Interim Report 1st Quarter 2017/18 (1 June 2017 – 31 August 2017)
Company Announcement No 17.11 - Struer, 2017-10-04 08:00 CEST (GLOBE NEWSWIRE) --
“In the first quarter, we saw double-digit growth across both business units and we improved our profitability. We launched several new, innovative products, increased brand partnering activities, and continued to strengthen our business model. Overall, we have had a satisfactory start and we are on track for the year”, says CEO Henrik Clausen.
The Group realised a revenue growth of 15 per cent, driven by double-digit growth in both Bang & Olufsen (13 per cent) and B&O PLAY (17 per cent)
In the quarter, the Bang & Olufsen business unit launched BeoLab 50 and BeoVision Eclipse. B&O PLAY launched E8 and E4. Together with the existing product portfolio and BeoSound Shape, which is now available in stores, the company has a strong foundation for the coming quarters.
Brand partnering remains an important driver of both licence income as well as brand awareness. In the first quarter, the company announced new collaborations with LG on the new V30 flagship smartphone, and with HARMAN to deliver an audio system to Bentley Motors’ Continental GT.
The Group gross margin increased to 39.9 per cent from 33.4 per cent driven by higher revenue, resulting in a higher indirect cost absorption, increased income from brand partnering, improved product margins and a change in the product mix.
As expected, capacity costs increased by 15 per cent due to higher depreciations on capitalised development costs related to the TV portfolio. Excluding the effect from the higher depreciations, capacity costs increased by 2 per cent.
Incurred development costs and capitalisations of development projects were particularly high in the quarter, due to the final development of the BeoVision Eclipse. These costs are expected to decrease significantly in the coming quarters.
Due to the seasonal nature of the business, EBITDAC was negative DKK 42 million, but still constitutes an improvement from negative DKK 67 million last year. The increase in revenue and improved gross margin contributed to an improvement in profitability.
In line with expectations, free cash flow was negative DKK 159 million compared to negative DKK 32 million last year. The change was due to product launches driving higher inventory and trade receivables as well as increased investments in products and the Innovation Lab in Struer.
The outlook for 2017/18 remains unchanged. 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.
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 4 October 2017 at 10:00 CET. Access to the webcast is obtained through our website www.bang-olufsen.com