BANG & OLUFSEN A/S GROUP

Company announcement no. 16.21 - 7 April 2017

INTERIM REPORT 3RD QUARTER 2016/17

1 JUNE 2016 -

28 FEBRUARY 2017

Bang & Olufsen a/s Peter Bangs Vej 15 DK-7600 Struer

Tel. +45 9684 1122

www.bang-olufsen.com Comreg: 41257911

Q3 HIGHLIGHTS

"In the third quarter of 2016/17, Group revenue increased 12 per cent leading to an improved profitability. B&O PLAY showed strong growth momentum, and grew by 53 per cent driven by new product launches and continued expansion of the retail network. Revenue in the Bang & Olufsen segment declined by 6 per cent, negatively impacted by TV sales. Overall, we remain on track to deliver the guidance for the full year, supported by a strong product portfolio, which is expected to continue to drive revenue growth and improve profitability," says CEO Henrik Clausen.

Key financial highlights Q3

(DKK million)

Q3 2016/17

Q3 2015/16*

Change %

YTD 2016/17

YTD 2015/16*

Change %

Revenue

786

703

12

2,169

1,937

12

Bang & Olufsen

464

492

(6)

1,246

1,238

1

B&O PLAY

322

211

53

922

699

32

Gross margin, %

42.6

38.0

4.6

39.9

36.9

3.0

Bang & Olufsen, %

44.8

40.0

4.8

42.5

40.0

2.5

B&O PLAY, %

39.4

33.5

5.9

36.4

31.5

4.9

Capacity costs

317

247

28.1

908

794

14.4

EBITDAC

63

45

66

(10)

EBIT

18

22

(34)

(75)

Free cash flow

97

(63)

196

(169)

* 2015/16 has been adjusted for non-recurring and aperiodic items and costs previously allocated to the Automotive business. 2015/16 included DKK 17 million in the third quarter and DKK 56 million year-to-date.

Third quarter 2016/17

  • In line with our expectations, the Group realised a revenue growth of 12 per cent. The B&O PLAY revenue increased by 53 per cent, whereas the

    Bang & Olufsen segment revenue declined by 6 per cent.

  • The Group gross margin increased to 42.6 per cent from 38.0 per cent last year, primarily due to im- proved gross margins in B&O PLAY, improved prod- uct profitability in the Bang & Olufsen segment and a positive impact from increased income in brand partnerships in the Bang & Olufsen segment.

  • Capacity costs increased by 28.1 per cent compared to last year. Excluding the effect from higher depre- ciations on development projects, capacity costs increased by 18.5 per cent, mainly driven by higher distribution and marketing costs.

  • EBITDAC was DKK 63 million against DKK 45 million last year, as the growth momentum driving gross profit exceeded the cost increase.

  • Free cash flow was DKK 97 million against negative DKK 63 million last year. The improvement was pri- marily driven by a positive EBITDAC and a positive net working capital development with a significant reduction of trade receivables.

    Year-to-date 2016/17

  • The Group's total revenue for the first three quarters of 2016/17 was DKK 2,169 million, resulting in an in- crease of 12 per cent (14 per cent in local currency). The increase was driven by 32 per cent growth in B&O PLAY (35 per cent in local currency) and 1 per cent growth in the Bang & Olufsen segment com- pared to last year (3 per cent in local currency). EBITDAC for the first three quarters of 2016/17 was DKK 66 million, an improvement of DKK 76 million compared to last year. Free cash flow in the first three quarters of 2016/17 was improved by DKK 365 million, realising DKK 196 million against negative DKK 169 million last year.

  • The outlook for 2016/17 remains unchanged. Rev- enue for the Group is expected to grow by 10-15 per cent compared to 2015/16, driven by 25-30 per cent growth in B&O PLAY and low single-digit growth in the Bang & Olufsen segment. The EBITDAC margin

    for the underlying business is expected to improve for the full year compared to 2015/16. The EBIT- DAC margin is expected to be in the range of 2-3 per cent, excluding the impact from the sale of the Czech assembly subsidiary.

  • On 13 March 2017, Bang & Olufsen announced that the company has entered into a share purchase agreement with its long-term partner Tymphany Acoustic Technology HK Limited for the sale of

all the shares in Bang & Olufsen's Czech assembly subsidiary, Bang & Olufsen s.r.o. (company an- nouncement no. 16.16). The divesture of the as- sembly facility expands Bang & Olufsen and Tym- phany's successful partnership model and supports Bang & Olufsen's strategy to focus on the core capa- bilities with an agile and asset light business model. The cash flow impact to Bang & Olufsen is DKK 123 million and the accounting gain is expected to be DKK 33 million, which is expected to be recognised in the fourth quarter of 2016/17. In the short term, no additional impact is expected from the transaction.

Any enquiries about this announcement can be addressed to:

Investor contact, Claus Højmark Jensen, tel.: +45 2325 1067

Press contact, Morten Juhl Madsen, tel.: +45 4030 8986

A webcast will be hosted on 7 April 2017 at 10:00 CET. Access to the webcast is obtained through our website www.bang-olufsen.com.

KEY FIGURES

Bang & Olufsen a/s - Group

3rd quarter YTD

(DKK million)

2016/17

2015/16

2016/17

2015/16

Income statement

786

703

2,169

1,937

Revenue

Gross margin, %

42.6

37.0

39.9

35.6

Earnings before interest, taxes, depreciation,

amortisation and capitalisation (EBITDAC)

63

27

66

(66)

Earnings before interest, taxes, depreciation and

amortisation (EBITDA)

99

62

170

47

Earnings before interest and tax (EBIT)

18

5

(34)

(131)

Financial items, net

(10)

(19)

(14)

(25)

Earnings before tax (EBT)

8

(14)

(47)

(156)

Earnings after tax, continued operations

3

(11)

(41)

(122)

Earnings after tax, discontinued operations

-

10

-

25

Earnings after tax

3

(1)

(41)

(98)

Financial position

Total Assets

2,937

2,970

2,937

2,970

Share capital

432

432

432

432

Equity

1,690

1,830

1,690

1,830

Net interest-bearing deposit / (debt)

790

618

790

618

Net working capital

232

334

232

334

Cash flow

- from operating activities

148

(24)

251

(5)

- from investment activities

(52)

(40)

(55)

(164)

Free cash flow

97

(63)

196

(169)

- from financing activities

(2)

(3)

(13)

(219)

Cash flow for the period

95

(67)

183

(388)

Key figures

EBITDA-margin, %

12.6

8.9

7.8

2.4

EBIT-margin, %

2.3

0.7

(1.6)

(6.7)

Return on assets, %

0.8

0.2

(1.9)

(5.4)

Return on invested capital, excl. goodwill, %

10.8

3.4

16.4

(0.3)

Return on equity, %

0.2

(0.1)

(2.4)

(5.5)

Full time employees at the end of the period

1,599

1,818

1,599

1,818

Stock related key figures

Earnings per share (EPS), DKK

0.1

(0.0)

(0.9)

(2.3)

Earnings per share from continuing operations (EPS), DKK

0.1

(0.2)

(0.9)

(2.8)

Earnings per share, diluted (EPS-D), DKK

0.1

(0.0)

(0.9)

(2.3)

Earnings per share from continuing operations,

diluted (EPS-D), DKK

0.1

(0.2)

(0.9)

(2.8)

Price/Earnings

n/a

n/a

n/a

n/a

Bang & Olufsen A/S published this content on 07 April 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 21 April 2017 13:53:16 UTC.

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