3 HIGHLIGHTS

“In the third quarter we saw signs of improvement in our European business, which was driven by strong demand for our newly launched speakers in particular and AV products in general. With the successful launch of new products and with a strong pipeline of new products in the coming quarters, we believe that the improvements in our European AV business will continue. Our Automotive business continued on a solid trajectory, whereas the B&O PLAY revenue saw a set-back due to the focus on AV activities in the B1 stores and a too low level of new product introductions”, says CEO Tue Mantoni.

• The Group’s revenue was DKK 675 million for the third quarter of the 2013/14 financial year compared to revenue of DKK 655 million in the same period last year.
• The B2C business recorded revenue of DKK 528 million in the third quarter of the 2013/14 financial year compared to DKK 524 million in the same period last year. The AV segment grew by 12 per cent whereas B&O PLAY decreased by 25 per cent. The same quarter last year was positively affected by the DKK 25 million build-up of inventory to the dedicated B&O PLAY shop-in-shops in China.
• B2C revenue in Europe increased by 17 per cent in the third quarter compared to the same quarter last year. The B2C revenue in BRIC markets decreased by 36 per cent compared to the same quarter last year which was affected by the DKK 25 million build-up of inventory mentioned above. North America decreased by 14 per cent, and revenue in Rest of world decreased by 22 per cent.
• The B2B business recorded revenue of DKK 152 million in the third quarter of the 2013/14 financial year compared to revenue of DKK 131 million in the same period last year. Automotive grew by 10 per cent.
• The Group’s gross margin for the third quarter of the 2013/14 financial year was 42.7 per cent compared to 34.9 per cent in the same period last year, and on level with the 42.7 per cent in the second quarter of  the financial year 2013/14. The low gross margin in the same quarter last year was mainly related to an adverse effect from indirect production costs due to reduction in inventory levels. The improved gross margin is also a result of higher margins on new products in both the AV and the B&O PLAY segments.
• Capacity costs were DKK 315 million in the third quarter, compared to DKK 343 million in the third quarter last year. Distribution and marketing costs have increased by DKK 6 million compared to the same quarter last year due to increased marketing activities and take-over of distribution in China. R&D costs decreased by DKK 22 million compared to the same quarter last year but were on level with the previous quarters.
• Administration costs were positively affected by a non-recurring gain of approximately DKK 11 million relating to a sale and leaseback of the land and production facilities previously owned by Bang & Olufsen s.r.o. in the Czech Republic.
• Earnings before interest and tax for the third quarter of the 2013/14 financial year were negative DKK 28 million compared to negative DKK 114 million in the same quarter last year.
• The Group’s net working capital was DKK 560 million at the end of the third quarter of the 2013/14 financial year, compared to DKK 708 million at the end of the third quarter last year, and DKK 630 million at the end of the second quarter of the 2013/14 financial year.
• Free cash flow in the third quarter was DKK 94 million compared to DKK 92 million in the same period last year. The free cash flow was positively impacted by DKK 79 million from the sale of the land and  production facilities owned by Bang & Olufsen s.r.o. in the Czech Republic. The same period last year was positively impacted by a significant reduction in net working capital.
• On a year-to-date basis, for the first nine months of the 2013/14 financial year, the Group’s total revenue was DKK 2,063 million against DKK 2,074 million last year, corresponding to a decrease of 1 per cent. Earnings before interest and tax for the first nine months of the 2013/14 financial year were negative DKK 61 against negative DKK 149 million last year. The free cash flow in the first nine months of the 2013/14 financial year was negative at DKK 28 million compared to negative DKK 261 million last year.
• During the third quarter Executive Vice President and CFO Henning Bejer Beck resigned from his position at Bang & Olufsen. He will continue in his position at Bang & Olufsen until the end of July 2014. The search for a new CFO has been initiated.
• The Group’s expectations to the 2013/14 financial year remain unchanged.

Any enquiries about this announcement can be addressed to:

CEO, Tue Mantoni, tel.: +45 9684 5000

CFO, Henning Bejer Beck, tel.: +45 9684 5000

Investors, Claus Højmark Jensen, tel: +45 2325 1067

A webcast will be hosted on 11 April 2014 at 10.00 CET. Access to the webcast is obtained through our home page www.bang-olufsen.com