Bang & Olufsen has been hit by China lockdowns, inflation and dip in consumer confidence
(Picture: Bang & Olufsen )Danish high-end audio equipment manufacturer Bang & Olufsen has recorded a drop in revenue of 8.2% to 612 million Danish krone (£71.6 million) during its first quarter as the business was “adversely impacted by lockdowns in China”.
Sales in Asia declined by more than a quarter at 27% “mainly due to China” as Covid restrictions ramped up in the country and consumer confidence declined. This was not, however, offset by sales in Europe, Middle East and Africa that dropped 2% in the three months to August with demand moving to “outdoor products” rather than home entertainment due to hot weather conditions over the summer. America grew by 14%.
The business said that “uncertainty and declining consumer confidence” had led to some of the company’s retail partners “reducing their inventories and being more cautious when replenishing”.
Bang & Olufsen also added that it had faced problems across its product mix through a “higher cost for components” sale of a large quantity of its earphones “at a lower price”.
The company said it had initiated measures to mitigate the effects of increasing uncertainty and declining consumer confidence. These include a general hiring freeze, a lowered production forecast and phasing of investments.
Kristian Teär, boss of the group, said: “The challenging macroeconomic environment continued in the first quarter of 2022/23, which, seasonally, is our smallest quarter of the year. Despite that, we saw robust demand for our products with higher sell-out performance than sell-in in all markets except China.
“However, regional lockdowns and the economic climate in China had a direct impact on our sales, and rising interest rates, the war in Ukraine and higher inflation affected consumer confidence across Europe. As a result, revenue declined compared to last year.”
“We can see our strategy is working. We have created a strong portfolio with award-winning products and significantly improved our sales and marketing efforts, which will help us realise our growth potential. We have a strong focus on our cost base, adjusting our investment plans to reflect the high uncertainty.”
