Page — 1
Interim report
9M 2022/23
Page — 2
Management’s review
Interim report 9M 2022/23
The quarter was impacted by a shift in
COVID-19 policy in China, which
adversely affected performance, a
decline of 65%, and by continuing
macroeconomic headwinds. Our
company owned stores outperformed
all other channels, underlining the
strategic strength of our Win City focus.
Financial highlights
Revenue declined 18% (-20% in local currencies) in the
quarter. Sales in China decreased significantly as the
country was heavily affected by a change in COVID-19
policy in December, which led to a surge in infections
negatively impacting consumer behaviour. The
macroeconomic uncertainty affected the quarter and
retail partners in the EMEA region remained cautious
about inventory replenishment.
The decrease in reported revenue was related to total
product sales, which declined by 21.5% (-25% in local
currencies), while Brand Partnering & other activities
grew by 15.3% (11% in local currencies).
While the decline in revenue (sell-in) was 18%, like-for-
like sell-out declined by 4%. The decline in sell-out was
driven by low demand in Asia. EMEA saw a slight
decline, whereas Americas continued to grow. Across
regions, our Staged category was on par year over year,
being our best-performing category. Sell-out declined
across channels, except for our company owned stores
and etail, which both generated positive growth rates.
Gross margin was 43.6% against 44.0% last year. A
change in product mix towards lower-margin products
was partly offset by improved margins for the Staged
and Flexible Living categories.
EBIT before special items was DKK -43m (Q3 21/22:
DKK 6m), corresponding to an EBIT margin of -6.8%
(Q3 21/22: 0.7%). Special items were DKK -15m, mainly
due to a provision for redundancies. In February, we
initiated a reorganisation as part of our continued focus
on balancing strategic investments while securing a
lean cost base.
EBIT and EBIT margin came in at DKK -58m and -9.1%,
respectively (Q3 21/22: DKK 1m and 0.1%). The result for
the period was a loss of DKK 55m (Q3 21/22: loss of
DKK 16m).
Free cash flow was DKK 33m (Q3 21/22: DKK -14m),
driven by a positive change in working capital.
Available liquidity was DKK 208m (Q2 22/23:
DKK 187m).
Progress on strategic priorities
We continued our efforts to increase brand awareness,
onboard new customers and increase average product
ownership. We grew our customer base by 5% while
delivering a slight increase of 3% in the number of
customers owning two or more products.
Our core market Americas delivered positive sell-out
growth. The quarter also saw the opening of a partner-
owned store in Orlando, Florida, which is an attractive
area due to the density of Very High Net Worth
Individual (VHNWI) customers.
A new partnership with Scuderia Ferrari for the 2023
Formula 1 season was announced in February. Ferrari
and Bang & Olufsen share a passion for state-of-the-art
design, technology and performance, and share much
of the same audience. Formula 1 has 445m viewers a
year. The new partnership got off to a good start and
brought immense interest from the launch.
Outlook 2022/23
On 17 March, we adjusted our outlook due to lower-
than-expected sales in China. The outlook is as follows:
• Revenue growth in local currencies: -9% to -3%
(previously at the lower end of -4% to 5%)
• EBIT margin before special items: -4% to -1%
(previously at the lower end of -2% to 3%)
• Free cash flow: DKK -100m to 0m (previously at the
lower end of DKK -50m to 100m)
The outlook for 2022/23 is subject to unusually high
uncertainty due to high inflation, rising interest rates
and the war in Ukraine.
Q3 highlights
Revenue
DKK million
635
Q3 21/22: 775
Growth in local currencies
-20%
Q3 21/22: 10%
EBIT before special items
DKK million
-43
Q3 21/22: 6
Free cash flow
DKK million
33
Q3 21/22: -14
Page — 3
Management’s review
Interim report 9M 2022/23
For definitions, see note 8.7 to the Annual Report 2021/22.
Key financial highlights
Q3
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Income statement
Revenue
635 775 2,106 2,250 2,948
EMEA
333 361 972 1,030 1,360
Americas
73 71 242 222 307
Asia
145
270
611
798
983
Brand Partnering & other activities
84 73 281 200 298
Gross margin, %
43.6
44.0
41.9
44.4
45.3
EMEA
35.9
41.8
34.4
41.5
42.2
Americas
29.9 40.9 28.1 34.5 35.1
Asia
43.1
33.7
38.3
37.8
37.7
Regions, total
37.0 38.7 34.9 39.3 39.7
Brand Partnering & other activities
86.8 95.6 87.3 96.5 95.2
EBITDA
0 52 35 192 257
EBIT before special items
-43 6 -114 42 54
EBIT
-58 1 -130 35 46
Special items, net
-15
-5
-16
-7
-8
Financial items, net
3 -18 -26 -33 -54
Profit/loss before tax (EBT)
-55 -17 -156 2 -8
Profit/loss for the period
-55 -16 -152 -5 -30
Financial position
Total assets
2,325 2,540 2,325 2,540 2,518
Share capital
613 613 613 613 613
Equity
955 1,119 955 1,119 1,100
Cash
212 225 212 225 162
Available liquidity
208
511
208
511
301
Net interest-bearing deposit/debt
36 318 36 318 111
Net working capital
269
187
269
187
335
Q3
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Cash flows
Cash flows from operating activities
74 61 100 173 76
Operational investments
-41 -75 -147 -155 -248
Free cash flow
33 -14 -47 18 -172
Cash flows from investing activities
-37 -75 -136 -151 -239
Cash flows from financing activities
-15 20 88 22 145
Cash flows for the period
22
6
52
44
-18
Key figures
Growth in local currencies, %
-20 10 -9 19 10
EBITDA margin before special items, %
2.4 7.4 2.4 8.8 9.0
EBITDA margin, %
0 6.8 1.6 8.5 8.7
EBIT margin before special items, %
-6.8 0.7 -5.4 1.9 1.8
EBIT margin, %
-9.1
0.1
-6.2
1.6
1.6
Return on assets, %
-6.5 -0.2 -6.5 -0.2 -1.2
Return on invested capital, excl. goodwill, %
-7.1 12.8 -7.1 12.8 19.3
Return on equity, %
-15.9 -0.4 -15.9 -0.4 -2.7
Full-time employees (FTE) at end of period
1,037 1,063 1,037 1,063 1,073
Stock-related key figures
Earnings per share (EPS), DKK
-0.5 -0.1 -1.2 -0.0 -0.2
Earnings per share, diluted (EPS-D), DKK
-0.5 -0.1 -1.2 -0.0 -0.2
Price/Earnings
-27.8 -150.9 -10.3 -526.0 -67.6
Revenue per share, DKK
5.3
6.5
17.6
18.8
24.7
Revenue per share, diluted, DKK
5.3 6.5 17.6 18.8 24.7
Page — 4
Management’s review
Interim report 9M 2022/23
Revenue declined 18% (-20% in local
currencies) in the quarter, mainly
caused by Asia, where China was
heavily impacted by the change in
COVID-19 restrictions.
Sell-out declined by 4%, primarily
driven by Asia. EMEA experienced a
small decline whereas Americas
continued to grow. Sell-out improved
across all regions towards the end of
the quarter.
Gross margin was 43.6% against
44.0% last year. EBIT margin before
special items was -6.8% (Q3 21/22:
0.7%).
Free cash flow was DKK 33m (Q3
21/22: DKK -14m), positively impacted
by reduced net working capital.
After lockdowns were initiated yet again in China in
April 2022, a radical shift in COVID-19 policy removed
all restrictions early December 2022 in China. This led
to a surge in COVID-19 cases, creating major
uncertainty in many parts of the country. Demand was
heavily affected, and lower-than-expected sales
impacted performance in Q3.
The ongoing war in Ukraine, high inflation and rising
interest rates continued to impact our overall
performance in Q3.
General uncertainties related to the economic outlook
and consumer behaviour impacted the quarter. In
EMEA, monobrand partners remained cautious on
replenishment of inventories. Americas was the least
impacted region where in Q3 we added a new store in
Orlando, Florida. Further, we expanded our partnership
with Origin Acoustics, which operates within our
custom installations (CI) channel.
All product categories were affected by the challenging
environment. The biggest impact was felt in the
Flexible Living category, mainly reflecting high
comparables in China.
By contrast, our newly launched soundbar and TV
solution, Beosound Theatre, had a positive impact on
our financial performance for the quarter. The
soundbar has received a number of best-in-class
reviews and the positive sell-out trajectory continued.
Gross margin was slightly down against last year (down
0.4 pp). Change in product mix adversely impacted
gross margin, offset by improved margins on the Staged
and Flexible categories. The On-the-go category was
adversely impacted by inventory depletion of specific
headsets. Currency movements also had an adverse
impact on margin.
We continue to see improved market conditions in the
market for components with better supply-demand
balance and fewer components in shortage. In Q3 we
reduced the impact of component spot buys by a
further 45% compared to Q2. From Q4 onwards, we
expect minor effect from component spot buys.
EBIT margin before special items was -6.8% (Q3 21/22:
0.7%), driven by lower sales activity, while capacity
costs decreased 1.5% year-on-year.
Special items amounted to an expense of DKK 15m,
driven by redundancies, and EBIT margin came in at -
9.1% (Q3 21/22: 0.1%).
Last year, we introduced a hiring freeze as part of our
cost initiatives, and in February this year, 35 employees
were made redundant as part of a reorganisation. The
redundancies were part of a number of cost initiatives
implemented as part of our efforts to secure a lean cost
base while balancing strategic investments.
Free cash flow was DKK 33m (Q3 21/22: DKK -14m),
reflecting a positive change in our net working capital,
primarily driven by reduced inventory levels.
Like-for-like sell-out
Like-for-like sell-out declined by 4% compared to Q3 of
last year. This was mainly related to a lack of market
activity in China and some customer hesitancy in
Europe.
Sell-out in EMEA declined by 2% in the quarter. The
decline for the quarter was primarily driven by
northern European markets. The company owned
stores delivered solid sell-out growth of 55%.
Like-for-like sell-out in Asia declined by 13%, primarily
driven by reduced sell-out in China due to a change in
Management’s review for Q3
LIKE-FOR-LIKE SELL-OUT*
Q3 22/23
Q3 22/23
EMEA
-2%
Staged
0%
Americas
3%
Flexible Living
-18%
Asia
-13%
On-the-go
-1%
Total
-4%
Total
-4%
* Defined as sell-out from the same stores, provided they were open and active in both periods.
Page — 5
Management’s review
Interim report 9M 2022/23
consumer behaviour following the change in COVID-19
policy.
Sell-out in Americas grew 3%, mainly driven by the
monobrand and etail channels. Strong growth in etail
resulted in good performance from the On-the-go
category.
Product category like-for-like sell-out
The situation in China impacted sell-out negatively in
all product categories.
Staged category sell-out was on par with last year,
driven by growth in TVs. Beosound Theatre was one of
the best-performing products in terms of sell-out value,
continuing the positive trend since the launch in Q2.
Flexible Living sell-out declined by 18%. We generally
saw lower volumes, reflecting higher sensitivity in
consumer behaviour caused by economic uncertainty.
Beosound Emerge performed well following the
relaunch in Q2.
Sell-out in the On-the-go category declined by 1%. We
saw positive sell-out trends for headphones and
earphones, while Bluetooth speakers declined. Our
newest earphone, Beoplay EX, generated the highest
sell-out value across all On-the-go products.
Revenue in Q3
Revenue in Q3 declined by 18.1% year-on-year (-20% in
local currencies) to DKK 635m.
The decrease in reported revenue was related to total
product sales, which declined by 21.5% (-25% in local
currencies), while Brand Partnering & other activities
grew by 15.3% (11% in local currencies).
Product revenue, regions
The change in product revenue was mainly driven by
Asia, across all channels and categories. Revenue from
China was severely impacted by a surge in COVID-19
cases and declined by 65% year-on-year. Revenue from
China accounted for approximately 42% of total
revenue in Asia.
Due to the prolonged lockdown conditions in China,
some companies are cash-strapped, and some retail
partners have built up excessive inventory, which
impacts our business.
In EMEA, monobrand partners continued to be
cautious on inventory replenishment, which adversely
impacted growth.
In February 2022, we stopped all sales to Russia and
Belarus as a result of the invasion of Ukraine. Excluding
sales to the Russian market in Q3 of last year, the year-
on-year increase was 1 pp higher for the Group and 2 pp
higher on product revenue.
Product revenue, channels
Revenue from our company owned stores grew, driven
by EMEA, whereas monobrand growth was negative
due to the above-mentioned hesitance from retail
partners and the low market activity in China.
Revenue from the multibrand channel declined, driven
by Asia and due to the situation in China, which
resulted in lower footfall. In EMEA, revenue related to
multibrand increased. This was mainly due to low
comparables.
Revenue split
361
333
71
73
270
145
73
84
EMEA
Americas
Asia
Brand Partnering & other activities
Q3 2022/23
Q3 2021/22
323
281
183
108
196
162
73
85
Staged
Flexible Living
On-the-go
Brand Partnering & other activities
Q3 2022/23
Q3 2021/22
Monobrand
Multibrand
Points of sale
End Q3 22/23
End Q2 22/23
End Q3 22/23
End Q2 22/23
EMEA
308
312
1,548
1,547
Americas
29 28 2,251 2,250
Asia
75
79
942
996
Total
412 419 4,741 4,793
Page — 6
Management’s review
Interim report 9M 2022/23
Revenue from multibrand declined in Americas against
last year due to relatively high comparables.
Online revenue was impacted by the low market
activity in China, Our eCommerce sales accounted for
approximately 4% (Q3 21/22: 4%) of product revenue in
Q3 and our combined eCommerce and etail revenue
accounted for around 14% (Q3 21/22: 16%) of regional
product revenue.
The number of monobrand stores declined by seven
during Q3, which was related to the store closures
announced last year. We also completed several
relocations of existing stores, and in the Americas we
opened a new store in Orlando, Florida.
Revenue, Brand Partnering & other activities
The 15.3% growth in Brand Partnering & other activities
was driven by both higher licence income and product
revenue, related to our Cisco partnership and the
automotive industry.
Staged category
Revenue declined by 13% to DKK 281m.The Staged
category saw declining volumes from both TVs and
speakers. By contrast, Beosound Theatre showed good
performance following its launch in Q2 and was the
biggest contributor to group revenue for the quarter.
The overall volume decline was partly offset by higher
average prices.
Flexible Living category
Revenue declined by 40.9% to DKK 108m. We generally
saw lower sales volumes compared to Q3 of last year,
reflecting high comparables in China last year and the
fact that this product category has higher sensitivity in
consumer behaviour caused by economic uncertainty.
The decline was partly offset by the relaunch of
Beosound Emerge and higher average prices.
On-the-go category
Revenue decreased by 17.6% to DKK 162m. The
declining volumes came from Bluetooth speakers.
Headphones were flat year-on-year whereas earphones
increased. Beoplay EX performed well in the quarter,
delivering higher revenue than the combined revenue
from all other earphone products last year.
The decline in Bluetooth speakers mainly reflected high
comparables in Americas, where we ran a campaign
together with a partner. The decline was partly offset by
improved average prices.
Gross profit
Gross profit was DKK 277m (Q3 21/22: DKK 341m). This
was equivalent to a gross margin of 43.6% against
44.0% last year.
Gross profit from regional product sales was DKK 205m
(Q3 21/22: DKK 271m), equivalent to a gross margin of
37.0% (Q3 21/22: 38.7%). The decline was primarily
related to the On-the-go category and was mainly
driven by efforts to reduce inventory on products with
shorter lifecycles. All remaining component costs for
spot buys across the categories have now been
expensed.
Gross margin in the On-the-go category declined to
16.8% (Q3 21/22: 23.9%). Adjusted for the above-
mentioned efforts to reduce inventories, gross margin
came in at 19.0%. Furthermore, the fixed-costs-to-
revenue ratio within this category eroded the margin.
We delivered improved gross margin on Staged and
Flexible Living, partly due to price increases
implemented.
We saw a positive development in logistics, as we
managed to ship most freight by sea in Q3. This had a
positive impact on both costs and emissions. We
managed to reduce freight costs by around 45%
compared to Q3 of last year.
Gross profit from Brand Partnering & other activities
was DKK 72m (Q3 21/22: DKK 70m), equivalent to a
gross margin of 86.8% (Q3 21/22: 95.6%). The decline 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. The change
in mix, with more product sales, reduced gross margin
in Q3 compared to the same period last year.
Currency movements, in particular USD, had an
adverse impact on gross margin of approximately 1.5pp
compared to Q3 of last year.
Capacity costs
Capacity costs were DKK 335m (Q3 21/22: DKK 340m),
corresponding to a year-on-year decrease of 1.5%. The
quarter was impacted by reversal of bonus of DKK 19m
due to lower-than-expected performance partly offset
by a provision for redundancies of DKK 14m.
Q3
YTD
GROSS MARGIN
2022/23
2021/22
2022/23
2021/22
Staged
44.9%
43.2%
44.4%
45.0%
Flexible Living
47.4% 46.9% 46.9% 46.4%
On-the-go
16.8%
23.9%
15.2%
24.8%
Products, total
37.0% 38.7% 34.9% 39.3%
Brand Partnering & other activities
86.8%
95.6%
87.3%
96.5%
Total
43.6%
44.0%
41.9%
44.4%
Page — 7
Management’s review
Interim report 9M 2022/23
Development costs increased by DKK 16m to DKK 86m
(Q3 21/22: DKK 70m). This was driven by higher incurred
costs in combination with a lower capitalisation ratio
compared to Q3 of last year. The increase in incurred
costs was partly driven by the addition of more
competencies, including in our new office in Sofia,
Bulgaria, which is focused on software development.
Distribution and marketing costs decreased by
DKK 20m to DKK 216m (Q3 21/22: DKK 236m). The
decrease was mainly related to a one-off service cost
relating to warranty obligations last year. The
marketing cost ratio was 10.8% in Q3 compared to 8.2%
in Q3 of last year. The increase was driven by higher
marketing costs in the three regions as well as lower
revenue.
Administrative expenses were stable at DKK 33m (Q3
21/22: DKK 34m).
Special items
Special items amounted to an expense of DKK 15m,
mainly due to a provision for redundancies in February,
when 35 employees were laid off as part of a
reorganisation.
EBIT
EBIT was a negative DKK 58m (Q3 21/22: DKK 1m). This
was equivalent to an EBIT margin of -9.1% (Q3 21/22:
0.1%).
The margin decline was related to the lower revenue.
Currency movements had a negative impact of
approximately 1.0pp compared to last year.
The EBIT margin before special items was -6.8% (Q3
21/22: 0.7%).
Financial items
Net financial items amounted to an income of DKK 3m
versus an expense of DKK 18m last year. The increase
was primarily driven by positive exchange rate
adjustments and higher interest income.
Profit/loss
The result before tax was a loss of DKK 55m (Q3 21/22:
DKK 17m) and income tax was approximately nil (Q3
21/22: income of DKK 1m).
The result for the period was a loss of DKK 55m (Q3
21/22: DKK 16m).
Cash flow
Free cash flow for the quarter was DKK 33m compared
to DKK -14m last year. The year-on-year increase was
related to higher cash flows from operating activities
(DKK 13m) and lower operational investments, which
were DKK 41m compared to DKK 75m in Q3 of last year.
The increase in cash flows from operating activities was
mainly related to a positive impact from changes in net
working capital and other non-cash items (mainly a
change in provisions), partly offset by a lower EBITDA.
The change in net working capital was a positive
DKK 66m compared to DKK 30m last year.
Cash flows from operational investments were an
outflow of DKK 41m (Q3 21/22: DKK 75m). The decline
related mainly to lower capitalisation of development
projects due to timing.
Cash flows from financing activities were an outflow of
DKK 15m (Q3 21/22: inflow of DKK 20m).. The cash
inflow last year was related to net repo transactions of
DKK 30m.
The cash position at the end of the quarter was
DKK 212m (Q2 22/23: DKK 189m). Total available
liquidity was DKK 208m (Q2 22/23: DKK 187m), made up
of cash DKK 212m, securities DKK 396m less DKK 400m
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 328m (Q2 22/23: DKK 307m).
Net working capital
Net working capital decreased by DKK 66m during the
quarter to DKK 269m.
Trade receivables decreased by DKK 118m, driven by
lower sales and focus on cash collection. Sales with
extended credit accounted for 5% of revenue and were
in line with Q3 of last year.
Inventories declined by DKK 69m during the quarter,
coming from a relatively high level established in Q4 of
last year, and mainly related to the lockdowns in China.
The inventory reduction was mainly related to On-the-
go products, partly driven by a reduction in inventory
of products with shorter lifecycles, both headphones
and earphones. The inventory composition continued
to improve and at the end of Q3 no components
purchased on the spot market remained.
Other receivables decreased by DKK 22m, mainly
related to VAT and derivatives.
Trade payables decreased by DKK 142m, mainly related
to lower activities in the quarter and timing of
payments.
Other liabilities decreased by DKK 12m during the
quarter, primarily related to employee bonus.
Net working capital to the last 12 months’ revenue was
9.6% (Q3 21/22: 6.2%). The net working capital ratio
declined compared to the high level at the end of the
previous financial year (11.4%) and the first two
quarters of 2022/23.
Page — 8
Management’s review
Interim report 9M 2022/23
Net interest-bearing deposit
Net interest-bearing deposit, including net lease
liabilities of DKK 108m, amounted to DKK 36m,
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 47m for the year.
During the quarter, the net interest-bearing deposit
increased by DKK 32m, driven by the positive free cash
flow for the quarter.
For further details, see note 8.
Equity
Equity was DKK 955m, corresponding to a decline of
DKK 145m, driven by the loss for the year.
Financial performance 9M 2022/23
Revenue amounted to DKK 2,106m. This was equivalent
to a year-on-year decline of 6.4% (9M 21/22:
DKK 2,250m). Revenue declined by 9% in local
currencies.
The On-the-go category grew by 1.7%, partly driven by
inventory reduction, while both the Staged and Flexible
Living categories declined. Our financial performance
was adversely impacted by retail partners being more
cautious, working to reduce their inventories due to
current macroeconomic uncertainties. Recent product
launches had a positive impact on growth. Revenue
from Brand Partnering & other activities increased year-
on-year and was driven by both higher licence income
from the automotive industry and product revenue,
mainly related to our Cisco partnership.
Gross margin was 41.9% (9M 21/22: 44.4%), equivalent
to a year-on-year decrease of 2.5pp. Gross margin was
positively impacted by price increases and lower
component costs, offset by change in product mix and
inventory depletion within the On-the-go category.
Brand Partnering & other activities represented a larger
portion of revenue, supporting the overall margin.
Currency movements had an adverse effect on gross
margin of approximately 1.8pp.
Capacity costs amounted to DKK 1,013m (9M 21/22:
DKK 964m). The increase was driven by targeted
investment into our strategic focus areas, where we
have prioritised product development and sales and
marketing.
EBIT was a negative DKK 130m (9M 21/22: positive
DKK 35m), equivalent to a margin of -6.2% (9M 21/22:
1.6%). The decline was driven by the lower gross profit
and higher capacity costs.
EBIT before special items was a negative DKK 114m (9M
21/22: positive DKK 42m) with a margin of -5.4% (9M
21/22: 1.9%).
Free cash flow was DKK -47m (9M 21/22: DKK 18m),
primarily driven by lower cash flow from operating
activities of DKK 73m. EBITDA was DKK 157m lower
than the prior year, offset by a positive change in net
working capital of DKK 66m.
Page — 9
Management’s review
Interim report 9M 2022/23
Despite COVID-19 headwinds in China
and continued macroeconomic
pressure affecting consumer behaviour
across all regions, we continued to see
progress on our strategy in Q3.
We are confident that the
transformation of our business in
recent years has put us in a better
position to navigate through
challenging times and continue our
focus on growing our business.
In January, we sharpened our strategic
direction. This will enable us to
differentiate ourselves even further,
prioritise investments and drive
growth.
Strategy execution in Q3 – delivering on our
priorities
Strategic market update
Despite our European core markets being adversely
impacted by macroeconomic headwinds throughout
the quarter, we delivered sell-out growth in four out of
six core European markets: UK, France, Switzerland
and Spain. Our company owned stores were a primary
driver of growth, and our Win City projects yielded
results in both London and Paris.
Our core market Americas also delivered positive sell-
out growth, primarily driven by our partnership with
Origin Acoustics. With this partnership, we have
managed to expand our presence in the custom
installation (CI) channel in a short period of time. By
the end of Q3, we had recruited more than 50 CI
partners across the US. The quarter also saw the
opening of a partner-owned store in Orlando, Florida,
which is an attractive area for us to build a presence in
due to the density of Very High Net Worth Individual
(VHNWI) customers.
Generally, in our European core markets as well as for
Americas, our monobrand channel was challenged
during the quarter. Our monobrand partners in the
regions exercised tight inventory management as they
continued to be cautious with regards to
replenishment.
In December 2022, China moved away from its zero-
COVID-19 policy after an extended period of lockdowns.
This led to a surge in COVID-19 cases, which created
major uncertainty in many parts of the country and
continues to impact consumer behaviour. These
circumstances had a greater than expected impact on
the company’s performance in the quarter and are still
having an adverse effect on consumer behaviour.
Despite the situation in China, our Lunar New Year
Collection was well received in the market, and we
executed strong influencer and SoMe activations as well
as WeChat campaigns with brand and product
endorsements. These marketing activities not only
helped drive awareness, traffic and sales, they also built
a stronger connection between our brand and a younger
group of target customers.
Positive customer base development
We continued our dedicated efforts to increase brand
awareness, onboard new customers and increase
average Bang & Olufsen product ownership. We grew
our customer base by 5% during the quarter while
delivering a slight increase of 3% in the number of
customers owning two or more Bang & Olufsen
products. We also grew our newsletter subscription
base by 6%.
Altogether, these customer-oriented metrics validate
our ability to create brand and product desirability.
Our sharpened strategic direction guided
critical priorities and achievements in the
quarter
In Q2, we launched a sharpened strategic direction. A
direction that echoes the best of our past while pointing
us towards an exciting future.
The direction is outlined by five key strategic shifts to
support our proposition of Luxury Timeless Technology
and enable us to differentiate ourselves further,
prioritise investments and drive growth.
1. Reigniting our brand to become a culturally
relevant luxury love brand
2. Building a seamlessly connected product portfolio,
bridging our past, present and future
3. Creating magical moments in connected touch
points
4. Winning in key, global cities
5. Exploring existing and new adjacent opportunities
In Q3, we reached important strategic milestones
within three of these five desired shifts.
Reigniting our brand to become a culturally
relevant luxury love brand
Particularly two customer segments are important to
our future, Gen Z / Young Millennial and VHNWI. We
want to become culturally relevant, and to work with
relevant brand ambassadors, partnerships and
sponsorships to reach and get exposure within these
segments.
Progress on key strategic priorities for 2022/23
Page — 10
Management’s review
Interim report 9M 2022/23
Q3 saw the announcement of a new partnership with
Scuderia Ferrari for the 2023 Formula 1 season. Ferrari
and Bang & Olufsen share a passion for state-of-the-art
design, technology and performance, as well as fan base
similarities. Formula 1 has 445m viewers a year.
(Source: Nielsen data, 2021 F1 viewers.)
The new partnership attracted immense interest from
its early launch. Extensive media coverage brought
about a combined publications audience of 2.41bn, and
our social platforms saw high levels of interaction and
boosted brand followers. The partnership is expected to
bring much more than brand reach and awareness.
Events and activations throughout the Formula 1
season will enable interaction and engagement with
VHNWI customers and bring Bang & Olufsen product
experiences to Formula 1 and Ferrari fans globally.
Building a seamlessly connected product portfolio,
bridging our past, present and future
To cement our position in luxury, we want to continue
and accelerate the creation of desirability for our
products. Acknowledging that our target segments have
an affinity for product customisations, Q3 saw the first
launch of a B&O Atelier limited edition, a made-to-
order collection of the award-winning EX true wireless
earphones.
B&O Atelier is our studio in Struer which truly leverages
our unparalleled craftsmanship capabilities and
specialises in bespoke creations. Our first Atelier
Edition is made-to-order only, truly personal and
created inhouse by our team of experts.
Apart from meeting customer demand for
customisation and creating product desirability, our
Atelier Editions are further intended to reinforce our
brand heritage, drive brand interest and create
exclusivity and collectability in our offerings.
In the first hours following the announcement, 1,500
customers signed up to buy the first Atelier Edition EX,
and we experienced a peak in the number of newsletter
subscribers post launch. When the collection became
available for sale, all units sold out in less than two
hours.
More editions will launch throughout 2023 in a variety
of unique colours, and B&O Atelier will work with other
elements of bespoke, customised offerings.
In March we introduced our iconic speaker Beosound
A9, 5
th
Generation on our Mozart platform. The heart of
Bang & Olufsen’s Mozart platform is the replaceable
module, frontloaded with enough processing power to
receive software updates and features for many years to
come. If the connectivity and streaming technology
ever becomes obsolete, the module can be replaced
with the latest version – providing great sound
experiences for years to come.
Winning in key, global cities
Through our Win London project, we have developed
and validated a go-to-market approach that is scalable
to other relevant cities of focus. Our Win London
project has been in execution for some time, while Win
Paris has gradually gone into execution and Win New
York is in the planning phase and expected to go into
execution in Q4.
Win London activations for the quarter included Gen Z
influencer events and brand collaborations yielding a
reach of 1.2 million people. The activations also zoomed
in on the topic of longevity and featured hosting of
longevity workshops and several other initiatives. The
efforts for the quarter paid off, delivering solid sell-out
growth of 75% for our company owned stores in London
specifically and sell-out growth of 14% for the UK
overall.
Win Paris activations kicked off in the quarter. A
cornerstone activation was the first edition of “Écoutes
en Scène”, which is a planned series of listening events
powered by our flagship product, Beolab 90, dedicated
to the discovery of album releases and reeditions with
renowned artists, on the main stage of historic concert
hall Salle Pleyel, in the 8
th
arrrondissement of Paris.
Tickets for the first event sold out in less than two
minutes. The event enjoyed participation from around
200 guests, a large proportion of whom were VIP guests,
and we made extensive use of media coverage to boost
awareness and interest in our brand and in the
forthcoming “Écoutes en Scène” events.
Additionally, we hosted a private DJ Master Class at Le
Bon Marché with 40 invited VIP customers. We also co-
hosted a pop-up event over five days with participation
by a curated audience of Parisian target customers,
journalists and influencers.
Our targeted Q3 Win Paris activation yielded positive
results, with sell-out growth reaching 12% for our
company owned stores compared to flat overall sell-out
in France for the quarter.
We also executed a number of sub-elements of our five
strategic shifts during the quarter, and we will continue
to execute for the remainder of the fiscal year, while
also sharpening our desired goals and critical
milestones ahead.
Page — 11
Management’s review
Interim report 9M 2022/23
Like-for-like sell-out
Sell-out declined by 2%. Company owned stores
delivered solid growth of 53% with positive growth in
all markets, while the remaining channels were below
last year. The development in monobrand varied
significantly across countries. The northern European
countries generally experienced lower demand,
whereas the southern European countries saw a
positive sell-out trend. Combined sell-out in the six core
markets declined 2%.
The overall sell-out decline was mainly related to
Flexible Living but also On-the-go products while
Staged experienced sell-out growth.
Revenue
Revenue was DKK 333m (Q3 21/22: DKK 361m). This was
equivalent to a decrease of 7.8% (-7% in local
currencies). In February 2022, we stopped all sales to
Russia and Belarus following the invasion of Ukraine.
Excluding sales to Russia and Belarus last year, revenue
decreased by 4% in local currencies.
The ongoing war in Ukraine, high Inflation and rising
interest rates continued to impact our overall
performance for the quarter.
The development in revenue was mainly driven by
monobrand partners who continued to remain cautious
and therefore held off replenishing inventories. The
decline from monobrand was partly offset by growth in
multibrand and company owned stores.
The market conditions mostly impacted our Flexible
living category and to a lesser extent our On-the-go and
Staged categories.
Total revenue from our Staged category declined by 7%.
The launch of Beosound Theatre could not fully offset
the decline, yet Beosound Theatre continued to see
good sell-out performance. The remaining products in
this category experienced lower revenue, which was
partly offset by higher selling prices.
Revenue from the Flexible Living category declined by
16%. We experienced a general decline in the volume
sold, which was partly mitigated by the relaunch of
Beosound Emerge and higher selling prices.
Revenue from the On-the-go category declined by 6%.
The main reason for the decline was Bluetooth
speakers, whereas both headphones and earphones
grew. We continued to see strong performance by
Beoplay EX in the earphone category.
Gross profit
Gross profit amounted to DKK 120m (Q3 21/22:
DKK 150m). This was equivalent to a gross margin of
35.9% (Q3 21/22: 41.8%).
The decline was mainly related to On-the-go and the
remaining efforts to reduce inventory on products with
shorter lifecycles. In addition, the fixed-costs-to-
revenue ratio within this category eroded the margin.
9M 2022/23
Revenue was DKK 972m (9M 21/22: DKK 1,030m). This
represented a decline of 5.6% (-6% in local currencies).
The decline was primarily driven by the Staged and
Flexible Living categories, while On-the-go grew.
Gross margin decreased by 7.1pp to 34.4%, primarily
driven by product mix and sale of On-the-go products
as part of our efforts to reduce inventories with shorter
lifecycles.
EMEA
Q3 revenue split (%)
60%
59%
17%
18%
23%
23%
22/23 21/22
Staged Flexible Living On-the-go
Q3
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
333 361 -28 972 1.030 -58
Growth in local currencies
-7%
-2%
-6%
11%
Gross profit
120 150 -30 335 427 -92
Gross margin
35.9%
41.8%
-5.9%
34.4%
41.5%
-7.1%
Page — 12
Management’s review
Interim report 9M 2022/23
Like-for-like sell-out
Sell-out increased by 3%. The growth was mainly driven
by monobrand and etail. The main contribution to the
sell-out growth in the monobrand channel came from
the high-end products in the Staged category coupled
with new products like Beosound Theatre and Beoplay
EX.
Etail showed solid growth of 49% in the quarter, driven
by successful campaigns, with the On-the-go category
as the main contributor.
Revenue
Revenue was DKK 73m (Q3 21/22: DKK 71m), equivalent
to an increase of 3.0% (-8% in local currencies).
The ramp-up of our expanded partnership with Origin
Acoustics on custom installations (CI) contributed to
the growth.
The etail channel also delivered solid growth, both
within Flexible Living and On-the-go.
The monobrand channel declined overall, driven by the
Staged category, and primarily related to Beolab
speakers offset by Beosound Theatre. On-the-go grew,
supported by both headphones and earphones.
The multibrand channel declined, mainly due to lower
activity within On-the-go and inventory depletion of
headsets in the previous quarter.
Revenue from our eCommerce channel declined
slightly, but we saw growth within A9 and our premium
headphone, H95.
Revenue from the Staged category grew by 2%. Our TV
category grew by 66%, driven by the launch of
Beosound Theatre, whereas Beolab speakers declined
due to Beolab 50 and Beolab 90.
Revenue from the Flexible Living category was up 15%
compared to last year. We saw good revenue growth
across the portfolio, including from the relaunch of
Beosound Emerge. The growth was supported by price
increases implemented since Q2 of last year, which
offset volume declines on some products.
Revenue from On-the-go declined by 4% compared to
last year. The decline was driven by Bluetooth speakers,
with campaign activities driving revenue last year.
Headphones and earphones delivered solid growth. In
the earphone category in particular, growth was driven
by the strong performance of Beoplay EX.
Gross profit
Gross profit amounted to DKK 22m (Q3 21/22:
DKK 30m). This was equivalent to a gross margin of
29.9% (Q3 21/22: 40.9%).
The decrease was related to lower margins across all
categories.
9M 2022/23
Revenue was DKK 242m (9M 21/22: DKK 222m),
equivalent to a year-on-year increase of 9.1% (-3% in
local currencies). We saw positive performance from
the Staged category and Flexible Living showed good
growth in the period, while On-the-go declined.
Gross margin decreased by 6.4pp to 28.1%, driven by
lower margins within On the-go. Overall, both product
mix and Staged and Flexible Living margins have
improved.
Americas
Q3 revenue split (%)
33%
34%
25%
23%
42%
43%
22/23 21/22
Staged Flexible Living On-the-go
Q3
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
73 71 2 242 222 20
Growth in local currencies
-8%
32%
-3%
67%
Gross profit
22 30 -8 68 77 -9
Gross margin
29.9%
40.9%
-10.9%
28.1%
34.5%
-6.4%
Page — 13
Management’s review
Interim report 9M 2022/23
Like-for-like sell-out
Sell-out declined by 13%, mainly related to mainland
China due to change in COVID-19 policy and the
resulting impact on consumer confidence. Lower
consumer confidence also affected other markets in the
region, whereas Japan delivered solid growth rates.
Sell-out in China declined by 19% and was affected
across channels. The lifting of COVID-19 restrictions in
December resulted in uncertainty in large parts of the
country being due to a surge in COVID-19 cases. The
Chinese market saw early signs of improvement during
February.
Due to the prolonged lockdown conditions, some
companies are cash-strapped and some retail partners
have built up excessive inventory, which impacts our
business.
Revenue
Revenue was DKK 145m (Q3 21/22: DKK 270m),
corresponding to a -46.4% decline (-50% in local
currencies).
Revenue from our two core Asian markets declined by
59% in local currencies and accounted for
approximately 62% 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
lockdown conditions in China.
Revenue from the Staged category declined by 34.4%.
The decline was within speakers and to a lesser extent
TVs, driven by a positive impact from the launch of
Beosound Theatre.
The Flexible Living category declined by 66%, mainly
attributed to last year, when some products
experienced very high growth. We saw positive
contributions from the relaunch of Beosound Emerge.
The On-the-go category declined by 35.1%, driven by
both Bluetooth speakers and earphones. By contrast,
Beoplay EX made a positive contribution in the quarter.
Gross profit
Gross profit amounted to DKK 63m (Q3 21/22:
DKK 91m), equivalent to a gross margin of 43.1% (Q3
21/22: 33.7%).
The increase was driven by improved margins within
all categories. The margins were also supported by price
increases earlier in the year.
9M 2022/23
Revenue was DKK 611m (9M 21/22: DKK 798m),
equivalent to a year-on-year decrease of 23.5% (-14% in
local currencies). The decline was seen across all
categories, with Flexible Living showing the biggest
decline.
At 38.3%, gross margin was slightly better than last
year. Overall, product categories improved, supported
by price increases but offset by lower revenue and
fixed-costs-to-revenue ratios.
Asia
Q3 revenue split (%)
39%
32%
23%
37%
38%
31%
22/23 21/22
Staged Flexible Living On-the-go
Q3
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
145
270
-125
611
798
-187
Growth in local currencies
-50% 22% -26% 29%
Gross profit
63 91 -28 234 302 -68
Gross margin
43.1% 33.7% 9.4% 38.3% 37.8% 0.5%
Page — 14
Management’s review
Interim report 9M 2022/23
Revenue
Revenue was DKK 84m (Q3 21/22: DKK 73m),
corresponding to a 15.3% increase (11% in local
currencies). The reported growth benefited from
currency tailwind.
Licence fee revenue grew by 9%. The growth was
mainly driven by the automotive industry, which was
supported by a solid order backlog and easing of supply
chains for car components. Licensing income
accounted for 72% of total revenue in Brand Partnering
& other activities.
Revenue from co-branded products provided a
significantly larger part of growth than last year, mainly
related to the ramp-up of the Bang & Olufsen Cisco 980
earphones. Revenue related to aluminium production
for third parties also increased significantly compared
to last year, largely due to the partnership with
Harman.
Gross profit
Gross profit amounted to DKK 72m (Q3 21/22:
DKK 70m), equivalent to a gross margin of 86.8% (Q3
21/22: 95.6%).
The decline in gross margin was related to the change
in mix, as the category now includes a larger proportion
of product revenue from our brand collaboration.
9M 2022/23
Revenue was DKK 281m (9M 21/22: DKK 200m),
equivalent to a year-on-year increase of 40.6%
(33% in local currencies). The increase came
mainly from our Cisco partnership and the
automotive industry.
Gross margin decreased by 9.2pp to 87.3%, driven
by the above-mentioned change in mix.
Brand Partnering
& other activities
Q3
YTD
(DKK million)
2022/23
2021/22
Change
2022/23
2021/22
Change
Revenue
84 73 11 281 200 81
Growth in local currencies
11%
9%
33%
-2%
Gross profit
72 70 2 246 193 53
Gross margin
86.8%
95.6%
-8.8%
87.3%
96.5%
-9.1%
Page — 15
Management’s review
Interim report 9M 2022/23
Key events in Q3
We continued to
expand our
partnership with
Origin Acoustics
We have expanded our partnership with
Origin Acoustics and together we will
create a broader network of Bang &
Olufsen integration
-centric resellers
across America.
By the end of Q3, we
had recruited more than 50 custom
installation (CI) partners across th
e US.
Bang & Olufsen has a long track record
in the CI market, including years of
successful collaboration with Origin
Acoustics.
Origin Acoustics will be responsible for
bringing the full line of Bang & Olufsen
products to a wider audience in the
North
American market.
Positive reviews of
Beosound Theatre
“Bang & Olufsen has no problem dispatching even the
most significant dynamic shifts without breaking audible
sweat
.” T3
“Let’s cut to the case: the Beosound Theatre is problably
the most dynamic s
ound I’ve ever heard. The speed of its
transient response, the depth of its bass, is something
else
.” TrustedReviews
“It’s a better
-balanced and more assertive listen than
any soundbar you’ve ever heard; It’s a visual delight and
a conversation
-piece.” Stuff
“
the Beosound Theatre is undoubtedly the most potent
sound system we have tested yet.
” Flatpanels
Pop
-up store in
Copenhagen
As part of our Longevity proposition, a
refurbishment pop
-up store in
Copenhagen was open in January and
February, offering customers the
opportunity to bring in their classic
B&O products to give them a new lease
of life. The store service technicians
wel
comed all products, with a special
focus on the iconic Beogram turntables
–
bridging our past, present and future.
Bang & Olufsen launched limited-edition
collection celebrating the Lunar New Year
Celebrating the Lunar New Year 2023 in January 2023, we
launched a limited collection
inspired by the classic colours and elements of the ancient Silk Road in China.
The collection includes five iconic Bang & Olufsen products: the Beoplay A9 home speaker,
the Beolit 20 Bluetooth speaker, the Beosound A1 port
able speaker, Beoplay H95
headphones, and Beoplay EX true wireless active noise
-cancelling earphones.
,
Page — 16
Management’s review
Interim report 9M 2022/23
MS Teams
certification of
Beocom Portal
Last quarter, we launched our Beocom
Portal to expand our enterprise
proposition with a dedicated headset for
the growing number of hybrid workers.
In February, Beocom Portal received MS
Teams certification becoming our first
Microsoft Teams certified device. It is
optimi
sed for use with Microsoft Teams,
a popular video conferencing and
collaboration platform used by
businesses and organi
sations worldwide.
Available for sale from March with
both
Microsoft Teams and Zoom certification
,
Beocom Portal is
fit for best-in-class
hybrid work expe
rience and made
specifically to cater to the needs of
professiona
ls who want premium audio
and design that is equally suitable for
work as for leisure and sports.
Introducing Beoplay EX
Atelier Editions
– colour
drops
In Q3
, we announced a made-to-order collection of the
award
-winning Beoplay EX true wireless earphones.
Starting with the shade Lime Green, this colour is the first
drop in Atelier Editions
– a new initiative from Bang &
Olufsen’s studio in Struer, Denmark, which specialises in
bespoke crea
tions.
The Lime Green edition was introduced in February and
all units sold out in less than two hours.
Different Beoplay EX Atelier Editions will launch
throughout 2023, showcasing the impressive
customisation capabilities that are unique to Bang &
Oluf
sen. Each colour will be completely unique to that
drop
– reflecting unique moments, tastes, and styles.
New partnership with
Scuderia Ferrari
We have entered into
a partnership with Scuderia
Ferrari for the 2023 Formula 1 season.
In addition to Bang & Olufsen’s logo featuring on the
cars driven by Charles Leclerc and Carlos Sainz, Bang
& Olufsen will work closely with Scuderia Ferrari to
create best
-in-class Formula 1 fan experiences. These
will take place at Scuderia Ferrari’s facilities trackside
at the Formula 1 Grand Prix races as well as globally
across Bang & Olufsen branded stores.
To fuel the magical moments trackside, we will install its
high
-end products such as the company’s most
advanced,
powerful, and best-sounding Beolab
loudspeakers as well as the immersive TV experiences
that we are widely renowned for.
In Bang & Olufsen stores worldwide, customers can
look forward to a series of immersive events t
hat
celebrate the love of speed and music.
Page — 17
Management’s review
Interim report 9M 2022/23
On 17 March 2023, we adjusted our
outlook for the full financial year.
The adjusted outlook is a result of
lower-than-expected sales in China.
In December 2022, China moved
away from its zero-COVID-19 policy
after an extended period of
lockdowns. This led to a surge in
COVID-19 cases, which created major
uncertainty in many parts of the
country.
These circumstances had a greater
impact on the company’s performance
in Q3 than expected and are still
having an adverse effect on consumer
behaviour.
The outlook remains subject to unusually high
uncertainty due to high inflation, rising interest rates
and the war in Ukraine, which, in combination, have
increased the risk of recession.
We will continue investments related to product and
retail development, as well as marketing and product
development.
Further, 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
-9% to -3% from previously at the lower end of -4% to
5%.
EBIT margin before special items
• EBIT margin before special items is expected to be
-4% to -1% from previously at the lower end of -2% to
3%.
Free cash flow
• Free cash flow is expected to be DKK -100m to 0m
from previously at the lower end of DKK -50m to
100m.
The expectations are subject to the following
assumptions:
• Improved market conditions in China during Q4, yet
a slower pace than initially expected.
• Launch of three or more product innovations in Q4.
• No impact on product availability due to geopolitical
changes or COVID-19 related lockdowns.
• No major COVID-19 related lockdowns in the
remainder of the year.
• Exchange rates against DKK, including in particular
USD, CNY and EUR, in line with current exchange
rate levels, overall.
• Pressure on sourcing components through spot buys
is expected to decline.
• Improved inventories.
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 adjusted
OUTLOOK 2022/23
March 2023
October 2022
Revenue growth in local currencies (%)
-9 to -3 -4 to 5
EBIT margin before special items (%)
-4 to -1 -2 to 3
Free cash flow (DKKm)
-100 to 0 -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 — 18
Consolidated financial statements
Interim report 9M 2022/23
0Condensed income statement
Q3
YTD
Year
(DKK million)
Notes
2022/23
2021/22
2022/23
2021/22
2021/22
Revenue
2, 4 635 775 2,106 2,250 2,948
Production costs
-358
-434
-1,223
-1,251
-1,612
Gross profit
Development costs
5 -86 -70 -236 -215 -279
Distribution and marketing costs
-216
-236
-676
-650
-875
Administrative expenses
-33 -34 -101 -99 -136
Operating profit/loss (EBIT)
-58 1 -130 35 46
Financial income
Financial expenses
-5 -21 -42 -41 -65
Financial items, net
Profit/loss before tax (EBT)
-55 -17 -156 2 -8
Income tax
Profit/loss for the period
-55 -16 -152 -5 -30
Earnings per share
Earnings per share (EPS), DKK
-0.5 -0.1 -1.2 -0.0 -0.2
Diluted earnings per share (EPS-D), DKK
-0.5
-0.1
-1.2
-0.0
-0.2
Page — 19
Consolidated financial statements
Interim report 9M 2022/23
1BCondensed statement of comprehensive income
Q3
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Profit/loss for the period
-55 -16 -152 -5 -30
Items that will be reclassified subsequently to the income statement:
Foreign exchange adjustments of foreign entities
-1 7 -8 20 16
Fair value adjustments of derivatives
-7
-8
-2
-22
-13
Value adjustments of derivatives reclassified in
Revenue
Production costs
-3 -2 -14 -3 -6
Tax on other comprehensive income/loss
-1
-1
Other comprehensive income/loss for the period, net of tax
-4 5 -5 15 21
Total comprehensive income/loss for the period
-59 -11 -157 10 -9
Page — 20
Consolidated financial statements
Interim report 9M 2022/23
ASSETS
(DKK million)
Notes
28-02-23
28-02-22
31-05-22
Goodwill
Acquired rights and software
Completed development projects
Development projects in progress
5 86 96 138
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
8 396 426 415
Cash
8 212 225 162
Total current assets
Total assets
EQUITY AND LIABILITIES
(DKK million)
Notes
28-02-23
28-02-22
31-05-22
Share capital
Translation reserve
Cash flow hedge reserve
-2 -15 -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
8 400 140 276
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 9M 2022/23
Q3
YTD
Year
(DKK million)
Notes
2022/23
2021/22
2022/23
2021/22
2021/22
Profit/loss before tax (EBT)
-55
-17
-156
-8
Financial items, net
-3 18 26 33 54
Depreciation, amortisation and impairment
Operating profit/loss before depreciation,
amortisation and impairment (EBITDA)
Other non-cash items
-5
Change in net working capital
6 66 30 66 0 -148
Interest received
Interest paid
-12 -8 -29 -21 -28
Income tax received/paid
-3
-11
-25
-33
Cash flows from operating activities
Purchase of intangible non-current assets
-32
-49
-114
-107
-181
Purchase of tangible non-current assets
-11 -27 -40 -49 -68
Sublease payment
Other cash flows from investing activities
Operational investments
-41 -75 -147 -155 -248
Free cash flow
Purchase of securities
Sale of securities
Financial investments
Cash flows from investing activities
-37 -75 -136 -151 -239
Q3
YTD
Year
(DKK million)
Notes
2022/23
2021/22
2022/23
2021/22
2021/22
Repayment of lease liabilities
-9 -9 -30 -24 -36
Repayment of mortgage loans
-1 -1 -3 -3 -4
Proceeds from loans and borrowings
-3 125 124 335 712
Repayment of loans and borrowings
-95
-
-215
-456
Purchase of treasury shares
- - - -37 -37
Settlement of matching share programme
-2 - -3 - -
Settlement to other liabilities
- - - -34 -34
Cash flows from financing activities
-15 20 88 22 145
Cash and cash equivalents, opening balance
Foreign exchange gain/loss on cash and cash
equivalents
-2
Change in cash and cash equivalents
Cash and cash equivalents, closing balance
Available liquidity
8 208 511 208 511 301
Condensed statement of cash flows
Page — 22
Consolidated financial statements
Interim report 9M 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
-8
-8
Fair value adjustments of derivatives
Value adjustments of derivatives reclassified in
Revenue
Production costs
-14
-14
Income tax on items that will be reclassified to the income statement
Comprehensive income/loss for the period
Share-based payments
Equity 28 February 2023
Equity 1 June 2021
Profit/loss for the period
-5
-5
Foreign exchange adjustments of foreign entities
Fair value adjustments of derivatives
-22
-22
Value adjustments of derivatives 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
Acquisition of own shares
Equity 28 February 2022
Page — 23
Consolidated financial statements
Interim report 9M 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 declining consumer confidence, increased risk of recession, increasing
inflation, rising interest rates, the war in Ukraine, and geopolitical uncertainty and risks 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 not impaired any assets. Further, we have not capitalized the tax value of the loss
for the period within 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 regional COVID-19 related lockdowns and effects related
to the current high macroeconomic uncertainty described above.
Notes
Page — 24
Consolidated financial statements
Interim report 9M 2022/23
4 Segment information – Q3
(DKK million)
EMEA
Americas
Asia
Regions, total
Brand Partnering
& other activities
All
Q3 2022/23
Revenue
333 73 145 551 84 635
Production costs
-213
-51
-82
-346
-12
-358
Gross profit
120 22 63 205 72 277
Gross margin
35.9%
29.9%
43.1%
37.0%
86.8%
43.6%
Q3 2021/22
Revenue
361 71 270 702 73 775
Production costs
-211
-41
-179
-431
-3
-434
Gross profit
150 30 91 271 70 341
Gross margin
41.8%
40.9%
33.7%
38.7%
95.6%
44.0%
(
DKK million) Staged Flexible Living On-the-go Products, total
Brand Partnering
& other activities All
Q3 2022/23
Revenue
281 108 162
551
84
635
Production costs
-156 -56 -134 -346 -12 -358
Gross profit
125 52 28
205
72
277
Gross margin
44.9% 47.4% 16.8% 37.0% 86.8% 43.6%
Q3 2021/22
Revenue
323 183 196
702
73
775
Production costs
-183 -98 -150 -431 -3 -434
Gross profit
140 85 46
271
70
341
Gross margin
43.2% 46.9% 23.9% 38.7% 95.6% 44.0%
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 9M 2022/23
Segment information – YTD
(DKK million)
EMEA
Americas
Asia
Regions, total
Brand Partnering
& other activities
All
2022/23
Revenue
972 242 611 1,825 281 2,106
Production costs
-637
-174
-377
-1,188
-35
-1,223
Gross profit
335 68 234 637 246 883
Gross margin
34.4%
28.1%
38.3%
34.9%
87.3%
41.9%
2021/22
Revenue
1,030 222 798 2,050 200 2,250
Production costs
-603
-145
-496
-1,244
-7
-1,251
Gross profit
427 77 302 806 193 999
Gross margin
41.5%
34.5%
37.8%
39.3%
96.5%
44.4%
(
DKK million) Staged Flexible Living On-the-go Products, total
Brand Partnering
& other activities
All
2022/23
Revenue
826 376 623
1,825
281
2,106
Production costs
-460 -200 -528 -1,188 -35 -1,223
Gross profit
366 176 95
637
246
883
Gross margin
44.4% 46.9% 15.2% 34.9% 87.3% 41.9%
2021/22
Revenue
915 524 611
2,050
200
2,250
Production costs
-503 -281 -460 -1,244 -7 -1,251
Gross profit
412 243 151
806
193
999
Gross margin
45.0% 46.4% 24.8% 39.3% 96.5% 44.4%
Gross profit is a segment KPI. There are no unallocated elements, and total gross profit reconciles to the income statement.
Page — 26
Consolidated financial statements
Interim report 9M 2022/23
5 Development costs
Q3
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Incurred development costs before capitalisation
78 80 239 226 328
Of which capitalised
-19
-31
-79
-77
-138
Incurred development costs after capitalisation
59
49
160
148
190
Capitalisation (%)
24.6% 39.4% 33.0% 34.3% 42.0%
Total charges and impairment losses on development projects
27
21
76
67
89
Development costs recognised in the consolidated income statement
86 70 236 215 279
Incurred development costs before capitalisation ratio (% of revenue)
12.3%
10.3%
11.3%
10.0%
11.1%
6 Change in net working capital
Change in
Change in
Change in
(DKK million)
28/02/23
31/05/22
Q3 2022/23 YTD
Q3 2021/22 YTD
2021/22
Inventories
499
629
130
-178
-260
Trade receivables
327 397 70 -24 41
Other receivables*
68
88
20
10
2
Prepayments
24 28 4 1 4
Trade payables
-506
-581
-75
200
79
Other liabilities
-140 -212 -72 -9 -13
Deferred income - non-current
-3
-14
-11
0
-1
Total
269 335 66 0 -148
* Other receivables were adjusted for financial receivables related to leases of DKK 2m not included as net working capital at 28 February 2023 (31 May 2022: DKK 1m).
The decrease in other liabilities primarily related to provisions for employee bonus.
Page — 27
Consolidated financial statements
Interim report 9M 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 organisational changes.
In Q3, 35 employees were laid off as part of a reorganisation.
Q3
YTD
Year
(DKK million)
2022/23
2021/22
2022/23
2021/22
2021/22
Severance and garden leave, Executive Management Board
-1 4 - 4 4
Restructuring costs and severance
16
1
16
1
2
Consultants
- - - 2 2
Total
15 5 16 7 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, 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 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
28 February 2023, repo transactions amounted to DKK 400m.
During the quarter, the net interest-bearing deposit increased by DKK 32m to DKK 36m compared to DKK 111m at
year-end 2021/22. Available liquidity amounted to DKK 208m (year-end 2021/22: DKK 301m).
(DKK million)
28-02-23
28-02-22
31-05-22
Mortgage loans (non-current)
-56 -59 -58
Mortgage loans (current)
-4 -4 -4
Bank loans (current)
-400
-140
-276
Lease liabilities (non-current)
-83 -102 -95
Lease liabilities (current)
-30 -28 -39
Other non-current liabilities*
-3 -6 -
Interest-bearing debt
-577 -339 -472
Finance lease receivables (non-current)
3 4 4
Finance lease receivables (current)
2 2 2
Cash (current)
212 225 162
Securities (current)
396
426
415
Interest-bearing assets
613 657 583
Net interest-bearing deposit/(debt)
36 318 111
* 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 increased by DKK 21m to DKK 208m (30 November 2022: DKK 187m),
consisting of cash and securities offset by repo transactions. As of 31 May 2022, net available cash was DKK 301m.
(DKK million)
28-02-23
28-02-22
31-05-22
Cash (current)
212 225 162
Securities (current)
396
426
415
Bank loans (current)
-400 -140 -276
Available liquidity
208 511 301
Including the undrawn part of our ESG-linked credit facility, capital resources were DKK 328m (year-end 2021/22:
DKK 433m), consisting of available liquidity of DKK 208m and undrawn committed credit facilities of DKK 120m.
7 Special items
Page — 28
Consolidated financial statements
Interim report 9M 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.
The 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 4m for the quarter
(Q3 2021/22: DKK 3m) and DKK 15m YTD (9M 21/22: DKK 13m).
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
Number
Number
DKK
Months
2020/21
01.06.2020-
31.05.2023
3,091,511
22
2022/23
12.93
6
2021/22
01.06.2021-
31.05.2024
2,218,064 37 2023/24 33.11 18
2022/23
01.06.2022-
31.05.2025
2,582,108
38
2024/25
14.28
30
Page — 29
Consolidated financial statements
Interim report 9M 2022/23
Financial instruments by category
(DKK million)
28-02-23
28-02-22
31-05-22
Non-current other receivables
22 24 27
Trade receivables
327 462 397
Other receivables
70
82
89
Cash
212 225 162
Financial assets at amortised cost
631 793 675
Securities
396 426 415
Fair value through income statement
396 426 415
Derivatives used for hedge accounting
3 6 9
Fair value through other comprehensive income
3 6 9
Financial assets
1,030 1,225 1,099
Mortgage loans
60 63 62
Bank loans
400 140 276
Lease liabilities
114 130 134
Trade payables
506 702 581
Financial liabilities at amortised cost
1,080 1,035 1,053
Derivatives used for hedge accounting
8
29
18
Fair value through other comprehensive income
8 29 18
Financial liabilities
1,088 1,064 1,071
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 2021/22 Annual Report for an overview of foreign exchange contracts.
11 Financial instruments
Page — 30
Consolidated financial statements
Interim report 9M 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 328m (year-end 2021/22: DKK 433m), consisting of available liquidity of DKK 208m
and the undrawn part of our ESG-linked credit facility of DKK 120m.
The company holds a total of 2,983,739 treasury shares (30 November 2022: 3,122,870 shares) to cover outstanding
long-term incentive programmes.
For details of monetary transactions, see the statement of changes in equity.
Except as described 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 — 31
Consolidated financial statements
Interim report 9M 2022/23
Management's statement
Executive Management Board:
Board of Directors:
Page — 32
Consolidated financial statements
Interim report 9M 2022/23