Welcome everyone to GN's interim Q2 2023 conference call. Thank you all for dialing in. It's great to have you on the call. Participating on the call today is Gitte Aabo, CEO of GN Hearing, Peter Karlstromer, CEO of GN Audio, Søren Jelert, our new CFO of GN Store Nord, and myself, Anne-Sophie Veyhe, Head of Investor Relations, Treasury, and M&A. Today's presentation is expected to last about 20 minutes, after which we will turn to the Q&A session. You can find the presentation afterwards on gn.com. With that brief introduction, I'm happy to hand over to Søren. Thank you, Anne-Sophie. Hello everyone, thanks for joining our Q2 2023 call today. Just a few words about myself before diving into the performance in the quarter. After five exciting years at ALK, I'm absolutely thrilled to join GN. Before joining ALK, I spent many years building finance organizations for companies such as Novo Nordisk and NNE Pharmaplan. GN has an important legacy, certainly also a very interesting future. The markets in which we operate are supported by multiple attractive long-term trends. However, to stay ahead of the curve, we need to continue our relentless focus on innovation, at the same time, drive profits and margins. To support this, it's my clear ambition to harvest even more company-wide synergies to enable a stronger, profitable growth for GN in the years to come. Although I'm only officially joined GN on the June 1st, I have been closely watching from the sideline during the process leading up to the new capital plan that was announced in late May. Now we need to execute, and I'm satisfied with the execution we have seen this quarter across the company. With that, let's move to slide 5 and a snapshot of the performance during the quarter. For the third consecutive quarter, GN Hearing grew strongly double-digit, and with 15% organic growth, we are keeping our strong momentum and continue to take market shares. GN Audio delivered a solid execution despite some challenged market conditions and a difficult comparison base from last year. Consequently, organic growth was - 18%, but we still managed to grow sequentially. On a group level, we improved our margins sequentially as well. Combining the focus on cost with our relentless focus on improving the balance sheet, I'm very happy to see us delivering a very strong cash flow of more than DKK 600 million in the quarter. Following the strong cash flow, as well as the capital increase we executed in late May, our new debt decreased by DKK 3.2 billion. We have also updated the financial guidance for 2023 across the company. GN Hearing has performed better than expected during the second quarter of 2023 and have continued their momentum going into third quarter, we are pleased to be able to upgrade our organic revenue growth guidance for the year. On GN Audio side, we have unfortunately not seen the anticipated market recovery in the enterprise business yet. That said, our current expectations still fall within our scenarios from the beginning of the year, and as a consequence, we have narrowed the organic growth guidance towards the lower end of the original guidance. With that introduction, I'm happy to hand you over to Gitte for an update in GN Hearing. Thank you, Søren, and hello to all of you. I would like to leave you with the following key messages for the quarter. For the third consecutive quarter, we are delivering strong double-digit organic growth rates, driven by significant market share gains across countries and channels. We also managed to turn the strong revenue into an improvement in profitability and very strong cash flow figures, with cash conversion of close to 80% in the quarter. Finally, I'm very proud of upgrading our organic revenue growth guidance. Let's have a closer look at GN Hearing's Q2 2023 financial performance. In Q2 2023, we delivered 15% organic revenue growth as a result of the strong commercial execution across the company, driven by ReSound OMNIA. This growth was better than we had expected and was executed in a hearing aid market growing in line with structural growth rates, which means that we managed to deliver significant better growth than the market growth. The adjusted gross margin was essentially flat compared to Q2 2022, driven by top-line growth and pricing initiatives, however, negatively impacted by country and channel mix. The adjusted EBITDA margin in the core business ended at 14.1% in Q2 2023, an improvement of 7.5 percentage points compared to last year, driven by operating leverage. The EBITA in the emerging business was negative DKK 40 million in Q2 2023, which is in line with Q1 2023. Non-recurring items of minus DKK 26 million was booked in the quarter, primarily related to operational initiatives in the supply chain. Especially our Design for Manufacturing initiatives are expected to drive future unit cost reductions. Let's move to slide 8 and some more color on the regional development in the quarter. Beginning with North America, we delivered 22% organic revenue growth in a stable, growing hearing aid market. We experienced very strong performance across the independent market, VA and Costco, compared to Q2 of last year, primarily driven by the ReSound OMNIA family. Moreover, we continue to see strong performance in Jabra Enhance.com. Moving on to Europe, we delivered an organic revenue growth of 5% in the quarter in a region impacted by macroeconomic headwinds. Nevertheless, we delivered further market share gains, supporting our solid performance in the quarter, with a particularly strong performance in France and Spain. In the Rest of World region, we delivered an organic revenue growth of 12%, driven by strong growth in, among other, Japan and China, following a difficult 2022 impacted by COVID-19 lockdowns. We also experienced a very strong growth from the tender in Australia, which is now fully ramped up. All in all, very strong execution across regions and countries. Let's move to slide 9 and our initiatives to restore profitability. One of the key pillars in the profitability improvements in the coming years is our cost of quality. The industry has always been challenged by return rates in general, but the strong initiatives to secure a continued increase in product quality during the past few years is paying off, and we are starting to see a substantial decrease in return rates across our recent product launches. The effect of these initiatives is clear. Once our legacy products are out of the portfolio, we will see substantial fewer returns and thereby less quality costs associated with our hearing aids. This, together with other initiatives, primarily in our supply chain, will support our ambition of getting back to 20% EBITDA margin in our core business by next year. Moving to slide 10 and our financial guidance. Since we reported in May, we have seen the hearing aid markets developing in line with historical growth rates, and the estimates for the market growth for 2023 as a whole remain unchanged. While the hearing aid markets are largely growing in line with expectations, our own performance has been much better than earlier anticipated. The strong performance in Q2, coupled with the strong momentum we've seen going into Q3, makes us able to upgrade our organic revenue guidance to now 9%-13%. The EBITDA margin in the core business of 14%-16% is confirmed to allow for further investments to drive growth, as well as preserving flexibility to take appropriate actions to ensure continued margin expansion. With that, I would like to hand over to Peter for an update on GN Audio. Thank you, Gitte, and hello to all of you. Let's start with slide 12 and the financials. As we knew, Q2 would be a challenging quarter to drive growth because of the significant 2022 base effects when the supply chain bottlenecks eased and a significant part of the backlog we had shipped. This is important to have in mind as we digest the 2023 Q2 results. In Q2, the GN Audio business grew organically with a - 18%. Both enterprise and consumer met tough comparisons and declined, while SteelSeries managed to grow 16% positively organically. When comparing to Q1 2023, the total GN Audio business grew with 3% sequentially, and enterprise, 5% sequentially, which more speaks to the momentum on how the business is developing. Gross margin ended at 44.2%, which was 2.6% lower than Q2 2022 levels, but more than 3% higher than Q1 2023, which is primarily driven by the easing of freight and input cost. Despite the reduction in our OpEx, our profitability decreased compared to last year due to less operating leverage, but we still managed to grow our EBITDA margin sequentially to 9.5% in the quarter. We have a strong focus on cash flow and delivered a healthy DKK 464 million in the quarter. We continue to reduce our excess inventory in gaming consumer and benefited from a new agreement with a major manufacturing and logistics provider, where we now have longer payment terms than before. Let's move to slide 13 to provide some more color on the enterprise business. The enterprise market remains challenged in the quarter. The growth headwind is a combination of base effects from last year and the uncertainty in the market. These are challenges that not only affect our market, but also the enterprise equipment market more broadly. The challenge has started in the U.S. and in the second half of last year, and we're now also experiencing some difficulties in EMEA and APAC. We expect the market to continue to decline year-over-year in Q3 and Q4, but gradually improve towards the end of the year. We've already seen some signs of stabilization in the U.S., which is encouraging. While the year-over-year growth likely will be negative, we see the global demand environment to be stable in absolute terms. In this uncertain environment, we are very focused on what we can control. We are managing our OpEx. We have, since Q4 2022, reduced OpEx with around 10%. This is a combination of headcount reductions and cautious discretionary spend. The OpEx control also involves R&D, where we made some targeted reductions. We don't maintain enough investments to have a strong pipeline of products to benefit from when the market turns. As an example of this, we will, in the quarter, start shipping our PanaCast 50 Android-based video system, which will support our growth in video. When it comes to pricing, we executed on increases we announced in the beginning of the year and continued to be prudent with discounting. We actively optimize our global supply chain and logistic to support our gross margins. As earlier mentioned, this has lately involved a shift in logistic from air to sea, with quite some significant margin benefits. Our commercial execution at court was strong. We are defending our market-leading position despite the challenging market. Our organic growth and enterprise should be seen in the light of the difficult comparison base from last year. If we would neutralize from these challenging base effects, our growth would have been significantly better. All in all, we're experiencing a challenging environment, but we are making sure to take the necessary actions to protect margins and cash flow without cutting too deeply into the bone to allow us to execute well and benefit when the market is normalizing. Let me also be clear, depending on how the market develop going forward, we're also ready to take further actions as needed. Let's move to slide 14 for an overview of our consumer-oriented businesses. The gaming market is gradually stabilizing, and we estimate the market growth to be flat to slightly positive in the quarter. In this stabilizing market, SteelSeries have continued to outperform, and in the quarter, organically grew with 16%. In Q2, we continued to do targeted promotions to reduce our excess inventory, which contributed some of the growth. The inventory reductions continue according to plan. From peak inventory, we said we would reduce inventories with around DKK 1 billion. We now have delivered DKK 600 million in reductions and plan for another DKK 400 million throughout the rest of the year. We remain excited about the prospect of SteelSeries going forward. We have a great team that continue to innovate and execute well. For Jabra Consumer business, we're seeing some of the same elements in the market. Following a very difficult 2022, the market has stabilized lately, but the difficult comparison base impact the year-over-year growth negatively. As part of our ongoing focus to protect margin and cash flow, we're also doing a more thorough analysis of our consumer product portfolio. This means that we're narrowing our portfolio and put a sharper focus on the True Wireless market. This has impacted our growth in the quarter but will help us to improve our margins over time. While we reported a - 29% organic growth year-over-year, the sequential decline was smaller. It was -5%, and that decline is primarily explained by the larger one-off deals, which we mentioned in Q1. Let's move to slide 15. When looking across our markets and portfolio, we're still confident about the long-term attractiveness of the industry and where we operate. The long-term growth drivers are intact; we operate the market with significant further penetration opportunities. That goes both for classical enterprise headset, video camera equipment, and gaming gear. Once this challenging period is behind us, we believe that the industry will return to healthy growth as experienced pre-COVID. With that, let's go to slide 16 and our updated financial guidance. In the beginning of this year, we gave a broader guidance than what we normally would do. As we talked about, we did this to be able to cater for different market scenarios. Unfortunately, the enterprise market has remained challenged for longer. As a consequence of this, we are narrowing our guidance towards the lower end. For the full year, we expect now an organic revenue growth of -10% to -4% for 2023. Reflecting the lower revenue development, we are also narrowing our EBITDA margin guidance to 10%-12%. We like, though, to reiterate that we remain confident in our markets and see significant growth opportunities when the markets get back into growth. With that, I'm happy to hand it back to you, Søren. Thank you, Peter. Summarizing on a group level, GN delivered a -8% organic growth and an adjusted EBITDA margin of 9.2%. The adjusted EBITDA ended at DKK 404 million for the quarter, which was a significant increase compared to the first quarter of 2023, as a result of the very strong performance in GN Hearing and the solid execution in GN Audio, despite the challenging market conditions. Free cash flow, excluding M&A, came in very strong at more than DKK 600 million, driven by the healthy earnings and a material positive impact from working capital. Total non-recurring items were negative at DKK 73 million, reflecting the initiative to restore profitability across GN Hearing and GN Audio. During the quarter, we announced our new capital plan and executed the first building block, a private placement of 17 million shares. Before touching further upon the new capital plan, let's move to slide 19 to cover the cash flow generation. GN Hearing's cash flow was positively impacted by the business performance and a positive impact from working capital. As a result, GN Hearing ended the free cash flow of DKK 131 million. For GN Audio, we also saw very strong cash flow despite the decrease in absolute earnings due to improvement in working capital across inventory and payables. We managed to deliver a free cash flow of DKK 464 million in the quarter. Most of the working capital improvements seen in the quarter are sustainable, and we will see further excess inventory reductions during the remainder of the year. Moving to slide 20 and our newly announced capital plan. During May, we announced our new capital plan, preparing for the debt maturities in 2024 and in 2025. The new plan aims to strike the right balance between current market challenges and further significant growth opportunities, allowing us to execute on both short- and long-term market share opportunities. Essentially, we had around DKK 7 billion in debt maturing in 2024, and we developed a solid plan for repayment. We are utilizing four building blocks and let me just give you an update on the execution of those four. For the equity component, this is fully executed and part of the directed issue and private placement of 17 million new shares and existing treasury shares in late May. That generated net proceeds of DKK 2.6 billion. For the debt component, we have renegotiated a new term loan with our commercial banking group, which essentially means that we are adding DKK 2.1 billion in new debt, as well as extending our maturities from 2025 to 2026. We're confident we will finalize this during Q3 of 2023. Moreover, we've also now managed to increase our unutilized RCF from DKK 2.6 billion to DKK 3.9 billion. We've agreed on the commercial terms and expect to sign in third quarter. This upsized RCF is giving us even more liquidity buffer. Regarding our disposable program, we've already signed the disposal of BelAudição in June and expect the transaction to complete in third quarter of 2023. This will generate around DKK 500 million in net proceeds at closing. On top of this, we are well progressed with the disposal of our headquarter building and remain confident that BelAudição and headquarters will have line of sight of the first DKK 1 billion of disposal proceeds. We are early stage on other disposals and have optionality in how to generate further proceeds from these disposals. Finally, we have executed strongly on the operational initiatives with more than DKK 600 million in free cash flow generated during this quarter. We remain focused on continued optimizations, and we continue to expect positive cash flow for the full year. Let's move to slide 21, and the impact on our maturity profile from the mentioned pillars. Once the new capital plan is fully executed, this effectively means that all material debt maturities until Q3 of 2026 are fully funded. On a short-term basis, we will continue to roll the commercial papers and money market loans on a one to three months rolling basis. These instruments are primarily intended to cover working capital. We're certainly not done yet, but we remain very confident in the new plan and have executed strongly in the first few months after the announcement. Let's move to slide 22 and our financial guidance. Gitte and Peter already went through the guidance across GN Hearing and GN Audio, so I will keep this short. To conclude, on group level, we are now expecting an organic revenue growth of -4% to +2%. With that, I'm happy to hand you back to Anne-Sophie. Thank you to Gitte, Peter, and Søren for the updates. Before opening the line for questions, I just want to mention that we are once again arranging an investor and analyst meeting in connection with EUHA, this year in Nuremberg. With that, I'm handing over to the operator for Q&A. Please limit your questions to two at a time. Certainly, at this time, if you would like to ask a question, please press star one on your touchtone phone. You may withdraw your question at any time by pressing the pound key. Once again, that's star one. We will take our first question from Martin Brenøe with Nordea. Please go ahead. Hi, thank you. Thank you very much for taking my question, Martin Brenøe from Nordea. I have two questions for you, Peter. By your best assessment and excluding for seasonality, do you think that enterprise business has hit rock bottom here and we'll see only sequential improvement? That's the first question. The second question is, you had in the audio business quite a lot of cost cutting. Is it correctly understood that the strategic review has caused this to primarily be in the consumer part of the business that you've cut costs, which, I mean, must be sensible from a margin and perhaps also growth perspective? Yeah, if you can just confirm that maybe, and maybe also confirm whether you expect the consumer to be a diminishing part of the audio business over the medium term. Thank you. Thanks, Martin for your questions. I mean, I would take them in order here. Has the enterprise hit the bottom? I mean, if we talk more about the market as absolute demand, I think it's almost easier, since the base effects were so difficult last year. We see stabilization at this point in time. I think that's probably how I would portray it. Of course, we are hopeful that that stabilization will lead to the forming of a bottom, as we can start to build from. That's also why we're so focused on the sequential growth in our communication. We like to see the market being stable and quarter by quarter sequentially grow the market to, to the upside, so to say. Hopefully, that gives a bit of color without me trying to predict too much about the future. If we look on the cost where we have taken it, you're right in the way we have taken the cost in areas where we think it will hurt us the least, so to say, I think it goes in some kind of administrative roles, I mean, G&A type of cost cuts. When it comes to more the business lines, you're absolutely right in your assumptions. We have cut a bit harder where the business is weaker and where we have a, what you would say, weaker margin outlooks as well. I think your assumptions probably are right there. Consumer business, the size of it, has dramatically reduced the last few years already. Today, it's a fairly small part of our business compared to what it used to be. We are not giving forecast for the future but, let me just say it's a small part today, and strategically, we have no, kind of intentions to grow it, so to say, and then we need to see what the market provides for us as we're going forward, basically. Thank you. That's very clear. Thank you so much, Peter. Thank you. We'll take our next question from Hassan Al-Wakeel with Barclays. Please go ahead. Thank you for taking my questions. I have two, please. Firstly, just on the new audio guide, which implies an improvement to - 5% in the second half from - 10% in the first, assuming the midpoint of the new range. Could you talk about your confidence and visibility that you have around the recovery in audio markets and your growth rates? Whether you're able to give us a steer with, you know, nearly eight months under your belt, whether the upper end of the new range, which is still pretty wide, is more likely as comps ease. Then secondly, could you talk about the hearing margin guidance and why you didn't raise this despite, you know, what was a very strong top line and, and raise here, and what level of buffer you're building into the second half? Thank you. Thank you. Let me start here on, the revised guidance in second half. When, when we're making guidance, we're trying to make it where the midpoint reflects the most likely scenario, of course. As we look into the market, in spite of all uncertainties, we also, of course, have some level of visibility into the short term, so to say. That, together with the trends we see, what we hear from our customers, what we hear from our partners in the market, is what informs us on how we guide. Still, of course, if you look for the second half, you still see it's a fairly broad guide for the second half, in spite of that. I think it should be seen that there is remaining uncertainty in the market. It is still a market that's fairly difficult to read, more difficult than normally. But, put it like this we have put a lot of thoughts into how to make our guidance, and we believe that, this is the right guidance for the second half. On our guidance, on the margin, 14%-16%, the reason why we've decided to keep the guidance as such, despite a higher top line, is because we want to keep flexibility in the sense that, with the strong momentum we see in our business right now, we want to continue that, obviously, and have the opportunity to support that with sales and marketing costs, and also support that with further investments into innovations. We have a clear ambition and target to get back to a 20% EBITDA margin in 2024, and I think the performance we've seen in Q2 and what we guide ahead, it confirms that. Very helpful. Thank you. Thank you. We'll take our next question from Maja Pataki with Kepler. Please go ahead. Yes, thank you very much, for taking my questions as to, I'll start with hearing maybe, Gitte. Could you talk a bit about, the different kind of pricing impacts you've seen or ReSound has taken, in the quarter, or what the price impact was in the quarter in the various regions? I'm sure you're not gonna give us the number, but maybe, you know, just give us a bit of an indication of where you are, and how you see that, going forward, into the next year. Quickly on audio, I mean, you have tried to explain that there, the momentum for enterprise in the U.S. is starting to stabilize, Europe has started to get worse. Do you anticipate that the environment in Europe would remain difficult for a similar reason, a similar period, like the U.S. was having, so let's say around 12 months or 14 months? Could you elaborate a bit on what is happening exactly in Europe? What are the main reasons why we see the hesitancy coming in? Thank you. Thank you, Maja. On the pricing, again, when we look at the overall ASP in the hearing, it's important to take into account that we see strong growth in channels like Costco. We see strong growth in the tender in Australia. We also see strong growth in APAC, China, the Chinese market coming back after COVID lockdowns last year. Obviously, if you like, we see a strong growth in channels that typically has a slightly lower price than the normal market price in these markets. In addition to that, ReSound OMNIA is now one year into the market, and we always launch in a higher price point and then trickle down into the lower price points. While we still take price increases, and we did that with the launch of the rest of the family in Q1, the other points that I just talked to also has an impact on our overall pricing. If we talk about the enterprise market, yeah, as you said, our observations is that the U.S. have started to stabilize. We see that in our own business and also hear that from the other industry players we have partnership and discuss with. In MEA, the difficulties there started with a bit of a time lag, I think it is probably still some time before we see the full stabilization in the MEA market. We are not there yet. I would say also the guidance on audio, most of that range and uncertainties related to the enterprise market. I would also say most of that uncertainty lies in the MEA, how that will perform, basically. We obviously don't know exactly how it plays out, but that's also why we're given the range here in the guidance, largely due to that. Where we are today is that. I mean, I don't want to characterize it as a dramatic, rapid kind of deterioration of the market. It's more like it's a more difficult to move market, a bit slower, some hesitancy, that driving a bit of a more difficult environment that, than it has been in previous periods. All right, thanks. Can I just have a follow-up, Gitte? Shall we assume that there was a positive ASP, ASP impact, but not a significant positive impact on ASPs? Maja, I think the way to think about it is that when we deliver 15% organic growth, it's mainly volume driven. Okay, thank you. Thank you. We'll take our next question from Christian Ryom with Danske Bank. Please go ahead. Yes, hello, and thank you for taking my questions. I have two as well, both of them on the gross margin. First, to you, Gitte, can you discuss a bit what kind of gross margin you are assuming or looking for to be able to reach the 20% EBITA margin in the core business in hearing? Then the second question is to the gross margin in GN Audio. Peter, help us understand what drove the rebound in the gross margin of more than 3 percentage points over Q1 here in Q2? If I may, then just quickly squeeze in a part B question for Audio. Yeah, how do you see customer inventory levels in enterprise these days? Thank you. In order to get to, to the 20% EBITA margin, I'll take that as point of departure. You know, we don't guide specifically on the gross margin. Having said that, getting to the 20% in 2024, it is a combination of three thing. Continue to have a top line growth above market growth. It is a number of initiatives in our supply chain, and I'll come back to that in a second. Then it's OpEx leverage. We expect to continue to grow our top line above market growth and basically contain OpEx at the the current level. In terms of supply chain initiatives, there are three major ones. One is that our future launches will include products that are more automated, and therefore, we will see products with more features at a lower unit cost come into the market. We have had significant improvements in our quality over the last couple of years. That means as our legacy products roll out, that we'll see a significant improvement in our quality costs. Last but not least, we're really benefiting from the combined supply chain of Audio and Hearing that gives us synergies in, among others, our freight costs. Maybe just to quickly clarify. When we're thinking about, say, the 20% EBITA margin, level, which was also what you had in back in 2018, 2019, that doesn't require the gross margin should get back to 2018, 2019 levels. You are looking at a different composition of the PNL. Is that a fair interpretation? That is absolutely fair, because what I think what is important to keep in mind is that back in 2018 and 2019, we had more than 250 retail stores that we owned in the U.S., and that obviously drove up our gross margin. So we're looking at a different structure now, since we have divested, most of them are now having a below 50 own retail stores. Okay, great. Thank you. If I move to, to the Audio questions here, I mean, first, the gross margin, if we look on the improvement in Q2 compared to Q1, I would say most of it are freight and input cost. That has developed in a favorable way for us. There is also a bit of the price increases, which we have done early in the year that help us here compared to Q1. If we speak about the channel inventory, it has increased slightly in the quarter compared to where we were a quarter ago. It is still, though, below the levels we like it to be. We still would prefer to have slightly more channel inventory, actually across both enterprise and consumer. I think it speaks a bit to the pressure on the industry and the difficulties for some of the channel partners to hold what we believe is enough inventory to serve our portfolio well. If anything, it is moving, from our perspective, slightly more in the right direction. Okay, we will take our next question from Chris Gretler with Credit Suisse. Please go ahead. Thank you, operator. Good morning. Two questions, you know, maybe, one is now on the OTC. I think, you know, you mentioned, you know, Jabra Enhance, you know, as a growth driver in the U.S., you know. Could you maybe speak about, you know, that, you know, success and, you see, you know, the current market rate there, in terms of penetration, et cetera, or your units also? And the second question is just on your, you know, capital plan, you know. Could you maybe address, you know, these converts that you still have now out, you know, in 2024, and basically somehow it disappears, you know, from the new profile, you know? So I was just wondering how that actually specifically is going to be refinanced. Thank you. Yeah, on jabrae nhance.com I just want to make sure or, or maybe be precise in saying that we have obviously Lively, which is like a business model that we have now renamed to Jabra Enhance.com, and that's where we see more than 50% growth. On Lively, we are both providing Jabra Enhance Plus, which is our earbud-like hearing aid, and we are also providing traditional form factors. I think jabrae nhance.com is doing really well. We estimate that the online market is growing around 30%, and obviously with the growth above 50%, we are outgrowing the market in line with our expectations. In terms of the OTC market as such, I think overall the market has probably opened up slower than what we had originally anticipated. I think, we are here operating in a market that is obviously somewhat similar to, I guess, the resilience you see in the hearing aid market, but also impacted by consumer sentiment. I think, it is a market that also has some of the same negative headwinds as we see in the consumer market. Okay, thank you. Then on the capital plan, as we said, we have the term loan in place so that once the convertible runs out, then we will be able to use the term loan. That's actually why specifically we talked to, that we have the underlying capital plan in place. Once the other items fall due during 2024 and 2025, we have readily the cash available, enabling us to focus on driving the business until Q3 of 2026, giving us a quite a good runway, in my mind, at competitive terms. You don't need to tap into the RCF to, on your kind of plan? No, that's correct. That's not the plan. Then just on these RCF, is it actually still necessary for the sale and lease back, you know, transaction, or, you know, with the upsized RCF, now you basically can, you know, actually fulfill the liquidity requirements, too? I think in any company, right, you need to have a flexibility on your financial resources, and that's exactly what we will use this for. I guess it's giving you all comfort that we are in a good position, and probably more importantly, that we've also been able, with a good consortium of banks, to make this plan, and all have sort of tuned into that. I think that basically calls for that they see a strong company going forward. Great. Thank you. I appreciate your comment. Thank you. We'll take our next question from Mattias Häggblom with Handelsbanken. Please go ahead. Yeah, thanks so much, Mattias here with Handelsbanken. Two questions, please. Firstly, on GN Audio free cash flow improvement. In the report, you referenced a significant improvement in trade payables driven by a new commercial agreement with a major manufacturing and logistics provider. I'm not sure what that exactly refers to, so I'd be interested if you could perhaps provide some more color to it or rank maybe the key components that drove the cash flow improvement, so we better understand the durability of this improvement, vis-a-vis any improvements that were more of one-time nature in the quarter. Then secondly, also for Peter, I guess, since we knew the base effect from Q2 last year would be challenging to drive growth from, and you revised your guidance down for the year post Q2, I'm curious to understand if Q2 was in line with your internal expectations, and as the downgrade is completely due to lower projections for the second half, or it's a combination of both Q2 performance and second half outlook? Thanks so much. Thanks, Mattias, for your questions. The agreement here is that we, on the audio side and increasingly also on the hearing side, we're working with an outsourced logistic chain and supply chain. The agreement here is actually was a negotiation part of a kind of a timely cadence, so to say, in capacity with the future set of, or how to work together, across multiple fronts. What primarily is driving the cash flow improvement are improved payment terms from our point of view. That is a one-time effect, but it's also a staying effect, so it's nothing we will give back in coming quarters and so. It's of course not either repeated in coming quarters, but it's something that will help the yearly cash flow for sure. Hopefully that provides a little bit better understanding. If we look on the downgrade, I think it's fair to say it's a combination. I mean, I think the difficulties continued surely in the market during Q2. As I spoke about before, in particular, we saw some, some difficulties in the MEA and rest of the world. It's of course, also a combination of what we see and have visibility for, for the coming quarter. I would say it's a combination of, of the effects. Very clear. Thank you so much. Thank you. We'll take our next question from Oliver Metzger with BHF. Please go ahead. Yeah, good morning. Thanks a lot for taking my questions. The first one is on the consumer business. You, you mentioned that you narrowing the focus and cut off all products except the True Wireless. My question is, I assume there is a meaningful transfer of technology from the enterprise business. Is it fair that, basically going forward, it's primarily the distribution and marketing costs which become relevant for the consumer business, from your perspective? Also a question on the enterprise business. Is it, or have I correctly understood that right now you hold back launches just, and, and wait until the market environment becomes better? Thank you. Thank you for your questions. On the consumer business, like all businesses, we, we are evolving them and trying to improve them, and what we have done here with the portfolio is, we, before we used to do over-the-ear headsets, sometimes we call them headbands as well in the industry, and that is a category which we have discontinued. That is contributing negatively to the year-over-year growth, because a, a year ago, we sold them, this year, we are not selling them, so to say. We're also going through a review on the portfolio, where we're trying to have slightly fewer products in the market for the True Wireless, but we're still very committed to the True Wireless market. There are certainly some synergies for us in the company to have the consumer business, both with enterprise, but I would also say with over-the-counter hearing business. We still benefit from quite some synergies. On the product side, there is, of course, innovation and R&D synergies, even with hearing, but we are also doing True Wireless earbuds for enterprise purposes and product lines. T here are synergies in a quite substantial way, also as we move forward, for that part of the business. If we look on the enterprise product portfolio, no, that must have been a misunderstanding. We have not held back any launches and so, we have launched products earlier in the year and are continuing to have a healthy pipeline of new launches going forward as well. I would say, overall, we feel very good about the product portfolio we have on enterprise, but we're of course, also gradually upgrading it. It's a portfolio in a good shape. Okay, great. Thank you very much for this clarification. Thank you. We'll take our next question from Susannah Ludwig with Bernstein. Please go ahead. Great, thank you. Good morning, and thanks for taking my questions. I have two. So I guess just first on the hearing margin, if we think about the 500 basis point improvement from the midpoint of your guidance this year to 20% next year, what percent can sort of be attributed to the above-market growth and OpEx leverage, and then how much should come from the supply chain? Then second, just on enterprise, what do you expect is sort of the typical replacement cycle for these products, and when would you expect to see replacements for products sold in 2021 during the pandemic? And I guess, you know, how far out can replacements be pushed in a weak macro environment? I think in terms of what will drive the margin improvement, there are, as you point to the three elements, top line growth, keeping OpEx in check, which will obviously lead to a better EBITDA margin, and then improvements coming out of the supply chain. They, they, they probably all have a balanced or equal approach impact on the improvement. Okay, great. Thanks. For the replacement cycles, it, it varies a bit across the different product categories we have, but I think it's fair for headset to say that we're starting to get into that window, in about 6-12 months or so, where we would, with normal replacement time, start to see some benefit from that. Then there is always a bit of a risk when the market environment is more difficult and there's more uncertainty that those replacement cycle, they are a bit extended, so to say. Even with that, this is an effect we should, over time, benefit from. And the way to think about that is that we have a significant installed base with very loyal customers. This is something we've seen in the past and, we likely will see as we move forward also over time. We'll take our next question from Niels Leth with Carnegie. Please go ahead. question on net working capital development in the second half. So, you're expecting positive free cash flow. Would you be able to confirm that this regards both for quarter three and quarter four? Could you be, would you be able to talk us through what will drive the improvements in net working capital in quarter three and quarter four? Then finally, would you be able to help us understand where will the net debt to EBITDA arrive towards the end of this year? Thank you. Niels Leth, thank you very much for the questions. I think, of course, that kind of precision, bombing almost on the cash flow, I think we will be not giving you that, but I would for sure talk to what is going to be the positive change here. I think also Peter talked to it, even in the written, right? That we are for sure, very focused on bringing down our inventories. Why is that likely? Because where we actually had a high inventory coming out of 2022 is on the, the consumer and the SteelSeries, where we actually do anticipate that we have, as normal, by the way, a higher sell-in in fourth quarter, so we would be able to take advantage of that to bring down the inventories. Essentially, that will be the core new driver. I think we will still generate cash from, from operations, but we will also be investing. I think that's probably more a neutral stand in essence. That's for sure, one of the things. In terms of the leverage, I think, look at it like this way, so far we have been able to bring down the leverage, so from adjusting in Q1's 5.7 to now 5, I think we will, of course, stay focused on bringing that down, it will not come to significant change levels during this year. We remain focused on getting down over the long time, that's also how our overall loan portfolio is structured. Rest assured, we are focused on getting the leverage down, of course, it will follow and be improved once we get the money in, especially also from BelAudição, of course. Essentially, we have the right focus. The capital plan is in a good state, and we see, and have a good reason to believe that the inventories can be brought down to bring in a positive cash flow for the year. Great. Then just a follow-up question to Peter. You mentioned that you would consider further actions to rightsize the business to the current revenue level. Would that potentially trigger additional restructuring programs running into 2024? I think it's too early to say, but we also, we also believe that if we just look on where we are today, we have the balance right. We have made reductions, and then we have made some targeted investments into areas where we believe there is growth in terms of our product portfolio. So we, at, at this very time, we think we have the balance right. If the market would develop more towards lower end of the guidance, and, I mean, this year, we would certainly also look on what we can do to be prudent on the OpEx. When it comes to 2024, we need to come back to that at a later point in time, for sure, the same principles applies. Thank you. Thank you. We'll take our next question from Robert Davies with Morgan Stanley. Please go ahead. Hi, it's Robert from Morgan Stanley. I had a few questions. One was just going back to the login assumptions in the hearing around- Sorry, Robert, your line is breaking up. Could you, could you repeat, please? Sorry, is that any better? Yes. Thank you. Okay, great. My first question was just on your assumptions on the profitability in hearing to get to the 20% margin number, just between the core and the emerging business. I've obviously seen the associated losses in an integrated business coming down a bit, but I just wondered, within that 20% margin, are you actually assuming emerging business gets to breakeven, or are you still assuming a loss in that business at the 20% margin? That was my first question. My second question was just around your thoughts on the announcement recently it's come out from Essilor, in terms of entering the entering the hearing aid market. Do you see any sort of implications there, or what are your kind of thoughts, I guess, in terms of, potential, obviously, the reason, so how you think that may or may not disrupt the market? Then the last one was just, just an update on, kind of the influence or input from the William Demant Foundation, obviously, taking a stake. Those are my questions. Thank you. Thank you very much. In terms of the 20% margin in 2024, just to be absolutely clear, that is in our core business. In terms of our emerging business, we have said that we expect to see break even late 2025 going into 2026. The 20% EBITDA margin is in the core business. In terms of Essilor and their new sort of form factor and entrance, if you like, into, to the market, I think it's obviously an interesting move, but I think maybe what's most interesting is also that you see a new channel opening up in terms of the optic channel in the US, and that's obviously an interesting move. I think we still see, generally speaking, in the hearing, hearing aid market, low penetration rates. Obviously, we welcome new initiatives to drive higher penetration. Your last question on, on the William Demant Foundation, I mean, William Demant Foundation is a large shareholder of ours. We meet them, as we do with other large investors in our quarterly road shows, and I guess that's all I can say around that. Okay. Okay. Thank you. We will take our next question from Shubhangi Gupta with HSBC. Please go ahead. Hello, thanks for taking my question. I have two, please. First, with the growth momentum in hearing aid, can you please simplify if this is coming from new customers, or these are returning customers who had, like, been postponing their purchases? Second, a major eyewear company has announced that they would be entering the hearing aid market, what are your thoughts around that? Thank you. Okay, thank you for your questions. I think in terms of the balance between returning customers and new customers, I think generally speaking, we see the hearing aid market normalize. I think when we look back in the second half last year, we probably saw a slowdown in returning customers that were postponing their replacement of hearing aids a little bit. Now I think we see a more normalized balance between new and returning customers. Then again, I guess back to the new competitor in terms of EssilorLuxottica entering into the market, I think they enter obviously, with an interesting form factor, but I think equally interesting, it's a new channel opening up as the optic channel in the US market. I think, again, looking at the hearing aid market overall, a low penetration rate, so it's obviously an opportunity with a new distribution channel for all of us. Thank you. Thank you. We will take our next question. Caller, if you would please go ahead and state your name and ask your question. Hi guys, can you hear me? Yep. All good. Hey, it's Veronica from Citi. Sorry, I've had a nightmare in terms of my phone this morning, so apologies I am here a bit late. Three questions from me, if I can. One for you, Gitte, just would love to get your thoughts on whether you feel more comfortable at the upper or the lower end of the guidance for the full year, both in terms of revenues and margins. Just, is there anything you'd like to point us to? That's my, that's my first question. My second question is on the audio side, and two parters to that. One is, what's your degree of confidence that we sequentially, that we see sequentially stable revenues, Q3 versus Q2? If you could comment on that, that'd be helpful. Second, I think previously you had guided for progressively improving gross margins over the year as we move quarter-to-quarter. I was just curious if you are still comfortable with that assumption, would you expect Q3 to be higher than Q2 and then Q4 higher than Q3? My final question is for Søren. Welcome, great to hear your initial thoughts. I know it's early days. You talked about a desire to drive profitable growth and also to look at more synergies between the two organizations. I'd just love to hear your thoughts on what are some of the biggest opportunities early on that you are seeing across the business. Thank you. Thank you, Veronica. Let me start, and I just wanna make sure I understand your question correctly, 'cause you were breaking up a little bit, but I understood it to in terms of the ranges that we are still providing, both on revenue and EBITDA, where do I feel most comfortable? I feel most comfortable in the mid of the ranges, so that's, I think that's a prudent way to think about a range. If I take the, the audio questions here, yes, I mean, the, the why we're talking about the sequential growth, I think it is, as I spoke to before, in the absolute terms, the demand environment is starting to stabilize. It is our ambition to grow the second half over the first half, so to say, as, as it also imply from our guidance. When we do that, it, it's our aspiration, and we're not guiding like that, of course, to do that in, in Q3 and Q4. With that said, I think it's clear that Q4 is sequentially larger quarter than, than Q3, which has also been in the past. The gross margin improvements, many of the positive effects that we have experienced, because we increased the gross margin Q1 over Q4, and now Q2 over Q1, continued to stay with us. We though in Q3 and Q4, drive a bit of more seasonally strong consumer and gaming business, which has a slightly lower margin profile than the rest. We will have a little bit the business mix working in that way. Exactly where that lands, I think we, we, we need to see. But, but certainly, there, there is an underlying healthy trend helping us to driving up gross margins over time. Veronica, thank you very much for, for welcoming me. It is early days, so I would be unwise of me just to lay out a plan and communicate. However, I think GN so far have been tiptoeing into starting the journey on the synergies. I think we, in operations for sure, are at the start of that journey where we take advantage of scale. Not only we take advantage of scale, but actually also making things easier or more lean within our operations. I think that's, that's important, and that's something that we in the group management will of course, ensure that we follow through. Also, when it comes to our products, I think we've seen more and more collaboration on also product development, and that's also where we need to harvest the synergies as we, in all fairness, work within sound, as in a broad sense, and I think we definitely can harvest that. Essentially, you could say, even with my coming now, right, we also trim the synergies as having one CFO, where we probably prior to that, had more, and we'll also see how we can optimize that. In many ways, I think we are moving the right way, and rest assured that, as I said in my introductory comments, I'll be focusing on that going forward. Very clear. Can I just follow up today on your comment about the midpoint? I mean, that would suggest a significant deceleration in your sales growth as you move into the second half of the year. I appreciate there's a ton of uncertainty in the market, just slightly puzzled by that statement. Is there something you are seeing Q3 to date that is giving you a pause around either the market growth or your relative momentum? Yeah, thank you for, for that, Veronica. I think when looking ahead, obviously when we come to Q4, we have a, a tougher comparison in the sense that, if we go back to Q4 last year, we actually saw the, the discontinuation of Sonova in Costco at that point of time, which gave us a tailwind in the quarter. So, it's in that light that you should see our guidance. Also, obviously, there is still some uncertainty on the market, which is why we, we still provide a broad range. Okay, thank you, guys. There are no further questions at this time. I'll turn the call back to the speakers for closing remarks. Thank you very much, operator, and thank you to everybody on the call. We appreciate your time today, and we will see you on the road. Thank you very much.