Interim report for Q2 2022/23: Bang & Olufsen delivered 6% growth and a positive EBIT despite macroeconomic headwinds
January 11 2023 - 2:04AM
Interim report for Q2 2022/23: Bang & Olufsen delivered 6%
growth and a positive EBIT despite macroeconomic headwinds
In a quarter characterised by macroeconomic headwinds, Bang
& Olufsen grew revenue by 6% (2% in local currencies). Growth
was driven by product sales in EMEA and the Americas in combination
with a strong performance in Brand Partnering. Especially, the
launch of the company’s latest soundbar, Beosound Theatre, had a
positive impact on product sales. However, due to the economic
climate, the company’s retail partners remained cautious about
replenishing their inventories.
Second quarter gross profit was up by 6.4%, and gross margin was
in line with last year. As a result, the company achieved a
positive EBIT margin before special items of 1.6% (Q2 21/22: 3.5%).
Free cash flow was DKK 1m (Q2 21/22: DKK 11m), driven by cash flow
from operating activities offset by investments.
CEO Kristian Teär comments:
“We achieved 6% growth in the second quarter – despite the
macroeconomic headwinds. Our Americas region delivered a record
quarter in terms of revenue, and we had strong product sales in
EMEA and a very positive performance in our Brand Partnering
business. Our APAC region was, however, significantly impacted by
Covid-related lockdowns in China. Our latest soundbar, Beosound
Theatre, was well received by customers and reviewers, and we also
saw growth in our category for headphones and smaller portable
speakers. The results reflect the resilience of our diverse
business model and the breadth of our portfolio. I am proud to see
how colleagues and partners continued to execute our strategy and
create magical experiences for our customers. We maintain our
outlook, but due to macroeconomic development, we now expect the
results to be at the lower end of our range.”
“We continued to see solid progress on our strategic
initiatives. In the first half of the year, we grew our customer
base by 13%, and the number of customers owning two or more
products increased by 12%. This is a result of our improved brand
and marketing efforts and the strong ecosystem products we have
built over the past couple of years. We also saw good progress with
our Win City Concept in Q2. London delivered healthy growth, and
the expansion to the next cities, New York and Paris, is well
underway.”
“Our turnaround is progressing well, and to ensure that we stay
on track and are prepared for the future, we are sharpening our
direction. That means cementing our position within luxury,
enhancing our focus on circularity and creating timeless products,
and leveraging technology to offer our customers more spatial and
personalised sound. We believe it will enable us to differentiate
ourselves further, help us prioritise our investments, and support
our growth ambitions even in a challenging macroeconomic
environment.”
Financial highlights, Q2 2022/23
- Revenue grew 6% (2% in local currencies), driven by product
sales and a positive performance in Brand Partnering. The growth in
product sales was driven by EMEA and Americas and supported by the
launch of Beosound Theatre. In contrast, retail partners,
especially in the EMEA region, remained cautious about inventory
replenishment. In addition, the company’s exit from Russia and
Belarus in February 2022 had a 1.4pp negative impact on
growth.
- Sell-out declined by 3%, driven by EMEA and Asia, whereas the
Americas continued to grow. Across regions, the On-the-go category
showed solid growth.
- Gross profit grew 6.4%, and gross margin was 44.4%, which was
in line with Q2 of last year and 7.8pp higher than Q1. Gross
margins on the Staged and Flexible Living categories grew, partly
offset by the On-the-go category, which was adversely impacted by
reductions of On-the-go inventory. Furthermore, currency movements
impacted the margin negatively.
- EBIT was DKK 13m (Q2 21/22: DKK 27m), corresponding to an EBIT
margin of 1.5% (Q2 21/22: 3.4%). Special items amounted to DKK 1m,
and the EBIT margin before special items was 1.6% (Q2 21/22:
3.5%).
- The result for the period was a profit of DKK 3m (Q2 21/22:
profit of DKK 10m).
- Free cash flow was DKK 1m (Q2 21/22: DKK 11m), driven by a
positive cash flow from operating activities.
- Available liquidity was DKK 187m (Q1 22/23: DKK 206m).
Progress on strategic initiatives
- In Q2, the company had different activations to showcase Bang
& Olufsen’s ability for personalisation. Under the headline
“Art of A9” the company celebrated Beoplay A9’s tenth anniversary
with a series of designs by leading artists working across art,
design and music to customise the canvas cover.
- The company participated in an event during the Art Basel fair
in Miami, where bespoke products created for very high net worth
individuals were revealed. A select range of products was plated in
gold, and more than 200 special guests attended the event.
- In Q2, Beosound Emerge was relaunched. The company stopped
producing this in the last financial year due to component
scarcity. The company also launched Beocom Portal, a dedicated
headphone designed for hybrid work. Beocom Portal is Bang &
Olufsen’s first headphone certified to work with Zoom, and the
company is working on more certifications in the future.
- Bang & Olufsen Radio was launched on the company’s legacy
platform, further improving the product ecosystem.
- The company continued to implement the Win City strategy, which
now includes Paris and New York. In London, the company continued
to deliver healthy growth, and in 2023 a new flagship store will be
opened. In addition, the company has completed market segmentation
in Paris and New York to identify where the target customers are
and how to approach them.
- In the first half of the year, the number of customers with
products registered in the Bang & Olufsen app increased by 13%.
In addition to expanding the customer base, the company also
increased the number of customers who own two or more products by
12%.
Outlook 2022/23Bang & Olufsen maintain the outlook for the
financial year 2022/23. However, the company now expect revenue
growth, EBIT margin before special items and free cash flow to be
at the lower end of the range. The outlook is as follows:
- Revenue growth (in local currencies):
|
-4% to 5% |
- EBIT margin before special items:
|
-2% to 3% |
|
-50 to 100 |
The outlook for 2022/23 is subject to unusually high uncertainty
related to consumer confidence due to high inflation, rising
interest rates and the war in Ukraine, which, in combination, have
increased the risk of recession.
Conference call for analysts and investorsThe company will host
a webcast on 11 January 2023 at 10:00 CET, where the financial
development for Q2 2022/23 will be presented.
The webcast can be accessed at
https://streams.eventcdn.net/bo/2022-2023-q2/
Dial-in details for participants in the Q&A:DK: +45 7876
8490UK: +44 203 769 6819US: +1 646 787 0157PIN: 193621
For further information, please contact:
Martin Raasch EgenhardtInvestor RelationsPhone: +45 5370
7439
Jens Bjørnkjær GamborgGlobal Sustainability and
CommunicationPhone: +45 2496 9371
- BO_2206_Interim report Q2 2022-23_UK
- Interim report H1 2022-23
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