Interim report for Q3 2023/24

B&O’s strong gross margin performance contributed to positive earnings in Q3 despite lower revenue

Despite a lower-than-expected revenue level, Bang & Olufsen generated positive earnings and delivered another quarter with a record-high gross margin. This is an outcome of the company’s continued work to implement its Luxury Timeless Technology strategy and build a more resilient business. Enhanced focus on the customer experience in branded channels, luxury positioning, and product excellence are key elements in this transition.

The macroeconomic conditions in key markets in Europe did not improve as the company expected. This impacted sales during the quarter. Also, B&O does not expect the Chinese economy to improve significantly in the near future. Therefore, the company adjusted its full-year revenue outlook on 17 March 2024. Group revenue for the quarter declined by 3.4% (3% in local currencies) year-on-year. The company’s product revenue in local currencies was flat, while customer demand (measured as sell-out) declined by 2%.

The company’s gross margin increased to 53.2%, nearly a 10-percentage point increase compared to last year. Normalised component and logistics costs, a strong pricing focus, and a positive change in both channel and product mix drove the increase. Bang & Olufsen delivered positive earnings, and the EBIT before special items was DKK 11m (Q3 22/23: DKK -43m). This corresponded to an EBIT margin before special items of 1.8%, which was an increase of 8.6 percentage points compared to Q3 of last year. The free cash flow was positive, amounting to DKK 5m for the quarter.

For the first nine months of 2023/24, group revenue declined by 7% year-on-year in local currencies. EBITDA before special items was DKK 228m corresponding to a margin of 11.8% (9M 22/23: 2.4%) and an increase of 177m from DKK 51m in the first nine months of 2022/23. The EBIT margin improved by 7.9 percentage points to 2.5%.

CEO Kristian Teär comments:

"This was another quarter with a record-high gross margin, and we delivered the best nine-month EBIT results in half a decade, even at a lower revenue level. We do not see the expected improvement in the macroeconomic conditions in key markets in Europe and China, and this unfortunately impacts our sales. This meant that we had to adjust our outlook for full-year revenue in March.”

“We're transitioning towards higher margin revenue in line with our strategy. We do that by focusing more on creating the right experience in our branded channels, ensuring high product quality, and strengthening our luxury positioning. That transition takes time, but we believe this is the right way for us to create profitable growth for Bang & Olufsen in the long term. I want to thank my partners and colleagues for their hard work during the quarter.”