Bang & Olufsen A/S Group Annual Report 2012/13
Q4 HIGHLIGHTS
Bang & Olufsen realised revenue of DKK 2,814 million in the 2012/13 financial year, corresponding to a decline of 6 per cent compared to last year. The positive contribution from the successful launch of many new and innovative products was more than outweighed by continued challenging market conditions in Europe, combined with short-term, adverse revenue effects of terminating low-performing retailers and taking control of the distribution in China. The Group EBIT was negative DKK 188 million. Both revenue and EBIT were in line with the company’s latest guidance.
- The Group’s revenue was DKK 740 million for the fourth quarter of the 2012/13 financial year compared to revenue of DKK 867 million in the same period last year.
- The B2C business recorded revenue of DKK 582 million in the fourth quarter of the 2012/13 financial year compared to DKK 688 million in the same period last year. Fourth quarter last year was a tough comparison base due to the launch of BeoPlay V1.
- Based on the success of recently launched products and a strong roadmap for new products for the next 12-18 months, Bang & Olufsen has decided to reduce the complexity in the product portfolio by terminating a number of older, non-productive products across all product segments. The new product launches and the terminations of old products will significantly rejuvenate and strengthen the product portfolio, make it even more attractive to consumers and retailers and further position Bang & Olufsen as a leader within high-end AV solutions.
- The B2B business recorded revenue of DKK 159 million in the fourth quarter of the 2012/13 financial year compared to revenue of DKK 158 million in the same period last year.
- B2C revenue in all markets outside Europe saw strong increases in the fourth quarter compared to the same quarter last year. North America increased to DKK 49 million from the unusually low DKK 15 million in the same quarter last year, BRIC markets increased by 21 per cent and Rest of world increased by 22 per cent. The strong developments outside Europe were offset by a 30 per cent decrease in Europe.
- The Group’s gross margin in the fourth quarter was 35.8 per cent, compared to a gross margin of 40.6 per cent last year. The decline in the gross margin was mainly a result of extraordinary inventory write-downs (DKK 22 million) reflecting the decision to terminate older, non-productive product and an adverse effect from indirect production costs due to a significant inventory reduction in the quarter. These effects were only partially offset by a decrease in warranty provisions (DKK 23 million) reflecting a continued positive development in the quality level of the product portfolio.
- Capacity costs were DKK 304 million in the fourth quarter, compared to DKK 271 million in the fourth quarter last year. The quarter was impacted by higher amortisation and lower capitalisation on development projects of DKK 25 million compared to the same quarter last year. Additional cost increases relate to an increased level of own retail and the establishment of a B&O PLAY organisation. The capacity costs included net non-recurring items of DKK 15 million, mainly related to network restructuring and organisational changes.
- Earnings before tax for the fourth quarter of the 2012/13 financial year were negative DKK 45 million against positive DKK 77 million in the same quarter last year.
- Free cash flow in the fourth quarter was positive at DKK 59 million compared to negative DKK 51 million in the same period last year. The Group’s net working capital was reduced to DKK 557 million at the end of the fourth quarter of the 2012/13 financial year compared to DKK 613 at the end of the 2011/12 financial year.
- The 2013/14 financial year is the third year of the transition phase in the “Leaner, Faster, Stronger” strategy. The key focus for the year will be to continue to build a strong foundation that will prepare Bang & Olufsen for future growth, while ensuring a significant improvement in the financial results.
- After the end of the reporting period Bang & Olufsen has taken over 20 shops from the previous master dealer Richcom in China (including Beijing and Shanghai). This means that Bang & Olufsen now owns and operates 31 out of the 36 stores in China and Hong Kong. The final purchase price has not been finalised yet, but is expected to be in the level of DKK 35 million.
Any enquiries about this announcement can be addressed to:
CEO, Tue Mantoni, tel.: +45 9684 5000
Press contact, Morten Juhl Madsen, tel.: +45 4030 8986
Investors, Claus Højmark Jensen, tel: +45 2325 1067
A webcast will be hosted on 16 August 2013 at 10.00. Access to the webcast is obtained through our web page www.bang-olufsen.com/investor.
