Company announcement No 17.12

Q2 highlights

“In the second quarter, we delivered double-digit growth and improved our profitability, and we remain on track for the full year. The result was driven by strong sales in B&O PLAY, cost control and positive developments across all markets. All in all, I am pleased with the progress that we have made in the first 6 months. It underlines that we have a strong product portfolio and that our continued focus on creating a scalable business model is paying off”, says CEO Henrik Clausen.

Second quarter 2017/18

The Group realised a revenue growth of 15 per cent. The revenue of the B&O PLAY business unit increased by 30 per cent, and the revenue of the Bang & Olufsen business unit increased by 4 per cent. The growth was driven by a combination of strong sales of both existing and new products with good development across all markets.

As expected, the gross margin for the Group was on par with last year (41.2 per cent), but with a higher share of the revenue coming from the B&O PLAY business unit.

Capacity costs in the underlying business increased by 3.5 per cent, mainly due to higher depreciations. Excluding the effect from the higher depreciations, capacity costs were slightly below last year.

EBITDAC in the underlying business was DKK 135 million against DKK 70 million last year. The company’s ability to increase revenue without increasing capacity costs was key to the improved profitability.

Free cash flow was positive DKK 44 million against DKK 131 million last year. Last year, free cash flow included the escrow payment from HARMAN of DKK 93 million, and excluding this impact free cash flow improved by DKK 6 million.

First half year 2017/18

The Group’s total revenue for the first half of 2017/18 was DKK 1,591 million, corresponding to an increase of 15 per cent, which was driven by 25 per cent growth in the B&O PLAY business unit and 8 per cent growth in the Bang & Olufsen business unit compared to last year. EBITDAC in the underlying business for the first half of 2017/18 was DKK 93 million, which was an improvement of DKK 90 million compared to last year, while EBIT in the underlying business was DKK 5 million compared to negative DKK 52 million last year. Free cash flow in the first half of 2017/18 was negative DKK 114 million against DKK 99 million last year. The development was mainly due to an increase in net working capital of DKK 144 million compared to 31 May 2017.

Outlook

The Group expects to continue the growth momentum and increase revenue by around 10 per cent compared to 2016/17, and to increase the underlying EBITDAC margin to 8-10 per cent in 2017/18. The Group’s free cash flow is expected to be positive in 2017/18. The EBIT margin for the underlying business is expected to be around 3 per cent (previously 1-3 per cent) for 2017/18.

Any enquiries about this announcement can be addressed to:
Investor contact, Claus Højmark Jensen, tel.: +45 2325 1067
Press contact, Jens Bjørnkjær Gamborg, tel.: +45 2496 9371

A webcast will be hosted on 11 January 2018 at 10:00 CET. Access to the webcast is obtained through our website www.bang-olufsen.com

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