Press Releases

Interim Report 3rd Quarter 2015/16 (1 June 2015 - 29 February 2016)

April 6, 2016 at 2:05 AM CEST

“The results of the third quarter confirm that we are on track with growing revenue and improving profitability. In addition, we are pleased to have announced the technology partnership with LG Electronics, which will enable Bang & Olufsen to stay at the forefront of innovation in the TV category, while addressing one of the company’s key challenges related to scale and complexity”, says CEO Tue Mantoni.

 

The revenue growth of 8 per cent (7 per cent in local currency) was primarily driven by a continued positive momentum in the B&O PLAY segment, which grew 18 per cent (17 per cent in local currency) compared to the same quarter last year. The growth in the B&O PLAY segment continued to be driven by a combination of strong customer demand for existing and new products and a continued expansion of the number of third party retailers compared to the same quarter last year.

The revenue in the Bang & Olufsen segment grew by 5 per cent (3 per cent in local currency) in the third quarter, compared to the same quarter last year. The new flagship speaker, BeoLab 90, has been well received in the market.

The Group’s gross margin improved compared to the same quarter last year. The margin improvement initiatives in the Bang & Olufsen segment continued to show a positive effect but not to the level expected.

Capacity costs were DKK 45 million lower than last year, as distribution and marketing costs and R&D costs declined. The decrease is a result of general savings across the Group.

Earnings before interest and tax (adjusted for costs previously allocated to Automotive) were DKK 22 million, compared to negative DKK 53 million last year, corresponding to an improvement of DKK 75 million. The improvement was driven by the increase in revenue, the margin improvement and the decline in capacity costs.

Free cash flow for the third quarter was negative DKK 63 million compared to positive DKK 28 million in the same quarter last year. Net working capital increased to DKK 334 million, compared to DKK 270 million at the end of the second quarter of 2015/16, mainly due to a decrease in trade payables. The decrease in trade payables was primarily related to the seasonality of the B&O PLAY business where the holiday period represents a high season.

The Group’s total revenue for the first three quarters of the 2015/16 financial year was DKK 1,937 million compared to DKK 1,661 million last year, corresponding to an increase of 17 per cent (12 per cent in local currency). At the same time gross margins have been improved and capacity costs have been reduced by 10 per cent. Earnings before interest and tax for the first three quarters of the 2015/16 financial year were negative DKK 131 million compared to negative DKK 397 million last year, corresponding to an improvement of DKK 266 million. Free cash flow in the first three quarters of the 2015/16 financial year was negative DKK 169 million compared to negative DKK 223 million last year.

Full year guidance for the Group revenue is adjusted. Group revenue is expected to grow by 12-15 per cent compared to 2014/15 mainly due to higher revenue in B&O PLAY than expected. This is compared to the previous estimate of 8-12 per cent growth. EBIT before costs previously allocated to Automotive and restructuring costs is expected to be slightly below break-even. This compares to a previous EBIT expectation around break-even. Costs previously allocated to Automotive are expected to be in the range of DKK 70 to 80 million. The Group expects to fully eliminate the costs for shared functions previously allocated to Automotive during the 2016/17 financial year.

On 18 March 2016 Bang & Olufsen announced that the company has entered a strategic technology partnership with LG Electronics regarding development and production of Bang & Olufsen’s future TV (Company announcement no. 15.09). The agreement enables Bang & Olufsen to focus on its unique competencies within design, acoustics and smart home integration within TV development, and combine this with LG’s technological leadership within OLED technology.

In company announcements no. 15.09 and 15.10 it was announced that Bang & Olufsen is currently in a dialogue with Sparkle Roll. The dialogue may or may not lead to an offer for the whole or part of the issued share capital of Bang & Olufsen. At present, uncertainty remains as to the outcome of the dialogue.

As announced in Company announcement 15.11 Bang & Olufsen has signed an agreement to divest 100 per cent of the shares in the non-core business, ICEpower a/s. The enterprise value received by Bang & Olufsen is DKK 32 million and the free cash flow impact is expected to be DKK 23 million. As part of the transaction, Bang & Olufsen is entitled to a potential earn-out payment dependent on the future performance of ICEpower. As a result of the transaction, Bang & Olufsen expects to book a non-recurring, non-cash accounting loss of DKK 31 million in the fourth quarter of the 2015/16 financial year, which will be recognised in discontinued operations.

 

Any enquiries about these announcements can be addressed to:

Investor contact, Claus Højmark Jensen, tel.: +45 2325 1067

Press contact, Jan Helleskov, tel.: +45 5164 5375

 

A webcast will be hosted on 6 April 2016 at 10:00 CET. Access to the webcast is obtained through our website www.bang-olufsen.com.

Investor contact

Martin Raasch Egenhardt
Head of Investor Relations
+45-53707439
mare@bang-olufsen.dk
 
Major Shareholder Announcements should be sent directly to
major-shareholder@bang-olufsen.dk
 

Press contact

Jens Gamborg
Head of Group Communications
+45 2496 9371
Press@bang-olufsen.dk