Bang & Olufsen has announced preliminary financial results for Q3 2022/23 and adjustments for the financial year 2022/23 ended on May 31st, 2023. The adjustment is due to lower than expect sales in China. At the end of last year, China had moved away from its zero-COVID-19 policy after a longer than expect period of lockdowns. The surge in cOVID-19 cases create uncertainty in many parts of the country. This has impacted the company’s performance in Q3 more than expected and continue to impact consumer behavior.
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 behaviour. That is the reason why we are adjusting our outlook today. However, we do anticipate consumer demand will start to normalise.”
“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: decline of 4% y-o-y)
As communicated in the H1 2022/23 report, the outlook is subject to unusually high uncertainty due to high inflation, rising interest rates and the war in Ukraine.
The expectations are further subject to the following assumptions:
Improved market conditions in China during Q4, yet at a slower pace than initially expected.
Launch of three or more product innovations, as previously communicated, in the remainder of the financial year.
No impact on product availability due to geopolitical changes or COVID-19 related lockdowns.
No major COVID-19 related lockdowns in the remainder of the financial year.
Exchange rates against DKK, including in particular USD, CNY and EUR, in line with current exchange rate levels, overall.