is a strong start to the year for the group, delivering 6% organic growth, which is obviously in the higher end of our expectation. Growth was additionally supported by 10% growth from acquisitions. Hearing Aids delivered a very strong organic growth of 9% with growth momentum being fueled by Oticon Zeal and our existing product portfolios, and we can only attribute it to the strength of our industry-leading AI hearing aid platform delivering fantastic performance at very low power consumption.

The integration of KIND is progressing as planned with KIND as, of course, a significant contributor to growth from acquisitions in the first quarter. Structural changes announced at the full year report in our business to ensure higher growth and improved profitability were announced and have been executed in line with plans for the quarter. And maybe also worth giving a small comment to the market development. We're going to get back to the more details, but we saw an estimated market growth of 4%, which was in the higher end of our expected 2% to 4% growth for the full year.

Key financial takeaways from the first quarter. As already stated, organic growth of 6%, which is again on the higher end of our expectations. And then you can, of course, in the table to the right see how it's composed of local currency growth, organic growth, acquired growth and also the negative FX impact. Gross margin increased primarily from 2 elements: higher ASP in Hearing Aids and a positive mix effect, meaning when Hearing Care grow faster than Hearing Aids, then we'll see a natural uplift to the gross margin.

OpEx saw organic growth in line with our expectations, and we continue to invest in the business, in particular, of course, in innovation while maintaining a strong focus on cost management, including the already addressed structural changes to, everything else equal, lower the cost growth. Acquisition contributed, of course, to OpEx due to the consolidation of KIND and of course also other acquisitions. EBIT before special items improved compared to first quarter '25, driven by Hearing Aids and the consolidation of KIND and this being despite the negative effects from exchange rates.

We continue to see solid cash flows, both from operation and free cash flow was positive, both were positive in the first quarter. And on the outlook, we maintained the outlook of organic growth of 3% to 6% and EBIT from DKK 4.1 billion to DKK 4.5 billion. However, with the comment that due to the strong receipt of Oticon Zeal in the market, this makes results at the lower end of the range less likely.

Business areas, we start with the hearing aid market in the first quarter. We estimate that the overall unit growth was around 3%. As always, we have statistics from 2/3. So this is relatively solid. Q1 was relatively broad-based, however, still below the structural unit growth rate of 4% to 6% being 3%, you could say, very much in line with what we saw during last year. The ASP was estimated or is estimated by us to be up by 1%. This is stemming from geography mix, channel mixes and certain price improvements in certain channels. And of course, also, by example, us selling more premium products into the market. This is 1%. So all in all, a 4% estimated growth rate.

Growth in Europe was primarily driven by Germany and France. In the U.K., growth was negative. This is back to NHS having a very strong fourth quarter, and therefore, buying less in the first quarter. So not really structural, more timing of ordering. Growth in North America was driven by the private pay channels, but overall growth was significantly impacted from negative growth in Managed Care. VA growth improved, partly supported by easy comparison figures. In Canada, we saw unit growth remain solid. Rest of the World delivered growth driven by Japan and slight growth in China. We estimate that several emerging markets saw solid growth as well. Again, all in all, a market growth of 4%, meaning in the high end of our expectations for the full year of 2% to 4%.

Hearing Aids, from our side, significant growth following the launch of Oticon Zeal. With the Oticon Zeal now being rolled out in all major markets here in the first quarter, we can confirm and that's basically, I would say, today's main message that once Zeal is introduced in the market, we see renewed momentum in the business. We both see strong interest around Zeal and sales of Zeal, but also growth in our existing product portfolio, and it speaks to the strength of the entire portfolio.

This has, in combination led to an organic growth of 9%, driven by share gain in terms of value, but also in units and both units and ASP supported the growth. We continue to invest in the business, including new products, and we can also confirm we will come with new products in the second half. We have no more comments to what exactly it is, but we will also be bringing new products to the market in the second half of the year, just like we did in addition to Zeal, by the way, in the beginning of this year.

Europe growth was fueled by very solid performance in Germany and U.K. France, we saw smaller growth, and this is back to value versus units. There is a negative mix development since last year because more units are in the free-to-client driven by the upgrades. Strong double-digit growth in North America, organic growth in North America, very strong and positive feedback to Zeal. U.S. is the market with the highest or biggest market for premium products. So both Zeal and our existing portfolio experienced a renewed momentum and strong momentum, and this leads to very strong growth in the U.S. commercial market and also growth in VA, more driven by pricing.

Flat organic growth in Japan and China slightly negative. Rest of the World, organic growth was strong. To the right, you can see the growth distribution. You can also see, of course, the strong and significant development in internal revenue stemming from the KIND acquisition mostly and also the growing share of wallet there of Demant products.

And then I will spend a little more time commenting on Oticon Zeal. We were also ourselves a little bit, of course, unsure until we have seen how things play out in U.S. And therefore, I will comment to conclusions now on the product after being broadly introduced. Just to remind everybody, what is it that makes Zeal unique? It is very unique and unmet or unmatched to combine such a small instrument with the latest and greatest in AI signal processing, full connectivity, rechargeability and the ability to do a same-day feeding. So an unmatched product in the market, and therefore, also a positive feedback from the market.

And what we can now confirm and share, you see here kind of 3 sections. The first one is who can actually use Zeal? And if all hearing-impaired users are 100%, then there is around 1/3 where the physics, meaning ear canal, something makes you not having this as the right form factor for you. Then out of the same 100, there is around 20% that don't have a hearing loss bigger than what Zeal can support. And therefore, all in all, you end with 55% of all hearing-impaired people that choose to get a hearing aid being candidates for Zeal. So a big potential.

And there's been many discussion whether this is just an in-ear category or not, and CIC-only and on, we can say this has a broad appeal and where the broad appeal is seen most clearly is, of course, first-time users that we know are more skeptical to the cosmetics. And what we have seen so far in the data we have is that around 2/3 of all Zeal users are first-time users. This is more than the normal, which is more like 50-50 or 60-40, a little different from market-to-market. And this means that there is an over-representation of first-time users, but it's not exclusively for first-time users. But this is exactly also the commercial angle, of course, when it's good for first-time users, it's also good to attract traffic to your business and interest.

And this, I have no doubt, is part of why Zeal has broad appeal and why many customers would like to be able to offer Zeal. We also had questions and some ourselves, how many will go with a dome? How many would need a custom fitting to make it perform well? We can see that 95% of all fittings we have participated in so far. This is U.S. data, I believe, is 95% dome. So it is a same-day fit concept, and it gives very strong results this way.

And then to talk about the momentum, what we have tried to illustrate here is the fundamental of what's happening. It does create a momentum. It does create interest. It open doors to new customers, and both to existing customers and new customers, it pulls in both sales of Zeal, but also a significant uplift to the remaining portfolio.

So what the graph to the lower left illustrate is a run rate illustrative before introduction of Zeal and then post Zeal, you could say the distance between the dotted line and the full line is sales of Zeal and the below is the uplift to the existing portfolio. So we see both effects and they are both stronger than anticipated or at least in the highest, most positive scenario, and that's what we see now. This is solid. This is maintained. We can see it both in the markets that introduced all the way back to [ OHA ] so more than 6 months in the market, but also markets where we have been in 2 or 3 months.

So we see this as a global effect. And again, why U.S. and North America ends up playing an even bigger role in this and which is now why we can reduce the uncertainty is, of course, that that's the market in the world where most premium products are being sold. And therefore, it was so important for us to see the effect in U.S. before we could, you could say, increase our own comfort and also your comfort in the fact that Zeal is a very successful product concept that drives, again, both traffic in itself and sales also above what we had as a, you could say, middle-of-the-road scenario, but also pull in extra business of the remaining portfolio.

Zeal is available in all major markets. It's still only available in a premium price point, also priced above basically all other products in the market. And that, of course, also attributes to the value that it brings to clients and brings to our customers on the wholesale side. We have had a staggered launch to make sure we could supply the markets before opening the next one. We have full supply and operation is running well. We have launched in all major markets unless there is regulatory work outstanding. And we have also May 1 introduced Oticon Zeal in VA and now look very much forward to the uptake in VA.

So all in all, a strong launch, strong feedback from customers and end users that are very happy with the product and also a testament to our, I would say, industry-leading AI-based platform, again, which is based on a very low power consumption, still delivering all the benefits, and therefore, able to use a much smaller battery than competitors and also being on all the time, where in most other applications I've seen at least, there is some kind of limit to how much you can actually use the AI system.

Moving on to Hearing Care. In first quarter, we saw good performance with the integration of KIND progressing as planned. We saw a remarkable total growth in local currency of 26% coming from 4% organic growth and 23% acquisitive growth. So a very big step-up for that business, but also showing a mature and stable business that continued to deliver strong, solid organic growth rates. So a good start to the year as well for Hearing Care despite of the many things going on. And it was both units and ASP grown, and we have definitely also see markets where our own retail have benefited from the introduction of Oticon Zeal, similar to many other companies.

In Europe, solid performance across regions, driven by strong performance in U.K. Performance in Germany was also solid, good organic growth in general in North America with solid growth in Canada and good organic growth, solid organic growth in the U.S. Australia saw good growth, whereas China was slightly negative after several quarters of good performance.

Diagnostics had a good start to the year, strong finish, as you will remember. So despite still facing certain headwinds in the U.S. markets from the market still not growing as normal, then a good start, delivering 4% organic growth across many markets. However, Europe being the primary driver of growth, a good example of that, U.K. and Poland, whereas U.S. had a slightly negative growth, again, still attributed to a lack of market growth in U.S. Canada was the primary -- therefore, the primary driver of growth in North America. China continued to be impacted by general market weakness and was a drag in Asia. Most other markets did well for Diagnostics.

To outlook and our outlook assumptions. I would only highlight market. We guided when we started the year for 2% to 4% growth in the market, keeping general macroeconomic uncertainty in mind. We still think this is the best take on the full year. We can very quickly see a few percentages up and down. But of course, we have seen a good positive start, and we could see that continue, of course. The rest, special items, et cetera, there are no changes, and therefore, I will not repeat all of them.

So financial outlook is maintained. However, we find it less likely now that we will before -- in EBIT before special items and organic growth will be in the lower end, and this is attributed to the reduced uncertainty around Zeal's ability to deliver growth, and of course, also having seen such a strong start to the year.

And with that, let's go to Q&A.

[Operator Instructions] Our first question comes from Niels Granholm-Leth with DNB Carnegie.

First question would be about the ITC, CIC category. So where would you expect this part of the market to be as a percentage of the overall market as of today? And what would be the prospects of this category growing in size going forward?

Then my second question would be if you could just remind us of your exposure to the Managed Care category in the U.S. where you mentioned that you're actually growing despite your modest exposure to this category?

The world market for in-ear CIC, ITC products, I would still say the volume of Zeal compared to the total in-ear having all price categories in mind, all brands and so on, I would say, still not something that significantly changed the assumed 10%. But of course, you can zoom into individual businesses where it is and you would definitely see a higher share. But again, remember, there is many channels and customers in the world to which it's not introduced that also sell in-ear products. And therefore, I think it will still be -- yes, I haven't done the percentages, but not significantly big on the 10%. But for our business, of course, significantly changing.

We were under-represented. We're growing that. And with the customers to whom we have introduced it, yes, a significant change to product mix. In the premium segment, of course, we still talk about a premium-only product, which also put some limitations to the total market growth of the category. And Managed Care, yes, we are definitely under-indexed. We actually see good growth in our Managed Care business. So absolute good growth as well. So for us, it is despite of the headwind from the market, a positive addition what we experience right now.

So we shouldn't expect it to grow further into Managed Care from here?

It's one step at a time, but upwards, yes.

Our next question comes from Andjela Bozinovic with BNP Paribas.

First one is on the guidance. Can you please discuss why after a strong Q1 and what seems to be a strong start into Q2, you have reiterated the full range for the guidance? Can you discuss further phasing into the year and what is needed for you to maintain this momentum?

And the second one is on markets. So we have seen the positive development, especially in the U.S. in Q1. And I was wondering if the U.S. recovery is mainly driven by easy comps from last year or you expect the market growth to continue to improve throughout the year? And a follow-up to this is we've heard from your peer, Amplifon, that they are expecting the pent-up demand in the market to realize, especially in EMEA region. Can you give us your thoughts on this?

Yes. Thank you very much. First of all, why keep the guidance. We are still within what we guided for. We see a market delivering 4% growth. We guided for 2% to 4%. We could see the market be 3%. We could see the market be 2%. Things go up and down. There's also a little bit of number of working days between quarters, et cetera. So that's definitely still we think the right guidance. Then, of course, our own, we have done well. We have seen a market in the upper end. So therefore, we also land in the 6% for the quarter, and we find it less likely on the full year basis to deliver in the lower part.

And I think that's as far as we can take it for now. Of course, if things continue to develop this positive way, both market and us, then we will also further increase the likelihood of being in the positive end of our guidance. And that's the color we try to bring you. And we feel that's the right assessment of what's in front of us and still the uncertainty related to a dynamic market with multiple competitors, et cetera. On market for Q1, is it only comps or what is it? Not in particular. I think this is, again, I mentioned the NHS, then timing of orders and so on. And so there is always a lot of dynamics.

The regions you also saw last year, varies, who in the exact quarter delivers the growth. So looking at the full year, we saw 3% in units. Now we have seen 3%. So therefore, we take this as stability, not particularly upwards, but it is true that if there are people not fitted in a certain period, yes, then theoretically, you build for a later uptake. And that's also why it is unusual that you see 2 years in a row with a below the 4% to 6%. We have basically not seen that for many years. So yes, our 2% to 4% guidance for the full year, as we said in the beginning of the year, could be seen as slightly conservative, but we prefer that against being too optimistic.

Our next question comes from Martin Parkhoi with SEB.

Yes. Martin Parkhoi, SEB. Firstly, of course, Zeal with the addressable market of 55%. Are there anything you can see that is possible with the second-generation Zeal? Although that it's maybe too early to talk about that, but are there any possibility of with this size and that production technique you have that you can lift the hearing loss, that it can meet or you could do anything that would fit better into -- anything you can do on that front?

And then secondly, just again, I don't just want to talk so much about the guidance. It's obviously somewhat conservative. But can you talk about the momentum in the February and March versus what you saw in January? And if that momentum for February and March is also what you have seen at least in going into the second quarter?

Yes. Thank you very much, Martin. No, I cannot disclose a lot about the future, but we always end up improving Hearing Aids. And I would say, for now, squeezing the size further, we would have to scratch our head a little bit, but I would find it more likely that we over time would be able to increase the fitting range, meaning we could fit slightly higher hearing losses. And another 5 or 10 to be would definitely bring in more as the penetration is higher when you get higher hearing losses. So yes, we, of course, work on how to make Zeal fit even more people over time.

And then the sequencing, of course, it matters that we had an introduction in late January, early February in North America. But on the other hand, there is also a certain introduction effect. So if you take the average for the quarter, then things are relatively stable with, of course, continued slight upwards positive. We also look at the comps from last year, and you saw the momentum growing during the year. So what do we see? Well, we see a continued strong momentum in the business and expect that to continue.

Our next question comes from Martin Brenoe with Nordea.

Different Martin, slightly different question on Zeal. Just wanted to understand what the cadence could be in terms of not a new generation of Zeal, but just the same generation Zeal at a lower price point. At what time would it make sense for you guys to introduce a product that would be sort of more affordable? That's the first question.

And then the second question would be on the reception of Zeal in France. How has that been doing compared to what you have seen in the U.S.? And should we expect to see more sort of expansion to new markets here in Q2?

Yes. Thank you, Martin, for that. I would say as long as we have a good strong demand for the pricing we have and the price points we have chosen to introduce and match that well with production capacity, I don't see a need to expand it further. So any timing of additional price points or brands for that matter is something we will share once it happens.

On France, it's difficult to call out an individual market, but France would also experience that it creates a new momentum in the business. We introduced it relatively long into March, but we have not seen -- or we have seen the same effect in France as we have seen in other places. But keep in mind that the premium sales in France as a share of the total French market after the many free-to-client products coming in is not the same share of the market as it is in U.S. and therefore, slightly different. But same good momentum, definitely bringing attention. Definitely, France has for long been characterized as either as a RIC or it's a CIC type of market. So good positive trend, I'm sure.

Our next question comes from [ Zhang Wen ] with Citi.

This is Zhang From Citi. I'm going to ask about the market. The first question is, can you provide a bit more comment on the Hearing Aids market development in the quarter? Specifically, what was the exit growth rate for wholesale versus the average of 4? And is there any comment you can provide on April and May?

And the second question is whether you have seen any signs of disruption or opportunities from the announced deal between Amplifon and GN Hearing in the market?

Yes. Thank you very much. Well, we always have a natural seasonality in the first quarter where January is basically the weakest month in the full year. And of course, you can look at the growth, but it's almost a little bit relevant because of the actual absolute size of the market. So yes, we have seen an improved growth rate during the quarter, ending relatively strong in March, but there's also an effect of one more working day compared to last year. So all in all, a, I would say, modest upwards going trend, but don't overinterpret it. But all in all, 4%. And that's -- yes, it's in the higher end of what we guided. It's in the lower end of the normal. So nothing really seems to change. We don't have market statistics yet for either April or May. So we can only look at our own business, and that is, yes, a continued strong momentum. So nothing there.

Sorry, your second question, I hadn't made a good enough note on that. Well, I can't comment on the specific, but it is also always so that when big things happen, just when we -- as when we acquired KIND, then there is a bit of dynamic and disruption to stability of customer relationships and so on. And we, of course, try to benefit as much as we can from that.

And maybe as a reminder, sales to Amplifon from Demant is very limited, less than 1% of sales and even less of profit. So there's no negative for sure impact.

No, no. It's a pure, I would say, opportunity.

And sorry, just to confirm, whether you have already seen the disruption in Q1 that you could perhaps take advantage of or is it more of a forward-looking comment?

Yes, yes, that's always something on the longer run. Yes, discussions are going on and people ask a lot of questions, what do we think and so on. But materializing, not anything meaningful in the first quarter.

Our next question comes from Martinien Rula with Jefferies.

It's Martinien from Jefferies. I would have 2, if that's okay for you. The first one would be a very quick one actually on France, because as you know, we've had one of your peers reporting yesterday as well. They commented a little on France, saying that the French market was up in a solid way in Q1, but given the anniversary of the reform and so on the trend for the remainder of 2026 was somewhat uncertain. So I would love to hear your thoughts on that one.

And the second one would be on Zeal. I appreciate the slides that you've provided us with the comments of more than 50% of your addressable market being relevant for Zeal and that 2/3 of your Zeal customers are new users. But I would love to hear your view on the remaining inherent risk of cannibalization and how you intend to balance or mitigate that risk with the new products that you introduced into H2. Will these products be differentiated because you intend to innovate on the design side of things, on the features, battery capacity or is it also just on the pure tech side with stronger noise filtering capabilities and so on?

Thank you very much for your 2 questions. It's difficult to have a very firm and we don't have any different view on France. We said we will see growth in France. Some have been speculating it, whether it for the full year would be negative. We believe in growth full year. And yes, there is definitely this effect that due to the annualization, you could argue that you would see more growth in the first quarter in units than later. I don't think it's coming like that precise than exactly the day when 4 years are gone, then people come in and get a new hearing aid. So many come 4.5 years, 5 years. So I think we will see a continued good inflow of users. Still the main tricky point is the product mix that is realized. And therefore, more units, a little less on the ASP side.

On Zeal and risk of cannibalization, I think I would have to repeat what we have seen with Zeal. Any new product that has market relevance brings in momentum and business to the one that brings it. And therefore, I would say, no, I don't see a significant risk of cannibalizing Zeal with new products. Zeal has its relevance in the market. Other new products would have additional, and you would most likely give all products are perceived good and they should be from us, then you will see momentum increase.

Our next question comes from Richard Hombach with Bernstein.

Congrats on the strong quarter. I have 2 questions, please. So first, you noted that both unit growth and ASP contributed to the performance in Q1. Would you be able to quantify the contribution? How much of the ASP lift was driven by product mix versus improved geographic or channel mix?

And then secondly, you briefly mentioned the KIND integration. Could you give a bit of color how you are progressing in the conversion to Demant products?

Yes. Thank you very much for your 2 questions. It's right, it's both unit growth and ASP growth. They are not that far from one another, but ASP is the strongest effect, and that comes from the mix arriving. You can always discuss is it product or is it geography? I would say, it's geography and then it becomes product mix, because again, North America, U.S. delivering double-digit growth, then you do get a positive ASP effect because more people in U.S. buy the premium products. But we have market share gains also in units, and then I think you have enough to figure out more or less where we are.

On KIND integration, yes, it goes well and follow plans. And part of that plan is to significantly increase the share of Demant fitted products. And as you can see, internal sales have quite strong organic growth, and that's definitely a key contributor. So yes, it goes well with selling more Demant products. We also anticipated that the fitters are very familiar with the Oticon -- or not the Oticon, the Demant product portfolio in KIND's own range. And that's what we see. I cannot comment on how far we are, but it's going very well.

Our next question comes from Philip Omnou with JPMorgan.

Can I just ask, so you stated that Hearing Aids growth was supported by both Zeal and the existing portfolio. Can you help us sort of understand or quantify how much of that Q1 Hearing Aids growth came from Zeal versus the rest of that portfolio?

And then my second question, just on the Costco side, can you help us understand where we are with the Starkey trials? And are you assuming anything within your guidance regarding an additional supply being added in that channel?

Yes. Thank you very much. I cannot go into further details on what contributes from what, but they are both meaningful. Absolutely, Zeal is selling more than our plans and doing very well. But also, I would say, what have been the biggest difference in, you could also say, our own guidance and where we are a little bit uncertain is, yes, would it ultimately be cannibalization from your existing portfolio or would it be incremental to selling more of your existing portfolio? And it's a meaningful uplift to the existing portfolio.

One example is you have a user in trying Zeal, figure out for whatever reason, it doesn't fit the ear canal. It's not what you want. Well, then the most natural thing if the product is performing well from a sound quality point of view and deliver great benefits, well, you convert the client to another Oticon hearing aid that sound the same fantastic way. And therefore, it also pulls in sales to clients where you might have fitted other RIC products. And that's just an example. So it's meaningful for both.

On Costco, I can only comment on our own business. It is sequentially stable and good and strong. We, I'm sure, maintain a #1 position. Is it part of the guidance that some of the suppliers could gain further share? Yes, it is. That's within guidance.

Our next question comes from Aisyah Noor with Morgan Stanley.

First one is maybe a technical question for Rene. I think you mentioned the additional 1 percentage point M&A growth for the full year was for other acquisitions and not from a stronger outlook for KIND performance. Can you maybe disclose what acquisitions are these and where they are?

The second question is maybe again to push Soren a little bit on the guidance range of 3% to 6% organic growth for the year. I understand the point around conservatism, and maybe it's just semantics, but you said the lower end of the guidance range is less likely. Is there a chance here where the upper end of the guidance could also be too low given you're already doing 6% in Q1 itself? I guess another way to ask this question is, is 6% still the blue-sky scenario or is it more midpoint of the new range?

Yes. Thank you very much. Do you want to start, Rene?

Yes. So on the revised, say, contribution from acquisitions, it is related to our acquisition of the Amplifon business in the U.K. that we add to the outlook. Everything else is on the plans as we have laid them out in February. So that's the reason.

Yes. And on the guidance, you read the less likely very well. Are there things outside 6% that could happen? Yes, of course, but it's not our take right now. One of them is, of course, the market as an example. If we end up exceeding the 2% to 4% or continuously being the other end, then yes, things could be different. If Zeal continues to build a strong momentum and exceeds our current expectations, yes, we can keep it on. Can we find things that put it the other way? Yes, we could also. So this is our best take on the situation right now, less likely in the lower end and 3% to 6% growth and maintained, but also similar less likely in the lower end on the EBIT side.

[Operator Instructions]

Our next question comes from Andjela Bozinovic with BNP Paribas.

I just wanted to touch upon the point that you made during the call that you want to introduce new products in H2. I'm just wondering like what can you share with us at this point? And how do you think about new product introductions between the form factors? So would you continue to innovate and raise behind the ear or you want to focus your innovation on the in-the-ear custom form factor?

Yes. Thank you very much for the question. We will maintain to our traditional strategy of not disclosing details. But yes, it's meaningful products that we will bring out. And yes, we always work to improve our portfolio. Sometimes it's core technology and what we call a new platform, sometimes it's additional form factors. We don't pick just one. It is important that you have a complete strong portfolio, high relevance for all users and all purposes. So I think general logic is, of course, to revisit the portfolio and look for either weaknesses or relevance of moving on. And I think that's as far as we can take it today.

And you wouldn't say that this halo effect from Oticon Zeal has changed your perception into where you need to launch new products?

No, no. This is a launch scheduled for the next 1 to 2 years. It's relatively fixed and on track, similar to the opposite question, whether it was tactical to do platform before Zeal or whatever. These things are relatively fixed. We have worked a lot on Zeal to create something really innovative and spectacular and very unique. It has given us a tremendous attention in the market, which we are very good and happy for. But there are also other things that needs to be done to make sure we can address the entire market and all elements of the market.

Our next question is a follow-up from Richard Hombach with Bernstein.

Just super quickly, could you please elaborate on the decision to separate the Head of Hearing business position out again? And why was now the right time? And are there specific priorities that Mr. Bassel will be asked to focus on in the new role?

Yes. Thank you very much for the question. And maybe just a little bit of context if some have just seen it, we have just today released an investor news, which says that I'm after 9 years of both serving as Group CEO and President of our Hearing Aid business, have chosen to now focus my time fully on the CEO role of the group to make sure we continue to deliver growth on group level and strategically move forward in the right way. The group have in those 9 years almost doubled. So time has come to strengthen the overall leadership of the group further by adding a dedicated leader to the Hearing Aid business, similar to what we have for Hearing Care and Hearing Aids. And our new leader, President, will join us June 1 and come with a solid experience from MedTech, have a good combination of a strong commercial experience, global international and also understanding of core technologies, which fits very well with the profile needed.

Is there anything special? Yes, continued growth and deliver great results driven by the recipe we have now followed for some time of delivering innovative new products to the market at, I would say, growing speed and also capturing benefit of new technologies such as AI. So no revolutionary changes. We'll make a good solid transition. I'm also still here to advise and be part of developing the group, including the Hearing Aid business, but the daily leadership now have a fully dedicated business unit leader similar to our other 2 business areas.

This concludes our question-and-answer session. I would like to turn the call back over to management for any closing remarks.

Thank you, operator, and thank you so much to everybody for joining us today. Before we close out the session, we want to give you a very early heads up as we expect to host a Capital Markets Day here in the fall of 2026, more precisely on November 24 in Copenhagen. We will, of course, revert with additional details when we get closer to the date. Beyond this, please do reach out with any questions that you may have after the results here. And as always, we will try to be on the road in the coming weeks, and we look forward to seeing you there. Have a good rest of the day.

Good afternoon, everyone, and welcome to the Conference Call for Demant's 2025 Annual Results. My name is Peter Pudselykke, and I'm heading up the Investor Relations activities here in Demant.

With me here today, I have the usual team, our President and CEO, Soren Nielsen; our CFO, Rene Schneider; as well as Gustav Hoegh from the IR team.

For the call, we will do a presentation, which will be followed by a Q&A. We expect the session to last no more than 1 hour in total. [Operator Instructions] before we dig into the presentation, please do pay notice to the disclaimer on Slide #2.

And with that, I will go to Slide #3, we'll pass the baton to Soren, to kick-off the presentation.

Thank you very much, Peter, and welcome, everybody. The agenda for today is key events for 2025 financial takeaways, and then comment on sustainability advancement. More details on business area reviews, not the least the fourth quarter. Then Rene he will do group financial and also take us through outlook and initiatives to improve profitability.

And if we take a 2025 in total, at group level, we delivered 2% organic growth, 5% in local currencies. Of course, a significant element from acquisitions, headwind from currencies leaves us with 2% reported growth and biggest, you say, expansion is in Hearing Care, which now is the biggest business area, as you can see in the business mix split.

Gross profit, up 2%, but down on margin related, to I would say, hearing aids, some extent, diagnostic, but I'll get back to that. EBIT down 10% before special items and free cash flow down 11%. Key events in 2025, we acquired the KIND Group in Germany, closed the deal in December, so we have 1 month in the books, one of the world's leading retailers and with that a significantly expanding our position globally, but in particularly in Germany, to a #1 in Hearing Care.

In October, we introduced Oticon Zeal in selected markets and a launch that so far have created a lot of excitement and a lot of good momentum to carry into '26. During 2025, we signed agreement to divest both EPOS and Oticon Medical in line with our overall strategy to be more focused hearing healthcare company.

The hearing aid market in 2025 was softer than normal, and particularly in the U.S. where we saw flat market growth for 2025 in total.

Hearing Care delivered very solid performance in -- solid performance, not the least in the view of the global hearing aid market, whereas hearing aids and diagnostic delivered softer growth. All 3 business areas showed an improved and strong performance in Q4.

Key financial takeaways for the second half group organic growth of 4% for the second half in total. So a sequential improvement from the first half fueled by all 3 business areas. Gross margin decline versus second half '24 due to ASP headwinds in hearing aid and increasing share of rechargeability, I'm going to get back to it, but the ASP headwind comes from channel and geography mix, so selling [ more ] in countries and channels with a lower ASP and less in higher-priced markets like U.S.

Diagnostic was also a minor drag on the gross margin coming from their product mix and some geography. OpEx grew 5% organically, but -- and as already guided for, and expected flat sequentially from H1, so still reflecting a cautious approach to cost expansion when we look at in sequentially the 5% to some extent, originates from a significant holdback at the end of '24.

Acquisitions added 5 percentage points growth compared to second half last year. EBIT before special items, DKK 2.1 billion, negatively impacted by exchange rate effects and by lower operating leverage.

EBIT margin, therefore, before special items contracted 2.6 percentage points. Special items amounted to minus DKK 128 million. Strong cash flow from operations of DKK 2.3 billion and free cash flow of just around DKK 2 billion. Outlook, Rene's going to elaborate further on it for '26. Organic growth of 3% to 6% and EBIT before special items of DKK 4.1 billion to DKK 4.5 billion and continued pause on our share buyback to bring down the group leverage.

Sustainability achievements quickly, we saw a increase as expected of improved lives by overcoming their hearing loss to 12 million and a growing number of tests in our own clinics following the expansion of that. And when we look at our main -- or 3 main sustainability goals under the headline of Respect for the planet, a planet decrease in our scope 1 and 2 greenhouse gas emissions.

We have now achieved 16% reduction compared to baseline with a target of 46% by 2030. Gender diversity in top-level management now at 33%, so 1 in 3 and with the aim of getting above 35% by 2030. And the number of people that have read and understood out of the people for whom it's relevant should be 100% by 2030.

And you could say, basically already tomorrow, if at all possible, and we are almost there. Business area review, well, hearing aid market in '25 have definitely been special and fourth quarter, which is the new release is no different. We have seen a high unit growth, and this is all units in Europe, but it's all driven or mainly driven by NHS in U.K., the National Health Service that have -- had strong growth partly to expand the inventory levels, et cetera.

And then France also showing high growth as expected due to the annualization of the [ reform]. If we allow ourselves to exclude NHS and France, unit growth was 3% in Europe, in Germany, specifically growth declined year-over-year. North America saw a sequential slowdown from two quarters with 2% growth to 0 and leaving the year with 1%. U.S. or Canada saw a good growth. So it was offset by a flat growth in the U.S. commercial and a slightly negative in the VA.

Rest of the World delivered growth, Australia, positive growth, while Japan saw minimal growth. China saw a sequential improvement, and we estimate that several emerging markets saw good growth. So again, the ASP, we normally believe in a flat ASP, but no doubt that with the geography mix and channel mix in the year and fourth quarter as much, then we estimate that we should see a negative impact on ASP in -- it's not exact science, but in the area of percentage points at least.

So a global hearing aid market that have assumably grown just around 2% in value for the year. Hearing aids fourth quarter organic growth also in fourth quarter improved despite of the U.S. market weakness and the loss of share in U.S. the main area in which we have lost share in U.S. remains to be a large retailer where the number of providers or suppliers have been expanded.

We introduced Oticon Zeal in selected European markets, which have created excitement and momentum change in these 4 countries. We have really seen Zeal lift the sales also in general in these markets. However, with limited impact on the total group level in fourth quarter simply by the size of these 4 countries and the potential, even though Germany is a big country, the premium market in Germany is not that big.

So again, not something that financially impacts that much, if, of course, does some, but not that much in the fourth quarter. So unit growth was very solid. Representing overall market share gains in units across several key markets, I would say, almost with the main exception being U.S. the ASP was negative, as I said, due to geography and channel mix changes.

So France, U.K., Germany, good growth in Europe, all big markets, strong performance in Canada. U.S. growth was negative, as I said, good growth in Japan, South America, and also relatively broad-based growth in Asia, except for China, which, I still would say is market related.

And the rollout of Oticon Zeal, just a few more comments to that. We launched it in Europe and in both Germany, Switzerland, U.K. and Denmark, the conclusion is the same. It is undisputed, seen as a new very innovative concept by both hearing care professional and end users. It does help in having end users take the choice to get going and see less obstacles. So very positively seen uptake with first-time users. It does also lift sales of our other portfolio because it opens door to new customers.

And if an end user have tried a Zeal and happy with the sound quality and the quality of the instrument, but for some reason, don't continue with a -- or prefer to continue with an in year. There might be some comfort issues. The ear canal doesn't work. It's natural to then fit an intent because you'll have more or less exactly the same sound quality and something you just like.

So we do see additional sales to customers that did not work that watch with us. And we have actually also seen limited cannibalization with customers that we already were doing business with and that have taken in Zeal.

So this is the conclusion from the 4 markets. We have also I think, been open about that it's only in a premium price point and that we have lifted pricing in some markets significantly compared to intent. And so far, we have seen acceptance of the price and it has not prevented us from creating excitement and driving sales. That being said, it is a premium price point. It is a premium category type of products, but it definitely also makes some people spend more than they might have thought they would. They had to pick a [ receiver ] on ear instruments where there are more options available at different price points.

I also think we can say that you cannot really say, okay, what is the potential and what's the share and the in-ear market? Because that's not how people is basically first-time users think about hearing aids. They will look at what's available at the table and pick the one they find most attractive. And there's no doubt that by first-time users, this is seen as much more attractive than carrying a traditional right instrument.

So all in all, very good takeaways and we bring this excitement into '26, where we have now launched in U.S., where we will, in the coming weekend launch in Canada and where we -- early March, will launch in France, and then onwards with all remaining significant and major markets. Germany will also expand activity significantly here in first quarter to make sure they get to a full rollout, which was not the case in the initial launch.

So we move on. And again, not to open the discussion already, when we then say we still have something ahead of us, it is because it remains to be a sequential launch so we have to take it market by market to make sure we get off on the right foot. And of course, with U.S. market have been the most muted and a big premium potential, then it also, to some extent, depends on how the market develops, but maybe Zeal can be part of creating renewed excitement and also interest from end users.

So I would say there's still some uncertainty left around that, which I'm sure Rene will come back to. We continue to expand our portfolio also in Q1, we released devices of our latest technology containing disposal batteries, which in some channels and geographies are still important and then also a new offering in part of the pediatric portfolio and then all these new products offer latest and greatest sound quality and connectivity similar to Zeal, where we also get very good feedback on the latest technology, which is also a connectivity technology, which is also available in Oticon intent.

Hearing Care in Q4, solid performance in a weaker than normal hearing aid market, of course, strong tailwind from a month with KIND. So in the quarter, doing 17% in local currencies, 5% organic in -- across the geographies, strong performance in Poland and a number of other midsized European markets continued solid growth in France, driven by the anniversary of the '21 reform.

Good organic growth in North America, driven by continued improved performance in U.S. very positively. However, some negative development in Canada. Australia saw a good growth continuing improved momentum and China also delivered good organic growth, driven by ASP tailwind from a continued better product mix.

So all in all, well done in hearing care in the fourth quarter. And also diagnostic came in strong in the fourth quarter, delivered organic growth of 8% in local currencies. So clearly best performing quarter this year here and in general, a good uptake. Strong growth in U.K. and Germany, good performance across several midsized markets.

U.S. and Canada saw a strong growth, however, driven by service and consumable business again, back to gross margin, which is a little bit lower in these areas. Australia delivered strong growth primarily on instrument sales, and China continued to be impacted by general weak markets and there was some drag on growth in Asia in general.

With that, over to you, Rene.

Thank you, Soren. So let's push through the financials, a little bit of repetition. So I will be quick on this. So the revenue for second half year, we saw solid organic growth of 4%. Hearing Aids and Diagnostics saw a good organic growth and especially Diagnostics improved in the fourth quarter.

Growth from acquisitions contributed 3 percentage points to growth, and we had a FX headwind of 4% predominantly due to the decline of the U.S. dollars.

Turning to gross profit. It increased by 3% to DKK 8.8 billion. We saw a slight decline in the gross margin against second half of last year. And this decline was driven primarily by geography and channel mix changes in our hearing aids business. And we also saw some headwind in the Diagnostics business partly affected by tariffs. And last, also a slight headwind on the gross margin from the FX development.

On operating expenses and EBIT. So we increased OpEx by 5% organically half year over half year, partly due to very low comparative figures as we pulled back on cost significantly in '24. And we have seen a flat development sequentially from first half year into second half year, which is a reflection of our continued focus on cost management.

Acquisitions added an additional 5 percentage point to growth to OpEx in the second half year of '25. And again, also here, we see an offset from a declining U.S. dollar.

When it comes to EBIT, we ended second half at DKK 2.1 billion, negatively impacted by exchange rates and by lowering operating leverage in hearing aids. The decline in EBIT was due to weaker than normal growth in the overall hearing aid market as the main contributor and for us, specifically a loss of market share in the U.S., primarily due to lower sales to a large retailer. And this resulted in a contraction of the EBIT margin to 18 percentage points.

Special items in the period was related to the acquisition of KIND and a noncash adjustment. All in all, DKK 128 million in H2. Cash flow continued to be very strong. Cash flow from operations in H2 of DKK 2.3 billion and just shy of DKK 2 billion of free cash flow. So again, continued very strong cash flow generation. Our capital expenditure of DKK 409 million is an increase compared to same period last year primarily driven by higher investments in production facilities.

Cash out to acquisitions amounted to DKK 5.4 billion. And this, of course, predominantly related to the acquisition of KIND that closed beginning of December. We did not purchase any more shares under the share buyback program in second half year. So we end the year at a total of DKK 582 million as a previously disclosed.

When it comes to the balance sheet items, our net debt increased significantly. Again, this is solely due to the acquisition of a KIND and fully in line with our expectation, our gearing multiple at the end of the year, ended at 3.4%, which is above our medium- to long-term gearing target of 2% to 2.5%.

We will prioritize deleveraging and expect to return to our medium- to long-term gearing target of 2% to 2.5% within 18 to 24 months after the first of December of '25. And net working capital had a modest increase of 3% and this again, predominantly related to the result of adding acquisitions to the balance sheet. So in good control here.

Thus, summing up the financial key takeaways for the full year. As such, we're ending up at 2% organic growth, again, driven by the weak overall hearing aid market. A contraction of the gross margin by 0.6 percentage points, driven by weak market growth, particularly in the U.S. and ASP headwinds in hearing aids due to geography and channel mix changes.

The operating expenses for the full year increased by only 3% organically due to our continued focus on cost management. EBIT before special items, DKK 3.96 billion and an EBIT margin of 17.2%. And special items amounting to DKK 128 million.

And as just reviewed, strong cash flow of DKK 3.85 billion of cash flow from operations for the full year and free cash flow of above DKK 3 billion for the full year also. And share buyback DKK 582 million. So that was the quick review of the financials, and that brings us into the outlook section and initiatives that we have taken there.

So if we start on some of the assumptions that goes into our outlook and assumptions, of course, alluding to that we don't have certainty around these things, but we go in with a starting hypothesis.

And of course, the main hypothesis that goes or assumption that goes into our outlook for the year is our projection for the global hearing aid market to grow 2% to 4%, and in 2026 in value, which obviously is a conservative assumption being temporarily below our medium to long-term assumption of 4% to 6% and also, of course, low seen in the light of the last decade of growing exactly in line with these 4% to 6%.

So we believe it's prudent and in line with what we have seen in the last quarter to take a cautious stand on the market going into the year, and that is what we do with the 2% to 4% for the market.

We will come back to it, but we believe that Demant in all scenarios will grow above the market in '26. Another key assumption on the right-hand side is that as part of our plans for '26, we have launched a company-wide initiative to exactly improve profitability and lower cost growth and specifically in some areas, lead to cost reductions. These initiatives will positively impact EBIT before special items of around DKK 250 million in '26.

Since this is an initiative that is starting now, we foresee that the majority of this impact will be materialized in second half year, which is why, we, for '26 see an EBIT's good more than usual towards the second half year.

Also, product launches impact the phasing of EBIT for '26. So this is an important note. We have seen a significant decline in the U.S. dollar in particular, but also other currencies. And we expect a negative impact on EBIT from FX of DKK 200 million compared to '25, with the impact evenly split between H1 and H2.

We expect the KIND Group to contribute with DKK 300 million on EBIT before special items in '26. This is in line with our previous communication. And we expect a limited impact on tariffs on the group -- from tarrifs on the group, DKK 25 million in our Diagnostics business, also nothing new in that.

So summing up on the special items where we see particular things to take into the account for '26 is now totaling DKK 325 million, of which DKK 125 million related to the previously announced integration cost related to the KIND acquisition. And then we do add to that an additional DKK 200 million related to the foreseen restructuring and also adjustment to the organization and size as part of this cost reduction initiative.

Here, we see DKK 200 million of one-off costs. So all in all, DKK 325 million. So these are some of the core assumptions. And if we -- based on that build up and say some of the components in a more [indiscernible] visual schematic way on the graph on the right. The starting point is our EBIT for the full year '25 or DKK 3.96 billion. From that, we need to subtract the DKK 200 million that is the FX headwind in '26.

That brings us to an FX adjusted EBIT for '25 of DKK 3.76 [ billion]. To that, we would -- in line with the guidance we give here at a contribution from KIND incremental contribution from KIND which means 11 months of EBIT. As a reminder, we did have 1 month in '25. So this is a 11 months of the DKK 300 million, DKK 275 million. And then we need to add the organic part of our business, which includes the before mentioned cost savings initiatives that we are confident will bring DKK 250 million of savings to the OpEx line.

And then adding to that, whatever else we will see of organic impact from profitability in the remaining part of the group. And this builds up to an EBIT outlook of DKK 4.1 billion to DKK 4.5 billion. And important to notice here, the backdrop for this outlook is, of course, the starting point of a market assumption of 2% to 4%. And we have in our plans, and we aim to grow above that 3% to 6%. So taking market share essentially in all scenarios.

So in this light, you can say, of course, that the DKK 4.1 billion which is the lower end of this guidance reflects a very, very conservative scenario where the market, of course, is in the conservative end of the already contributive outlook here and also that our market share gain is modest, but still there.

But this is the starting point for the year, and we feel comfortable with that.

Lastly, just a few more comments on the initiatives to improve profitability. I did mention before the effect in '26 of DKK 250 million, but this is a 2-year program that will -- beginning '28 and onwards bring around DKK 500 million of cost savings to the group.

We also announced today that we estimate that this will affect approximately 700 people globally in Demant in '26, of which 150 are located in Demant. The associated costs that we recognized under special items is DKK 200 million in '26 and an additional DKK 100 million in '27, both, of course, of a one-off nature, whereas the expected cost savings will be structural and permanent.

So summing up, in total, this brings us to our outlook for '26. Organic growth of 3% to 6% EBIT of DKK 4.1 billion to DKK 4.5 billion. Share buyback is foreseen to be paused throughout '26 as we focus on deleveraging. And for modeling purpose, we estimate acquisitive growth of 8%. FX growth of minus 2%, and special items, minus DKK 325 million and an effective tax rate of 23%.

With this, we would hand over to Q&A, please.

[Operator Instructions] The first question today comes from Richard Felton with Goldman Sachs.

The first question is on the -- on your guidance and the midpoint of the organic growth guidance does imply growing ahead of the market in 2026. I think you said you expect to do that in all scenarios. So my question is sort of what -- what is giving you that confidence in outperforming the market in 2026 in all scenarios?

And then secondly, Rene, I just wanted to follow-up on your comments on EBIT phasing linked to product launches. Is that due to the phasing of the Zeal rollout or anything else to consider as you think about EBIT phasing?

Yes. I'll take the first one, Rene can comment on the other. This is in hearing aids market share gains, that is the main driver for that. We, of course, also going to see share gain coming from lifting our share in the German market after the acquisition of KIND. But the predominant is the momentum that I'm sure Zeal will create once we get full rollout in all channels at the end are opened. And also, of course, we continue to have a strong launch program for the remaining of this year and next year. So it's the comfort and all that, that make us be firm on the market share gains in all scenarios.

Yes. On the phasing of EBIT, there are 2 factors to be aware of. One is the effect of our cost savings initiative that will obviously have a little effect in Q2 but predominantly in Q3 and Q4. That is the one. And the second one is the gradual launch of Zeal that, of course, will have an effect here in the first half year, but a full half year effect in H2.

The next question comes from Martin Parkhoi with SEB.

Just a couple of questions. Firstly on -- again, back to the 3% to 6% organic growth guidance. Can you elaborate a little bit about the organic growth assumption across divisions. Now we saw a little bit of a dream run for dynastic in the fourth quarter, but what are you assuming [ genostics ] going into being in '26.

And then, of course, also, the split on wholesale and Hearing Care on our organic growth. I understand that KIND will add of course, acquisitive growth.

And then secondly, just on, Rene on the gross margin expectations, for 2026. It was not a pretty year in '25. What have you assumed of gross margin development in '26 on an underlying basis. And of course, also say how much is the contribution from KIND in that context as well.

Yes, Martin, I will do the first one quick. At this stage, I would say it's equal organic growth opportunities for all businesses. So for modeling purposes, I would be relatively equally spread across the 3.

Yes. And on gross margin, we have our, let's say, general guidance of being in the range of [ DKK 76 million to DKK 77 million ] on an underlying basis, as you referred to, you are probably in the low end of that range, but with the contribution from KIND, we are likely to see a gross margin in the high end of that range.

Just a follow-up, Soren, on organic growth. I appreciate that it's unknown yet if CEO will be included in VA from 1st of May, but have you included that scenario in the high end of your guidance?

It's very specific with the individual channels. We have estimates of -- we entail a growing business in VA during '26, and we do our utmost to ensure Zeal can also become available for veterans. We have not yet achieved that conclusion.

The next question comes from Hassan Al-Wakeel with Barclays.

Firstly, on your comments around intense competition, could you help quantify the impact in the quarter from Costco and how you're factoring this into your guidance for 2026? And how would you characterize share trends in the commercial market in the U.S. And if there are any other adverse share dynamics that you would flag?

And then secondly, on margin guidance for the -- I appreciate a weaker market. But can you help us understand some of the building blocks for a margin which is down year-over-year despite a benefit from the restructuring program in the second half? And just your comment around launches and that. Can you talk about how that would impact phasing and whether you're on track for a platform launch in 2026?

Yes. Let me start with the first on the very last. We don't comment on any new launches before they're there. I think you all know the tradition for that. I can only repeat, we have a strong program in front of us, we believe, for the coming year, including the second half of this year.

Share trends in -- and U.S., you, of course, have visibility to VA where we after recent launches, have seen a minor dip to Oticon but have held, I think, well two things. We year-over-year does see a declining share with a large retailer after expanding the number of suppliers, but relatively stable after that change.

And then with the independent, I can only say it's a very intense fight whether some have been holding that a little bit in the way for Zeal. I can't rule out, and therefore, I would say, sequentially a little bit softening towards the end of the year. But I'm sure and hopeful that we will pick up on that now Zeal out in the U.S. market. I think that's what I can speak to for now.

Yes. And when it comes to the margin, let's say, development in '26, it is, of course, challenged by our starting assumption of a market growth of 2% to 4%. That is the, you can say, fundamental margin headwind that we sit with. And of course, in this slide, our cost initiative becomes extremely important because this is what brings us, let's say, at the midpoint of our guidance, it leads to a flat EBIT margin in local currency and then, anything above that would be margin expansion.

But of course, when we assume a market growth of 2% to 4% margin expands which is not in line with our mid- to long-term then margin expansion per se is a challenge, but at least the midpoint, we are flat.

The next question comes from Julien Ouaddour with Bank of America.

So I have two. The first one is on Zeal, where, I mean, you said the feedback was like pretty good. My understanding is that Zeal is the main moving part for the share gain in '26, as you said. Just could you tell us a little bit what kind of market share assumptions have you embedded in the '26 guide for the ITE category? I'm just asking because we see a complete project working pretty well right now.

And I think another of your competitors just announced new ITE project this morning. And also on Zeal, could you confirm if it's already margin accretive to the group and how the volume pickup could impact the profitability? And a very quick second question is on the ASP. It was down 2% in '25. I think it's below your midterm assumption. You're also feeling intense competitive pressure at the moment.

So do you feel the need to have some -- maybe some kind of price discounts in the [ REIT ] category until you have a new premium platform as Intent gets old? So just what could it imply on the pricing for H1 '26? Could it be down again?

Yes. Let me start with the pricing and then return to Zeal. ASP, when we see it down is a channel and geography mix. We still uphold I think, a strong ability to have significant better pricing than many and most in the independent sector. So no, I don't see the call out for selling Intent because it should be not competitive.

I would also like to stress maybe a little bit back to Hassan's question on product launches. We are very, very happy with the performance of Oticon Intent and Zeal. This platform allows us to exactly do these very high-performing products at now unprecedented small sizes. It is with full connectivity, it is with full AI-driven signal processing that we enable Zeal, and that's why Zeal gets such a good reputation. It's not the first product that you can do as an in-ear instant fit type of product.

But you have never before seen it with such a feature list that is totally comparable to any RIC. So back to my initial comments as well, when we open new doors with Zeal, the conclusion from the first 4 markets is, we also see growing sales of Intent, because it's equally a very good product.

So Zeal is a door opener to a broader sales, and that's also why you cannot measure Zeal's, ASP effect. You cannot measure Zeal comes in with very strong ASP and of course, additional Zeal volume will lift ASP, everything else equal, it's higher price than anything else we sell. So yes, very positive for ASP. If we sell a lot in U.S. and the U.S. market growth, our ASP will go up the ASP effect in '25 is geography and channel related.

Zeal IT category, we have no other products that offer same features all new rechargeable with connectivity type of in-ear products are custom made. They are what's called in-canal which are relatively big devices that don't offer the same discreteness and invisibility as Zeal, if they are to be near as smaller Zeal, that connectivity is not there and typically also limited signal processing in order to accommodate for a much smaller battery.

The core element of Zeal is that it offers a much larger battery than any competitor, and therefore, in this size. And therefore, we uphold the full functionality we know from RICs. And that's the strength. And therefore, you cannot just measure share in the EMEA category, and I don't see any new releases that challenge the position of Zeal.

And just if I can very quickly follow up on your last point. So should we expect at least market share in line with the global average for Zeal in the IT category, I mean, given everything that you just said?

It will naturally go above because Zeal will capture share outside in your category. So you will see compared to -- you, of course, have to look at a certain higher end of that market. There could be markets where there's a lot of relatively cheap in-ear products sold if I allow myself to exclude those, Zeal will take significant share in the premium segment both from existing in-ear solutions, which are typically only the smaller, more cosmetically attractive or primarily and also from RIC products because that's the preference of the first-time user.

Next question from Andjela Bozinovic, from BNP.

Maybe the first one, again on the guidance. Can you give us your assumptions on the competitive environment and especially the competitor launches that are planned in H2 and more specifically in the ear category? Have you embedded the competitor launch that was announced this morning? And second question on the cost initiatives. Can you please give us more details on the initiatives that you're implementing, which areas, which regions would be affected?

Yes. First of all, we, of course, expect competition to continue to try to innovate and bring new products to the market. We don't have anything special in and I would definitely see what I've seen today from a single competitor.

Yes, it's an in-ear product, but in -- as I understand, lower price category and nothing special when it comes to functionality. So I don't see anything changing the fundamental competitiveness and uniqueness and an innovative level of Zeal. And I don't expect others to launch products down that Elite there is a very close relation between the production technology and the ability to make this small form factor with all the features and benefits, as I just said.

And no, I don't expect competition to be able to close that gap very short and not in this year. Cost initiatives, they are widespread across the group. They come basically in all geographies to various extent, of course, depending on our size and footprint. They -- comes in all areas. It's not just operation, it's not just R&D, it's not just any of it is basically the entire company that we have looked at.

But of course, in selected areas, so we can be even more firm in our commitment to invest in R&D in new products in a continued expansion of our hearing clinic footprint, et cetera, all the things that matters to growth. But we will find areas where you could say, inside the box, we can find more cost-effective ways of doing things.

Perfect. And just a follow-up on the first question on the traditional RIC and behind the ear, do you embed any competitive launches in your guidance?

I don't have a specific assumption on exactly who's going to introduce what except that in the last 12 months, we have seen a high number of launches from our competitors. So new premium launches, I would find less likely.

Next question comes from Martin Brenoe with Nordea.

I just have 2 relatively simple questions. The first is on the cost program which will affect a lot of people in the organization. So I would just like to hear about the timing of the cost reduction and the reduction in the number of employees. I guess that we should expect this to be relatively quickly announced and the cost program to be more of a Q1 and Q2 program rather than back-end loaded to avoid unnecessary uncertainty. That's the first question, and then I'll take the second one afterwards.

I'll do that quickly. Yes, when it comes to staff and organizational changes, of course, as quickly as possible to make sure we can move on with the business. It always takes up time and energy. But on the other hand, there's also part of this program, which is centered around cost of goods sold where we want to work against the more and more expensive types of hearing aids we have to do.

That takes some effort from selected groups of R&D, et cetera, before they come in. And before you have used existing parts if it entails a redesign. So there's also elements of the program, which have a longer run but the majority and most of what's related to people will happen here very soon.

And then just the second question is on value growth. I think 2025 was growing around 2%. And some of that were driven by France, which has been benefiting from the replacement cycle, also from the VA with a quite significant price increase, which will lap in May.

So you can say that the market growth is maybe a little bit inflated by these 2 channels and markets. So I'm wondering in your assumption going from 2% to 2% to 4%. And where do you see the sequential step-up happening if you look at the global market from here?

I would say that would be a more equal growth or different split in market growth between U.S. and rest of the world. U.S. was basically down to flat, where the rest of the world grew more. And I would say that's in the assumption of the 2% to 4% that we see a slightly better U.S. market, which will then help on global ASP.

The next question comes from Veronika Dubajova with Citi.

I have 2, and apologies, they're going to be slightly bigger picture. The first one, I just want to push you a little bit on the sort of EBIT guidance. I think if we sort of build the bridge, I think adjusting for FX, adjusting for the cost savings, adjusting for, obviously, the contribution from [indiscernible] I think the guidance implies sort of EBIT that's year-on-year minus 4% to plus 5% against sort of revenue growth of 3% to 6%.

So even at the top end really isn't a huge amount of margin expansion. And I guess sort of right big picture question is, is this the new normal? I mean if we end up in a market where growth is continuously challenged, not just in 2026, but let's say, maybe even in 2027, should we assume it's going to be quite difficult, not just for you, but for the industry as a whole to drive earnings growth? I think that's kind of the question that we've been having lots of discussions around.

My second question, and I apologize for being forthright and blunt about this, but Intent is now 2 years old. You have normally followed 2-year launch schedules. We are clearly not getting a platform in February this year. Can you reassure us that there is nothing wrong with the R&D process and that the delay is a deliberate tactic on your part as opposed to something going wrong in the background? I think given the experience with Zeal last year, it'd be helpful to understand your thinking around that.

Yes. Thank you very much, Veron. And you to some extent, have to see the cost savings in combination with the remaining business. We would still like to continue to invest in R&D. We would still like to invest in further expanding our footprint. And that's why we, in other areas, take cost out. So you have to, in my book, see the 2 together, you can't just take the cost out and then look at the rest.

So in all scenarios, when you take the 2 together, there is a growing EBIT and there is also improving margins, the better we are in the range, of course.

On the more blunt question, no, I don't think there is anything wrong in the R&D. We have made a priority to bring our Zeal, because Zeal is possible due to the platform we have, and we think it holds a big potential half of all users in the hearing aid industry are first-time users around half. And this is a major opportunity there.

And also for some the product, they really want, even if they already have one. It holds a significant innovative element. So our product road map is a conscious choice and not a broken bike.

The next question comes from Susannah Ludwig with Bernstein.

I have 2, please. I guess, first on Viola you talked about it having a higher ASP and then sort of being a positive contribution to ASP. Could you just clarify in terms of the impact on margins, I guess, sort of whether the margin is also sort of higher than the rest of your portfolio, given that higher ASP or given sort of the different manufacturing process, if there's any sort of negative impact on margins?

And then second, I guess, on the cost reduction program, are you able to share a little bit more in terms of which business areas you are targeting? Should we expect, for example, in retail, are there any closures of stores that you're expecting to do as part of this program?

Yes. Thank you very much. Selling more premium is super positive for profitability. And Zeal is intended and will grow our premium share. And this way, yes, definitely. I think we have said before that the cost of producing Zeal is higher than a RIC. So if it was just a substitution and the price was not significantly higher, it would not be.

It's better than classic in-ear instruments and the price is set higher than RIC. So all in all, good profitability, lifting premium sales, which we have seen so far in the markets we have launched definitely good for profitability.

On the cost saving program, it is for all business areas to deliver of course, a little bit different in form and shape. And yes, we would like to do the most on cost of goods sold because that helps everybody. we are very cautious on our retail footprint and network, but there are also optimization opportunities within a network where certain regions, geographies, areas down to cities, you could find that you have stores that are not optimally placed and don't deliver the profit you expect. So we will look also at the network, but it's not the majority of things.

The next question comes from Niels Granholm-Leth with DNB. Carnegie.

Could you provide a little bit more color on the phasing of your growth for this year? So would you expect the year to begin on a slightly weaker note and then end on a stronger one. And also, could you talk about for how long you would expect to maintain Zeal only available in your premium price version would -- should we expect this to go on for the remainder of this year?

Yes. Thank you very much. The phasing of the growth is relatively normally phased and with a little uptake during the year as we see a full rollout of Zeal, of course, but not very different from first half to second half if we keep it at that level. And Zeal only in premium, this is, of course, also a careful choice. We think it holds a very significant potential for value. And as long as it's unique and that potential is, you could say, not fully tapped, then we will be cautious in adding more price points. Will it eventually happen? Yes, it will, but for now it's off the table.

The next question comes from Carsten Lonborg Madsen with Danske Bank.

I only have one question left, and that's actually sort of a high-level question. So the question we are being asked a lot about from investors is whether now that you're implementing AI and hearing aids across the sector, you, your competitors and you're seeing other AI players invest massively in CapEx.

Are we seeing sort of a step change in R&D cost to develop the next hearing aid with AI capabilities? Or are you seeing more of a continuation of R&D budgets that you have seen historically? That's the question, I guess.

Yes. And thank you for the question. I don't -- I wouldn't say we see a step-up. But yes, if you look relatively to years back, this is definitely where you put in more and more effort and the complexity of what we have to develop increases. And that's also why a continued commitment to investment in R&D is key and back to our structural changes.

They are part of making sure we can continue to invest in R&D and a lot of that is into AI-driven signal processing and benefiting from AI, you could say, in all aspects of running a modern hearing aid system.

And a quick follow-up. So should we expect you longer term to sort of enter into more external collaboration in order to drive the AI agenda?

I would say we have an example of that at our research center where the William Demant Foundation have given quite a significant grant to make sure further programs in the research community can be done under the umbrella of our Eriksholm Research Centre. So yes, we do more collaboration also with external parties to build on this agenda.

The last question today comes from Jack Reynolds-Clark with RBC Capital Markets.

Two, please. First on Zeal manufacturing. Could you just remind us whether this is fully scaled? Or is this going to be a limiter for launch globally? And then how long until you're fully ramped and launched across all of your markets for Zeal? And then the second question is, I mean, is the profitability initiative a signal that you're more cautious around the timing of the recovery in market growth kind of over the longer term versus where you were in the past beyond 2026?

Okay. I think I got your questions. I'm not really sure. But the first one, no, we have made a sequential launch to make sure we don't create demand we can't fulfill. That's why we take one market at a time, and we feel comfortable about that and have a good production capacity and can also or have plans to ramp up significantly. So all good. We're a little bit ahead of the curve, if anything. So I think that's the answer to that.

Just to make sure, Jack, to understand your second question, whether that relates to the fact that we have a different view on if and when the market returns back to the normal growth, that's the reason why we introduced profitability initiatives.

Yes, you could say you should -- we always do that. I would say we accelerate it to make sure we remain a strong company that can continue to invest in the things that matters the most to our customers, R&D strong service, et cetera. So is there some link, yes, there is, I would say, the acceleration definitely has happened also as it reacts into a continued weak assumption of a continued weak market.

This concludes our question-and-answer session. I would like to turn the conference back over to the company for any closing remarks.

Thank you, operator, and thank you so much to everybody for joining us here today. I see we still have a couple of people in line in the queue, so please do reach out after the call and we'll be happy to follow-up. As always, we expect to be on the road in the coming weeks and do look forward to see all of you when we could get there. Have a good rest of the day.

Good afternoon, and welcome to our conference call following the release of our Q3 Interim Management Statement, which was sent out after market close yesterday evening.

For today, we plan for the usual structure of the call. We'll start with the presentation, and then we'll proceed with Q&A.

On a practical note, the presentation we'll be showing should now be on our website for you to find, and we plan for the call to last no more than 1 hour in total, including the Q&A session.

In the room here at our head offices, we have our President and CEO, Søren Nielsen; our CFO, René Schneider; and the IR team with Gustav Hoegh and myself, Peter Pudselykke. That is it for the practical stuff. Over to you, Søren, for the presentation.

Thank you very much, Peter, and welcome, everybody. We'll go straight to the agenda for today is business highlights and key financial takeaways. A little bit of color and flavor and update to each of the three business areas, outlook for 2025, and then let's quickly get to the Q&A session.

Business highlight for Q3 is a performance overall in the lower end of our expectations, driven by hearing aids, which due to a remaining softer than normal general market and a sequential slowdown in U.S. due to mix effects have seen a weaker ASP or you would say in the scenarios with a weaker ASP. We have, however, in the hearing aid business seen global market share gains and a good momentum in the business.

So the -- to the softer side, organic growth in the Hearing Aids business is purely driven by unfavorable geography mix and a still overall soft hearing aid market. Hearing Care have delivered solid growth above the general market growth rate. The performance is broad-based despite also having strong comparable figures from last year.

The Diagnostics business continues to be impacted by a general weak market, especially in the U.S., resulting in lower investments in equipment, the market or the general appetite on investments and expansions, et cetera, has put less incentive to do investments right now. We still see a good order book and still see orders coming in. So it's more a reflection of a postponement.

In October, after the quarter, but still important to mention, we launched Oticon Zeal at the German Congress. We have also announced the signing of the agreement to divest Oticon Medical, found the new future owner, and we expect the closing of this part to take place no later than the end of the first quarter '26, and with that, knowing the final route to a full departure from the implant business area.

Key financial takeaways from Q3, Group organic growth of 3%, which is an improvement from first half. It is fueled by improvements in both Hearing Aids and Hearing Care, so positive. However, as already stated, we see gross margin decline coming from the negative ASP effect in Hearing Aids and a continued increased share of rechargeable devices. Diagnostic also saw a drag on the gross margin. So a pure translation from the lower ASP into gross margin.

Our OpEx saw a modest organic growth compared to last year, fully in line with expectations. Of course, acquisition contributes to further growth, and we remain very focused on managing costs carefully given the uncertain market.

EBIT was in the lower end of our expectations, however, still within, driven by the gross margin contraction. Foreign exchange rate also had a negative effect in Q3, but in line with expected and already disclosed. The group continues to generate very solid cash flow, particularly -- partially supported by working capital development and a strong focus on that, of course.

The outlook for the year 2025, maintain the 1% to 3% organic revenue growth and DKK 3.9 billion to DKK 4.3 billion, however, likely to be in the lower end of the range. As announced previously, share buybacks were stopped in June due to the announced acquisition of KIND, yet not closed. We have bought back shares worth of DKK 582 million in the year and will not buy further.

Business area highlights review. Hearing aid market in total has grown to our best estimates and having statistics for 2/3, around 3%, which is more or less in line with expectations. However, a slight uptake in Europe, a sequential slowdown in U.S. commercial from 4% to 2%, which is not as expected. And VA, on the other hand, growing. It seems like some funds for restaffing have been released, which have made it pick up. Rest of the World, 4%. So we are still below the normal 4% to 6%. However, I think it's worth to highlight 3% is still a growing hearing aid market and our fight is then, of course, for share in that market.

Growth in Europe is primarily driven by strong performance in France, which continued to show strong growth, however, primarily in the free-to-client category. In U.K., growth was driven by the private market and partly offset by a slightly negative growth in the National Health Service. In Germany, growth accelerated sequentially following a slow Q2. It is worth saying that Europe without France would more be in the 2% category level. So underlying Europe is also I would say, quite below normal, and that is, of course, also affecting our business.

North America saw positive Q3 growth as announced, driven by a certain rebound in VA after a very long period with very low growth. So at some stage, again, would also have to work into the backlog, but still below normal levels. And again, U.S. commercial slowed down from Q2, while growth accelerated a bit in Canada.

Rest of the World delivered growth. It was primarily driven by solid growth in Japan, Australia, China delivered flattish to slightly negative growth, while we estimate that several of the emerging markets delivered good growth. We still estimate the ASP to be flat to slightly negative due to geography and channel mix changes.

Of course, not the least, the unfavorable development between Europe and North America. Hearing Aids in Q3, organic growth improved from Q2 and continues to -- however, continues to be impacted by the softness in the global hearing aid market. Unit growth was positive and above the estimated 3% market unit growth. So we have taken share in third quarter. And however and in several countries, not just single callouts.

Our ASP was negative due to geography and some channel mix changes. And in Europe, growth was, of course, fueled by France. And we have also positive growth in U.K. private market and a flattish growth year-over-year in Germany. I would both say in Germany, important to highlight a good strong sequential growth after some pushback after the announced acquisition of KIND, things seems to normalize.

Strong performance in Canada. U.S. growth was positive due to VA and managed care, but year-over-year, negatively impacted by the effect of additional suppliers to large U.S. retailer, as spoken to previously. Strong growth in Japan, slightly negative growth in China and strong performance in Australia and Latin America. And again, not to talk in length about Oticon Zeal, just to highlight that we did introduce and present to the world a new very novel and innovative product concept, Oticon Zeal at the recent Congress in Germany.

It is a new level of performance for in-ear hearing aids. It upholds our best and most advanced AI-driven signal processing, full connectivity, rechargeability in a so far unmet discrete design, I would say, for most invisible design and it got very good reception and feedback. And I'm sure this is even that we cannot make a very fast broad global rollout, definitely bring more attention to our business and enable a lot of good discussions with customers about the business in general.

It is a new manufacturing process, totally new. And due to the ramp-up of that, it will be more gradual than normal, then we will also see a more gradual commercial rollout where we have selected a number of European markets to start here in the fourth quarter, but more broad-based global rollout will happen, I would say, in particular, during the first half of '26.

Hearing Care in Q3, solid performance in a continuous soft market. We generated 9% growth in local currency, of which 4% was organic. So very good. And it's broad-based. Of course, also here, France do above average and also Poland, but we also have several medium-sized European markets doing well and delivering solid organic growth.

In North America, we saw an improvement in performance in the U.S. and a slightly negative development in Canada. We saw solid organic growth in Asia and Pacific, mainly driven by China and Australia due to especially improved product mix, meaning, yes, more advanced solutions. Growth in Asia, particularly offset by weak performance or partly offset by weak performance in Japan.

Diagnostics in the third quarter continues to face a headwind from soft market developments for instrumentation. Organic growth was slightly negative due to declines in key markets in Europe, but also area or part of Pacific and other regions. We did see growth in U.S., but not to normal and expected level, and that's driven by, again, macroeconomic uncertainty that leads to lower-than-normal investments in new equipment. We see good growth in our service and consumable business, but however, not enough to offset the negative growth in -- on the instrument side.

France continued to do well and grow in the quarter, some negative growth in U.K. and Germany, but strong growth in several other European markets, slightly positive in U.S., good growth in Canada. And then positive organic growth in Asia and a number of other markets.

Outlook. There are very little changes to the fundamental assumptions. I would only highlight the changes to our expectation in the discontinued business. We still are in the process of getting out of both communication and implants. We, as I said, announced that we have made an agreement to sell to a new owner, the Oticon Medical business. But as part of that, we also have recognized a need to increase the in year 2025 loss in the discontinued business. And this was already mentioned in the announcement, but this is why this has been updated.

Other than that, no changes to tariff assumptions to -- exchange rate assumptions, et cetera, et cetera, no changes at all. And therefore, also on the outlook, relatively simple. The only change is that for both organic growth and EBIT, as I mentioned earlier, we now expect that we will most likely be in the lower end of the range for both organic growth and EBIT. But other than that, no changes. And let's, with that, go to the Q&A session.

[Operator Instructions] And our first question comes from [ Janguin ] from Citi.

Two questions from me, please. The first thing is on [Technical Difficulty] comment on the uptake of the product I appreciate [Technical Difficulty] anything you can comment on how it has been trending again [Technical Difficulty] that. And my second question is on the rest of P&L. Given pressure on gross margin [Technical Difficulty]how do you envision getting to the low EBIT guidance [Technical Difficulty] second half [Technical Difficulty]...

Your line is quite poor at least on our end. But I think we got your first question on uptake of Oticon Zeal. And then you were asking a bit on the development through the P&L with the gross margin development. So I'll let Søren answer that, and then you can revert with extra questions.

Yes. And thank you very much. Well, we presented the Oticon Zeal on the EUHA Congress. We, a few days later, made the official launch and released it after compliance to all quality systems and so on. So we are still very, very early days. We have -- we can sell what we can produce. That's why we have chosen to introduce in a selected number of countries. We have seen high interest, and we can deliver to that interest. We do not yet have any fitting feedbacks or anything that can confirm our own assumption of good and broad results.

So it is too early to say anything beyond that, except very good market interest. I think I'll leave it to you, René, to comment a little bit on gross margin.

Yes. So with the caveat that we didn't get the full question, the pushes and pulls, of course, are that as a direct consequence of the changed geography and channel mix on the hearing aid business side, we see the impact on the ASP and then subsequently on the gross margin.

And therefore, this is why we explicitly guide for a gross margin that is below our general expectations of 76% to 77%. The exact, you can say, precision on how much lower it will be depends, of course, on also the development in the rest of the year and the geography mix channel changes there. Yes, so I'll leave it at that, and please revert if there's further questions around that.

Sorry for the line. But how do you think about getting to the EBIT guidance with the pressure on gross margin? What kind of cost control can you do for the rest of the year?

So it's part of the equation, of course, that we do a cost control and you can say there are across all the items in the P&L, various scenarios. And there's, of course, also a scenario where operating expenses in H2 would be lower than in H1. That's also a scenario that's there. But all things equal, our guidance is that it's likely to be flattish half year over half year.

The same with the gross margin, of course, again, back to ASP, which is a very sensitive component in our business due to very different product mix in different channels and pricing. So I think it is much more the top line growth and the composition of that, that determines where in the range we will end.

Our next question comes from Niels Granholm-Leth from DNB Carnegie.

First question on France. You're talking about double-digit growth. One of your peers, Amplifon talked about 6%. Have you seen an inventory buildup in France during the quarter? And second question on the U.S. commercial channel. In your view, what's the reason for the sluggish growth in the U.S. commercial? Is it lost purchasing power among end users, geopolitical tension? So what's wrong there?

Yes. Thank you very much, Niels. Yes, I've also noted the slight difference in expressing. I think our competitor on the retail space maybe use another source, could be reimbursement numbers, statistics from the dispenser side. We always report at wholesale level. So what is to sell into the channel and these things sometimes have a delay. Yes, there can be stock building. There can be people that buy outside reimbursement schemes and other things.

We see and have -- we are tracking well to the double digits. So I think it's more a reflection of different sources that it is of whether we are seeing a different world.

And on the U.S. commercial, I think that the U.S. commercial is everything that's not VA. And we have seen, of course, one movement downwards consistently during the year that's been mostly in the managed care space. So that's, of course, one drag. They are less eligible and so on. But there is also what I think we all know have to contribute to consumer sentiment.

So people are a little more uncertain rather than actually financial impact that it is easy to postpone your first hearing aid. It is easy to use the one you have a little longer. And the reason for believing is that also back to Europe that with out France is in 2%. We have several markets with significant reimbursement, if not free to client, and the effect is more or less the same. So we do attribute it to a lack of consumer confidence.

So following up on that. So the patients who stays away, are those first-time buyers? Or are they the recurring customers?

Yes. I would say it's both because it is also the response to calling in patients for a check and a follow-up and see new stuff. So it is in both sides, it is also the ability to attract new clients, but it's -- the exact split, I cannot say because the one is dragging a bit, you push a bit harder on the other, but it is definitely from both sources. So both extension and postponement.

Our next question comes from Julien Ouaddour from Bank of America.

So I have two, but I would like to ask the first one first. So I know a question has been asked many times. Let me just try again. Looking at the global hearing aid market in volume, I think we clearly see some slowdown versus the historical 4% to 6% level for quite some time now. Looking at some surveys out, we see that penetration may have slowed or even go backwards in some key markets, while it gets to a pretty high level in many countries, which could suggest less upside than in the past.

Going forward, we have managed care, as you said, moving backwards on benefits, maybe new options for the patients with the hearing aid glasses. So my question is, what do you expect for penetration going forward? And another way of maybe asking the question is whether you could consider it revising down the midterm growth outlook for the hearing aids market. And just for the record, this is the main question we probably all receive from investors right now. So that's why I'm pushing on this.

It's fine, Julien, and I fully understand. No, I don't see any fundamental changes. The 4% to 6% is a range because it goes up and down year-over-year. There is for isolated markets, nothing more powerful to penetration than reimbursement. We have just seen a brilliant example of that in France. So of course, you would technically see that if there is less support for managed care in U.S., you will see penetration go down a bit in U.S. But at a global level, nothing changed.

The assumed willingness to pay, the assumed threshold for when you think your hearing loss is big enough to get started. The main tailwind we have over time is extended life expectancy, which is what drive up the pool. And again, once you have started with hearing aids, you're very unlikely not to continue. And that also, of course, you could say, protects the penetration.

So no. To make a long story short, no, we don't have any changes to our expected mid- to long term. And most of the would say, additional new products around are all focused on trying to expand penetration for mild hearing losses. So that's, of course, a joker in it. Will it work or will it not? I don't see it as cannibalizing the existing market. So if anything, it will add to it. And therefore, enough up and downs to continue to believe in a 4% to 6% range. It is a little more than the prevalence and a little more than the simple number of people that have turned 65 or even 70.

And therefore, there is, in this assumption, a continuous small uplift to penetration, which is typically driven by increased reimbursement over time, which does happen around the world.

Perfect. My second question is about 2026. I know it's still a little bit early to talk precisely about next year. But I mean, can you maybe talk about the -- let's say the key impact for next year?

I'm looking at consensus, I think it has 5% to 6% organic growth, more than 100 basis points of margin improvement. The question is more, does this scenario need a normalized market growth for you to achieve it? Or maybe with new product share gains, is it realistic for you to, let's say, to get to this point?

Maybe I can start a bit and René can supplement, but thank you. No, we don't want to make this call a guidance for '26. That's for sure. But there is, of course, again, as always, a long list of things that works for us and against us. Market growth is, of course, a key one. What is the market growth going to be. And I don't think any of us have a crystal ball to predict that exactly. We don't expect an immediate change. But of course, over time, hope and anticipate we will get back to a more normalized growth rate.

Then it is market share gains in the wholesale space.

And definitely, I would consider '26 a good year compared to the year we have just been in with a Zeal launch coming out most market and also continued innovation. We have KIND coming in on top, which will also give scale and market share gains to the business. And with that, several improvements on leverage and gross margin, et cetera. So many good things. There's also currency is the other way and, of course, continued investment in the business.

So there are many lines -- many line items and things that end up determining the year. I don't know, René, if you have anything to add?

No. Well, it would be a repetition to what are the moving parts to think about. Well, it's the market assumption. And of course, short term, we don't have a strong line of sight to improvement in the beginning of the year, at least. But apart from that, it is, you can say, anybody's guess. Likely you would have still a continued tailwind in France to some extent since there is some distribution of the reform that will also take place next year.

As Søren mentioned Zeal, and I would also say other innovation, we will continuously launch. That's what we invest in. We will see a contribution from KIND the acquisition there, which we are very excited about continuously. FX, of course, when we go into next year will be a headwind. And lastly, of course, in a much smaller scale, tariffs in diagnostics, you will have a full year effect of that.

So that's some of the moving parts. And of course, we will get back to it when we talk about formally '26 next year.

This is super helpful. You mentioned KIND -- I mean, can we be sure that there is no contribution into the '25 guidance, that's all for '26, right?

It's for '26, exactly.

Our next question comes from Martin Brenoe from Nordea.

First of all, maybe just piggybacking a bit on Niels question on the commercial U.S. Can you maybe elaborate a little bit what's going on, break it down, what's happening? And how much is driven by managed care, for example, and how much is driven by something else? And then that would be the first question to understand a little bit more what's going on in U.S. commercial and also if you have seen a continuation into this quarter. And then just on Zeal and investing into this product launch, how do you balance the fact that you have this exciting product launch, which seems to be quite a big marketing splash behind it and the fact that you are in a situation where you are at the very bottom of your guidance range in terms of EBIT. What's most important to you taking market shares or delivering on your EBIT guidance? That would be the second question.

Yes. Thank you, Martin. I don't think I have much I didn't already say when speaking to the U.S. commercial market. Again, we are talking 4%, 2%, 3%. So you have to be careful. You don't overinterpret what causes what. I can only again high level highlight managed care contraction as well as general consumer sentiment. I simply don't have it more precise than that. We have no statistics yet from first month of Q4, so no comments to that.

Zeal balance, it is, of course, so important for us as a company to deliver on our guidance and deliver good results. It's also an important part of that to sell some products. We are very conscious about not creating what you call marketing spares in markets that cannot sell anything. We do enough to create attention to the business, enough to get in dialogue with customers that might not otherwise have enough dialogue with us, and we do that to win share also this year. And this is, of course, a careful balance between share gain within this year, building expectations for next year, but we are very focused on that.

Our next question comes from Susannah Ludwig from Bernstein.

I have two, please. I guess maybe just focusing back again on the U.S. market. You guys talked about better performance in managed care and the VA and then the weakness in Costco. Could you clarify how your performance versus the market was in the independent channel? Do you think you're taking market share there as well? And then are you able to quantify the headwind on sort of wholesale from the return to more players in Costco? And I guess just on Zeal, could you talk about your decision to launch first in European markets rather than launching in the U.S. market? Have you chosen markets that have a higher share of ITE products? Or what was the rationale behind sort of the launch schedule?

Yes. Thank you very much. U.S., I think it's quite simple overall. It is a, you could say, structural change in Costco following the additional supplier. Given that, I think we do quite well in terms of share in the system after the change. When we mentioned VA, this is driven by product news and general performance and of course, growth in the channel.

Managed care, yes, the general managed care market is soft, slightly down. It improved a little bit lately, but still negative. And of course, we are very little exposed in that.

However, our current performance is gaining share in that channel after bottoming out in the spring and the fall of last year. And with the independent, we have, I would say, a very stable to slightly positive development, meaning that we take some share, but very sensitive, of course, month-to-month exactly where it lands. This is also in -- all of this is in units. And of course, there is also a pricing component to it. And there's no doubt there is a quite competitive situation in the general independent market, but we do well. I think compared to most people's expectations after the many new launches, I would say we definitely stand well with the independent in the U.S. market.

Zeal Europe versus U.S., U.S. is simply too big. We don't want to start a launch in U.S. and have to run with allocation and selected customers and so on. So we have picked a number of European market where the size is at a level where we are sure we can supply to demand back to Martin's good question on efficiency and return on the investment in marketing. So we have to make sure we get a good return in the markets we launched it, meaning a significant volume compared to, you could say, the market share potential and get a good pickup.

And that's how we have selected. And then, of course, Germany, what I would call a soft launch, but you cannot announce it in, not release it to customers in the country. But that's a little more select, not selective, but with a little more constraints on the volume. But on the other hand, Germany is not a big EMEA market. So well chosen and to make sure we can balance demand and production capacity.

Our next question comes from Martin Parkhoi from SEB.

You said it before because I was just on the normal call as well. So maybe I've missed it, but I'll try again in away, just on Zeal, Søren, can you tell -- talk a little bit about your ambition for which segments of the market you actually believe [Technical Difficulty] because I'm sure that you're not only going for the [ CSC ] market.

I'm sure that you maybe also have ambitions outside the IT category, maybe the [Technical Difficulty] technology. So where do we actually see the possibility of the [Technical Difficulty] same content, if you just look at the IT [Technical Difficulty] you are more or less nonexistent in IT. Where do you see not a specific number, but are you significantly underrepresented globally in the IT market compared to your average global market share?

And then second question, I understand that still, of course, as also said would be once we [Technical Difficulty] hit the market during next year in the bigger market. Launch events at the size of a typical new platform launch with a new right? And does such market launch events interfere with the timing of a new platform?

Martin, at our end, the line was not too good. So bear with me if I don't hit it exactly on the nail compared to your question, then I come back. What segments do we see Zeal in for sure, starting with the obvious is already small in-ear products, CICs, IICs. But I think it's one level up, why have right products grown a lot in the past 5 years? Well, the combination of the most advanced technology and given that many people like to have direct streaming from their phone and a rechargeable battery and so on, these products have offered much greater benefit than the average in-ear product have done.

So we see this as the way to get all benefits back into the year. And exactly how that then plays out with the segments and so on, I think that's one of the things we want to learn and see and understand. There is a limitation in ear canal in size, not all ears can host an in-ear product. This is the smallest, I think, or one of the very smallest you can make. So it's not that it's worse than others, but there is just a limitation. Some people feel a level of occlusion, meaning like having an ear plug in. For some, it's others, it's not an issue, depend a little bit on how deep it is.

So back to your question, I think, of course, in your products, we expect to capture significant share. Why go up in size if you can have it smaller. But there will also be some cannibalization from right products. There might also be people that choose to start earlier. Now there is a solution that actually meet their needs a little bit back to how important cosmetics and design is for maybe especially the still work active, 65-year old, et cetera, milder hearing loss struggling in certain situations.

So yes, I think it's very broad. It's very important not just to look at and maybe that's a better answer what you should not just look at. Don't just look at a category for instant fit or CIC, IIC. That's, in my book, way too narrow a potential to look at. And our global share is low. We are strong in building rights. We actually made the first one.

So it's also what's the footprint and what's the sand. We are part of the market. So there's no doubt that that's one of our competitive strengths. And you could also say the reason why we reinvent the way of doing it is because we have not managed to build success in conventional India products and we believe much more in this way of doing it going forward as it can offer all benefits.

The second question was not too loud and clear. But if you ask for future introductions under these new platforms, as always, we don't disclose any details on that. But Zeal is a key focus now, but it does not prevent us from introducing other products in '26.

I just have a follow-up. It's actually another follow-up. It's actually a new question. It's just for René. We, of course, VA pricing, we, of course, most of us at least noted that you have a pretty low price on charters compared to your peers in VA. Can you confirm that if you should be lucky enough to get that sort of out and get a price on par with peers in the charter category that, that would be a potential contribution at the neighborhood of DKK 75 million to DKK 80 million on sales and EBIT on an annualized basis?

Yes. I think I will allow myself to answer. I think there is, of course, an upside of improved pricing. And you know the total market, you know the market share, you know the number of rechargeable, you know the price difference. So assuming that the price gap is narrowed significantly, then I think you can all make your math and come to a conclusion on what the upside of that is.

Our next question comes from Andjela Bozinovic from BNP Paribas.

The first one, maybe just on your wholesale business, you managed to increase market share despite having one of the oldest platforms available. Can you maybe just share any details where did you see the market share gains? And if you want to highlight any particular channel or region?

And following up on this is you've now launched Oticon Zeal, but do you feel like you can still deliver market share gains with the current offering in 2026 as well?

And the second question is just on your implied Q4 because if we put the low end of the guidance, we arrive at a slowdown in Q4. Can you give us any reasons why to assume so? And any moving parts that we should have in mind?

Yes. Thank you very much. I think our ability to grow share globally is a testament to the quality of our platform. if I may use Oticon Zeal as an illustration, this product is only possible because we have a super power-efficient platform that delivers very, very high audiological performance that have a very power-efficient system that even in a small form factor and a slightly smaller battery, you can still get a full day use and take good care of the battery in the life of the product.

And we have a very strong power-efficient radio 2.4 gigahertz, Modern Bluetooth Low Energy radio.

And these things together enable us to make an Oticon Zeal. It enables us to make very small new mini PC, very powerful one without compromising size. So I think it is actually a testament to the quality of the underlying platform and the stability of it, the quality of it, people's patient satisfaction ultimately. And this is why we have been able to year-over-year and also sequentially improve share. And there is not a single one to call out.

There is one to call out on the negative side, which is the year-over-year effect in large U.S. retailer due to expanded portfolio of manufacturers. So you could say, excluding that, we definitely have done, I think, well compared to the number of competitive introductions that have been.

So then adding Zeal and a powerful very small BT for more profound or severe to profound hearing losses and also a good launch schedule for next year, then yes, I feel comfortable about the ability to gain share in a global market. The reason why we are not performing at our best is primarily, of course, that loss of share in that particular channel in U.S., but then also the global market.

Low-end slowdown, I think you should expect at least what we do that we see somewhat similar in the fourth quarter to the performance of the third quarter. The third quarter have performed in the lower end of expectations. And it's always many scenarios when we build an expectation and also why we have 1% to 3% organic growth and DKK 400 million in EBIT is because there is a lot of variables down the line. And yes, big picture is expect Q4 to also be, I would say, in the low end of our expectations, but somewhat similar to what we have seen from a growth point of view in the third quarter.

Perfect. And if I can squeeze in just a quick one on France. I know you commented that it's probably statistic that is making the difference between you and Amplifon. But can you just comment on your market share in the country since the start of the...

Where we measure. So it, of course, both come from good performance in our retail activities as well as wholesale activities.

Our next question comes from [ Martinia Nula ] from Jefferies...

I hope that you can hear me okay. And apologies in advance if the question has already been addressed, but the line was really bad on my end. So I would ask two, if that's okay for you. The first one revolving around managed care. I'd be curious to hear your thoughts on your share recovery in the channel and any potential contribution that could or could not be baked into the 2025 guide? And how should we think about any potential tailwind going into next year? I'll give you some time to answer that -- this question to before asking the second one, if that's okay for you.

Thank you, you are loud and clear. We are still, as [indiscernible] you would say, underrepresented in managed care for, I would say, structural reasons. One of the biggest administrators is owned by one of our competitors. It would be naive to believe we could get a very high share in their channel. So we will always be sub average in that channel.

We also do it slightly -- with a slightly different strategy between our wholesale business and our retail business.

In our U.S. retail business, we have come to the conclusion that we are better off trying to build our own traffic and therefore, do less to little managed care compared to the market. And that's working good for the U.S. retail business.

On the wholesale side, we are reestablishing I would say, business relationships with a broader array of the players after the loss of share last year and into the beginning of this year, and we see continued sequential improvements. All in all, for the group performance, it's not that big and therefore, not a big weight in the total equation, but we are gaining share in the channel to confirm.

Okay. That's perfect. And my second question would be around the economics around the Zeal products. I would love to hear your thoughts on the potential margin impact that this could have not right now because I understood that you are not ready from a manufacturing capacity standpoint and so on at the moment. But just circling back on one comment that you've made around the improvements in terms of robustness and reliability stemming from the encapsulation of the body of the device. So I was wondering if this product could start to be a tailwind on the margin because I get the point that the product is more reliable, but having only one big piece for the shell of the device could also imply that the device could be less sustainable, i.e., so more difficult to repair. So any comments around that would be super helpful.

Yes. There's a lot of moving parts in that equation, and I think it's a little too early to give a precise guidance. I would still repeat what I said that from a cost of goods point of view, then a Zeal is less expensive than a custom-made in-ear product, but it is at least at current production maturity and efficiency, et cetera, more expensive than a right product. Is it then more or less reliable.

It fundamentally has been built to be more reliable because you obviously can't repair to the same extent. So you can say the call frequency or service frequency hopefully go down. On the other hand, those where we can't solve the problem with replacing a wax filter or a dome or the filter around the microphone on the antenna would be more expensive. So it's simply too early to call out exactly how that total cost equation through life looks like. So we will have to have a bit more experience until we can finalize any more specific guidance on that.

And our final question this morning comes from Niels Granholm-Leth from DNB Carnegie as a follow-up.

Again, this summer Amplifon called out this 5-year replacement cycles. So in your view, what proportion of units sold in the global hearing aid market would take place in markets where there is a pretty accurate 5-year replacement cycle?

Yes. Thank you, Niels. I think it is relatively inconsistent. If you just take the biggest markets in the world, U.S. is primarily commercial and therefore, more in the 4-year range because that's actually what people tend to do if they pay without reimbursement. Then we have France, which is 4 years, so a relatively short cycle. And then you have Germany in the other end with -- for some insurance companies up to beyond 6 years.

So I think the global average of 5 years is a very fair assumption, but it distributes. So when you have -- whether it's 4, 5 or 6 years, not everybody shows up day 1 when the reimbursement is -- when you're eligible again, it's actually an important part of our building traffic to remind people that at least they are now eligible for new reimbursement and therefore, maybe it's worth making a visit.

Great. And then just finally, do you still expect to announce integration costs related to KIND at the time of the closing?

Yes, that's still the plan, Niels.

Ladies and gentlemen, with that, we'll be ending today's question-and-answer session. I'd like to turn the floor over to management for any closing remarks.

Thank you, operator, and thank you so much to everybody for joining our call here today. As always, if you have further questions that we can help you with, please do reach out to us directly. Our contacts can be found online, as always. And we, of course, always look forward to seeing you on the road in the coming weeks ahead. Have a good rest of the day. Thank you.