Interim report for Q3 2022/23: Bang & Olufsen: Q3 highly impacted by COVID-19 in China
April 13 2023 - 2:12AM
Interim report for Q3 2022/23: Bang & Olufsen: Q3 highly
impacted by COVID-19 in China
The company had a revenue decline of 18% (-20% in local
currencies) in the third quarter of its financial year 2022/23.
This was primarily due to lower-than-expected sales in China, which
adversely affected performance. Revenue declined 65% in China and
led to an adjusted outlook for FY 22/23, announced on 17 March
2023. China’s change in COVID-19 policy in December led to a surge
of COVID-19 infections across the country, negatively impacting
consumer behaviour and demand throughout the quarter. In addition,
the global macroeconomic uncertainty continued and many of the
company’s retail partners showed cautiousness in their inventory
replenishment, especially in EMEA.
Despite headwinds, Bang & Olufsen made good progress with
its strategic priorities in the quarter. The company’s own stores
outperformed other channels across all three regions, the Win City
Concept in London continued to show strong growth figures, and the
customer base increased again this quarter. The company also
announced the first Atelier Editions of the award-winning Beoplay
EX true wireless headphones, a limited edition collection in the
colour Lime Green.
The Q3 gross margin was 43.6% against 44.0% last year, despite a
change in product mix towards lower-margin categories. Heavily
impacted by the company’s China performance, the EBIT margin before
special items was negative 6.8% (Q3 21/22: 0.7%). Free cash flow
was positive DKK 33m (Q3 21/22: DKK -14m), driven by a
positive development in working capital. Like for like sell-out
declined 4% in the quarter mainly driven by low demand in China,
EMEA saw a slight decline whereas Americas continued to grow.
CEO Kristian Teär comments:“We are not satisfied with the
results for the quarter. The COVID-19 development in China had a
major impact on our performance, and our dealers in EMEA were
cautious with replenishing inventory due to the macroeconomic
situation. Despite these external factors challenging us, we saw
robust consumer demand in most markets and improved our free cash
flow, and we expect the situation in China to begin to
normalise.”
“Our transformation continued, and we made good progress with
our strategic priorities. Our Win City Concept continued to yield
results, we added more customers in the quarter, and our new
partnership with Ferrari will help us build brand awareness. We
will continue to execute in line with our strategy, but we are
phasing our investments to reflect the high uncertainty in the
world.”
Financial highlights, Q3 2022/23
- Revenue declined 18% (-20% in local currencies) in the quarter.
Sales in China decreased significantly as the country was heavily
affected by a change in COVID-19 policy in December. The quarter
was also impacted by macroeconomic uncertainty and retail partners
in the EMEA region remained cautious about inventory
replenishment.
- Gross margin was 43.6% against 44.0% last year. A change in
product mix towards lower-margin products was partly offset by
improved margins for the Staged and Flexible Living
categories.
- EBIT before special items was DKK -43m (Q3 21/22:
DKK 6m), corresponding to an EBIT margin before special items
of -6.8% (Q3 21/22: 0.7%). Special items were DKK -15m, mainly
due to a provision for redundancies. In February, the company
initiated a reorganisation as part of the continued focus on
balancing strategic investments while securing a lean cost
base.
- EBIT and EBIT margin came in at DKK -58m and -9.1%
respectively (Q3 21/22: DKK 1m and 0.1%).
- The result for the period was a loss of DKK 55m (Q3 21/22:
loss of DKK 16m).
- Free cash flow was DKK 33m (Q3 21/22: DKK -14m),
driven by a positive change in working capital.
- Available liquidity was DKK 208m (Q2 22/23:
DKK 187m).
Progress on strategic initiatives
- The company continued its efforts to increase brand awareness,
onboard new customers and increase average product ownership, and
the customer base grew by 5% while delivering a slight increase of
3% in the number of customers owning two or more products.
- Americas delivered positive sell-out growth. The quarter also
saw the opening of a partner-owned store in Orlando, Florida, an
attractive area to build a presence in due to the density of Very
High Net Worth Individual (VHNWI) customers.
- The company’s Win City Concepts performed well and yielded good
results in both London and Paris.
- The company launched the first Atelier Editions of the
award-winning Beoplay EX true wireless headphones, a limited
edition collection in the colour Lime Green.
A new partnership with Scuderia Ferrari for the 2023 Formula 1
season was announced in February. The new partnership got off to a
good start.
Outlook 2022/23With reference to company announcement no 22.07
dated 17 March 2023, the company adjusted the outlook for the
financial year 2022/23 due to lower-than-expected sales in China.
The current outlook is as follows:
- Revenue growth (in local currencies):
|
-9% to- 3% |
- EBIT margin before special items:
|
-4% to -1% |
|
-100m to 0m |
The outlook 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.
Please see Interim report 9M 2022/23 for further details on
outlook and assumptions.
Conference call for analysts and investorsThe company will host
a webcast on 13 April 2023 at 10:00 CEST, where the financial
development for Q3 2022/23 will be presented.
The webcast can be accessed at
https://streams.eventcdn.net/bo/2022-2023-q3
Dial-in details for participants in the Q&A:DK: +45
78768490UK: +44 2037696819US: +1 6467870157PIN: 193621
For further information, please contact:
Cristina Rønde HeftingInvestor RelationsPhone: +45 4153 7303
Jens Bjørnkjær GamborgGlobal Sustainability and
CommunicationsPhone: +45 2496 9371
- BO_2208_Interim report Q3 2022-23_UK
- Interim Report 9M 2022-23
Bang & Olufsen A/s (LSE:0MRM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Bang & Olufsen A/s (LSE:0MRM)
Historical Stock Chart
From Jul 2023 to Jul 2024