Bang & Olufsen Q1 2021/22 interim report: positive EBIT
The company continued to implement its turnaround strategy and maintained the strong momentum of last year. For the first time since fiscal 2007/08, Bang & Olufsen achieved a first quarter with both positive EBIT before exceptional items and positive free cash flow.
Revenue increased 44% in local currencies year over year. The company grew in all regions and all product categories, improved its gross margin and benefited from the full effect of the cost reduction program implemented last year.
CEO Kristian Teär comments:
“We are satisfied with the progress we made in the first quarter. Despite the pandemic and the continued challenges of global supply chain issues, the hard work of our employees and partners has helped us deliver 44% growth and a profitable first quarter for the first time since 2007/08. Results were driven by solid growth in all regions and product categories and the full effect of our cost reduction program. “
“We have entered the second phase of our turnaround where we focus on building greater robustness in our business, while achieving double-digit growth and improving our profitability. In the first quarter, we made solid progress in our strategic focus areas. We have expanded our customer base, strengthened our organization, launched new product innovations, continued our digital transformation and improved the customer experience. Overall, we are delighted to see that our strategy is working and we remain on track to meet our expectations for the entire year. “
Financial Highlights, Q1 2021/22
- Sales increased 44% in local currencies, across all regions and product categories.
- Flexible Living maintained the strong momentum of last year, with growth of 87%. The Staged and On-the-go categories recorded growth of 35% and 48% respectively. Growth in all product categories was driven by both existing and new products.
- Component shortages remained a challenge and had a negative impact on growth and margins. The company’s procurement team continued to successfully secure components, but delivery times are even longer for specific products, especially in the Staged category.
- Gross profit was DKK 299 million (Q1 20/21: DKK 198 million). This amounted to a gross margin of 44.8% (Q1 20/21: 42.8%). The improvement in gross margin is due to a 4.4 point increase in gross margin on products thanks to a favorable product mix, price increases and a better income / fixed cost ratio. The improvement was partially offset by higher costs for components and logistics.
- EBIT was DKK 7 million (Q1 20/21: -DKK 49 million). This corresponds to an EBIT margin of 1.1% (Q1 20/21: 9.0%).
- EBIT before exceptional items was DKK 9 million, which equates to a margin of 1.4% (Q1 20/21: -8.4%).
- The profit for the period was a profit of DKK 1 million (Q1 20/21: loss of DKK 49 million).
- Free cash flow was DKK 21 million (Q1 20/21: DKK -62 million), driven by EBITDA.
- Available cash remained stable at DKK 608 million (Q4 20/21: DKK 593 million).
Progress on strategic priorities
The company continued to implement its strategy which generated profitable growth while strengthening the robustness of its business operations.
- The company hired 85 new employees, especially in the software and engineering fields, with the aim of building the right teams, capabilities and structures.
- The first quarter saw the launch of three product innovations, Beovision Contour in a 55 ” version, Beoplay EQ and stereo pairing as a software update for the products of the new product platform.
- To support product and platform launches, several marketing activations were carried out, including the Beoplay EQ launch campaign with Chinese musician Lay Zhang.
- The six main European markets and the two main Asian markets achieved 37% and 17% year-on-year growth, respectively. Last year, sales in China were positively affected by delayed orders compared to the fourth quarter of the previous year. Taking into account the phasing of last year’s orders, growth was just over 30%.
- The brand and license partnership agreement with HP was renewed and the company announced a brand and license partnership with Sagemcom.
- The customer base grew 7.5% in the first quarter and the company plans to continue the positive trajectory throughout the year.
The company maintains the outlook for the 2021/22 financial year which is as follows:
|2.9 billion DKK to 3.1 billion DKK|
|0m DKK to 100m DKK|
The outlook is based on certain assumptions and remains subject to high uncertainty due to COVID-19 and general pressure on supply chains.
Conference call for analysts and investors
The company will host a webcast on October 6, 2021 at 10:00 a.m. CEST, where the financial developments for the first quarter of 2021/22 will be presented.
The webcast can be accessed at https://streams.eventcdn.net/bo/q1202122
Login details for Q&A participants:
DK: +45 7872 3251
United Kingdom: +44 333 300 9030
United States: +1 646 722 4956
For more information, please contact:
Martin Raasch Egenhardt
Telephone: +45 5370 7439
Telephone: +45 2496 9371
Interim report Q1 2021-22
BO_2109_ Interim report Q1 2021-22_UK