Luxury TV and stereo maker B&O warns of sales decline, lower profit margin

Copenhagen

DANISH luxury TV and stereo maker Bang & Olufsen cut its revenue and operating margin outlook, blaming fierce competition and poor sales - the fourth such profit warning for the struggling company in a year.

B&O had vowed to return to profit in 2019 following three warnings in the previous year, but was forced to ditch this promise as it failed to entice shoppers, resulting in a 31 per cent sales decline in the second quarter to 627 million crowns (S$127 million).

B&O, which was founded in 1925 and built its initial success on innovative audio technology, blamed increased competition in wireless earphones and unsatisfactory sales for the slump.

''The strategic direction is unchanged, but it is evident that a fundamental change of the sales and marketing efforts is required,'' chief executive Kristian Tear said in a statement late on Tuesday. ''We need to create a culture in which we are closer to customers and partners.''

Mr Tear, who took up the position in October, added that a new threeyear plan would be presented at a capital markets day on April 3.

B&O now expects revenue to drop 13-18 per cent in its 2019-20 financial year which ends in May compared with single-digit growth previously forecast.

It cut its earnings before interest and tax margin forecast to a drop of 4-9 per cent from a previously expected improvement on the 2.1 per cent achieved last year.

Nordnet analyst Per Hansen called the profit warning ''catastrophic'' and said the stock could fall at least 25 per cent when the Copenhagen stock exchange opened. Its share price is down roughly 70 per cent over the past year.

B&O's biggest shareholder is Chinese investor Qi Jianhong, who owns just under 15 per cent in the company through his Sparkle Roll companies, Refinitiv data showed. In April 2016, Bang & Olufsen rejected a takeover bid by Sparkle Roll. REUTERS