Bang & Olufsen releases preliminary Q3 numbers and adjusts outlook due to lower-than-expected sales in China

by

Bang & Olufsen releases preliminary Q3 numbers and adjusts outlook due to lower-than-expected sales in China 

Bang & Olufsen releases the preliminary financial numbers for Q3 2022/23 and adjusts the outlook for the
financial year 2022/23 (ending on 31 May 2023). The reason for the outlook adjustment is lower than
expected sales in China. In December 2022, China moved away from its zero-COVID-19 policy after a
longer period of lockdowns. That led to a surge in COVID-19 cases which created a large uncertainty in
many parts of the country. These circumstances impacted the company’s performance in Q3 more than
expected and continue to impact consumer behavior. 

The company now expects revenue growth (in local currencies) to be between -9% and -3% for the full
financial year. The adjusted revenue outlook will also impact the company’s EBIT margin before special
items and free cash flow for the financial year 2022/23. The EBIT margin before special items is expected
to be between -4% and -1%, while free cash flow is expected to be between DKK -100m and DKK 0m. 

CEO Kristian Teär comments:

“Sales in China did not progress as expected after the reopening because of all the challenges with COVID-19. In the first two quarters, extensive lockdowns in China severely impacted our sales. When the country
suddenly abandoned most of the restrictions in December, we did not expect this negative development
in consumer behavior. That is the reason why we are adjusting our outlook today. However, we do
anticipate consumer demand will start to normalize.” 

   “We will continue with our strategy and transformation as planned. We are building a more robust

Bang
& Olufsen with a strong customer and cost focus and will continue to launch products and initiatives that
support our growth ambitions. However, as previously said, we are phasing some of our strategic
investments due to the high uncertainty we currently see in the world.”

The preliminary results for 9M 2022/23 (Q3 2022/23) are as follows: 

  • Revenue of DKK 2,106m, equivalent to -9% y-o-y growth in local currency (Q3: DKK 635m,
    equivalent to -20% y-o-y growth in local currency) 
  • EBIT before special items of DKK -114m, corresponding to a margin of -5.4% (Q3: DKK -43m,
    corresponding to a margin of -6.8%)  
  • Free cash flow of DKK -47m (Q3: DKK 33m) 
  • Like-for-like sell-out declined 5% y-o-y (Q3: the decline of 4% y-o-y)
Macroeconomic headwinds impacted the Q3 performance in all regions. However, the Asia region
declined more than expected, driven by a decline in China’s revenue of 65% y-o-y.
Revenue growth in local currencies:          -9% to -3%   (Previously in the lower end of -4% to 5%)
 
EBIT margin before special items:    -4% to -1%        (Previously in the lower end of -2% to 3%) 
Free cash flow:  DKK -100m to DKK 0m   (Previously in the lower end of DKK -50m to DKK 100m)  

Leave a Comment