Interim Report 1st half year 2015/16 (1 June 2015 - 30 November 2015)
Struer, 2015-12-17 08:00 CET (GLOBE NEWSWIRE) -- Company Announcement no. 15.08
“The second quarter revenue increased by 26 per cent, driven by a very strong momentum in B&O PLAY, where new and existing products and the ongoing expansion of the retail network drove revenue growth. The revenue in Bang & Olufsen declined slightly, but margins were improved significantly. We are excited about the demand for our new products and will continue to launch innovative products across Bang & Olufsen and B&O PLAY to improve our profitability through revenue growth, margin improvements and cost management”, says CEO Tue Mantoni.
The revenue growth of 26 per cent (21 per cent in local currency) was driven by a continued momentum in the B&O PLAY segment, which grew 132 per cent compared to the same quarter last year. The growth was driven by strong high-season customer demand for existing and new products through all sales channels and a continued expansion of the number of third party retailers.
The revenue in the Bang & Olufsen segment declined by 8 per cent (14 per cent in local currency) in the second quarter, compared to the same quarter last year. The decline was mainly in the European market.
The Group’s gross margin improved significantly compared to the same quarter last year. The improvement was mainly driven by improvements in the Bang & Olufsen segment. The improvement compared to last year was driven by a change in product mix, positive effects from the ongoing cost optimisation, as well as the fact, that the second quarter last year was adversely impacted by costs related to the ramp-up issues in the TV production. The Bang & Olufsen gross margin was adversely impacted by approximately DKK 7 million of costs previously allocated to Automotive, which the company is planning to eliminate over time.
Capacity costs were moderately lower than last year, as costs for distribution and marketing during the high-season remained high, while the costs for R&D showed a moderate decline. The capacity costs for the second quarter included costs for shared functions previously allocated to Automotive of DKK 10 million.
Earnings before interest and tax (adjusted for costs previously allocated to Automotive) were negative DKK 14 million, compared to negative DKK 118 million last year, corresponding to an improvement of DKK 104 million. The improvement was mainly driven by the increase in revenue and an improvement in the gross margin.
Free cash flow for the second quarter was positive DKK 63 million compared to negative DKK 40 million in the same quarter last year. Net working capital decreased to DKK 270 million, compared to DKK 338 million at the end of the first quarter of 2015/16, mainly due to an increase in trade payables. The increase in trade payables was mainly related to higher activity, especially within the B&O PLAY segment.
The Group’s total revenue for the first half of the 2015/16 financial year was DKK 1,235 million against DKK 1,012 million last year, corresponding to an increase of 22 per cent. Earnings before interest and tax for the first half of the 2015/16 financial year were negative DKK 136 million against negative DKK 327 million last year, corresponding to an improvement of DKK 191 million. Free cash flow in the first half of the 2015/16 financial year were negative DKK 105 million compared to negative DKK 281 million last year.
Full year guidance for the Group is maintained. Revenue is expected to grow by 8 to 12 per cent compared to 2014/15. EBIT before costs previously allocated to Automotive is expected to be 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.
As previously announced (Company Announcement no. 14.26) Bang & Olufsen has decided to investigate the future ownership alternatives for ICEpower. ICEpower therefore continues to be classified as discontinued operations.
On 26 November 2015 Bang & Olufsen announced (Company announcement no. 15.07) that the company has received certain initial approaches in respect of a potential launch of a takeover offer, and based hereon the company has initiated a dialogue to investigate and analyse the firmness of these approaches. The ongoing dialogue may or may not lead to an offer for the whole or part of the issued share capital of Bang & Olufsen. As such, there is no certainty about the outcome of the discussions, or whether a takeover offer will be announced at all. Bang & Olufsen will make further announcements if and when it is deemed necessary or appropriate.
Any enquiries about this announcement 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 17 December 2015, at 14:00 CET. Access to the webcast is obtained through our home page www.bang-olufsen.com.