While shares in Bang & Olufsen have slightly risen recently, CEO & President of the company Tue Mantoni has warned that a rise in the first quarter audio video sales following several quarters with negative sales growth, was not enough to conclude that the core business had now been turned around. Sales in the automotive segment rose to 98 million Danish crowns from 91 million in the same quarter last year.
Bang & Olufsen stated that A-V sales accounted for 80% of total group sales in the first quarter. “It is very dangerous to take the development in just one quarter and say that this is an indicator of what will happen in the future” Mantoni told Reuters. “I think we have had a decent first quarter in a very tough market but we are definitely not out of the woods”.
“Group sales rose 6.6% to 599 million crowns, in line with forecasts and Bang & Olufsen said turnover for the core audio-video division rose 5% to 480 million crowns against 457 million one year ago. ” All in all, today’s main news is that they have managed to turn around numerous quarters of negative sales growth in the core business” said Jyske Bank analyst Rune Moller. “This quarter shows that when they launch the right new products, they can manage growth” Moller said. “But Southern Europe is definitely a challenge for B&O in the future, as it is for all luxury good makers due to the macro economic environment” Moller said Sales in core markets Germany and Denmark rose in the first quarter together with sales in Asia, Switzerland and North America, while sales its third biggest market, Britain was unchanged from a year ago. The producer of sound systems and high-end televisions, such as the top-of-the-line BeoVision4-103 that costs roughly 100,000 euros, said Southern Europe saw a decline in turnover where particularly Spain and Italy decreased, by 27 percent and 26 percent respectively. “It is very clear that the macro economic environment is not improving.”
Bang & Olufsen recently launched a five-year strategy which the company hoped would triple sales and increase margins to pre-crisis levels, and which included boosting its core business and stepping up its focus on the newer Chinese market.