Page — 1
Interim report Q1
2022/23
Page — 2
Management review
Interim report Q1 2022/23
Financial highlights
We continued to see robust demand for our products.
Sell-out in EMEA was down 2%, with demand moving
to more travel and outdoor-related products compared
to last year. Sell-out in Americas grew by 14%, while
Asia declined by 27%, mainly due to China, which was
impacted by lockdowns and declining consumer
confidence. All in all, sell-out declined by 9% compared
to Q1 of last year.
Compared to last year, revenue declined by 8.2%. to
DKK 612m. The decline was related to regional product
sales, which declined by 13.7% (-16% in local
currencies). Brand Partnering & other activities grew by
51.7% (44% in local currencies). Our exit from the
Russian and Belarusian markets had a 1pp negative
impact on growth.
Due to the increased uncertainty in the markets, we saw
retail partners reduce inventories and being more
cautious about replenishing. This impacted financial
performance, especially in EMEA and Asia.
Gross profit was DKK 224m (Q1 21/22: DKK 299m). This
was equivalent to a gross margin of 36.6% (Q1 21/22:
44.8%). The decline reflected product mix, higher costs
mainly from components purchased late last year, and
sale of a large quantity of earphones. Lastly, the higher
fixed-costs-to-revenue ratio and currency movements
contributed to the overall margin decline.
EBIT was DKK -85m (Q1 21/22: DKK 7m). This
corresponded to an EBIT margin of -14.1% (Q1 21/22:
1.1%). No special items were recognised in Q1 and the
EBIT margin before special items was therefore also
14.1% compared to 14% in Q1 of last year.
The result for the period was a loss of DKK 100m (Q1
21/22: profit of DKK 1m).
Free cash flow was DKK -81m (Q1 21/22: DKK 21m),
driven by EBITDA. Available liquidity was DKK 207m
(Q4 21/22: DKK 301m).
We have launched measures to mitigate the effects of
increasing uncertainty and declining consumer
confidence while continuing to execute on core parts of
our strategy. These include a general hiring freeze, a
lowered production forecast and phasing of
investments.
Progress on strategic priorities
Q1 saw the launch of our most modular design to date,
our Beosound Theatre soundbar. The modularity value
of Beosound Theatre is twofold as the soundbar fits
almost any TV screen and outlasts traditional product
cycles due to its upgradability as technology advances.
With an ambition to build a seamlessly connected
product ecosystem, we continued to strengthen our
software capabilities. In Q1, we opened our new office
in Sofia, Bulgaria, which will supplement our software
team in Denmark
In Q1, we launched one of our most successful brand
collaborations to date, our Balenciaga Speaker Bag. The
collaboration enjoyed impressive media reach and
brand interest.
We continued our growth trajectory in London with
sell-out from our company owned stores growing 71%
year on year. The Win London project continues and we
have decided to expand to New York and Paris in the
coming quarters to leverage methodology and
learnings.
Outlook 2022/23
We maintain our outlook, which is as follows:
• Revenue growth in local currencies: -4% to 5%
• EBIT margin before special items: -2% to 3%
• Free cash flow (DKKm): -50 to 100
The outlook for 2022/23 is subject to unusually high
uncertainty related to consumer confidence due to high
inflation, rising interest rates and the war in Ukraine,
which, in combination, have increased the risk of
recession. Furthermore, there is higher geopolitical
uncertainty and risk related to current and potential
future regional COVID-19 related lockdowns, especially
in China.
Q1 highlights
Revenue
DKK million
612
Q1 21/22: 666
Growth in revenue
-8%
Q1 21/22: 44%
EBIT before special items
DKK million
-85
Q1 21/22: 9
Free cash flow
DKK million
-81
Q1 21/22: 21
Page — 3
Management review
Interim report Q1 2022/23
For definitions, see note 8.7 to the Annual Report 2021/22.
Key financial highlights
Q1
(DKK million)
2022/23
2021/22
Income statement
Revenue
612 666
EMEA
239 302
Americas
63 60
Asia
218
244
Brand Partnering & other activities
92 60
Gross margin, %
36.6
44.8
EMEA
30.1
42.6
Americas
18.4 30.9
Asia
27.6
38.2
Regions, total
27.6 39.7
Brand Partnering & other activities
87.2 96.7
EBITDA
-32 59
EBIT before special items
-85 9
EBIT
-85 7
Special items, net
-
-2
Financial items, net
-18 -5
Profit/(loss) before tax (EBT)
-103 2
Profit/(loss) for the period
-100 1
Financial position
Total assets
2,476 2,332
Share capital
613 613
Equity
1,012 1,143
Cash
125 201
Available liquidity
207
608
Net interest-bearing deposit
27 379
Net working capital
325
191
Q1
(DKK million)
2022/23
2021/22
Cash flows
Cash flows from operating activities
-28 47
Operational investments
-53
-26
Free cash flow
-81 21
Cash flows from investing activities
-50 -26
Cash flows from financing activities
38 2
Cash flows for the period
-40 23
Key figures
Growth in local currencies, %
-10 44
EBITDA margin before special items, %
-5.4 9.2
EBITDA margin, %
-5.4 8.9
EBIT margin before special items, %
-14.1
1.4
EBIT margin, %
-14.1 1.1
Return on assets, %
-4.1 0.0
Return on invested capital, excl. goodwill, %
-7.8 3.7
Return on equity, %
-9.9 0.1
Full-time equivalents at end of period
1,059 976
Stock-related key figures
Earnings per share (EPS), DKK
-0.8 0.0
Earnings per share, diluted (EPS-D), DKK
-0.8 0.0
Price/Earnings
-15.3
N.m.
Revenue per share, DKK
5.1 5.5
Revenue per share, diluted, DKK
5.1 5.5
Page — 4
Management review
Interim report Q1 2022/23
Sell-out declined by 9%, mainly
related to Asia, which was impacted
by continued regional lockdowns in
China. Overall, sell-out displayed a
return to more normal seasonality, with
Q1 sales moving to travel-related
products, but was also impacted by
declining consumer confidence.
The increased uncertainty and
declining consumer confidence led to
some retail partners reducing their
inventories and being more cautious
when replenishing. This impacted
financial performance in the quarter.
The gross margin was impacted by
product mix, higher cost for
components purchased last year,
lockdowns and the effect of high
inventories. This also had a negative
impact on our EBIT margin before
special items and free cash flow.
The quarter was characterised by a normalisation of
seasonality, with consumers focusing on travel during
the summer. This was in contrast to the same period
last year, when travel activity was restricted. We could
see that our sales moved towards our On-the-go
offerings compared to last year, when we saw high
demand for products in the Staged category during the
quarter.
Reports on global consumer confidence have shown a
steep decline due to high inflation and rising interest
rates. Europe was furthermore impacted by the effects
of the war in Ukraine, while China was still impacted by
regional lockdowns and a generally negative economic
climate. We experienced lower footfall in our stores and
retail partners were more cautious in placing orders
and were also reducing inventories.
The market for components improved in Q1 and we no
longer have significant issues with product availability.
In Q1, we reduced our component spot buys by around
50% compared to Q4 of last year.
However, the gross margin was impacted by higher
costs driven by components purchased late last
financial year, when prices were at their highest.
Additionally, we were impacted by higher obsolescence
costs due to inventory ageing as lockdowns in China
last year led to higher inventory going into Q1.
The decline in revenue and profitability also led to
lower EBIT margin compared to Q1 of last year.
We are adjusting to the macro environment
Due to increasing uncertainty and declining consumer
confidence, we have implemented certain measures to
align with market developments while continuing to
execute on core parts of our strategy. We have
announced a hiring freeze globally, except for certain
key roles, e.g. software resources. We have lowered our
production forecast to ensure efficient inventory
development and, lastly, we are phasing some
investments over a longer duration.
Like-for-like sell-out
Like-for-like sell-out declined by 9% compared to Q1 of
last year. This mainly related to the lockdowns in
China.
Like-for-like sell-out in Asia declined by 27%, with
China declining 42% compared to last year, impacted
by regional lockdowns and an overall drop in consumer
confidence.
The lockdowns in China impacted sell-out in all
product categories, especially Flexible Living, which
saw a high increase in sales last year.
Sell-out in EMEA declined by 2%. Sell-out reflected the
fact that demand in Q1 again moved to more travel and
outdoor-related On-the-go products, reflecting a more
normal seasonality. This also impacted channel
performance, and we saw multibrand and etail
delivering solid growth.
Our monobrand channel, which is more dependent on
the Staged category, declined. The decline was related
to monobrand stores operated by partners, while our
company owned stores delivered strong growth
compared to Q1 of last year.
Traffic on our eCommerce platform increased, but we
saw sales move to other channels with lower consumer
prices. This led to a decline in sales in our eCommerce
channel.
We experienced a bigger decline in sell-in compared to
sell-out from all channels in EMEA. This reflected the
fact that partners reduced inventories in Q1,
presumably driven by the declining consumer
confidence and general increase in uncertainty in
the markets.
Management review for Q1
LIKE-FOR-LIKE SELL-OUT*
Q1
Q1
EMEA
-2%
Staged
-3%
Americas
14%
Flexible Living
-23%
Asia
-27%
On-the-go
-7%
Total
-9%
Total
-9%
* Defined as sell
-out from the same stores, provided they were open and active in both periods.
Page — 5
Management review
Interim report Q1 2022/23
Americas grew sell-out by 14% compared to last year.
All channels delivered growth, except for our
eCommerce channel, which experienced sales moving
to etailers as a result of price inconsistency in the
market. The growth was driven by the Staged and On-
the-go categories.
Revenue in Q1
Revenue declined by 8.2% year on year (-10% in local
currencies) to DKK 612m.
The decline was related to regional product sales, which
declined by 13.7% (-16% in local currencies). Brand
Partnering & other activities grew by 51.7% (44% in local
currencies). Adjusted for sales to the Russian market in
Q1 of last year, the year-on-year decline was 7% and 13%
for the Group and product revenue respectively.
We experienced the biggest decline in the monobrand
channel in EMEA. We saw our retail partners in Europe
react to increasing uncertainty and declining consumer
confidence by reducing inventories and showing
greater caution when replenishing. Additionally, with
the increase in travel activity this summer, demand
moved to travel and outdoor-related On-the-go
products.
Revenue from our company owned stores grew in all
three regions and they outgrew the monobrand
network in general.
The number of monobrand stores declined by 16, which
was related to the store closures announced last year.
The multibrand channel was impacted by lockdowns in
China, among other factors. In Americas, we moved out
of physical stores with BestBuy to focus on their online
channel, which is now the main channel for our sales.
This also impacted the number of multibrand points of
sale, which declined by 813.
Online revenue through our eCommerce channel and
through etailers declined compared to last year.
Excluding Asia, online revenue increased by a mid-
single digit figure mainly driven by Americas. We
continue to experience some price inconsistency
between our eCommerce channel and the market. This
has resulted in sales moving to other channels. Our
eCommerce sales accounted for approximately 4% (Q1
21/22: 4%) of product revenue in Q1. Our combined
eCommerce and etail revenue accounted for around
17% (Q1 21/22: 16%) of regional product revenue.
The 51.7% growth in Brand Partnering & other activities
was driven by both higher licence income and product
revenue, mainly related to our Cisco partnership.
Staged category
Revenue declined by 19.7% to DKK 213m, primarily
attributable to the TV portfolio. Sales were lower across
all TV products, partly offset by higher average prices as
we have implemented price increases since Q1 of last
year.
The decline in revenue from our speaker portfolio was
attributable to Beolab 28, which had higher
comparables from last year, when it had just been
launched. Beolab 90 and Beolab 50 performed better
than last year. The performance in the speaker portfolio
was also supported by the price increases implemented
since Q1 of last year.
Revenue split
302
239
60
63
244
218
60
92
EMEA
Americas
Asia
Brand Partnering & other activities
Q1 2022/23
Q1 2021/22
265
213
148
125
193
182
60
92
Staged
Flexible Living
On-the-go
Q1 2022/23
Q1 2021/22
Monobrand
Multibrand
Points of sale
End Q1 22/23
End Q4 21/22
End Q1 22/23
End Q4 21/22
EMEA
322 340 1,730 1,637
Americas
27 26 1,730 2,456
Asia
79 78 799 979
Total
428 444 4,259 5,072
Page — 6
Management review
Interim report Q1 2022/23
Flexible Living category
Revenue declined by 15.5% to DKK 125m. With the
exception of Beosound Balance, revenue from all other
speakers declined. This was mainly related to the EMEA
region.
The decline in revenue was partly offset by price
increases implemented since last year.
Beoplay A9 continued to be our bestselling product
across product categories.
On-the-go category
Revenue declined by 5.6% to DKK 182m, impacted by
lockdowns in China, impacting especially the
headphone category.
Portable speakers and earphones both delivered
healthy growth compared to last year. Beolit 20 drove
the growth from portable speakers, while our new
Beoplay EX drove the growth in our earphone category.
Revenue from Beoplay EX was around 20% higher than
for Beoplay EQ in Q1 of last year. Regional lockdowns in
China in Q4 of last year led to higher inventory at the
start of the new financial year. In Q1, we managed to
sell a large quantity of earphones originally intended
for the Chinese market to a partner in the US.
Gross profit
Gross profit was DKK 224m (Q1 21/22: DKK 299m). This
was equivalent to a gross margin of 36.6% (Q1 21/22:
44.8%).
Gross profit from regional product sales was DKK 141m
(Q1 21/22: DKK 241m), equivalent to a gross margin of
27.6% (Q1 21/22: 39.7%). The decline reflected product
mix with more sales in lower-margin categories, and
higher costs mainly from more expensive components
purchased in the previous financial year. Furthermore,
the sale of a large quantity of earphones to a partner in
the US reduced the On-the-go margin in the quarter.
Lastly, the higher fixed-costs-to-revenue ratio
contributed to the overall margin decline.
Gross profit from Brand Partnering & other activities
was DKK 80m (Q1 21/22: DKK 58m), equivalent to a
gross margin of 87.2% (Q1 21/22: 96.7%). The growth in
gross profit was mainly driven by our new collaboration
with Cisco, where we have started to sell the Bang &
Olufsen Cisco 980 headset for hybrid work. Product
sales grew faster than high-margin licence income,
adversely impacting gross margin in Q1.
Currency movements had a negative impact on the
margin of approximately 1pp in the quarter.
Capacity costs
Capacity costs were DKK 306m (Q1 21/22: DKK 292m),
corresponding to a year-on-year increase of 5%.
The increase was driven by targeted investment into
our strategic focus areas, where we have prioritised
product development and sales and marketing
activities.
Development costs decreased by DKK 9m to DKK 69m,
reflecting higher capitalisations. Our incurred
development costs were DKK 6m higher than last year,
driven by platform upgrades and our new soundbar,
Beosound Theatre.
Distribution and marketing costs increased by
DKK 22m to DKK 205m (Q1 21/22: DKK 183m). The
increase reflected our investments into more marketing
and the full-year effect of the resources we have added
since Q1 of last year.
The increase in marketing costs was mainly due to local
marketing activities. The ratio of marketing to revenue
increased by 2.5pp to 9.8%.
Administrative expenses were DKK 35m (Q1 21/22:
DKK 31m). The increase was mainly driven by added
resources compared to a year ago. Compared to Q4,
administrative expenses declined by 5%.
EBIT
EBIT was DKK -85m (Q1 21/22: DKK 7m). This was
equivalent to an EBIT margin of -14.1% (Q1 21/22: 1.1%).
There were no special items in Q1 of this year (Q1 21/22:
DKK 2m). Before special items, the EBIT margin
declined by 15.5pp to -14.1%.
The negative margin reflected lower revenue, declining
gross margin, and slightly higher capacity costs.
Financial items
Net financial items were an expense of DKK 18m versus
an expense of DKK 5m last year. The increase was
driven by exchange rate adjustments and fair value
adjustments of securities.
Q1
GROSS MARGIN
2022/23
2021/22
Staged
37.4%
45.8%
Flexible Living
40.4% 46.1%
On-the-go
7.9%
26.6%
Products, total
27.6% 39.7%
Brand Partnering & other activities
87.2%
96.7%
Total
36.6%
44.8%
Page — 7
Management review
Interim report Q1 2022/23
Profit/(loss)
The result before tax was a loss of DKK 103m (Q1 21/22:
profit of DKK 2m).
Income tax amounted to DKK -3m (Q1 21/22: DKK 1m).
The effective tax rate was -3.3% (Q1 21/22: 46.4%). The
effective tax rate was primarily affected by a DKK 19m
impairment charge related to the deferred tax asset in
order to ensure that the deferred tax asset does not
increase further due to the unusually high uncertainty
as explained in Outlook for 2022/23.
The result for the period was a loss of DKK 100m (Q1
21/22: profit of DKK 1m).
Cash flow
Free cash flow was an outflow of DKK 81m compared to
a free cash inflow of DKK 21m last year.
Cash flows from operating activities were an outflow of
DKK 28m (Q1 21/22: inflow of DKK 47m).
The outflow was driven by the negative EBITDA of
DKK 32m (Q1 21/22: inflow of DKK 59m). Change in net
working capital was a positive DKK 10m compared to a
negative DKK 4m last year.
Cash flows from operational investments were an
outflow of DKK 53m (Q1 21/22: outflow of DKK 26m).
The investments were primarily related to the
development of new products and platforms.
Cash flows from financing activities were DKK 38m
(Q1 21/22: DKK 2m). The cash inflow was related to net
repo transactions of DKK 49m (Q1 21/22: DKK 10m),
which were used to access liquidity on an intra-day
basis for short-term liquidity planning and offset by
cash outflow related to lease liabilities.
The cash position was DKK 125m (Q4 21/22: DKK 162m).
Total available liquidity was DKK 207m (Q4 21/22:
DKK 301m), made up of the sum of cash and securities
amounting to DKK 532m less DKK 325m in bank loans
related to repo transactions.
Our combined capital resources, consisting of available
liquidity and the undrawn part of our ESG-linked credit
facility, amounted to DKK 337m (Q4 21/22: DKK 433m).
Net working capital
Net working capital declined by DKK 10m during the
quarter to DKK 325m.
Trade receivables were at the same level as at year-end
31 May 2022. Sales with extended credit accounted for
6% of revenue in the quarter (Q1 21/22: 6%).
Trade payables increased by DKK 51m since year-end
and related to timing of payments.
Inventories declined by DKK 5m during the quarter. We
entered the quarter with a high inventory following the
lockdowns in China in Q4 of last year. We were not able
to adjust production with our production partners
immediately. Our inventory level therefore remained
high at the end of Q1. We expect that our revised
production plans will enable us to reduce our inventory
during the remainder of the financial year.
Other liabilities decreased by DKK 41m during the
quarter, primarily due to payment of employee bonus.
Net working capital to the last 12 months' revenue was
11.2% (Q4 21/22: 11.4%). The net working capital ratio
remained at the high level from the end of our last
financial year.
Net interest-bearing deposit
Net interest-bearing deposit, including net lease
liabilities of DKK 119m, amounted to DKK 27m,
compared to net interest-bearing deposit of DKK 111m
at year-end 31 May 2022. The decrease was mainly due
to the negative free cash flow of DKK 81m.
For further details, see note 8.
Equity
Equity was DKK 1,012m, corresponding to a decrease of
DKK 88m in Q1 22/23.
Page — 8
Management review
Interim report Q1 2022/23
We entered 2022/23 with a relatively
high degree of uncertainty due to
declining consumer confidence driven
by high inflation, rising interest rates
and the war in Ukraine, which, in
combination, have increased the risk of
recession. The geopolitical unrest and
risks related to the potential
continuation of regional lockdowns in
China further increase the uncertainty.
Despite the instability of the macro
environment, we continued to execute
on our strategy but adjusted our plans
in line with market developments.
For the past two and a half years, we have been working
with our transformation strategy aimed at building a
robust business while reorienting strategically towards
scalable growth.
With our current operating environment, building
robustness in the business is more important than ever,
and we are consequently continuing our cost focus,
diligently managing our investments, and working on
production planning in a careful, structured manner to
ensure a tight fit between demand and supply. These
measures will help strengthen our resilience. But we
also want and need to continue our strategic
reorientation efforts in order to make us more relevant,
more competitive and more differentiated in the future,
especially in a potential time of recession. In Q1, we
took a few more, important, incremental steps in the
direction we wish to go.
Long-lasting, magical products designed for
the future
Product longevity is at the heart of our strategy. We
believe in designing and creating long-lasting, circular
products that inspire customers to buy fewer but better
products, thereby challenging the short replacement
cycles in the industry.
In Q1, we launched our new soundbar, Beosound
Theatre. With this launch, we demonstrated our
modularity ambition as the soundbar will fit almost any
TV screen and outlast all normal television cycles. Like
Beosound Level and our other recently launched
products, Beosound Theatre is built in modular design.
The response to the launch was very positive. Besides
being recognised for its sound performance and design,
the ability to extend the life of Beosound Theatre
beyond the normal life of a soundbar has been highly
praised.
We have initiated the process of getting Beosound
Theatre Cradle-to-Cradle certified, which is the world’s
most ambitious product circularity standard.
Beosound Level was the world’s first consumer
electronics product to receive Cradle-to-Cradle
certification. We have committed to certify at least ten
products by the end of our fiscal year 2024/25.
Since the launch of our strategy in April 2020, we have
strengthened our product development team,
especially within software skills. We are continuously
developing our technical platforms and enhancing our
product ecosystem. In Q1, we opened an office in Sofia,
Bulgaria, which will complement our software team in
Denmark. Our success in attracting people and skills
has so far been very encouraging.
In parallel with our dedicated recruitment efforts, we
are committed to motivate and excite the next
generation of product developers. In Q1, we hosted our
annual Innovation Camp in collaboration with Struer
Municipality, University of Aarhus, University of
Aalborg and the Technical University of Denmark. The
camp provided high-quality multidisciplinary STEM
(science, technology, engineering, mathematics) and
sustainability education to engineering, acoustics and
computer science students. The summer school was a
test run for establishing a residential college in Struer in
partnership with the universities focused on acoustics,
STEM and sustainable design for audio products. A
total of 42 highly committed students attended the
camp, and we managed to build excitement about our
company as well as capabilities for the future.
Building the brand and driving demand
Strengthening our brand awareness among our target
audience globally remains a critical lever for future
growth.
Product collaborations have been a programmatic effort
and key priority for many years to reach more potential
customers. Collaborating with other globally recognised
luxury brands not only creates awareness of our brand
but also strengthens our equity. In Q1, we launched two
such collaborations. The first was a limited edition of
our Beosound Explore portable speaker together with
luxury lifestyle brand Supreme, which has a large reach
and adoption among a younger customer segment.
The second collaboration in the quarter was with the
successful luxury fashion house Balenciaga. Together
with Balenciaga, we designed a fully functioning
speaker bag, crafted to resemble the sculptural form of
Balenciaga’s iconic Hourglass handbag.
Progress on key strategic priorities for 2022/23
Page — 9
Management review
Interim report Q1 2022/23
The speaker bag was unveiled at Balenciaga’s 51
st
Couture show in Paris. The music, an integral element
of Balenciaga fashion shows, was delivered to the
audience through the speaker bag, carried by models on
the catwalk. Each speaker bag was milled out of a single
block of aluminium at our Factory 5 facility in Struer. A
total of 20 speaker bags were created for the show and
sold out overnight with high demand for more.
The Balenciaga collaboration was the best-performing
collaboration to date and created significant awareness
for the Bang & Olufsen brand. So far, we have reached
nearly 30 million people. In our own social media
channels, we reached more than one million people
with the Balenciaga content.
In Q1, we also continued our other types of
collaborations to generate awareness. Through our
partnership with Williams Racing, we had several
activations in connection with the Formula 1 race at
Silverstone in the UK. Seven Bang & Olufsen stores ran
Formula 1-related events, and the events were attended
by more than 1,200 people.
The activations were a success. During the period of
activation, we saw a rise in instore footfall and sell-out
in all stores and on our eCommerce channel.
We continue our digital acceleration efforts,
particularly on our eCommerce platform. It remains an
important entry point for our customers, as it enables
us to tell our full brand story and get our customers
interested and immersed in our brand and product
proposition universe. Traffic to our eCommerce
platform continues to grow and increased by 25%. The
quality of traffic also improved, with visitors staying on
our website for longer.
However, overall revenue on our eCommerce platform
declined in Q1. This was due to price inconsistency
driving purchase transactions to other etail channels.
Nonetheless, our newly launched eCommerce sites in
Asia performed well with better-than-expected
conversion rates.
In Q1, we also continued our work with influencers. We
estimate that during Q1 we reached more than seven
million people via influencers and celebrities alone.
We also managed to drive organic reach, achieving
more than 17 million organic impressions via Google
Search, and more than 8% converted into visits on our
eCommerce platform.
For the fiscal year, we continue our pursuit to attract
customers. In Q1, we grew our customer base by 6.3%
compared to the end of the last financial year. We also
saw an increase of 5.1% in customers owning two or
more Bang & Olufsen products.
Pillars of growth
Our partnership with Cisco on the Bang & Olufsen Cisco
980 headset for hybrid work targeting the enterprise
segment delivered considerable growth. The headset
was released in a black version, and feedback from
Cisco is positive with solid interest in the product.
The partnership with Cisco is our first dedicated
venture into the enterprise segment. A number of our
products are already being used for hybrid work, and
several of our headphones and Bluetooth products will
be certified with Microsoft Teams and Zoom in the
coming quarters.
Last year, Bang & Olufsen sound was introduced in the
South Korean luxury car brand Genesis. In Q1, the line
of cars incorporating Bang & Olufsen sound was
expanded to include the GV90 model. The car systems
in both the GV60 and the GV90 received the Red Dot
design award.
In the quarter, our partnership with Sagemcom enjoyed
onboarding of an additional telecom operator, Starhub
in Singapore. This is the fourth telecom operator
onboarded by Sagemcom.
Performance in our two core markets in Asia was
materially impacted by the lockdowns and plunging
consumer confidence in China. Total sell-out in these
two markets declined by 36%, with China showing a
42% decline. Sell-out in South Korea grew by 12%.
In our six core European markets, sell-out grew by 3%
compared to an overall decline of 2% for the EMEA
region.
Page — 10
Management review
Interim report Q1 2022/23
The UK continued to be one of the top-performing
countries in EMEA. Our city strategy in London
continues to yield results. Sell-out from our company
owned stores in London grew by 71% compared to Q1 of
last year.
With the success of our Win London project, we are
going to expand our city focus to include other key
cities. Based on the Win London project and key
learnings, we have developed a conceptual framework
and city segmentation that will guide our geographical
expansion and market penetration going forward. We
will expand to select cities globally where cultural and
economic exchange is proportionally high, where we
see significant personal luxury spend, and where we
have a high density of target audience. This
geographical focus is therefore based on a set of
external parameters on target audience demographics,
consumption patterns and urban development
ultimately helping us to build presence and activity
where our customers live, work, shop and socialise.
This implies that we will expand our strategic
development activities to the US, as we see several US
cities ranking high on our segmentation criteria. While
the select US cities represent interesting commercial
opportunities, a focus on the US also mitigates the risk
of our current reliance on Europe (where the war in
Ukraine has accelerated a looming recession) and on
China (where our operations continue to be challenged
by lockdowns).
Our execution in London continues, and we have two
new cities planned for roll-out, New York and Paris.
Reducing CO2 emissions
This summer, we received external assurance from
Deloitte for our scope 1 and 2 greenhouse gas emissions
reporting for the first time. This year, we will set a long-
term target for reducing our scope 1, 2 and 3 emissions
in line with the Science Based Targets initiative. In Q1,
we initiated scope 3 inventory work, which is a
prerequisite to setting the long-term emission targets
for our value chain.
At our aluminium factory in Struer, we have been using
gas heaters for our anodising facilities. However, we
want to move away from natural gas and in Q1 we began
the installation of an electric boiler. This will enable us
to move to renewable energy sources in our operations.
We expect the transition to the electric boiler to be
completed by November.
Page — 11
Management review
Interim report Q1 2022/23
Like-for-like sell-out
Sell-out declined by 2%. This was the first summer
without major travel restrictions due to COVID-19, and
we therefore experienced a normalisation of seasonality
as demand moved to travel and outdoor-related On-the-
go products. Our On-the-go category delivered solid
growth, whereas the Staged and Flexible Living
categories both declined, with the bigger decline in
Flexible Living.
Revenue
Revenue was DKK 239m (Q1 21/22: DKK 302m). This was
equivalent to a decline of 21.4% (22% in local
currencies). Excluding sales to Russia last year, revenue
declined by 20%.
The decline was mainly attributable to the monobrand
channel, but most channels declined. With the war in
Ukraine, rising interest rates and higher inflation, we
saw more caution from our retail partners, with a
general tendency to reduce inventories.
Our company owned stores delivered solid growth
compared to Q1 of last year. Our London stores, in
particular, continued to deliver solid growth rates.
The eCommerce channel was impacted by price
inconsistencies in the market. Despite the increase in
traffic and improved quality of traffic, with increased
session durations, we saw some sales moving to other
etailers. Our eCommerce channel combined with our
etail channel declined by 14% compared to Q1 of last
year.
Revenue from our six core European markets declined
by 13%, but their share of revenue in EMEA increased to
70% because of a relatively better performance than the
rest of the markets. Sell-out in these markets was 3%
higher than last year, especially driven by the On-the-
go category.
Revenue from our Staged category declined by 23%,
mainly related to the TV portfolio. The decline from
speakers was attributed to high comparables for Beolab
28, which was still new in the market in Q1 of last year.
We delivered solid growth from our more expensive
speakers, Beolab 50 and Beolab 90. Revenue from the
Flexible Living category declined by 34%. With the
exception of Beosound Balance, sales of all speakers
declined compared to last year.
Revenue from the On-the-go category declined by 6%.
The decline was related to headphones. Our earphone
category grew compared to last year, driven by a solid
performance from Beoplay EX, which outperformed
Beoplay EQ last year. Revenue from portable speakers
was at the same level as last year.
Gross profit
Gross profit amounted to DKK 72m. This was equivalent
to a gross margin of 30.1% (Q1 21/22: 42.6%).
The decline was related to product mix, with more sales
in lower margin categories, and higher costs mainly
from more expensive components purchased in the
previous financial year. Lastly, the higher fixed-costs-
to-revenue ratio contributed to the overall margin
decline.
EMEA
Revenue split (%)
56%
57%
16%
19%
28%
23%
22/23 21/22
Staged Flexible Living On-the-go
Q1
(DKK million)
2022/23
2021/22
Change
Revenue
239 302 -62
Growth in local currencies
-20%
47%
Gross profit
72 129 -57
Gross margin
30.1%
42.6%
-12.5%
Page — 12
Management review
Interim report Q1 2022/23
Like-for-like sell-out
Sell-out increased by 14%. We experienced solid growth
from both the Staged and On-the-go categories, while
the Flexible Living category declined compared to last
year.
Revenue
Revenue was DKK 63m (Q1 21/22: DKK 60m), equivalent
to an increase of 4.5% (decline of 6% in local
currencies).
The growth was mainly driven by our monobrand
channel and etail. Revenue from our eCommerce
channel declined due to price inconsistencies in the
market.
Our B2B channel grew as we managed to sell a large
quantity of earphones to a partner in Q1.
Revenue from the Staged category increased by 22%.
The growth was driven by higher revenue from both
speakers and TVs. The growth was driven by a
combination of more products sold and higher average
prices.
Revenue from the Flexible Living category was up 1%
compared to last year. The growth was driven by
Beosound Balance and Beosound Level, which
performed well compared to last year.
Revenue from On-the-go was at the same level as last
year. The earphone category delivered growth driven by
a solid performance from Beoplay EX and supported by
the sale of a large quantity of earphones to a B2B
partner. Sales of headphones and earphones declined
compared to last year.
Gross profit
Gross profit amounted to DKK 12m. This was equivalent
to a gross margin of 18.4% (Q1 21/22: 30.9%).
The decline was related to higher costs, mainly from
more expensive components purchased in the previous
financial year. Furthermore, the sale of a large quantity
of earphones to a partner in the US reduced the On-the-
go margin in the quarter.
Americas
Revenue split (%)
29%
25%
17%
18%
54%
57%
22/23 21/22
Staged Flexible Living On-the-go
Q1
(DKK million)
2022/23
2021/22
Change
Revenue
63 60 3
Growth in local currencies
-6%
97%
Gross profit
12 19 -8
Gross margin
18.4%
30.9%
-12.5%
Page — 13
Management review
Interim report Q1 2022/23
Like-for-like sell-out
Sell-out declined by 27%, mainly related to the regional
lockdowns in China and impact on consumer
confidence. Sell-out in China declined by 42%. We saw
positive sell-out growth in the other regions in Asia.
Revenue
Revenue was DKK 218m (Q1 21/22: DKK 244m),
corresponding to an 8.8% decline (12% in local
currencies).
Revenue from our two core Asian markets declined by
10% and accounted for approximately 68% of total
revenue in Asia.
The development in the Asia region as a whole, and in
our two core markets, was impacted by the continued
lockdowns in China. The lockdowns also had an
adverse effect across sales channels and product
categories. In China, we also suffered from operational
delays as we took over the engagement with JD.com.
This also impacted our performance at the Chinese
shopping festival 618.
Revenue from the Staged category declined by 21%. The
decline was due to lower quantities sold within both
speakers and TVs.
The Flexible Living category declined by 4%. We saw all
speakers in the category develop similarly. Beoplay A9,
which delivered very strong growth last year, continued
to be the bestselling speaker in the category, followed
by Beosound Balance.
The On-the-go category decreased by 7% year on year.
The decrease was related to both headphones and
earphones, whereas portable speakers grew compared
to last year, driven by Beolit 20.
Gross profit
Gross profit amounted to DKK 60m, equivalent to a
gross margin of 27.6% (Q1 21/22: 38.2%).
The decline was due to higher costs, mainly from more
expensive components purchased in the previous
financial year. Lastly, the higher fixed-costs-to-revenue
ratio contributed to the overall margin decline.
Asia
Revenue split (%)
28%
32%
35%
32%
37%
36%
22/23 21/22
Staged Flexible Living On-the-go
Q1
(DKK million)
2022/23
2021/22
Change
Revenue
218 244 -26
Growth in local currencies
-12%
41%
Gross profit
60 93 -33
Gross margin
27.6%
38.2%
-10.5%
Page — 14
Management review
Interim report Q1 2022/23
Revenue
Revenue was DKK 92m (Q1 21/22: DKK 60m),
corresponding to a 51.7% increase (44% in local
currencies). The reported growth benefited from
currency tailwind.
Licence fee revenue grew by 16%. All our licence
partnerships contributed to the revenue growth,
including new partnerships that did not yield revenue
last year. Licence fees from automotive were also driven
by the addition of the Korean luxury car brand Genesis.
Licensing income accounted for 67% of total revenue in
Brand Partnering & other activities.
Revenue from co-branded products provided a
significantly larger part of growth than last year.
Product sales and revenue from aluminium
manufacturing for third parties more than tripled
compared to last year.
Revenue from our product collaborations was mainly
related to the Bang & Olufsen Cisco 980 headphones,
but the speaker bag developed for Balenciaga also
contributed to the increase in revenue.
Gross profit
Gross profit amounted to DKK 80m (Q1 21/22:
DKK 58m), equivalent to a gross margin of 87.7% (Q1
21/22: 96.7%).
The decline was related to the change in mix as the
category now includes more product revenue from our
brand collaboration.
Brand Partnering
& other activities
Q1
(DKK million)
2022/23
2021/22
Change
Revenue
92 60 32
Growth in local currencies
44%
9%
Gross profit
80 58 22
Gross margin
87.2%
96.7%
-9.5%
Page — 15
Management review
Interim report Q1 2022/23
JUN ‘22
New credit facility
linked to ESG
targets
We renewed and increased our
credit facility to DKK 150m from
previously DKK 100m. For the first
time, we tied our credit facility to our
sustainability targets. The facility runs
for two years with an option of a
one
-year extension.
Interest on the facil
ity will be
adjusted based on progress on the
following three strategic
sustainability KPIs:
•
Product longevity: Expanding the
number of Cradle-to-Cradle
certified products.
•
Moving Bang & Olufsen’s own
operations to renewable energy
sources.
•
Addressing o
perational waste and
value chain emissions.
We won three T3 awards
Bang & Olufsen won three T3 awards. T3 is one of the
most influential tech magazines, attracting more than 10
million monthly views.
•
The Beosound A1 (2nd Gen) won 'Best Portable
Speaker'.
•
The Beoplay Portal won 'Best Gaming Headset'.
•
Beolab 28 won 'Design Icon' in the 'Luxury' category.
JUL ‘22
Partnership
with Supreme
We entered into our fourth
partnership with Supreme, this time in
order to create Beosound Explore
Supreme Edition
as part of Supreme’s
Spring/Summer season.
Partnership
with Tom Sellers
We entered a multi
-year partnership
with two
-Michelin-starred chef Tom Sellers.
During Wimbledon, visitors to the Treehouse came face to
face with a selection of Bang & Olufsen TVs and speakers,
providing them with an enhanced audio and visual
experience.
Collaboration
with Balenciaga
We developed a special loudspeaker
in the shape of a handbag together
with one of the world’s leading luxury
brands, Balenciaga.
It i
s a unique loudspeaker that was
carried by models at a fashion show,
with the speakers playing all the
audio during the show. The event
generated a lot of attention.
Key events
Page — 16
Management review
Interim report Q1 2022/23
Innovation
Camp 2022
From 4
-22 July, we once again
hosted The Innovation Camp at our
headquarters in Struer, Denmark.
This is a unique course during summer
where university students are given
the chance to boost their innovation
skills in a multi
-disciplinary
environment and
learn about
innovative and more sustainable
product development in a real
-life
industrial setting.
AUG ‘22
New flagship store
in Beijing
In August, we opened a new flagship store in China World
Mall in Beijing, which features an extensive
selection of
luxury boutiques and brands.
The mall caters to many customers within the UHNWI
segment, and with the location of the new store we have
high expectations that we will reach a large number of
customers who are passionate about luxury brands.
Launch of
Beosound Theatre
Beosound Theatre is based on the
principles of modularity. Customers
can transform the soundbar into a
complete wall
-mounted or floor-
standing Bang & Olufsen TV
experience.
The modular design also applies to
the TV screens
and the cover of the
soundbar, both of which are
replaceable and can fit several
screen sizes. Beosound Theatre can
thus outlast many TVs in its lifetime.
Beosound Theatre is a powerful one
-
product solution. It can also be used
as a dedicated sound centr
e in
customers’ home cinemas. Starting
with its own seven built
-in outputs
and supporting up to 16 external
loudspeakers, it can be the heart of a
full
-blown Dolby Atmos 7.1.4
surround configuration. In this setup,
Beosound Theatre functions as a
centre sp
eaker that merges the
Dolby Atmos decoding and custom
-
tuned post
-processing with Bang &
Olufsen’s proprietary True Image
algorithm to maximise the
capabilities of all Bang & Olufsen
loudspeakers.
Red Dot design
award for Genesis
sound system
The Genesis G90 and GV60 luxury
cars both won a Red Dot award for
their sound system. The Red Dot
award is one of the most prestigious,
internationally renowned design
awards.
Page — 17
Management review
Interim report Q1 2022/23
We maintain our outlook for the
financial year 2022/23.
The outlook is subject to unusually high
uncertainty related to consumer
confidence due to high inflation, rising
interest rates and the war in Ukraine,
which, in combination, have increased
the risk of recession. Furthermore, there
is higher geopolitical uncertainty and
risk related to current and potential
future regional COVID-19 related
lockdowns in China.
We plan to continue our investments in
strategy execution, but the timing and
size of these investments will be
adjusted based on market
developments.
Revenue growth in local currencies
Revenue growth in local currencies is expected to be
between -4% to 5%. The expectations are subject to the
following assumptions:
• Improved market conditions in China during Q2.
• Launch of five or more product innovations,
including relaunch of Beosound Emerge.
• Improved product availability compared to 2021/22.
• No impact on product availability due to geopolitical
or COVID-19 related lockdowns.
• No major COVID-19 related lockdowns in the second
half of the year.
EBIT margin before special items
EBIT margin before special items is expected to be
between -2% and 3%. In addition to the company's
assumptions regarding revenue growth, the
expectations are based on the following assumptions:
• Cost of goods sold is expected to be impacted by the
inflationary pressure currently experienced in the
market, but the pressure on sourcing components
through spot buys is expected to decline in the
second half of the year.
• Continued investments into marketing and product
development.
• Exchange rates against DKK, including in particular
USD, CNY and EUR, in line with current exchange
rate levels, overall.
Free cash flow
Free cash flow is expected to be DKK -50m to
DKK 100m. In addition to the company's assumptions
regarding revenue growth and EBIT margin before
special items, the company's expectations regarding
free cash flow are based on the following assumptions:
• Improved net working capital.
• Continued investments related to product and retail
development as well as IT.
Sensitivities
The outlook for 2022/23 is subject to unusually high
uncertainty related to consumer confidence due to high
inflation, rising interest rates and the war in Ukraine,
which, in combination, have increased the risk of
recession. Furthermore, there is higher geopolitical
uncertainty and risk related to current and potential
future regional COVID-19 related lockdowns in China.
Outlook for 2022/23 maintained
Safe harbour statement
The report contains statements relating to the
expectations for future developments, including future
revenues and operating results, as well as expected
business-related events. Such statements are subject to
uncertainty and carry an element of risk since many
factors, some of which are beyond Bang & Olufsen's
control, may cause actual developments to deviate
significantly from the expectations expressed in this
report. Without being exhaustive, such factors include
general economic and commercial factors, such as
market and competitive matters, supplier issues and
financial issues in the form of foreign exchange, interest
rates, credit and liquidity risk.
OUTLOOK 2022/23
October 2022
July 2022
Revenue growth in local currencies (%)
-4 to 5
-4 to 5
EBIT margin before special items (%)
-2 to 3
-2 to 3
Free cash flow (DKKm)
-50 to 100
-50 to 100
Page — 18
Consolidated financial statements
Interim report Q1 2022/23
Q1
Year
(DKK million)
Notes
2022/23
2021/22
2021/22
Revenue
2, 4 612 666 2,948
Production costs
-388
-367
-1,612
Gross profit
Development costs
5 -69 -78 -279
Distribution and marketing costs
-205 -183 -875
Administrative expenses
-35 -31 -136
Operating profit/(loss) (EBIT)
-85 7 46
Financial income
Financial expenses
-22 -7 -65
Financial items, net
-18 -5 -54
Profit/(loss) before tax (EBT)
-103
-8
Income tax
Profit/(loss) for the period
-100 1 -30
Earnings per share
Earnings per share (EPS), DKK
-0.8 0.0 -0.2
Diluted earnings per share (EPS-D), DKK
-0.8 0.0 -0.2
0Condensed income statement
Page — 19
Consolidated financial statements
Interim report Q1 2022/23
Q1
Year
(DKK million)
2022/23
2021/22
2021/22
Profit/(loss) for the period
-100 1 -30
Items that will be reclassified subsequently to the income statement:
Foreign exchange adjustments of foreign entities
Fair value adjustments of derivatives
-2 -3 -13
Value adjustments of derivatives reclassified in
Revenue
Production costs
-5
-6
Tax on other comprehensive income/(loss)
Other comprehensive income for the period, net of tax
Total comprehensive income/(loss) for the period
-95 5 -9
1BCondensed statement of comprehensive income
Page — 20
Consolidated financial statements
Interim report Q1 2022/23
ASSETS
(DKK million)
Notes
31-08-22
31-08-21
31-05-22
Goodwill
Acquired rights and software
Completed development projects
Development projects in progress
5 137 40 138
Intangible assets
Property, plant and equipment
Right-of-use assets
Tangible assets
Non-current other receivables
Deferred tax assets
Total non-current assets
Inventories
Trade receivables
Tax receivable
Other receivables
Prepayments
Securities
8 407 437 415
Cash
8 125 201 162
Assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
(DKK million)
Notes
31-08-22
31-08-21
31-05-22
Share capital
Translation reserve
Cash flow hedge reserve
-5 -9 -5
Retained earnings
Total equity
Lease liabilities
Pensions
Deferred tax
Provisions
Mortgage loans
Other non-current liabilities
Total non-current liabilities
Lease liabilities
Mortgage loans
Bank loans
8 325 30 276
Provisions
Trade payables
Tax payable
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Condensed statement of financial position
Page — 21
Consolidated financial statements
Interim report Q1 2022/23
Q1
Year
(DKK million)
Notes
2022/23
2021/22
2021/22
Profit/(loss) before tax (EBT)
-103
-8
Financial items, net
Depreciation, amortisation and impairment
Operating profit/(loss) before depreciation, amortisation and impairment
(EBITDA)
-32 59 257
Other non-cash items
-6
Change in net working capital
6 10 -4 -148
Interest received
Interest paid
-8 -6 -28
Income tax received/(paid)
-9
-33
Cash flows from operating activities
-28 47 76
Purchase of intangible non-current assets
-46
-22
-181
Purchase of tangible non-current assets
-12 -4 -68
Sublease payment
Other cash flows from investing activities
Operational investments
-53 -26 -248
Free cash flow
-81 21 -172
Purchase of securities
Sale of securities
Financial investments
Cash flows from investing activities
-50 -26 -239
Q1
Year
(DKK million)
Notes
2022/23
2021/22
2021/22
Repayment of lease liabilities
-10
-7
-36
Repayment of mortgage loans
-1 -1 -4
Proceeds from loans and borrowings
Repayment of loans and borrowings
Purchase of treasury shares
-37
Settlement to other liabilities
Cash flows from financing activities
Cash and cash equivalents, opening balance
Foreign exchange gain/loss on cash and cash equivalents
Change in cash and cash equivalents
-40 23 -18
Cash and cash equivalents, closing balance
Available liquidity
8
Condensed statement of cash flows
Page — 22
Consolidated financial statements
Interim report Q1 2022/23
Condensed statement of changes in equity
(DKK million)
Share capital
Translation
reserve
Cash flow hedge
reserve
Retained
earnings Total
Equity 1 June 2022
Profit/(loss) for the period
Foreign exchange adjustments of foreign entities
Fair value adjustments of derivatives
Value adjustments of derivatives reclassified in
Revenue
Production costs
-5
-5
Income tax on items that will be reclassified to the income statement
Comprehensive income/(loss) for the period
Share-based payments
Equity 31 August 2022
Equity 1 June 2021
Profit/(loss) for the period
Foreign exchange adjustments of foreign entities
Fair value adjustments of derivatives
-3
-3
Value adjustments of derivatives reclassified in
Revenue
Production costs
- - - - -
Income tax on items that will be reclassified to the income statement
-1
-1
Comprehensive income/(loss) for the period
Share-based payments
Equity 31 August 2021
Page — 23
Consolidated financial statements
Interim report Q1 2022/23
1 Basis of reporting
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the
EU, and additional Danish disclosure requirements for interim financial reports of listed companies.
No interim report has been prepared for the parent company.
The interim report follows the same accounting policies as the Annual Report for 2021/22.
New standards, interpretations and amendments adopted by Bang & Olufsen
Bang & Olufsen has implemented the International Financial Reporting Standards (IFRS) and amendments
effective as of 1 June 2022 and endorsed by the EU. The implementation of new or amended standards and
interpretations had no material impact on the interim financial statements.
2 Critical accounting estimates and judgements
In preparing the interim financial report, Management makes various accounting estimates and assumptions,
which form the basis of the presentation, recognition and measurement of Bang & Olufsen's assets and liabilities.
Estimates and judgements are regularly reassessed.
Due to the current high uncertainty and increased risk of recession as a result of declining consumer confidence,
increasing inflation, rising interest rates, the war in Ukraine, and geopolitical uncertainty and risk related to
current and potential future regional COVID-19 related lockdowns, we have considered the recoverability of trade
receivables and the value of inventories. We have also assessed the value of intangible assets, deferred tax assets
and property, plant and equipment. We have realised no impairment of assets other than the deferred tax asset.
The method of calculating both inventory obsolescence and write-downs on trade receivables remains unchanged.
Apart from this, critical accounting estimates and judgements are consistent with those applied in note 1.2 to the
consolidated financial statements in the 2021/22 Annual Report, to which reference is made.
3 Seasonality
Due to the composition of the Bang & Olufsen business, some degree of seasonality of revenue must be expected.
Historically, the highest revenue has been realised in Q2 due to the seasonal nature of the business.
In the current situation, seasonality may be impacted by COVID-19 and global component scarcity affecting
product supplies.
Notes
Page — 24
Consolidated financial statements
Interim report Q1 2022/23
4 Segment information
(DKK million)
EMEA
Americas
Asia
Regions, total
Brand Partnering
& other activities
All
Q1 2022/23
Revenue
239 63 218 520 92 612
Production costs
-167
-51
-158
-376
-12
-388
Gross profit
72 12 60 144 80 224
Gross margin
30.1%
18.4%
27.6%
27.6%
87.2%
36.6%
Q1 2021/22
Revenue
302 60 244 606 60 666
Production costs
-173
-41
-151
-365
-2
-367
Gross profit
129 19 93 241 58 299
Gross margin
42.6%
30.9%
38.2%
39.7%
96.7%
44.8%
(DKK million)
Staged Flexible Living On-the-go Products, total
Brand Partnering
& other activities All
Q1 2022/23
Revenue
213 125 182
520
92
612
Production costs
-133 -75 -168 -376 -12 -388
Gross profit
80 50 14
144
80
224
Gross margin
37.4% 40.4% 7.9% 27.6% 87.2% 36.6%
Q1 2021/22
Revenue
265 148 193
606
60
666
Production costs
-143 -80 -142 -365 -2 -367
Gross profit
122 68 51
241
58
299
Gross margin
45.8% 46.1% 26.6% 39.7% 96.7% 44.8%
Gross profit is a segment KPI. There are no unallocated elements, and total gross profit reconciles to the income statement.
Page — 25
Consolidated financial statements
Interim report Q1 2022/23
5 Development costs
Q1
Year
(DKK million)
2022/23
2021/22
2021/22
Incurred development costs before capitalisation
78 72 328
Of which capitalised
-33
-18
-138
Incurred development costs after capitalisation
45
54
190
Capitalisation (%)
42.5% 25.4% 42.0%
Total charges and impairment losses on development projects
24
24
89
Development costs recognised in the consolidated income statement
69 78 279
6 Change in net working capital
(DKK million)
31-08-22
31-05-22
Q1 2022/23 YTD
Q1 2021/22 YTD
2021/22
Inventories
624
629
5
84
-260
Trade receivables
396 397 1 -33 41
Other receivables*
85
88
3
-2
2
Prepayments
36 28 -8 3 4
Trade payables
-632
-581
51
-131
79
Other liabilities
-170 -212 -42 82 -13
Deferred income - non-current
-14
-14
-
1
-1
Total
325 335 10 4 -148
* Other receivables were adjusted for financial receivables related to leases of DKK 2m not included as net working capital at 31 August 2022 (31 May 2022: DKK 1m).
The decrease in other liabilities primarily related to provisions for employee bonus.
Page — 26
Consolidated financial statements
Interim report Q1 2022/23
Special items consist of non-recurring expenses related to restructuring or structural changes that we do not
consider to be a part of our ordinary operations such as redundancies and specific consultancy costs and transition
costs in connection with restructuring.
Q1 Year
(DKK million)
2022/23
2021/22
2021/22
Severance and garden leave, Executive Management Board
- - 4
Restructuring costs and severance
- - 2
Consultants
- 2 2
Total
- 2 8
8 Net interest-bearing deposit/(debt)
Net interest-bearing deposit/(debt) consists of interest-bearing assets less interest-bearing debt. Interest-bearing
assets consist of securities, cash, sublease and finance lease receivables. Interest-bearing debt consists of mortgage
loans, bank loans, lease liabilities, and from Q2 2020/21 also the part of the Danish holiday pay provision for
“Lønmodtagernes Feriemidler”. We have placed the majority of our cash in Danish mortgage bonds, all with an
AAA S&P rating to minimise negative interest. To maintain short-term financial flexibility, we use repo
transactions, whereby we can access liquidity on an intra-day basis if needed by lending our banks bonds in return
for cash, while committing to a reverse transaction at a predetermined future date. Bonds are presented as
securities on the balance sheet as ownership of the bonds remains with the company during the term of the repo.
The obligation to return cash for bonds under such repo transactions is recognised as short-term bank loans. As of
31 August 2022, repo transactions amounted to DKK 325m.
Net interest-bearing deposit amounted to DKK 27m compared to DKK 111m at year-end 2021/22.
(DKK million)
31/08/22
31/08/21
31/05/22
Mortgage loans (non-current)
-57 -61 -58
Mortgage loans (current)
-4 -4 -4
Bank loans (current)
-325
-30
-276
Lease liabilities (non-current)
-85 -110 -95
Lease liabilities (current)
-39 -26 -39
Other non-current liabilities*
-0 0 -
Other current liabilities
- -35 0
Interest-bearing debt
-510 -266 -472
Finance lease receivables (non-current)
3 5 4
Finance lease receivables (current)
2 2 2
Cash (current)
125
201
162
Securities (current)
407 437 415
Interest-bearing assets
537 645 583
Net interest-bearing deposit/(debt)
27 379 111
* Only the interest-bearing part of Other non-current liabilities has been included in net interest-bearing deposit/(debt).
Net available cash was DKK 207m (year-end 2021/22: DKK 301m), consisting of cash and securities offset by repo
transactions.
(DKK million)
31/08/22
31/08/21
31/05/22
Cash (current)
125
201
162
Securities (current)
407 437 415
Bank loans (current)
-325 -30 -276
Available liquidity
207 608 301
Including the undrawn part of our ESG-linked credit facility, capital resources were DKK 337m (Q4 21/22:
DKK 433m), consisting of available liquidity of DKK 207m and undrawn committed credit facilities of DKK 130m.
7 Special items
Page — 27
Consolidated financial statements
Interim report Q1 2022/23
Related parties with significant interests
Other related parties of Bang & Olufsen with significant interests include the Board of Directors, the Executive
Management Board and their close family members. Related parties also include companies in which these
persons have control or significant interests.
Transactions with related parties
Bang & Olufsen did not enter into any significant transactions with members of the Board or the Executive
Management Board, except for compensation and benefits paid because of their membership of the Board or
employment with Bang & Olufsen.
Pursuant to Bang & Olufsen A /S ’s Remuneration Policy, the Board of Directors has resolved to allocate restricted
shares under Bang & Olufsen A/S’s Combined Performance and Retention Share Programmes to the Executive
Management Board, key employees, and certain other employees.
T
he Long-Term Incentive Programme (LTIP) is a combined performance and retention share programme. The
performance shares are eligible for vesting depending on the level of achievement of certain KPIs defined by the
Board of Directors for each performance year. The remaining shares are retention shares, which are subject to the
participants’ continued employment and satisfactory people review ratings.
The programmes are accounted for on an accrual basis over the three-year vesting period. The value of each
programme is adjusted on a timely basis until vesting based on the likelihood that certain KPIs will be met.
Costs related to the programmes have been recognised as staff costs and amounted to DKK 7m for the quarter
(Q1 2021/22: DKK 5m).
9 Related parties
10 Share-based programmes
Programme
Performance
period
Maximum shares
Total value at
time of allocation
Release after
Annual Report
Average share
price at grant
date
Remaining time
to vesting
Number
DKK million
Year
DKK
Months
2020/21
01.06.2020-
31.05.2023
3,091,511
22
2022/23
12.93
12
2021/22
01.06.2021-
31.05.2024
2,218,064 37 2023/24 33.11 24
2022/23
01.06.2022-
31.05.2025
2,582,108
38
2024/25
14.28
36
Page — 28
Consolidated financial statements
Interim report Q1 2022/23
Financial instruments by category
(DKK million)
31/08/22
31/08/21
31/05/22
Non-current other receivables
24 25 27
Trade receivables
396 405 397
Other receivables
87
90
89
Cash
125 201 162
Financial assets at amortised cost
632 721 675
Securities
407 437 415
Fair value through income statement
407 437 415
Derivatives used for hedge accounting
14 3 9
Fair value through other comprehensive income
14 3 9
Financial assets
1,053 1,161 1,099
Mortgage loans
61 65 62
Bank loans
325 30 276
Lease liabilities
124 136 134
Trade payables
647 633 581
Financial liabilities at amortised cost
1,157 864 1,053
Derivatives used for hedge accounting
23
16
18
Fair value through other comprehensive income
23 16 18
The fair value is approximately equal to the carrying amount for all financial assets and liabilities.
Securities
Securities comprise listed Danish mortgage bonds and are measured at fair value with all changes in fair value
recorded in the income statement. Bonds are measured using observable market values (level 1 in the fair value
hierarchy). We use repo transactions and as ownership of the bonds remains with us during the term of the repo,
the bonds remain on the balance sheet.
Derivative financial instruments
Derivative financial instruments comprise primarily foreign exchange contracts used to hedge the foreign
exchange risk related to unrecognised future transactions. Derivatives are measured at fair value in accordance
with level 2 in the fair value hierarchy using valuation techniques that apply market data such as exchange rates,
credit risk and volatility.
See note 7.3 in the 2021/22 Annual Report for an overview of foreign exchange contracts.
11 Financial instruments
Page — 29
Consolidated financial statements
Interim report Q1 2022/23
The capital structure consists mainly of equity, an undrawn credit facility and working capital financing. It is the
objective of Bang & Olufsen's capital management to ensure shareholders the best possible return on their
investment in Bang & Olufsen, while ensuring that Bang & Olufsen will be able to meet all its existing and future
commitments.
Capital resources were DKK 337m (Q4 21/22: DKK 433m), consisting of available liquidity of DKK 207m and the
undrawn part of our ESG-linked credit facility of DKK 130m.
The company holds a total of 3,244,692 treasury shares (3,244,692 shares at 31 May 2022) to cover outstanding
long-term incentive programmes.
For details of monetary transactions, see the statement of changes in equity.
As described in our outlook for the financial year 2022/23, Bang & Olufsen is facing higher than normal risks and
uncertainties. These include the duration of the COVID-19 pandemic, and the potential impact in the company's
different geographical markets and on supply chain and logistics, currently especially related to China.
Furthermore, increasing inflation, rising interest rates and Russia’s war against Ukraine could potentially impact
consumer demand in some countries. The company is working actively to mitigate these risks, but there may be a
financial impact.
Except as described above or elsewhere in these consolidated interim financial statements, no events have
occurred in the period from the balance sheet date until the presentation of the financial statements that
materially affect the assessment of the consolidated financial statements.
12 Capital structure
13 Subsequent events
Page — 30
Consolidated financial statements
Interim report Q1 2022/23
MANAGEMENT'S STATEMENT
Executive Management Board:
Board of Directors:
Page — 31
Consolidated financial statements
Interim report Q1 2022/23