Bang & Olufsen annual report 2021/22: Second year with double-digit growth and improved profitability despite headwinds
July 06 2022 - 2:25AM
Bang & Olufsen annual report 2021/22: Second year with
double-digit growth and improved profitability despite headwinds
Revenue amounted to DKK 2,948m, equivalent to 12% growth (10% in
local currencies). Both product sales and Brand Partnering &
other activities grew. The company managed to achieve double-digit
growth despite being impacted by component shortages throughout the
year and extended COVID-19 lockdowns in China in the last months of
the year.
The company improved its profitability to an EBIT margin before
special items of 1.8%, an increase from 1.4% last year. The margin
reflects both the company’s investments in building robustness but
also significantly higher component costs. The combined
extraordinary logistics and component costs amounted to DKK 220m,
which was an increase of DKK 155m compared to last year, or a 5pp
negative impact on the margin. The results show the strength of the
strategy and the resilience that has been created in the
company.
Free cash flow was negative by DKK 172m. It was adversely
impacted by extra component and logistics costs and extended
COVID-19 lockdowns in China in the last months of the year, which
led to an increase in working capital following the delay in sales
and the subsequent inventory increase. The company expects net
working capital to decline in 2022/23.
CEO Kristian Teär comments:
“For the second year in a row, we delivered double-digit growth
and improved our profitability. We achieved that despite facing
significant headwinds from lockdowns, the war in Ukraine, and
global challenges related to logistic and components, which meant
that we had to absorb DKK 220m in extraordinary costs. The extended
lockdowns in China resulted in lower sales and increased working
capital, and this, combined with the extraordinary cost, impacted
our free cash flow, which was negative for the year.”“The financial
results show that our strategy is working and that we have built a
more robust company capable of absorbing more external challenges.
I want to thank all colleagues and partners for their big
contribution and passion. We grew our customer base by more than
30%, hired new talents, especially within software, design, sales,
and marketing, and strengthened our digital presence and product
platforms. Today, we can also share our new strategy for how to
become an even more sustainable company with products that are
built to last.”
“Next year, we will continue our transformation and focus on
improving the customer experience across channels and products. We
will invest in product innovation, brand awareness and our people
to build a more future-proof Bang & Olufsen. We expect the
pressure on global supply chains to slowly ease. We are, however,
facing unusually high uncertainty related to the war, inflation,
and lockdowns in China, which means that we currently have lower
visibility on next year’s financial performance.”
Financial highlights, FY 2021/22
- Revenue increased by 12% (10% in local currencies), driven by
both product sales and Brand Partnering & other
activities.
- Product sales increased across all regions and product
categories. The three regions EMEA, Americas and Asia grew by 5%,
61% and 12% respectively (4%, 55% and 8% in local currencies). The
growth in Asia was adversely impacted by the extended lockdowns in
China in Q4.
- Like-for-like sell-out grew by 13%. All product categories,
regions and channels grew. Sell-out was adversely impacted by
COVID-19 related lockdowns in Q4. Sell-out in China declined by 28%
in Q4 as a consequence of lockdowns.
- The gross margin was 45.3%, which was 2.0pp higher than last
year. The increase was driven by an improved gross margin from
product sales.
- The combined additional supply chain costs for components and
logistics were DKK 220m above normal level and DKK 155m higher than
last year, equal to 5pp impact on product gross margin.
- EBIT before special items was DKK 54m, equivalent to an EBIT
margin before special items of 1.8% (FY 20/21: 1.4%). The
increase was driven by higher sales and improved gross profit.
- Free cash flow was DKK -172m (FY 20/21: DKK 119m). Free cash
flow was adversely impacted by lockdowns in China resulting in
lower sales and higher net working capital and extra costs for
components and logistics.
- Available liquidity was DKK 301m at the end of May 2022
(end-May 2021: DKK 593m).
Financial highlights, Q4 2021/22
- Revenue declined by 10% (12% in local currencies), mainly
driven by COVID-19 related lockdowns in China and high
comparables.
- Like for like, sell-out grew by 1%. Sell-out in China declined
by 28% in Q4, adversely impacted by COVID-19 related
lockdowns.
- The gross margin was 48.2%, which was 7.1pp higher than last
year, with the product gross margin improving by 4.9pp.
- Higher component and logistics costs adversely impacted product
margin by around 9pp, which was 3.5pp more than Q4 of last
year.
- EBIT before special items was DKK 12m, equivalent to an EBIT
margin before special items of 1.7% (Q4 20/21: 1.9%).
- EBIT was DKK 11m (Q4 20/21: DKK 7m), which corresponded to an
EBIT margin of 1.6% (Q4 20/21: 0.9%).
- Free cash flow was DKK -190m (Q4 20/21: DKK 34m).
Strategic initiativesAnother year of strategic focus has
strengthened the business. Despite a challenging operating
environment, the company continued to achieve results from its
strategy execution and delivering on many of its commercial and
operational ambitions.
- The six European core markets delivered 14% like-for-like
sell-out growth. The “Win London” project delivered 103% YoY
sell-out growth from monobrand. The pilot with in-field VIP service
team in France and insourcing of the Danish service centre has
improved customer satisfaction.
- The two Asian core markets delivered 5% like-for-like sell-out
growth. Sell-out declined by 28% in China in Q4, adversely impacted
by COVID-19 related lockdowns.
- Brand licensing expanded with new partnerships, including
products for hybrid work with Cisco.
- Five product launches and two significant software releases,
Beolink and Stereo pairing. Focus on longevity with Beolink,
connecting old, current and future products, and Beosound Level,
the world’s first Cradle-to-Cradle certified speaker.
- 31% customer growth and 37% growth in number of customers
owning two or more products.
- Improved brand awareness, 68% increase in SoMe follower base,
and 27 million people reached through influencers and
celebrities.
- 12% growth from eCommerce. The company also launched the
eCommerce platform in Japan, South Korea, Singapore and
Australia.
- Employee engagement score improved 4 points to 77 (0-100 scale)
and improved perception score of managers. New initiatives launched
such as a structured talent acquisition set-up and a Diversity,
Equity and Inclusion Council.
OutlookThe company will continue to execute in line with its
turnaround strategy and long-term vision. The outlook for 2022/23,
however, is subject to unusually high uncertainty related to
consumer sentiment due to high inflation, rising interest rates and
the war in Ukraine, which has increased the risk of recession.
Furthermore, there is higher geopolitical uncertainty and risk
related to current and potential future regional COVID-19 related
lockdowns especially in China. The company's outlook for the
financial year 2022/23 is as follows:
- Revenue growth (in local currencies):
|
-4% to 5% |
- EBIT margin before special items:
|
-2% to 3% |
|
-50 to 100 |
The outlook is based on certain assumptions described in the
annual report.
Conference call for analysts and investorsThe company will host
a webcast on 6 July 2022 at 10:00 CEST, where the financial
development for FY 2021/22 will be presented.
The webcast can be accessed at
https://streams.eventcdn.net/bo/q4annual-report-202122
Dial-in details for participants in the Q&A:Denmark: +45
7872 3252 UK: +44 333 300 9269 US: +1 646 722 4957
For further information, please contact:
Martin Raasch EgenhardtInvestor RelationsPhone: +45 5370
7439
Jens Bjørnkjær GamborgGlobal sustainability and
communicationPhone: +45 2496 9371
- BO_2201_annual report 2021_22_UK
- B&O_Annual Report 2021-22
- 52990018KGR3ILFDNJ20-2022-05-31-en (4)
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