Page — 1
Interim report
Q1 2023/24
Page — 2
Management’s review
Interim report Q1 2023/24
Despite continued macroeconomic
headwinds, we achieved revenue
growth of 5% in local currencies. EBIT
margin was 2.6% driven by an
improved gross margin of 52.6%, up 16
percentage points year-on-year.
Financial highlights
We saw robust demand for our products in most
markets despite the ongoing macroeconomic
headwinds. Overall, sell-out grew by 8%. Like-for-like
sell-out in APAC grew by 29%, albeit against low
comparables due to restrictions and regional lockdowns
last year. Consumers focusing on travel during the
summer affected demand in EMEA and sell-out growth
declined by 3%. Demand picked up end of quarter. Sell-
out in Americas grew by 5%.
Revenue grew by 1.2% (5% in local currencies) in 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
by 6.2% (13% in local currencies).
APAC revenue declined by 20.9% (16% in local
currencies) compared to Q1 of last year. China as a
single market declined by 26% (16% in local currencies)
year-on-year. Performance was impacted by a slow
Chinese economic recovery in addition to changes
made to distribution and high inventory levels among
some retail partners in China.
Brand Partnering & other activities declined by 16.1%
(13% in local currencies). This was mainly related to
high comparables due to the ramp-up of the B&O Cisco
980 headset last year. Revenue from the automotive
industry grew during the quarter.
Gross margin was 52.6%, up 16.0pp from last year. The
margin benefitted from normalisation of component
and logistics costs. In addition, the quarter saw
improved margins across product categories, supported
by price increases made since last year, as well as a
change in product mix towards higher margin products.
EBIT before special items was DKK 16m (Q1 22/23: DKK
-85m), corresponding to an EBIT margin of 2.6% (Q1
22/23: -14.1%). There were no special items in the
period. The result for the period was DKK 7m (Q1 22/23:
DKK -100m).
Free cash flow improved by DKK 20m and was negative
by DKK 61m (Q1 22/23: DKK -81m), driven by an
improved operating profit offset by a higher net
working capital since Q4 22/23. Available liquidity was
DKK 150m (Q1 22/23: DKK 207m).
Strategic highlights
To build brand awareness and target younger
consumers, we launched our campaign, 'See Yourself in
Sound.' The campaign included customer interaction
through Spotify to generate automated personalised
avatars and it gained strong traction with a global
reach.
We launched a collaboration with Ferrari with four
products in limited quantities. The products are sold in
B&O branded stores, own eCommerce, and Ferrari
channels.
We continued the optimisation of our channel network
to ensure a more consistent luxury experience.
Consequently, selected multibrand partners across
regions were discontinued during the quarter.
Our customer base grew by 4% and the number of
customers owning two or more B&O products increased
by 3% year-on-year.
Outlook 2023/24
We maintain our outlook for 2023/24, announced on 6
July 2023:
• Revenue growth in local currencies: 0% to 9%
• EBIT margin before special items: 0% to 6%
• Free cash flow: DKK -50m to 100m
The outlook for 2023/24 is subject to uncertainty due to
effects from a high inflationary environment, rising
interest rates, the war in Ukraine, and the recovery of
the Chinese economy.
Q1 highlights
Revenue
DKK million
619
Q1 22/23: 612
Growth in local currencies
5%
Q1 22/23: -10%
EBIT before special items
DKK million
16
Q1 22/23: -85
Free cash flow
DKK million
-61
Q1 22/23: -81
Page — 3
Management’s review
Interim report Q1 2023/24
*) Comparative figures for gross margin on segment level have been restated. No change in margin on group level.
For definitions, see note 8.7 to the Annual Report 2022/23.
Key financial highlights
Q1
(DKK million)
2023/24
2022/23
Income statement
Revenue
619 612
EMEA
303 239
America
67
63
APAC
172 218
Brand Partnering & other activities
77
92
EBIT before special items
16 -85
EBIT
16
-85
Special items, net
- -
Financial items, net
-5
-18
Profit/loss before tax (EBT)
11 -103
Profit/loss for the period
7
-100
Financial position
Total assets
2,244
2,476
Equity
969 1,012
Cash
141
125
Available liquidity
150 207
Capital resources
310
337
Net interest-bearing deposit/debt
-44 27
Net working capital
311
325
Q1
(DKK million)
2023/24
2022/23
Cash flows
Cash flows from operating activities
-19 -28
Operational investments
-42 -53
Free cash flow
-61 -81
Key figures
Gross margin, total, %
52.6 36.6
EMEA *)
47.3 31.0
Americas *)
45.5 19.8
APAC *)
48.9 28.8
Brand Partnering & other activities *)
87.8 82.1
Growth in local currencies, %
5 -10
EBIT margin before special items, %
2.6 -14.1
EBIT margin, %
2.6 -14.1
Return on invested capital, excl. goodwill, %
11.9 -7.8
Return on equity, %
0.6 -9.9
Full-time employee (FTE) at end of period
1,003 1,059
Stock-related key figures
Earnings per share (EPS), DKK
0.1 -0.8
Earnings per share, diluted (EPS-D), DKK
0.1 -0.8
Price/Earnings
158.7 -15.3
Page — 4
Management’s review
Interim report Q1 2023/24
Like-for-like sell-out grew by 8%,
primarily driven by APAC. Americas
continued to grow whereas EMEA
declined slightly.
Revenue grew by 1.2% (5% in local
currencies) mainly driven by EMEA.
Market challenges continued to impact
APAC.
Gross margin was 52.6%, up from
36.6% from last year, driven by an
absence of extraordinary component
costs, change in product mix and price
increases.
EBIT margin before special items
improved 16.7pp to 2.6% compared to
Q1 of last year.
Free cash flow improved DKK 20m and
was negative DKK 61m (Q1 22/23
DKK -81m), driven by improved EBIT.
Development in Q1 2023/24
The quarter was characterised by consumers focusing
on travel during the summer. This was the first year
with no travel restrictions post-covid, travel activity
increased compared to Q1 of last year. EMEA had
negative sell-out growth of 3% while Americas had sell-
out growth of 5%. APAC had solid sell-out growth of
29%, albeit generated from very low comparables.
Despite continued macroeconomic headwinds, we
delivered revenue growth of 5% in local currencies. At
the end of the quarter, we implemented price increases
on selected products in the portfolio, and saw retail
partners replenishing inventory and executing project
sales. This was particular within the Stage category. The
price increases are expected to have pulled some
demand forward from Q2.
The ongoing war in Ukraine and rising interest rates
continued to impact sales and demand. On the positive
side, we benefitted from lower pressure on global
supply chains and the normalisation of component and
logistic costs since Q4 22/23. Consequently, we
generated a gross margin of 52.6%, which was 16.0pp
above last year’s level and an improvement of 1.2 pp
from Q4 22/23.
The economic recovery in China has been slow, and we
do not expect to see improvements before second half
of the fiscal year. Moreover, we see a fragmentation in
the market where monobrand customers are less
sensitive to economic downturn than customers in the
online channels. This also reflects our strategic decision
to move towards the luxury position.
As part of our work to improve the luxury experience,
we are more selective when it comes to where
consumers experience our products and brand. In Q1,
this meant discontinuing more multibrand stores and
less volume in the multibrand channel overall, which
affected all regions.
We continued our focus on ensuring a lean cost base,
and in Q1 we improved our free cash flow for the
quarter. This was driven by the improved EBIT offset by
an expected higher net working capital level compared
to Q4 22/23.
We have a strong product portfolio, and we continued
to see good demand for several of our recently launched
products such as Beosound A5 and our soundbar
Beosound Theatre. In early September, we announced
the launch of our new outdoor proposition Beosound
Bollard and the speaker Beolab 8. We expect the latter
to generate good demand in the second half of 23/24.
Like-for-like sell-out
Sell-out grew by 8% compared to the same period last
year. Sell-out for our company-owned stores grew 1%
and our online channels, eTail and eCommerce grew
with 5% and 53%, respectively. Monobrand declined 5%
and multibrand declined 3%.
Like-for-like sell-out in EMEA declined by 3% in the
quarter. The decline was primarily driven by the
northern European markets. The company owned
stores delivered sell-out growth of 1% and the online
channels had growth of 10%. In EMEA, we grew the
Flexible Living category, whereas Staged and On-the-go
category declined in the period.
Sell-out in Americas grew 5%, mainly driven by our
eTail channel and company-owned stores. In terms of
product categories, our Flexible Living category had
strong growth in the quarter, the Staged category was
on par whereas On-the-go declined in the period.
Like-for-like sell-out in APAC increased by 29%,
primarily driven by a very low comparables in China
last year due to restrictions and regional lockdowns.
Management’s review for Q1
LIKE-FOR-LIKE SELL-OUT*
Q1 23/24
Q1 23/24
EMEA
-3%
Staged
-4%
Americas
5%
Flexible Living
38%
APAC
29%
On-the-go
7%
Total
8%
Total
8%
* Defined as sell-out from the same stores, provided they were open and active in both periods.
Page — 5
Management’s review
Interim report Q1 2023/24
Sell-out growth was mainly driven by our online
channels and multibrand. Flexible Living and On-the-
go had high growth rates, while the Staged category
declined during the period.
Across regions, our Flexible Living category grew by
38%, On-the-go category grew by 7%, while the Staged
category declined by 4%.
Revenue in Q1
Revenue in Q1 grew by 1.2% year-on-year (5% in local
currencies) to DKK 619m in line with expectations.
The increase in reported revenue was related to total
product sales, which increased by 4.3% (8% in local
currencies), while Brand Partnering & other activities
declined by 16.1% (-13% in local currencies).
Product revenue, regions
The growth in product revenue was mainly driven by
EMEA and across channels except for the multibrand
channel. Monobrand reported good growth.
Overall, revenue grew across channels, except the
multibrand channel which declined 37%. This was
mainly due to the above-mentioned strategic focus to
be more selective in this channel.
EMEA
EMEA grew by 26.7% (28% in local currencies) to DKK
303m, and had double digit growth in all channels,
except for multibrand. Revenue was positively
impacted by the above-mentioned replenishment by
retail partners and our monobrand channel grew 36%.
As part of our strategic transformation, the number of
multibrand stores in EMEA have been reduced by 204
stores since Q1 of last year. In addition, monobrand
stores were reduced by 23 year-on-year. This was
mainly due to a quality assessment of the monobrand
network and partners, where 40 stores were identified
to be closed in 22/23.
Total online sales in EMEA (eCommerce and eTail)
grew by 13% year-on-year.
Americas
Revenue in Americas grew 6.4% (13% in local
currencies) to 67m, mainly driven by growth in our
company-owned stores and our Custom Installations
(CI) channel driven by our partnership with Origin
Acoustics. Revenue from the multibrand channel grew
despite ending the partnership with T-Mobile,
consequently reducing the channel by more than 700
stores during Q1 23/24.
APAC
Revenue in APAC was DKK 172m (Q1 22/23: DKK 218m),
corresponding to a 20.9% decline (-16% in local
currencies). Revenue from our Chinese market declined
by 26% (-16% in local currencies) and accounted for
approximately 54% of total revenue in APAC.
In APAC, we continued our effort to change the eTail
network and multibrand setup. Both channels declined
in the period, where multibrand last year had high
comparables. Excluding partners with high inventory
levels, our monobrand channel saw growth in the
period, reflecting less sensitivity in consumer
behaviour in that customer segment.
Brand Partnering & other activities
The 16.1% decline in Brand Partnering & other activities
was mainly due to high comparables last year related to
the ramp-up of the Bang & Olufsen Cisco 980 headset.
Revenue driven by the automotive industry had solid
growth in the period.
Revenue split
239
303
63
67
218
172
92
77
EMEA
Americas
Asia
Brand Partnering & other activities
Q1 2023/24
Q1 2022/23
213
291
125
107
182
144
92
77
Staged
Flexible Living
On-the-go
Brand Partnering & other activities
Q1 2023/24
Q1 2022/23
Monobrand
Multibrand
Points of sale
End Q1 23/24
End Q1 22/23
End Q1 23/24
End Q1 22/23
EMEA
299
340
1,526
1.730
Americas
29 27 1,478 2,446
APAC
77
79
938
799
Total
405 446 3,942 4.975
Page — 6
Management’s review
Interim report Q1 2023/24
Product revenue, categories
Staged category
Revenue grew by 37% to DKK 291m. The Staged
category saw solid performance from TV’s and
soundbars, whereas volumes from speakers declined.
Beosound Theatre, in particular, performed well
following the launch in Q2 last year and was the biggest
contributor to group revenue for the quarter.
The growth was supported by higher average prices
since last year and the announced price increases
implemented 1 September 2023.
Flexible Living category
Revenue declined by 14% to DKK 107m. In general, we
had lower sales volumes compared to Q1 of last year,
reflecting high comparables in China.
The decline was partly offset by the launch of Beosound
A5 in Q4 as well as higher average prices.
On-the-go category
Revenue declined by 21% to DKK 144m. The decline
came from bluetooth speakers and earphones whereas
headphones were overall flat year-on-year. Beoplay EX
performed well in the quarter, yet declined year-on-
year as the product was newly launched last year. In
general, the optimisation of the multibrand channel
affected this category.
The decline was partly offset by improved average
prices.
Gross profit
Gross profit was DKK 325m (Q1 22/23: DKK 224m). This
was equivalent to a gross margin of 52.6% against 36.6%
last year, equivalent to an improvement of 16.0pp year-
on-year.
Gross profit from regional product sales was DKK 258m
(Q1 22/23: DKK 150m), equivalent to a gross margin of
47.6% (Q1 22/23: 28.8%), up 18.8pp against same quarter
last year.
The gross margin benefited from absence of
extraordinary component and logistic costs. In
addition, the gross margin was favourably impacted by
a change in the product mix towards higher margin
products as well as price increases. All product
categories delivered improved gross margins in the
period.
The extraordinary components and logistic costs in Q1
of last year amounted to around DKK 65m. This is
equivalent to a negative gross margin impact of approx.
11pp. In addition, the On-the-go category last year was
impacted by the sale of a large quantity of earphones to
a partner in the US, which reduced the On-the-go
margin.
Gross profit from Brand Partnering & other activities
was DKK 67m (Q1 22/23: DKK 74m), equivalent to a
gross margin of 87.8% (Q1 22/23: 82.1%). The increase in
gross margin was mainly driven by a lower share of
product sales compared to last year. In Q1 of last year,
we ramped up of the collaboration with Cisco to sell the
Bang & Olufsen Cisco 980 headset for hybrid work.
Currency movements had an adverse impact on gross
margin of approximately 0.2pp compared to Q1 of last
year.
As per 1 June 2023, internal cost allocations have been
updated, which has resulted in an updated split
between segments. Due to a higher cost allocation to
aluminium production, the gross margin in Brand
Partnering & other activities decreases by
approximately 5 pp and product sales increases by 1 pp,
depending on the mix and seasonality. Comparable
figures have been updated.
Capacity costs
Capacity costs were DKK 309m and on par with last
year (Q1 22/23: DKK 309m). In Q1, we received DKK 16m
as a final adjustment of the COVID-19 related relief
packages, of which DKK 12m reduced the capacity costs
for the quarter.
Development costs decreased by DKK 6m to DKK 63m
(Q1 22/23: DKK 69m). This was driven by lower incurred
costs due to COVID-19 related relief packages offset by a
lower capitalisation compared to Q1 of last year.
Distribution and marketing costs increased by DKK
10m to DKK 215m (Q1 22/23: DKK 205m). The increase
reflected our investments into more sales and
marketing activities and the full-year effect of the
resources we have added since Q1 of last year. The
marketing cost ratio was 11.6% in Q1 compared to 9.8%
in Q1 of last year. The increase was driven by higher
marketing costs in all three regions.
Administrative expenses decreased by DKK 4m to DKK
31m (Q1 22/23: DKK 35m) driven by COVID-19 related
relief packages and general cost savings.
EBIT
EBIT was DKK 16m (Q1 22/23: DKK -85m). This was
equivalent to an EBIT margin of 2.6% (Q1 22/23: -14.1%).
Q1
GROSS MARGIN
2023/24
2022/23
Staged
54.0%
38.1%
Flexible Living
48.1% 41.6%
On-the-go
34.9%
11.1%
Products, total
47.6% 28.8%
Brand Partnering & other activities
87.8%
82.1%
Total
52.6% 36.6%
Comparative figures for gross margin on segment level have been restated. No change in margin on group level.
Page — 7
Management’s review
Interim report Q1 2023/24
There were no special items in Q1 23/24 and Q1 22/23.
The margin improvement was related to the improved
gross profit.
Financial items
Net financial items amounted to an expense of DKK 5m
versus an expense of DKK 18m last year. The decrease in
expenses was primarily driven by less negative
exchange rate adjustments and higher interest income.
Profit/loss
The profit before tax was DKK 11m (Q1 22/23: loss of
DKK 103m) and income tax was DKK 4m (Q1 22/23:
income of DKK 3m).
The profit for the period was DKK 7m (Q1 22/23: loss of
DKK 100m). The overall improvement was driven by
the higher gross margin.
Cash flow
Free cash flow for the quarter was DKK -61m compared
to DKK -81m last year. The year-on-year improvement
was related to lower cash outflows from operating
activities (DKK 19m) and lower operational
investments, which were DKK 42m compared to DKK
53m in Q1 of last year.
The improvement in cash flows from operating
activities was mainly related to a positive EBITDA of
DKK 74m (Q1 22/23: DKK -32m). This was offset by
negative changes in net working capital of DKK 89m (Q1
22/23: positive change of DKK 10m) driven by a
decrease in trade payables.
Cash flows from operational investments totalled an
outflow of DKK 42m (Q1 22/23: DKK 53m). The decline
related mainly to lower capitalisation of development
projects due to timing.
Cash flows from financing activities were an outflow of
DKK 3m in line with last year (Q1 22/23: DKK 3m).
The cash position at the end of the quarter was DKK
141m (31 May 2023: DKK 216m). Total available liquidity
was DKK 150m (31 May 2023: DKK 224m), made up of
cash DKK 141m, securities DKK 392m less DKK 383m in
bank loans related to repo transactions.
Our combined capital resources (our available liquidity
and the undrawn part of our ESG-linked credit facility)
amounted to DKK 310m (31 May 2023: DKK 384m).
Net working capital
Net working capital increased by DKK 89m during the
quarter to DKK 311m (31 May 2023: DKK 222m).
Net working capital to the last 12 months’ revenue was
11.3% in line with last year (Q1 22/23: 11.2%) but up 3.2pp
since 31 May 2023.
Inventories declined by DKK 21m during the quarter,
driven by high activity and focus on inventory
management. The inventory reduction was mainly
related to Stage products.
Trade receivables ended at the same level (DKK 327m)
as last quarter (31 May 2023: DKK 341m). Sales with
extended credit accounted for 1% of revenue in the
quarter (Q1 22/23: DKK 6%).
Trade payables decreased by DKK 162m to DKK 403m,
mainly related to lower production activities in the
quarter and inventory management.
Other liabilities increased by DKK 25m to DKK 168m
during the quarter, primarily related to employee
related liabilities.
Other receivables decreased by DKK 13m to DKK 53m,
mainly related to VAT and other short-term loans.
Net interest-bearing deposit/debt
Net interest-bearing debt, including net lease liabilities
of DKK 136m, amounted to DKK 44m, compared to net
interest-bearing deposit of DKK 19m at year-end, 31
May 2023. The decrease was mainly due to the negative
free cash flow of DKK 61m for the quarter.
For further details, see note 7.
Page — 8
Management’s review
Interim report Q1 2023/24
A clear direction with Luxury Timeless Technology
Since the launch in January 2023, we have worked to
bring our proposition of Luxury Timeless Technology to
the +200 million design and music lovers worldwide
whom we target to win. Five strategic shifts guide our
execution, and the investments we make to reach our
ambition.
Due to the continued uncertainty in our macro-
environment, we are balancing our strategic
investments, and the pace of execution. We want to
remain prudent with our capital and resource
deployment.
In parallel to our execution, we have worked to size our
market, map our competitive environment, and
validate the attractiveness and viability of our
sharpened strategic direction. The result of this work
confirmed that we have an attractive market
opportunity, and that we are uniquely positioned to
capture it.
Leveraging on a differentiated and unparalleled
position in the growing luxury audio market
A fundamental choice in our strategy is to strengthen
our position as a luxury brand in the audio and TV
market. Our market, the luxury audio and tv market,
had an estimated market value of EUR 19bn in 2022 in
retail value. We currently hold just a 4% market share in
this segment but are uniquely positioned to expand this
for the future. Furthermore, this market segment has a
promising 16% projected CAGR towards 2028, which
provides an attractive growth opportunity for our
company (Source: Boston Consulting Group analysis,
July 2023).
The mass and premium segments of the global audio
and TV market combined are larger in size, with a total
market value of EUR 173 bn in 2022 in retail value and a
projected stagnant CAGR of 1%. Yet, the luxury audio
market is expected to have a more accelerated growth
trajectory than the mass and premium market. This will
result in a doubling of the luxury segment's penetration
of the total market, moving from 10% in 2022 to 20% in
2028 (by retail value), thereby taking up a larger share
of the total market over time.
The positive outlook of the luxury audio and TV market
is further strengthened by the expected growth in the
luxury sector, in general. Personal luxury, such as
watches, jewellery, and bags among others, is expected
to grow by 6-8% in the period 2023-2026. Experiential
luxury, focusing on the full memorable luxury
experience, is projected to grow by 8-10% in the period.
Based on the comprehensive competitor analysis, we
firmly believe that Bang & Olufsen is poised to further
penetrate this growing market. We categorise our
competitive market space into four segments:
Technology and personal electronics conglomerates,
Mass and premium audio market providers, Audio
specialists, and luxury audio. It is clear from our
competitor analysis that no other brand in the market is
better positioned to lead in luxury audio than Bang &
Olufsen. It is our intent to lead and expand this, and the
ultimate goal of our sharpened strategic direction with
the Luxury Timeless Technology proposition. Nobody
can match our broad product portfolio, iconic status
and heritage of our brand, and design and engineering
excellence of our products.
Q1 strategy execution
We continued to execute across our five strategic shifts.
1.Reigniting our brand to become a culturally relevant
luxury love brand
In early Q1, we launched our brand awareness
campaign, 'See Yourself in Sound.' The campaign
included user interaction through Spotify to generate
automated personalized avatars. It gained strong
traction right from the beginning, and more than
72,000 musical avatars have so far been created across
193 markets. We leveraged the reach of our brand
ambassadors, Lay Zhang and Fernando Alonso, who
posted stories about their avatars. In addition, we
engaged influencers across our regions to maximise our
reach. The campaign was designed to introduce the
Bang & Olufsen brand and associate it with music
amongst our important target segment, the Gen Z
population and young millennials.
In Q1, we grew our customer base by 4% and
successfully increased the number of customers owning
two or more Bang & Olufsen products by 3%. Both
metrics remain critical priorities to us.
2. Building a seamlessly connected product portfolio,
bridging our past, present and future
In Q1, we announced our new partnership with LG
Electronics on their groundbreaking large size LG
Magnit Micro LED screen intended for taking our home
cinema offering to new heights. With this partnership,
we are offering a 136-inch screen with our iconic Beolab
90 speakers for a complete, exclusive, and powerful
home cinema system to luxury customers seeking a
large-scale gold standard display and groundbreaking
sound, to elevate the experience of watching movies,
TV shows, sporting events and enjoying digital artwork
in luxury residencies.
We also announced the Cradle to Cradle certification of
our Beosound Emerge Wi-Fi speaker. The Cradle to
Cradle Certified® Product Standard is one of the world's
most trusted science-based frameworks for designing
and manufacturing responsible and circular products.
This is a validation of our work to build products that
last and are made in a responsible way.
Progress on key strategic priorities for Q1 2023/24
Page — 9
Management’s review
Interim report Q1 2023/24
Today's consumer electronics industry is characterised
by continuously decreasing product lifespans and
premature obsolescence. We are taking a different
approach by aligning with our strategic ambition of
designing and building for product longevity.
We believe our products outperform other consumer
electronic brands regarding longevity. Our customers
value that, and it allows them to build an emotional
connection with our products. Easy repairability and
upgradeability are ways to extend our customer's
memories with our products. Our approach also means
a higher resale value for our products, which is
important to many customers when assessing the total
cost of product ownership.
3. Creating magical moments in connected touch points
Our routes to market are critical for cementing the B&O
brand as a luxury brand. We are currently
implementing programmatic measures for the purposes
of ensuring high quality experiences and consistency in
our brand communication across our channel network.
In this respect, the B&O branded channels are
particularly important, and we continue to work to
improve customer experience in the monobrand
network.
We also intend to continue our improvement initiatives
within the multibrand and eTail channels, with a
strategic focus on channel partners that align with our
brand's positioning and values. This led to a
restructuring of our multibrand network in the US in
Q1, involving the discontinuation of our partnership
with T-Mobile, as well as a reduction in the number of
doors we occupy with Verizon, along with reducing the
product assortment available through both Verizon and
BestBuy.
The multibrand channel holds short-term significance
in terms of building brand awareness and expanding
our product exposure. Nevertheless, we remain
committed to ensuring that our multibrand presence is
consistently of high quality, and strategically
positioned to prevent any potential brand dilution.
Elevating our brand to a luxury level is a transformation
that will require both time and decisive choices
particularly within the multibrand channel.
4. Winning in key, global cities
Our execution for winning in the cities of London, Paris
and New York continued.
Q1 sell-out growth in London landed at 1% which was
impacted negatively by our company-owned store in
Bicester Village. Throughout the quarter, our Bicester
Village store was challenged by staff shortage and
limited stock availability. Several marketing activations
in London drew attention to our brand. These included
a presence at London Fashion Week, a collaborative
pop up with brand ambassador Tom Sellers at the
Wimbledon Tennis tournament, brand presence at Live
Nation summer festivals across London and the rest of
the UK, and multiple Ferrari activations and event
activities related to race weekends throughout the
quarter.
While our Win London execution continues to secure
positive results, our Q1 performance in Paris was more
differentiated. With a sell-out index of 68, Paris
monobrand had relative low activity, mainly due to
high comparables. Our CoCo and eCommerce channels,
however, showed positive, double digit sell-out growth,
and we had several marketing executions. These
included an immersive listening session at the Salle
Pleyel for a small VIP audience, and a cocktail evening
with a Ferrari simulator to launch the Ferrari x B&O
Collection.
In New York, sell-out grew 13%. We hosted various
events in our company-owned stores to bring magical
musical experiences to specially invited guests and to
activate our Scuderia Ferrari sponsorship with an
exclusive race watching event.
We continue our sales and marketing executing in the
three key cities and work diligently with our partners to
consistently improve and grow our business.
5. Exploring existing and new adjacent opportunities
In Q1, we were pleased to announce our strategic
product collaboration with Ferrari, a brand with whom
we share a common commitment to design and
performance excellence. This partnership is expected to
not only enhance awareness and equity for our brand
but also to bring joy and excitement to the extensive
global communities of both Ferrari and Bang & Olufsen
fans.
This collaborative effort stands as a testament to the
enduring strength of the Bang & Olufsen heritage and
brand perception. It also reflects our deliberate and
focused efforts to strengthen our relationships with
existing partners and explore opportunities to expand
our business within their ecosystems and for them to
reach new customers as well.
In addition, we expanded our business with Harman,
by providing a luxury sound system to all future Acura
car models with the ambition of elevating the in-car
audio experience across the entire Acura line-up in
coming years. Commercialising our sound capabilities
is not only a strong revenue driver but also a way of
ensuring we increase presence with our existing and
future customers throughout their daily lives. We want
to leverage our presence in the automotive space to
drive awareness and equity to our brand but also to get
access to the millions of people listening to Bang &
Olufsen sound systems while commuting every day.
Page — 10
Management’s review
Interim report Q1 2023/24
Like-for-like sell-out
Like-for-like sell-out declined by 3%. Company owned
stores delivered growth of 1%. The online channels
grew by 10%, while monobrand and multibrand
declined in the period. Monobrand stores in Paris were
adversely impacted by high comparables last year.
The like-for-like sellout in monobrand varied
significantly across countries. In general, the northern
European countries experienced lower demand,
whereas the southern European countries had a
positive sell-out trend.
The overall sell-out decline was mainly related to the
Staged category but also On-the-go products, while our
Flexible Living category delivered sell-out growth.
Revenue
Revenue was DKK 303m (Q1 22/23: DKK 239m). This
was equivalent to an increase of 26.7% (28% in local
currencies).
EMEA delivered double digit growth across channels,
except for multibrand, that declined. As part of the
strategic transformation, the number of multibrand
stores has been reduced by 204 stores since end of Q1
last year.
Our monobrand channel grew by 36%. We saw retail
partners replenishing inventory and executing on
project sales at the end of the quarter due to the
announced price increases from 1 September 2023. Last
year’s inventory levels were at a low level as retail
partners were hesitant to replenish due to the uncertain
macroeconomics.
Total online sales in EMEA (eCommerce and eTail)
grew by 13% year-on-year.
Total revenue from our Staged category grew by 49%.
TV’s and soundbars reported a strong performance,
mainly driven by Beosound Theatre, launched in Q2
last year, while Beolab speakers were largely on par
with Q1 of last year.
Revenue from the Flexible Living category grew by 18%.
The growth was supported by the launch of Beosound
A5 in April 2023.
Revenue from the On-the-go category declined by 16%.
Bluetooth speakers declined in the period, while
headphones increased. Beoplay EX reported solid
performance last year in connection with the launch.
We continued to see good performance from Beoplay
EX being the best single performing product in the
category.
Gross profit
Gross profit amounted to DKK 144m (Q1 22/23: DKK
74m), corresponding to a gross margin of 47.3% (Q1
22/23: 31.0%). The margin was positively impacted by a
change in product mix towards higher margin products
as well as price increases year-on-year. All product
categories reported improved gross margins in the
period.
EMEA
Q1 revenue split (%)
66%
56%
15%
16%
19%
28%
23/24 22/23
Staged Flexible Living On-the-go
Q1
(DKK million)
2023/24
2022/23
Change
Revenue
303 239 64
Growth in local currencies
28%
-20%
Gross profit
144 74 70
Gross margin
47.3%
31.0%
16.3pp
Page — 11
Management’s review
Interim report Q1 2023/24
Like-for-like sell-out
Like-for like sell-out growth was 5%. The growth was
mainly driven by Company-owned stores, which grew
19% and eTail, showing solid growth of 35% during the
quarter.
The main contribution to the sell-out growth came from
the Flexible Living category, while the Staged category
was on par with the same period last year. The On-the-
go category declined in the period.
Revenue
Revenue was DKK 67m (Q1 22/23: DKK 63m), equivalent
to an increase of 6.4% (13% in local currencies).
Our expanded partnership with Origin Acoustics on
custom installations (CI) continued to show good
progress in the period. In addition, our company owned
stores delivered solid growth as well as the eTail
channel, whereas monobrand declined.
The multibrand channel delivered growth in the period,
despite undergoing change due to the strategic
transformation. The partnership with T-Mobile ended
and consequently the multibrand channel was reduced
by more than 700 stores during Q1 23/24.
Revenue from the Staged category grew by 38%. Both
TV’s and soundbars and Beolab speakers grew in the
period. Growth was mainly driven by good performance
from Beosound Theatre, and Beolab 90. Higher average
selling prices also supported growth.
Revenue from the Flexible Living category grew by 53%
compared to last year. We saw good revenue growth
across the portfolio, and from the launch of Beosound
A5, in particular. Higher average selling prices also
supported growth.
Revenue from On-the-go declined by 29% compared to
last year. The decline was driven by earphones due to
the sale of a large quantity of earphones to a B2B
partner last year. Revenue from headphones grew in
the period, whereas bluetooth speakers had a modest
decline.
Gross profit
Gross profit amounted to DKK 30m (Q1 22/23: DKK
13m). This was equivalent to a gross margin of 45.5% (Q1
22/23: 19.8%). The improvement was positively
impacted by change in product mix towards higher
margin products as well as price increases year-on-year.
All product categories saw improved gross margins in
the period.
Furthermore, the sale of a large quantity of earphones
to a partner in the US reduced the On-the go margin last
year.
Americas
Q1 revenue split (%)
38%
29%
25%
17%
37%
54%
23/24 22/23
Staged Flexible Living On-the-go
Q1
(DKK million)
2023/24
2022/23
Change
Revenue
67 63 4
Growth in local currencies
13%
-6%
Gross profit
30 13 17
Gross margin
45.5%
19.8%
25.7pp
Page — 12
Management’s review
Interim report Q1 2023/24
Like-for-like sell-out
Like-for-like sell-out grew 29%, mainly driven by China
with a strong sell-out growth of 60%. Sell-out growth in
China was across product categories and mainly driven
by e-tail, albeit generated from a very low comparables
due to restriction and regional lockdowns last year.
Due to the prolonged lockdown conditions and the
current market situation in China, some companies are
cash-strapped, and a number of retail partners have
built up excessive inventory, which continue to impact
the sell-in and sell-out balance.
Japan had sell-out growth of 17% while South Korea
grew 12%. South Korea was impacted by excess
inventory related to the restrictions and regional
lockdowns last year.
Revenue
Revenue was DKK 172m (Q1 22/23: DKK 218m),
corresponding to a 20.9% decline (-16% in local
currencies).
Revenue from our Chinese market declined by 26%
(-16% in local currencies) and accounted for
approximately 54% of total revenue in APAC. Revenue
from South Korea was on par with last year.
We continued our strategic transformation in APAC
and have initiated a structural change in the e-tail
network and multibrand setup, changing partners and
reducing the number of stores. Both channels declined
in the period.
Our monobrand channel was affected by a number of
our retail partners in China who have built up inventory
last year. In general, the monobrand channel saw
growth in the period.
The economic recovery in China has been slow, and we
see fragmentation in the market where monobrand
customers are showing less sensitivity towards
economic downturn than customers in the online
channels. This is also reflected in the performance in
our product categories.
Revenue from the Staged category grew by 4%. The
growth was within TV’s and soundbars mainly driven
by a positive impact from Beosound Theatre.
The Flexible Living category declined by 41%, mainly
driven by high comparables as some partners
replenished inventory during the regional lockdowns in
China. We saw positive contributions from the relaunch
of Beosound Emerge and the launch of Beosound A5 in
April 2023.
The On-the-go category declined by 23%. Headphones
had growth, whereas Bluetooth speakers and
Earphones declined in the period. Beoplay EX saw a
strong quarter last year following the launch.
Gross profit
Gross profit amounted to DKK 84m (Q1 22/23: DKK
63m), equivalent to a gross margin of 48.9% (Q1 22/23:
28.8%).
The increase was driven by improved margins within
all categories as well as change in the product mix
towards higher margin products. The margins were also
supported by price increases implemented since last
year.
APAC
Q1 revenue split (%)
37%
28%
26%
35%
37%
37%
23/24 22/23
Staged Flexible Living On-the-go
Q1
(DKK million)
2023/24
2022/23
Change
Revenue
172 218 -45
Growth in local currencies
-15% -12%
Gross profit
84 63 21
Gross margin
48.9% 28.8% 20.1pp
Page — 13
Management’s review
Interim report Q1 2023/24
Revenue
Revenue was DKK 77m (Q1 22/23: DKK 92m),
corresponding to a 16.1% decrease (13% in local
currencies).
Licence fee revenue declined by 3%. This was mainly
due to declining income from HP. Revenue driven by
the automotive industry had solid growth in the period,
supported by a good order backlog and easing of supply
chains for car components. Licensing income
accounted for 80% of total revenue in Brand Partnering
& other activities.
Revenue from co-branded products declined year-on-
year; this was mainly related to high comparables last
year due the ramp-up of the Bang & Olufsen Cisco 980
headset.
Revenue related to aluminium production for third
parties was largely on same level as last year.
Gross profit
Gross profit amounted to DKK 67m (Q1 22/23: DKK
74m), equivalent to a gross margin of 87.8% (Q1 22/23:
82.1%).
The increase in gross margin was mainly related to the
change in mix, as the category included a lower
proportion of product revenue from our brand
collaboration with Cisco.
As per 1 June 2023, internal cost allocations have been
updated, which has resulted in an updated split
between segments. Due to a higher cost allocation to
aluminium production, the gross margin in Brand
Partnering & other activities decreases by
approximately 5 pp and product sales increases by 1 pp,
depending on the mix and seasonality. Comparable
figures have been updated.
Brand Partnering
& other activities
Q1
(DKK million)
2023/24
2022/23
Change
Revenue
77 92 -15
Growth in local currencies
-13%
44%
Gross profit
67 74 -7
Gross margin
87.8%
82.1%
5.7pp
Page — 14
Management’s review
Interim report Q1 2023/24
Key events in Q1
See yourself in sound
In June, we launched the
global marketing campaign
"See
yourself in sound".
The campaign
aims to increase brand awareness and
attract Gen Z customers to our brand. The campaign
was
digitally focused and personalised, inviting people
to create avatars based on their musical taste a
nd
share them on social media.
The
brand campaign was
activated on our social media
channels, in our stores, and through a global influencer
marketing campaign and PR
. The campaign had a
global
reach, and 72,000 avatars have so far been
created
across regions.
Summer innovation
camp in Struer
For
the second year in a row, and alongside
other industry peers and important
academic institutions,
we supported
the
Summer Innovation Camp at
Sound Hub
, Struer. This camp is made to
support
the education of young talents with
interest in science.
T
he Innovation Camp has
hosted more than
400 students since 2008.
Our continuous support to the Innovation
Camp is aligned with our ambitions and
contributes t
o the achieving of the UN
Sustainable Development goals mapped in
our strategy.
The B&O DNA
Collection goes
physical
In June,
we launched our first token-
gated product
– the Beosound A9 DNA
Edition. The
Besound A9 DNA
collection
is exclusively available for customers
who have bought one or more DNA
Collection NFTs (non
-fungible tokens).
Cradle-to-cradle certification
of Beosound Emerge
We were the first consumer electronics company to get a product Cradle to Cradle
Certified
with our speaker Beosound Level
, and in Q1, we reached another milestone with the
certification of the Beosound Emerge.
In contrast to an industry that is characterised by short
product lifespans
, we are going in the opposite direction with the ambition to design and
build for longevity and engage with consumers to promote the value of long
-lasting products
and circularity.
To be Cradle to Cradle Certified, Beosound Emerge was assessed across five catego
ries of
sustainability performance for the product's design itself and for the supply chain it is part of
in accordance with the Cradle to Cradle Certified® Product Standard.
Bang & Olufsen has committed to get at least
10 products Cradle to Cradle Cert
ified® by June 2025
and certify all future product innovations.
Beosound Emerge becomes the company's second product
to get certified.
,
Page — 15
Management’s review
Interim report Q1 2023/24
Partnership with
football team AS
Monaco
In August,
we announced our partnership
for
coming season
with the football team
AS Monaco, which includes our logo
featuring on the upper back of the shirt
worn by the AS Monaco football team.
Through the partnership, we want to
connect with new audiences by raising
ou
r awareness globally in a perfect fit,
with a team representing a country
synonymous with timeless glamour and
entertainment.
AS Monaco is a historic club of French
Championship, founded in 1924. With
eight Ligue 1 titles, ten national cups and
two Europe
an Cup Finals, AS Monaco
has one of the most impressive records in
French football and a strong heritage.
MS Teams certification
of Beocom EX
In August,
Beocom EX became available with
Microsoft Teams Certification,
following the MS
Teams certification of our Beocom Portal in
February, thereby, marking the completion of our
enterprise headset lineup
as Beocom Portal and
Beocom EX are both available in Zoom/UC and
MS
Teams versions.
Available with both Microsoft Teams and Zoom
certification, Beocom Portal
and EX are fit for
best
-in-class hybrid work experience and made
specifically to cater to the needs of professionals
who want premium audio and design that is
equall
y suitable for work as for leisure and
sports.
Atelier Editions colour drops
In Q
1, we
continued the launch of our atelier colour drops
of the Beoplay EX. In addition to the Beoplay EX, we
launched a Beosound 2 in gradient green and a
Beosound Level in Lilac purple, both in limited editions,
displaying our capabilities in aluminium colours.
All
colour drops were sold out.
Launch of the Ferrari
-collection
In August, we
launched a new collection with Ferrari. The collection champions our
excellence in aluminium and celebrates the two brands' shared passio
n for perfection
and
power by reimagining a series of headphones and speakers. In addition, the
collection is a departure from
our traditional approach of creating classic speakers
that
are meant to naturally blend in with people's homes while standing out for their
beautiful design.
As statement pieces, this collection is different. Much like supercars,
they make themselves seen
and heard.
The four products launched are
the Beosound 2 home speaker, Beoplay H95
headphones, Beoplay EX earphones and the portable speaker Beosound Explore. All
tied together with a
distinctive shade of red, creating an unmistakable connection to
the Fe
rrari brand signature.
The products come in limited edition and are available online on our and Ferrari e
-
com, selected B&O and Ferrari stores.
Page — 16
Management’s review
Interim report Q1 2023/24
We confirm the outlook for 2023/24,
announced on 6 July 2023. The
outlook is subject to uncertainty as
market challenges persist.
We will continue investments related to product and
retail development, as well as marketing and product
development.
In addition, 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
Revenue growth in local currencies is expected to be
between 0% to 9%.
EBIT margin before special items
EBIT margin before special items is expected to be
between 0% to 6%.
Free cash flow
Free cash flow is expected to be DKK -50m to
DKK 100m.
Assumptions
The expectations are subject to the following
assumptions:
• Improved market conditions in China in H2 23/24.
• Macroeconomic conditions in Europe and US will
improve during the fiscal year.
• Launch of six or more product innovations.
(including the launch of MS Teams for Beoplay EX,
Belolab 8, and Beosound Bollard).
• No impact on product availability due to geopolitical
changes or COVID-19 related lockdowns.
• No major COVID-19 related lockdowns.
• Exchange rates against DKK, including in particular
USD, CNY and EUR, in line with current exchange
rate levels, overall.
• No pressure on sourcing components through spot
buys.
• Improved inventories.
Sensitivities
The outlook for 2023/24 is subject to uncertainty
related to consumer sentiment from the effects of a
high inflationary environment, rising interest rates and
the war in Ukraine. In addition, there is higher
geopolitical uncertainty. The economic recovery and
pace hereof in China are also subject to uncertainty.
Outlook for 2023/24 maintained
OUTLOOK 2023/24
Q1 23/24 actuals
Outlook 2023/24
Revenue growth in local currencies (%)
5% 0% to 9%
EBIT margin before special items (%)
2.6% 0% to 6%
Free cash flow (DKKm)
-61 -50 to 100
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.
Page — 17
Consolidated financial statements
Q1 2023/24
0Condensed income statement
Q1
Year
(DKK million)
Notes
2023/24
2022/23
2022/23
Revenue
4 619 612 2,752
Production costs
-294
-388
-1,537
Gross profit
Development costs
5 -63 -69 -301
Distribution and marketing costs
-215
-205
-910
Administrative expenses
-31 -35 -128
Operating profit/loss (EBIT)
Financial income
Financial expenses
-17 -22 -56
Financial items, net
-5 -18 -28
Profit/loss before tax (EBT)
Income tax
-4 3 11
Profit/loss for the period
Earnings per share
Earnings per share (EPS), DKK
Diluted earnings per share (EPS-D), DKK
-0.8
-1.5
Page — 18
Consolidated financial statements
Q1 2023/24
1BCondensed statement of comprehensive income
Q1
Year
(DKK million)
2023/24
2022/23
2022/23
Profit/loss for the period
Items that will be reclassified subsequently to the income statement:
Exchange adjustments of subsidiaries
-5 5 -12
Fair value adjustments of hedging instruments
-2
-5
Value adjustments of hedging instruments reclassified in
Revenue
Production costs
Tax on other comprehensive income/loss
-1
Items that will not be reclassified subsequently to the income statement:
Actuarial gains/losses on defined benefit plans
Tax on other comprehensive income
Other comprehensive income/loss for the period, net of tax
Total comprehensive income/loss for the period
Page — 19
Consolidated financial statements
Q1 2023/24
ASSETS
(DKK million)
Notes
31-08-23
31-08-22
31-05-23
Goodwill
Acquired rights and software
Completed development projects
Development projects in progress
5 74 137 124
Intangible assets
Property, plant and equipment
Right-of-use assets
Tangible assets
Investments in associates
Other receivables
Non-current other receivables
Deferred tax assets
Total non-current assets
Inventories
Trade receivables
Tax receivable
Other receivables
Prepayments
Securities
7 392 407 394
Cash
7 141 125 216
Total current assets
Total assets
EQUITY AND LIABILITIES
(DKK million)
Notes
31-08-23
31-08-22
31-05-23
Share capital
Translation reserve
Cash flow hedge reserve
Retained earnings
Total equity
Lease liabilities
Pensions
Deferred tax
Provisions
Mortgage loans
Non-current other liabilities
Total non-current liabilities
Lease liabilities
Mortgage loans
Bank loans
7 383 325 386
Provisions
Trade payables
Tax payable
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Condensed statement of financial position
Page — 20
Consolidated financial statements
Q1 2023/24
Q1
Year
(DKK million)
Notes
2023/24
2022/23
2022/23
Profit/loss before tax (EBT)
-103
-152
Financial items, net
Depreciation, amortisation and impairment
Operating profit/loss before depreciation, amortisation and impairment
(EBITDA)
Other non-cash items
-3
-6
-4
Change in net working capital
6 -89 10 113
Interest received
Interest paid
-14 -8 -44
Income tax received/paid
Cash flows from operating activities
-19 -28 198
Purchase of intangible non-current assets
-32
-46
-169
Purchase of tangible non-current assets
-10 -12 -54
Sublease payment
Other cash flows from investing activities
-1 4 3
Operational investments
-42 -53 -218
Free cash flow
-61 -81 -20
Purchase of securities
Sale of securities
Financial investments
Cash flows from investing activities
-39 -50 -204
Q1
Year
(DKK million)
Notes
2023/24
2022/23
2022/23
Repayment of lease liabilities
-10 -10 -40
Repayment of mortgage loans
-1 -1 -3
Proceeds from loans and borrowings
Repayment of loans and borrowings
-3 - -
Settlement of matching share programme
Cash flows from financing activities
-14 38 64
Cash and cash equivalents, opening balance
Foreign exchange gain/loss on cash and cash equivalents
-3 3 -4
Change in cash and cash equivalents
-72 -40 58
Cash and cash equivalents, closing balance
Available liquidity
7 150 207 224
Condensed statement of cash flows
Page — 21
Consolidated financial statements
Q1 2023/24
Condensed statement of changes in equity
(DKK million)
Share capital*
Translation
reserve
Cash flow
hedge reserve
Retained
earnings
Total
Equity 1 June 2023
Profit/loss for the period
Exchange adjustments of subsidiaries
-5
-5
Fair value adjustments of hedging instruments
Value adjustments of hedging instruments reclassified in
Revenue
Production costs
Income tax on items that will be reclassified to the income statement
Comprehensive income/loss for the period
Share-based payments
Equity 31 August 2023
Equity 1 June 2022
Profit/loss for the period
-100
-100
Exchange adjustments of subsidiaries
Fair value adjustments of hedging instruments
-2
-2
Value adjustments of hedging instruments reclassified in
Revenue
Production costs
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
* The company holds a total of 2,983,739 treasury shares (3,244,692 shares as of 31 August 2022)
Page — 22
Consolidated financial statements
Q1 2023/24
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 2022/23.
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 2023 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
When 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 uncertainty, risk of recession, high inflation, rising interest rates, the war in Ukraine,
geopolitical uncertainty and risks related to potential regional COVID-19 related lockdowns, we have considered
the recoverability of trade receivables, deferred tax assets, intangible assets and the value of inventories. In
addition, Management have assessed both the supply situation and consumer demand in relation to the war in
Ukraine and concluded that the financial impacts consequently do not require significant judgements. In
addition, Management has assessed the impact of climate change, particularly in the context of the Group’s
sustainability targets, and concluded that these are not expected to have a significant impact on our future cash
flows or going concern assessment.
Apart from this, critical accounting estimates and judgements are consistent with those applied in note 1.2 to the
consolidated financial statements in the 2022/23 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 regional COVID-19 related lockdowns and effects related
to the current high macroeconomic uncertainty described above.
Notes
Page — 23
Consolidated financial statements
Q1 2023/24
4 Segment information – Q1
(DKK million)
EMEA
Americas
Asia
Regions, total
Brand Partnering
& other activities
All
Q1 2023/24
Revenue
303 67 172 542 77 619
Production costs
-159
-37
-88
-284
-10
-294
Gross profit
144 30 84 258 67 325
Gross margin
47.3%
45.5%
48.9%
47.6%
87.8%
52.6%
Q1 2022/23
Revenue
239 63 218 520 92 612
Production costs
-165
-50
-155
-370
-18
-388
Gross profit*
74 13 63 150 74 224
Gross margin*
31.0%
19.8%
28.8%
28.8%
82.1%
36.6%
(DKK million)
Staged Flexible Living On-the-go Products, total
Brand Partnering
& other activities
All
Q1 2023/24
Revenue
291 107 144
542
77
619
Production costs
-135 -55 -94 -284 -10 -294
Gross profit
156 52 50
258
67
325
Gross margin
54.0% 48.1% 34.9% 47.6% 87.8% 52.6%
Q1 2022/23
Revenue
213 125 182
520
92
612
Production costs
-133 -74 -163 -370 -18 -388
Gross profit*
80 51 19
150
74
224
Gross margin*
38.1% 41.6% 11.1% 28.8% 82.1% 36.6%
*
Comparative figures for gross margin and gross profit on segment level has been restated. No change in total gross margin and gross profit.
Gross profit is a segment KPI. There are no unallocated elements, and total gross profit reconciles to the income statement.
Page — 24
Consolidated financial statements
Q1 2023/24
5 Development costs
Q1
Year
(DKK million)
2023/24
2022/23
2022/23
Incurred development costs before capitalisation
63 78 319
Of which capitalised
-26
-33
-117
Incurred development costs after capitalisation
37
45
202
Capitalisation (%)
42.2% 42.5% 36.7%
Total charges and impairment losses on development projects
26
24
99
Development costs recognised in the consolidated income statement
63 69 301
Incurred development costs before capitalisation ratio (% of revenue)
10.1%
12.8%
11.6%
6 Change in net working capital
Change in
Change in
Change in
(DKK million)
31-08-23
31-05-23
Q1 2023/24
Q1 2022/23
2022/23
Inventories
478 499 21 5 130
Trade receivables
327 341 14 1 56
Other receivables*
53 66 13 3 22
Prepayments
24 24 - -8 4
Trade payables
-403 -565 -162 51 -16
Other liabilities
-168 -143 25 -42 -69
Deferred income - non-current
-0 -0 - - -14
Total
311 222 -89 10 113
* Other receivables were adjusted for financial receivables related to leases of DKK 1m not included as net working capital at 31 August 2023 (31 May 2023: DKK 2m).
Page — 25
Consolidated financial statements
Q1 2023/24
7 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, and finance lease receivables. Interest-bearing debt consists of mortgage loans,
bank loans and lease liabilities. We have placed the majority of our cash in Danish mortgage bonds, all with an
AAA S&P rating. 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 2023, repo transactions
amounted to DKK 383m.
During the quarter, the net interest-bearing deposit decreased by DKK 63m to a debt of DKK 44m compared to a
deposit of DKK 19m at year-end 2022/23. Available liquidity amounted to DKK 150m (year-end 2022/23: DKK
224m).
(DKK million)
31-08-23
31-08-22
31-05-23
Mortgage loans (non-current)
-55 -57 -56
Mortgage loans (current)
-3 -4 -3
Bank loans (current)
-383 -325 -386
Lease liabilities (non-current)
-100 -85 -109
Lease liabilities (current)
-36 -39 -37
Other non-current liabilities*
-3 0 -3
Interest-bearing debt
-580 -510 -594
Finance lease receivables (non-current)
2 3 1
Finance lease receivables (current)
1 2 2
Cash (current)
141 125 216
Securities (current)
392 407 394
Interest-bearing assets
536 537 613
Net interest-bearing deposit/(debt)
-44 27 19
* Only the interest-bearing part of Other non-current liabilities has been included in net interest-bearing deposit/debt.
During the quarter, net available liquidity decreased by DKK 74m to DKK 150m (year-end 2022/23: DKK 224m),
consisting of cash and securities offset by repo transactions.
(DKK million)
31-08-23
31-08-22
31-05-23
Cash (current)
141 125 216
Securities (current)
392 407 394
Bank loans (current)
-383 -325 -386
Available liquidity
150 207 224
Including the undrawn part of our ESG-linked credit facility, capital resources were DKK 310m (year-end 2022/23:
DKK 384m), consisting of available liquidity of DKK 150m and undrawn committed credit facilities of DKK 160m.
Page — 26
Consolidated financial statements
Q1 2023/24
Financial instruments by category
(DKK million)
31-08-23
31-08-22
31-05-23
Non-current other receivables
22 24 23
Trade receivables
327 396 341
Other receivables
54 87 68
Cash
141 125 216
Financial assets at amortised cost
544 632 648
Securities
392 407 394
Fair value through income statement
392 407 394
Derivatives used for hedge accounting
2 14 0
Fair value through other comprehensive income
2 14 0
Financial assets
938 1,053 1,042
Mortgage loans
58 61 59
Bank loans
383 325 386
Lease liabilities
136 124 146
Trade payables
403 632 565
Financial liabilities at amortised cost
980 1,142 1,156
Derivatives used for hedge accounting
5 23 8
Fair value through other comprehensive income
5 23 8
Financial liabilities
985 1,165 1,164
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 to the 2022/23 Annual Report for an overview of foreign exchange contracts.
9 Subsequent events
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.
8 Financial instruments
Page — 27
Consolidated financial statements
Q1 2023/24
Management's statement
Executive Management Board:
Board of Directors:
Page — 28
Consolidated financial statements
Q1 2023/24
Bang & Olufsen A/S, Bang & Olufsen Allé 17600 Struer41257911