Bang & Olufsen interim report for Q2 2023/24

Strong gross margin contributed to positive earnings in Q2 despite lower revenue

Bang & Olufsen improved its gross margin significantly by 9 percentage points in the second quarter of the financial year (September-November) and delivered positive earnings despite declining revenue compared to last year.

Customer demand remained stable during the quarter with like-for-like sell-out growing by 2%. However, group revenue declined by 18.5%, (-16% in local currencies). Negative growth had been expected for Q2, especially due to the successful launch of the soundbar Beosound Theatre last year. Additionally, the company’s decision to exit several multibrand stores as part of its strategic transition had a revenue impact. The price increases announced for 1 September 2023 also pulled some revenue into Q1. Lastly, the slower-than-expected recovery of the Chinese economy adversely impacted sales.

Gross margin increased from 44.4% to 53.1% year-on-year. Normalised component and logistics costs, price increases, and a positive change in channel and product mix drove the significant increase. The improved gross margin contributed to positive earnings despite the lower revenue level. EBIT before special items was DKK 21m (Q2 22/23: DKK 14m), corresponding to an EBIT margin before special items of 3.0%, which was an increase of 1.4 percentage points compared to Q2 of last year.

CEO Kristian Teär comments:

“We are pleased to report another quarter of an improved gross margin and positive earnings. This was a record-high gross margin and the third quarter in a row with a gross margin above 50%. This shows we are building a more robust company and progressing with key priorities in line with our strategy. However, we are not satisfied with the revenue development this quarter. Sales were impacted by several factors, such as the slower-than-expected recovery of the Chinese economy and our decision to exit multibrand stores to support our strategy and enable more sustainable growth in the future.”

“Recently, we opened our new flagship stores in New York and London as part of our Win City Concept, and B&O branded network of stores continues to be our best performing channels. Our strong brand, product portfolio and branded retail network enable us to deliver luxury experiences for our customers. We will continue to invest in these areas together with our partners. However, uncertainty remains high, and we will be prudent with our investments as we have previously communicated.”