Bang & Olufsen interim report Q3 2021/22: Bang & Olufsen achieved double-digit growth for the seventh consecutive quarter
April 07 2022 - 2:07AM
Bang & Olufsen interim report Q3 2021/22: Bang & Olufsen
achieved double-digit growth for the seventh consecutive quarter
The company achieved revenue growth of 10% and a positive EBIT
before special items in Q3. Bang & Olufsen continued to
progress in line with its turnaround strategy, delivering
double-digit growth for the seventh consecutive quarter.
In Q3, growth was driven by both product sales and Brand
Partnering. The positive trend in sell-out also continued,
underlining the good customer demand for B&O products across
markets. The global scarcity of components had an adverse impact on
both revenue, especially in the Staged and Flexible Living
categories, and costs. The EBIT margin before special items was
0.7% and free cash flow was a negative DKK 14m due to higher
component costs, which amounted to more than DKK 65m in the
quarter.
The company maintains its outlook for 2021/22. The company
expects the high level of component and logistics costs experienced
in Q3 to continue throughout the remainder of the financial year,
impacting earnings and free cash flow negatively. Therefore, the
company expect EBIT margin before special items and free cash flow
to be in the low end of the range. In addition, uncertainty related
to global supply chains and consumer demand has increased following
higher inflation, Russia’s invasion of Ukraine and COVID-19
lockdowns in China.
CEO Kristian Teär comments:
“For the seventh consecutive quarter we delivered double-digit
growth. We achieved this despite the ongoing global supply chain
challenges. That is a testament to the resilience of our partners
and employees, and I want to thank them for their big contribution.
In Q3, component scarcity impacted both our costs and growth, and
we expect this to continue for a while. In addition, we see
increased uncertainty related to consumer demand following higher
inflation, Russia’s tragic invasion of Ukraine and COVID-19
lockdowns in China.”
“Our strategy is working, and we continued to build robustness
in Q3. We added key people to the teams in especially engineering
and regional sales and marketing to ensure that we have the right
capabilities for the future. We continued to see high customer
demand across markets, we grew our customer base by 25%, and we
launched new products. We introduced a new edition of our gaming
headphone to strengthen our position in the fast-growing gaming
market. We also presented the Beosystem 72-22 as part of our
Classics programme, showcasing our unique capabilities and the
longevity of our products, which is a key differentiator for
us.”
Financial highlights
- As a result of steady progress on strategy execution the
company grew revenue by 10% in local currencies in Q3. This was the
seventh consecutive quarter with double-digit growth.
- The positive sell-out trend continued in the quarter with
like-for-like sell-out growing 6%. Reported revenue from product
sales grew by 10% in local currencies. Asia and Americas were the
biggest growth drivers, while EMEA was on par with Q3 of last year
due to high comparables in multibrand.
- Component scarcity continued to adversely impact operations,
especially on the Staged and Flexible Living product categories as
well as licensing income relating to the automotive industry.
However, the new brand licensing partners contributed positively in
Q3 and mitigated the decline related to the automotive
industry.
- Gross margin declined by 0.9pp to 44.0%. Gross margin from
product sales declined by 0.6pp to 38.7%, driven by higher
component and logistics costs which amounted to more than
DKK 65m and reduced product gross margin by approx. 9pp (Q3
20/21: 2.5pp). The effect was partly offset by changes in product
mix and price increases.
- EBIT margin before special items was 0.7% (Q3 20/21: 4.9%).
Despite the significant impact from higher component costs, the
company remained profitable thanks to the strategy, improved
robustness and agility to address challenges.
- Earnings for the period were a loss of DKK 16m compared to
a profit of DKK 13m last year.
- Free cash flow was an outflow of DKK 14m (Q3 20/21: inflow
of DKK 8m). The year-on-year decline was related to higher
component costs and higher CAPEX.
- Available liquidity was stable at DKK 511m (Q2 21/22:
DKK 534m).
- For the first nine months of the financial year, Bang &
Olufsen delivered 19% revenue growth in local currencies, EBIT
before special items of DKK 42m (9M 20/21: DKK 23m) and a
positive free cash flow of DKK 18m (9M 20/21: DKK 85m).
The results were impacted negatively by higher component and
logistics costs of more than DKK 150m.
Strategic
progressComponent scarcity impacted strategy
execution again in Q3. Marketing activities were adjusted to
accommodate for product availability.
- Demand was solid in the six core European markets, with
sell-out growth of 10%. However, reported revenue declined by 10%
in local currencies, mainly due to high comparables in
multibrand.
- The two core Asian markets grew by 28% in local currencies.
Sell-out was at the same level as last year. Sell-out growth was
lower than sell-in in the multibrand and etail channels as the
company transitions to new distribution partners. Also, the Chinese
New Year began earlier this year, thereby impacting the number of
sell-out days in Q3.
- Americas grew 32% in local currencies, driven by all product
categories and distribution channels. Like-for-like sell-out grew
by 18%.
- Year-to-date, the customer base grew by 25%. The company saw a
32% growth in customers owning two or more B&O products, partly
driven by retargeting of existing customers.
Outlook maintainedThe company
maintains the outlook for the financial year 2021/22, but due to
higher component costs, the company now expects EBIT margin before
special items and free cash flow to be in the low end of the range.
The outlook is as follows:
|
DKK 2.9bn to DKK 3.1bn |
- EBIT margin before special items:
|
2-4% |
|
DKK 0m to DKK 100m |
The outlook is based on certain assumptions, including ceasing
operations in Russia and Belarus since 24 February 2022. The
outlook is subject to increased uncertainty related to supply chain
and consumer demand due to higher inflation, the war in Ukraine and
COVID-19 lockdowns in China. (see page 18 of the interim report for
9M 2021/22)
Conference call for analysts and investorsThe
company will host a webcast on 7 April 2022 at 10:00 CEST, where
the financial development for Q3 21/22 will be presented.
The webcast can be accessed at
https://streams.eventcdn.net/bo/q3202122
DK: +45 7872 3250 UK: +44 333 300 9265US: +1 646 722 4902
For further information, please contact:
Martin Raasch EgenhardtInvestor RelationsPhone: +45 5370
7439
Jens Bjørnkjær GamborgGroup CommunicationsPhone: +45 2496
9371
- B&O_Interim Report_Q3 21-22
- BO_2115_interim report Q3 2021_22_UK
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