Danish audio Company Bang & Olufsen who are relying on the specialist channel in Australia for sales, has finally seen a turnaround in their share value with their stock climbing 33% during the past month, despite the Company is still struggling to grow revenues.
According to observers the business is not in good shape, with the market punting on green shoots in the hope of getting a return on investment from the business that has a market cap of A$0.46 Billion as of this month.
Despite last year’s revenues falling the Company that also reported a loss A$13.6M is tipping growth this year with the business set to launch several new audio products.
Bang & Olufsen Beosound 2 Gradient Collection
In the last quarter Like-for-like sales grew by 1% despite overall revenue declining by 0.4%.
During the past 12 months revenues have fallen 18.5% year-on-year.
Analysts claim that Bang & Olufsen is bordering on breakeven despite previous losses and tanking revenues.
The company that has been juggling capital with debt making up 39% of equity, has basically funded the Company from equity capital as revenues fell 15% over the past three years.
The predicted 7.2% growth tipped by management this year is still behind audio industry growth forecasts of 9.6% growth with the business still struggling to deliver profitability.
Analysts claim that investors who have driven the stock up this month are ignoring the fairly limited growth expectations and are willing to take risks on the stock.
With both the German, UK and Chinese market tanking the Company said that In APAC, the shift in the multiband channel towards travel retail positively impacted channel performance.
The gross margin rose to 53.7% compared to 53.1% in Q2 last year.
“The higher gross margin is a testament to the progress we are making and our strategic focus on building a robust financial foundation for the future. EBIT margin before special items was 1.7% compared to 3.0% in Q2 last year. The modest decline in revenue and improved gross margin was more than offset by increased development costs” management said.
The Company reported that in Asia Pacific Like-for-like sell-out in the eTail channel declined.
The Flexible Living category and On-the-go category also declined.
