Annual report 2022/23

A challenging year for Bang & Olufsen, aims to return to profitable growth in 2023/24

Group revenue was DKK 2,752m in 2022/23, a decline of 7% (-8% in local currencies) compared to last year. The decline was primarily driven by macroeconomic headwinds and the unexpected COVID-19 development in China, negatively impacting product sales. The company’s strategic efforts to expand its Brand Partnering business resulted in revenue growth of 22% in that segment.

In December, China suddenly abandoned its COVID-19 lockdown policy. This led to a surge in infections, which impacted the company’s sales. In Asia, revenue declined by 19% in 2022/23. Revenue in EMEA declined 6%, while Americas achieved 2% growth. Both regions were impacted by macroeconomic headwinds caused by high inflation and increasing interest rates. In addition, European retail partners were more cautious with replenishing inventory. Like-for-like sell-out declined by 2%, mainly impacted by China.

Gross margin was 44.2% against 45.3% last year. The decline was mainly related to a change in product mix being skewed towards lower-margin products. The overall margin level reflected higher-than-normal component and logistics costs of around DKK 160m. In Q4, component and logistics costs significantly decreased, and the company achieved a gross margin of 51.4%, up 7.8pp compared to Q3 of 2022/23. The EBIT margin before special items was negative 3.8% for the year, driven by the lower revenue and gross margin. The free cash flow improved by DKK 152m compared to 2021/22 and was negative DKK 20m in 2022/23. In Q4, the company had free cash flow of DKK 27m. This was the third consecutive quarter of positive free cash flow. Net working capital on 31 May 2023 was DKK 222m, a decrease of DKK 113m year-on-year primarily due to lower inventories.

In January, Bang & Olufsen presented a sharpened strategic direction with the ambition to strengthen its luxury timeless technology proposition. The Win City concept continued to yield results in Paris and London with like-for-like sell-out in company-owned stores growing by 16%. In Q4, New York was added to the list of Win Cities, and Bang & Olufsen expects the Win City concept to be a key driver of growth in the future. The company continued to invest in building a better and more connected portfolio of products based on its proprietary software platforms. Seven new product innovations were introduced this year. In addition, the company introduced its new Atelier Editions, which showcase Bang & Olufsen’s capabilities to offer bespoke solutions and create limited editions. The partnership with Ferrari helped increase awareness of the Bang & Olufsen brand, and the new product collaboration is expected to support that as well as drive revenue. This year, Bang & Olufsen also committed to long-term climate targets as part of its work to support the transition to a more sustainable future.