“The results of the third quarter confirm that we are on track with growing
revenue and improving profitability. In addition, we are pleased to have
announced the technology partnership with LG Electronics, which will enable
Bang & Olufsen to stay at the forefront of innovation in the TV category, while
addressing one of the company’s key challenges related to scale and
complexity”, says CEO Tue Mantoni.


The revenue growth of 8 per cent (7 per cent in local currency) was primarily
driven by a continued positive momentum in the B&O PLAY segment, which grew 18
per cent (17 per cent in local currency) compared to the same quarter last
year. The growth in the B&O PLAY segment continued to be driven by a
combination of strong customer demand for existing and new products and a
continued expansion of the number of third party retailers compared to the same
quarter last year.

The revenue in the Bang & Olufsen segment grew by 5 per cent (3 per cent in
local currency) in the third quarter, compared to the same quarter last year.
The new flagship speaker, BeoLab 90, has been well received in the market.

The Group’s gross margin improved compared to the same quarter last year. The
margin improvement initiatives in the Bang & Olufsen segment continued to show
a positive effect but not to the level expected.

Capacity costs were DKK 45 million lower than last year, as distribution and
marketing costs and R&D costs declined. The decrease is a result of general
savings across the Group.

Earnings before interest and tax (adjusted for costs previously allocated to
Automotive) were DKK 22 million, compared to negative DKK 53 million last year,
corresponding to an improvement of DKK 75 million. The improvement was driven
by the increase in revenue, the margin improvement and the decline in capacity
costs.

Free cash flow for the third quarter was negative DKK 63 million compared to
positive DKK 28 million in the same quarter last year. Net working capital
increased to DKK 334 million, compared to DKK 270 million at the end of the
second quarter of 2015/16, mainly due to a decrease in trade payables. The
decrease in trade payables was primarily related to the seasonality of the B&O
PLAY business where the holiday period represents a high season.

The Group’s total revenue for the first three quarters of the 2015/16 financial
year was DKK 1,937 million compared to DKK 1,661 million last year,
corresponding to an increase of 17 per cent (12 per cent in local currency). At
the same time gross margins have been improved and capacity costs have been
reduced by 10 per cent. Earnings before interest and tax for the first three
quarters of the 2015/16 financial year were negative DKK 131 million compared
to negative DKK 397 million last year, corresponding to an improvement of DKK
266 million. Free cash flow in the first three quarters of the 2015/16
financial year was negative DKK 169 million compared to negative DKK 223
million last year.

Full year guidance for the Group revenue is adjusted. Group revenue is expected
to grow by 12-15 per cent compared to 2014/15 mainly due to higher revenue in
B&O PLAY than expected. This is compared to the previous estimate of 8-12 per
cent growth. EBIT before costs previously allocated to Automotive and
restructuring costs is expected to be slightly below break-even. This compares
to a previous EBIT expectation around break-even. Costs previously allocated to
Automotive are expected to be in the range of DKK 70 to 80 million. The Group
expects to fully eliminate the costs for shared functions previously allocated
to Automotive during the 2016/17 financial year.

On 18 March 2016 Bang & Olufsen announced that the company has entered a
strategic technology partnership with LG Electronics regarding development and
production of Bang & Olufsen’s future TV (Company announcement no. 15.09). The
agreement enables Bang & Olufsen to focus on its unique competencies within
design, acoustics and smart home integration within TV development, and combine
this with LG’s technological leadership within OLED technology.

In company announcements no. 15.09 and 15.10 it was announced that Bang &
Olufsen is currently in a dialogue with Sparkle Roll. The dialogue may or may
not lead to an offer for the whole or part of the issued share capital of Bang
& Olufsen. At present, uncertainty remains as to the outcome of the dialogue.

As announced in Company announcement 15.11 Bang & Olufsen has signed an
agreement to divest 100 per cent of the shares in the non-core business,
ICEpower a/s. The enterprise value received by Bang & Olufsen is DKK 32 million
and the free cash flow impact is expected to be DKK 23 million. As part of the
transaction, Bang & Olufsen is entitled to a potential earn-out payment
dependent on the future performance of ICEpower. As a result of the
transaction, Bang & Olufsen expects to book a non-recurring, non-cash
accounting loss of DKK 31 million in the fourth quarter of the 2015/16
financial year, which will be recognised in discontinued operations.


Any enquiries about these announcements can be addressed to:

Investor contact, Claus Højmark Jensen, tel.: +45 2325 1067

Press contact, Jan Helleskov, tel.: +45 5164 5375


A webcast will be hosted on 6 April 2016 at 10:00 CET. Access to the webcast is
obtained through our website www.bang-olufsen.com.

BO_1512_Interim report Q3_15-16_UK.pdf