B&O to pump up the volume on cheaper speakers to drive growth

[COPENHAGEN] Bang & Olufsen is targeting its more affordable B&O Play products and brand partnerships to drive growth as the Danish company moves away from its mainstay high-end stereo and TVs.

Headphones and speakers from B&O Play along with partnerships such as those with luxury car producer Bentley and mobile maker LG, would drive growth in the future, Bang & Olufsen said on Wednesday.

"Brand partnership will become a bigger part of our business over time," Bang & Olufsen's chief executive Henrik Clausen told Reuters, adding that it was "looking at new options" to form partnerships in the car industry and other fields.

Bang & Olufsen lost 55 million Danish crowns (S$11.83 million) after tax in the first quarter due to difficulties at its more expensive division of high-end stereos and televisions and said it saw no change to that in the coming quarters.

For a TV from the classic Bang & Olufsen line, the top price is more than US$28,000 and speakers can cost nearly US$16,000, while products from B&O Play cost from US$190 to around US$2,700.

The company maintained its expectations for the financial year of flat earning in the Bang & Olufsen division and a more-than 20 per cent growth in its more affordable B&O Play range.

"Although we note volatility is high in B&O on a quarterly basis, we see the gross margins... as the main positive in the report, indicating we should expect stronger gross margins in B&O Play in he coming years," Nordea analyst Jesper Ilsoe said.

Shares in Bang & Olufsen were up 3 per cent to 137 Danish crowns at 1059 GMT after reporting results which were in line with analyst expectations.

REUTERS