Interim Report 1st quarter 2014/15 (1 June 2014 - 31 August 2014)
““Bang & Olufsen only grew 1 per cent in the first quarter of 2014/15, which is clearly a disappointment. The development was primarily a consequence of a sudden and temporary decline in Automotive of 23 per cent, and disappointing B&O PLAY sales. The core AV business grew by 19 per cent compared to the same quarter last year, driven by continued strong demand for our new TV BeoVision Avant and the new wireless speaker range. We reconfirm and further specify our guidance for the year based on our expectation that the Automotive business and B&O PLAY will recover from the disappointing first quarter and the AV business will continue the positive development”, says CEO Tue Mantoni.
- The Group’s revenue was DKK 571 million in the first quarter of the 2014/15 financial year compared to revenue of DKK 566 million in the same quarter last year, corresponding to an increase of 1 per cent.
- The B2C business recorded revenue of DKK 431 million in the first quarter of the 2014/15 financial year compared to DKK 397 million in the same quarter last year, an increase of 9 per cent. AV grew by 19 per cent, compared to the same period last year, while B&O PLAY declined by 15 per cent.
- B2C revenue in Europe increased by DKK 42 million compared to the same quarter last year, and hence continued the positive trend from the last two quarters. Revenue in North America was DKK 31 million, which was on par with last year. Overall BRIC revenue decreased by DKK 9 million due to a decrease in revenue of DKK 15 million in Russia which only to a certain extent was offset by growth in other BRIC markets. Rest of World decreased by DKK 10 million compared to last year.
- The B2B business recorded revenue of DKK 140 million in the first quarter of the 2014/15 financial year compared to revenue of DKK 173 million in the same quarter last year. Automotive declined by 23 per cent compared to last year, and registered revenue of DKK 116 million compared to DKK 151 million last year. The decline was mainly due to lower than expected production volumes over the summer of the high-end cars where Bang & Olufsen is primarily available. This lead to lower unit sales but also a changed mix between car models with a strong development in the premium systems and a weak development in the high-end segment. ICEpower grew by 8 percent compared to last year.
- The Group’s gross margin in the first quarter was 36.2 per cent, compared to a gross margin of 40.1 per cent last year. The decline in the gross margin was mainly due to a high share of TV sales in the AV segment and abnormally high production and logistic costs related to the fast production ramp-up of the new TVs.
- Capacity costs were DKK 336 million in the first quarter, compared to DKK 291 million in the first quarter last year, or an increase of DKK 45 million. The increase was driven primarily by higher distribution and marketing costs related to the launch of the BeoVision Avant as well as a lower capitalization rate of development costs.
- Earnings before interest and tax for the first quarter of the 2014/15 financial year were negative DKK 129 million compared to negative DKK 64 million in the same quarter last year.
- Earnings before tax for the first quarter of the 2014/15 financial year were negative DKK 132 million against negative DKK 68 million in the same quarter last year.
- Free cash flow in the first quarter was negative DKK 241 million compared to negative DKK 70 million last year. The adverse development is due to the negative operating results and the development in the Group’s net working capital which increased to DKK 777 million at the end of the first quarter of the 2014/15 financial year compared to DKK 545 million at the end of the same quarter last year and DKK 657 million at the end of the 2013/14 financial year. The increase in net working capital was mainly due to inventory build-up ahead of new product launches, ramp-up issues in the production during the quarter, increased line of credits to support the dealer network in connection with the launch of the BeoVision Avant, and lower than expected sales in Automotive.
- In June 2014 Bang & Olufsen a/s carried out a capital increase through a private placement at market price using an accelerated book-building process. The capital increase represented 3,927,042 shares of a nominal value of DKK 10 each and generated net proceeds of DKK 250 million.
- The outlook for the 2014/15 financial year is reconfirmed and further specified (refer to page 13).
Any enquiries about this announcement can be addressed to:
CEO, Tue Mantoni, tel.: +45 9684 5000
CFO, Anders Aakær Jensen.: +45 9684 5000
Investors, Claus Højmark Jensen, tel.: +45 2325 1067
Press, Jan Helleskov, tel.: +45 5164 5375
A webcast will be hosted on 2 October 2014 at 10.00 CET. Access to the webcast is obtained through our home page www.bang-olufsen.com.