Bang & Olufsen interim report for Q1 2023/24

Significantly improved gross margin contributed to profitable growth in Q1 for Bang & Olufsen

Despite challenging macroeconomic conditions continuing to impact the world, Bang & Olufsen saw robust consumer demand in most markets during the first quarter, spanning from 1 June to 31 August. Overall, like-for-like sell-out increased by 8%. In the APAC region, sell-out grew by 29%. This was partly due to low comparables as especially China was impacted by regional lockdowns last year.

Revenue grew by 1.2% (5% in local currencies) during the quarter. EMEA grew by 26.7% (28% in local currencies) supported by inventory replenishment from retail partners and execution of project sales. Americas grew 6.2% (13% in local currencies), while APAC declined by 20.9% (16% in local currencies). The company’s APAC performance was primarily impacted by a slow recovery in Chinese consumer spending. In addition, APAC was adversely impacted by changes made to distribution and high inventory levels among some retail partners in China.

The company improved the gross margin significantly. It was up by 16 percentage points to 52.6% compared to last year. For the past three years, Bang & Olufsen absorbed approximately 450 million in extraordinary logistic and component costs. Since Q4 2022/23, the company’s supply chains have normalised, contributing to the improvement in gross margin. In addition, the margin was favourably impacted by higher margins across all product categories, supported by price increases since last year, as well as a change in product mix towards higher-margin products. This contributed to improved profitability with an EBIT before special items of DKK 16m, equivalent to an EBIT margin before special items of 2.6%, against -14.1% last year.

CEO Kristian Teär comments:
        
“We are pleased to report revenue growth of 5% and a positive EBIT. While macroeconomic headwinds continued to challenge us, we made further progress with our key strategic priorities, and we saw robust customer demand in most markets. I want to thank my colleagues and partners for their hard work in Q1.”

“We still see a lot of uncertainty ahead of us, and therefore we remain prudent with our investments. This means that our strategic transition will happen a little slower, but we remain confident in our direction. We continue to improve the customer experience across products and channels and strengthen the global visibility of the B&O brand. The extraordinary component and logistic costs no longer impact us, and we have increased our gross margin significantly during the past two quarters. It is a priority for us to improve our margins. This will allow us to improve our profitability and invest in our strategy and products to support our future growth ambitions.”