Letter to shareholders
2018, a truly outstanding year
2018 was truly outstanding year for our Company. The acquisition of GAES, the largest in our history, has made our Group even stronger and enabled us to reach an even more important dimension. Amplifon today is present in 29 countries with around 16,000 people and is the largest player in the retail hearing care market with around 11% global market share.
The acquisition of GAES, announced in July and closed in December, perfectly fits Amplifon’s growth strategy, allowing us to consolidate our global leadership and become the undisputed market leader in Spain, as well as strengthen our market position in Portugal while entering the Latin American region, further diversifying our geographic footprint.
GAES represents a unique opportunity for our Company thanks to unique assets, which are also the hardest to build: in fact, thanks to its almost 70 years of experience in the hearing care market and similarly to Amplifon, GAES leverages on both its highly valued and recognized brand and its extensive distribution network and follows a deep customer centric strategy. We firmly believe this transaction represents a unique opportunity also to all employees and customers, given that both Amplifon and GAES have a long history of unrivaled quality of the service and utmost attention to customers. Finally, the consolidation of GAES activities will create extraordinary opportunities to further develop our Group, generating synergies and creating significant value to our shareholders.
Our internal growth continued also this year, even with the acquisition of GAES. In fact, we posted record financial results also in 2018, confirming the reliability of the Company, the validity of our strategy and our strong execution capability. As far as the results are concerned, we reached record revenues1 and EBITDA1, of respectively 1,372.7 and 241.3 million euros, up 8.4% and 11.0% compared to the previous year. Net profit1 reached 113.4 million euros, rising 19.3% compared to the year before. Such results allow Amplifon to propose a dividend distribution of 0.14 euro for each ordinary share to shareholders, an increase of 27.3% compared to 2017.
We are very satisfied also with the high quality of these results. In fact, the strong revenues growth, significantly above the market, was characterized by a strong organic growth and the continuous focus on acquisitions. A further increase in profitability was also possible thanks to revenues growth, the scale reached in key countries and the improved operational efficiency. Additionally, there was also a strong reduction in financial charges and an improvement of the tax rate, thus bringing net profit1 to a record of 113.4 million euros.
But it was not all. 2018 was an exceptional year also due to the several and important new initiatives carried out in line with the Company’s strategy of continuous growth and development. Firstly, we worked on new projects aimed above all at satisfying and anticipating our customers’ needs, offering a distinctive and highly innovative customer experience with the launch of the Amplifon product line and multichannel ecosystem, leveraging unique and unmatched assets such as data, brand and an impeccable and decidedly personalized service. The new Amplifon product line and multichannel ecosystem, launched in Italy in May and to be launched in other core countries in 2019, was highly appreciated by Italian consumers and at year-end accounted for around 90% of revenues coming from the free and paid-up market.
Later, in November, we announced the entry in the attractive Chinese hearing care market through a joint venture with a leading specialty retailer in the Beijing area. This transaction represents an important first step in building a local presence in China, a sizeable opportunity to sustain our medium-long term sustainable growth strategy given the estimated market size and growth potential in the foreseeable future. Lastly, on December 27th, 2018, Amplifon entered the FTSE MIB Index, the primary benchmark index for the Italian equity market, which measures the performance of the 40 most liquid and capitalized Italian equities, representing another significant milestone in the Company's long growth and development path.
We conclude by reminding that as far as the communication to our stakeholders is concerned and with the aim of providing transparent and thorough information, Amplifon presents also this year its third Sustainability Report, in the form of Non-Financial Disclosure in accordance with Italian Legislative Decree No 254/2016, which illustrates the Company’s commitment to socially responsible and sustainable growth.
Value creation continues to be our mission for the future. We are convinced that the results reached in 2018 and, above all, the countless new opportunities arising from the GAES acquisition and the important strategic projects initiated this year represent an excellent basis to face 2019 with optimism and reach our medium-long term objectives.
We thank, therefore, all the management team of the Company and all our people for the profound commitment, professionalism, talent and passion they devote to Amplifon every day. Finally, we also thank our shareholders and the other stakeholders that, in different ways, support us to do always better.
1 Recurring data without the application of IFRS 15 for the sake of effective comparison with 2017 figures.
Susan Carol Holland
Chief Executive Officer