Bang & Olufsen reports flat quarterly revenue
DANISH ELECTRONICS maker Bang & Olufsen reported flat quarterly revenue after strong sales of lower-priced products were outweighed by a steep decline at its top-end audio-visual unit.
Sales of its cheaper B&O Play range, launched at the start of the year to win new and younger customers, rose 92 per cent, the company said yesterday.
B&O’s audio-visual unit, whose 103-inch BeoVision4 TV costs about €100,000 saw revenue slide 20 per cent.
The business contributes over half of group revenue and also outweighed a 37 per cent rise in its automotive business which makes sound systems for luxury cars such as Aston Martin, Audi and Mercedes.
“The crisis in Europe is also hitting Bang & Olufsen, no doubt,” said Alm Brand analyst Michael Jorgensen. “They are feeling the lack of consumer willingness to spend.”
The quarter was also dented by an absence of new product launches, the company said.
Chief executive Tue Mantoni stood by B&O’s outlook for double-digit sales growth in its 2012/13 year and an improved operating margin, pinning hopes on BO Play product launches in October.
“It is expected that these two products will drive significant revenue in the second quarter.”
The group’s pre-tax loss doubled to 64 million Danish crowns in the June-August period – its first quarter – compared with an analysts’ forecast for a DKr25.7 million. Sales were flat at DKr600 million crowns, also missing forecasts.
“Overall, it is quite bad compared to what was expected,” Sydbank analyst Nicolaj Jeppesen said.
Costs related to product development and marketing rose 18 per cent to DKr306 million and were heavily affected by the launch of BO Play, Mr Jeppesen said.
Slowing growth in Asia’s luxury markets has put a question mark on the timing of BO’s ambition of moving into the region.
Mr Mantoni has said B&O wanted China to account for 20-30 per cent of revenue within two or three years, compared with about 3 per cent currently.
“Bang & Olufsen has to have a presence there, but the timing is another issue,” Mr Jorgensen said.