Bang & Olufsen discloses the Financial highlights for the Fiscal Year 2019-20

Bang & Olufsen has revealed the Financial highlights for the Fiscal Year 2019-20. The company says that 2019/20 remained a disappointing year for its business operations. The company revenue declined 29% in local currency Danish Krone (DKK) compared to the revenue of last year Its EBIT margin before special items showed decline of -15%.

Bang & Olufsen reported Earnings before tax of -367m (DKK 33m). The earnings came with loss of DKK 576m (DKK 19m). The company says the earnings were impacted negatively by an impairment charge that comes with the deferred tax asset amounting to DKK 265m. The negative impact was seen in Q3 2019/20. A better working capital management impacted in the favor of Free cash flow to stay at DKK -234m (DKK -271m). The company showed the cash position of DKK 215m during the financial year.

Company’s revenue was DKK 377m (DKK 618m) for the year, showing a decline of 39.0% (-39% in local currency), stating that COVID-19 crisis resulted in temporary closures of store in all markets and is the reason behind this decline. The gross margin declined by 9.1pp and 6.0pp to 39.4% (or 48.5% in local currency), this gross margin figure isn’t presents the effect of currency hedges. COVID-19 impacted the gross margin negatively because of various factors as the company provided higher discounts on several products, and saw more revenue sharing in sales because of the company’s e-commerce platform. The company sold more end-of-life products and the allocated the production-related capacity costs for sale operations. Its Free cash flow showed the amount of DKK -99m (DKK -69m) after the negative impacted of decline in EBITDA.

CEO of Bang & Olufsen Kristian Teär commented, “This has been a disappointing year for Bang & Olufsen.” Mr. Kristian He said the unsatisfactory results were because of primarily due to diminishing progress “with the ongoing transition towards a demand-driven retail model and higher-than-expected sales through unauthorised channels.” The company launched number of initiatives to deal with the challenges pre-COVID-19 pandemic challenges but the initial results of those efforts were hit by the COVID-19 pandemic. While he added, “With our new strategy we aim to solve some of the fundamental issues in our core business and ensure that we become profitable again.”

However, the company completed a capital increase on 1st July that can enable the company to cope with the COVID-19 crisis and could stay with its execution of the strategy to cope with the challenges related to demand-driven retail model and more sales through various unauthorized channels.

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