BANG & OLUFSEN A/S ANNOUNCEMENT NO. 08.02
7 JULY 2008
Bang & Olufsen a/s downgrades profit expectations 2007/08
Operating profit is now expected to be in the region of DKK 195 million against
the previously announced DKK 225-275 million. Profit before tax is expected to
total approx. DKK 155 million, i.e. DKK 45-95 million less than previously
estimated. This is based on a turnover of DKK 4,100 million.
The adjustment is primarily based on the following factors:
Uncertain global market developments and a reduced order book at the end of
the financial year.
Extensive winding up procedures involving extraordinary expenditure in
connection with the conclusion of pending legal proceedings in Denmark and
abroad.
Increased losses and provisions to counter losses on receivables etc.
After the close of the financial year, Bang & Olufsen has taken full control of
the strategically important subsidiary, ICEpower.
The market
The uncertain global economy has made it particularly difficult to anticipate
market developments - especially in the US and Western Europe.
Settlement of legal proceedings
The Board has deemed it a priority to conclude certain pending legal disputes.
Negotiations to this end have in a satisfactory way brought a number of these
issues to a conclusion. An offshoot of an arbitration case, which in
mid-December last year went against Bang & Olufsen, was also successfully
closed. As stated in announcement 07.11 of 9 January, 2008, the outcome of the
December arbitration case cost Bang & Olufsen DKK 25 million.
Provisions
The Board of Directors of Bang & Olufsen has consistently wished for the
company's risks in the debt portfolio to be covered through provisions in the
accounts. In total, DKK 48 million was expensed in the 2007/08 financial year
against DKK 13 million last year. Of this DKK 16 million was expensed in the
fourth quarter.
ICEpower
Bang & Olufsen is acquiring the shareholding of one of the co-founders of the
subsidiary, Bang & Olufsen ICEpower a/s, Director Karsten Nielsen, who is
leaving the company.
ICEpower has developed ground-breaking technology which features in all Bang &
Olufsen's main products. Consequently, it is of crucial strategic importance
for Bang & Olufsen to secure full control of the company.
The 10 per cent shareholding has been acquired for DKK 23 million.
Commented Chairman Jørgen Worning:
”With a solvency percentage in excess of 50 per cent, Bang & Olufsen is well
consolidated to absorb the necessary provisions and invest in the Group's key
areas. I am delighted that we have succeeded in concluding these outstanding
issues before we hand over responsibility for daily operations to the company's
new CEO Kalle Hvidt Nielsen on August 1.
Bang & Olufsen's ongoing cost adjustment is expected to take full effect in the
2008/09 financial year.
The Board of Directors expects that this year's profits will show an
improvement on the 2007/08 financial year, which will be announced on August
13.
Jørgen Worning Peter Thostrup
Chairman Executive Vice-President
# # #
For further information about this announcement, please contact:
Chairman Jørgen Worning
Executive Vice President Peter Thostrup
Head of Information Tino Pedersen, tel +45 61 55 41 41
