Bang & Olufsen A/s · OMXCOP:BO
Bang & Olufsen A/s — Non-Deal Roadshow (March 2019)
43 slides from Bang & Olufsen A/s's roadshow presentation, March 2019
Slide 1: IR Roadshow March 2019
BANG & OLUFSEN IR ROADSHOW MARCH 2019
Slide 2: Disclaimer
DISCLAIMER This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities issued by Bang & Olufsen a/s in any jurisdiction, including the United States of America, Canada, Australia, Japan o
Slide 3: Agenda
AGENDA • Introduction to Bang & Olufsen • Financial performance and outlook • Questions & answers 3
Slide 4: Bang & Olufsen at a glance
BANG & OLUFSEN AT A GLANCE Introduction FY 2017/18 revenue split • Bang & Olufsen is a global luxury‐lifestyle brand founded in 1925 in Struer, Denmark by Peter Bang and Svend Olufsen 615 • The rich heritage built around the relentless determination to create products that push the (19%) boundaries
Slide 5: A company with a global footprint
A COMPANY WITH A GLOBAL FOOTPRINT LISTED ON NASDAQ COPENHAGEN AMERICAS EMEA ASIA COPENHAGEN: ‐ Global sales TURNOVER DKK ‐ Development 3,285 MILLION (FY 2017/18) STRUER: EMPLOYEES 975 (FY 2018/19 Q2) ‐ HQ ‐ Development ‐ Production MONOBRAND STORES 523 (FY SHANGHAI: 2018/19 Q2) NEW YORK: ‐ Sales ‐ S
Slide 6: Board of Directors & Executive Management Team
B OA R D O F D I R EC TORS & E X EC U T I V E M A N AG E M E N T T EA M BOARD OF DIRECTORS EXECUTIVE MANAGEMENT HENRIK CLAUSEN, PRESIDENT & CEO • Employed by Bang & Olufsen since July 2016 Career before Bang & Olufsen • Telenor ‐ EVP, Strategy & Digital and advisor to Group CEO DiGi Telecommunicatio
Slide 7: The transformation of our operating model has progressed well
THE TRANSFORMATION OF OUR OPERATING MODEL HAS PROGRESSED WELL B&O PLAY LAUNCHED ESTABLISHMENT OF BRAND TRANSFORMATION OF SALES AND Extending brand reach through PARTNERSHIPS DISTRIBUTION NETWORK portable, stand‐alone products Bang & Olufsen establishes brand Roll‐out of new stores concepts in partne
Slide 8: The strategy is in place
THE STRATEGY IS IN PLACE VISION S T R AT E G I C T H E M E S BECOME THE BRAND PRODUCTS DISTRIBUTION MOST DESIRED & INNOVATION & CHANNELS AUDIO BRAND IN THE WORLD COMPETENCIES & PROCESSES 8
Slide 9: Developing the brand towards luxury/lifestyle
DEVELOPING THE BRAND TOWARDS LUXURY/LIFESTYLE LUXURY PRODUCT LIFESTYLE PREMIUM LUXURY‐LIFESTYLE • Placing the customer experience at the center of technology • Ensuring meticulous attention to detail in products and customer experience 9
Slide 10: One brand strategy implemented to improve awareness
ONE BRAND STRATEGY IMPLEMENTED TO IMPROVE AWARENESS AWA R E N ES S ONE BRAND EQUITY BRAND AFFINITY • Higher aided brand awareness with the • The two business units have supported a • Creative Curators have high affinity for the target audience of creative curators than the common brand equity brand
Slide 11: The new operating model is a proven case
THE NEW OPERATING MODEL IS A PROVEN CASE BeoVision Eclipse TV CATEGORY Revenue (DKKm) +55 Focus on core capabilities and Focus on Bang & Olufsen leveraging leading technology core capabilities partners create unique customer experiences 2016/17 2017/18 Beoplay A9 UNITS SOLD (CAGR) >10% Iconic produc
Slide 12: Our products are made for three use cases
OUR PRODUCTS ARE MADE FOR THREE USE CASES ON‐THE‐GO FLEXIBLE LIVING S TA G E D Products that are mobility based, built around Products for consumers who want flexibility in use Products used in stationary settings for immersive nomadic use cases. This includes both immersive and and placement in dom
Slide 13: Securing the brand experience across channels
SECURING THE BRAND EXPERIENCE ACROSS CHANNELS • Give the full brand experience 2017/18 • Cater for customers already familiar with the brand and DKK 1,945m special customer requests 59% MONOBRAND • Expose new customers to luxury‐lifestyle brand execution Flagship store (pre‐opened as a pop‐ Pop‐up s
Slide 14: We continue to strengthen our retail setup
WE CONTINUE TO STRENGTHEN OUR RETAIL SETUP PURPOSE INSIGHTS CHANGE • Give the full brand experience The best quartile of monobrand stores are characterised by a • Ensure consistency in customer location in… experience • Cater for customers already familiar with the brand and special customer • Locat
Slide 15: Several initiatives in place to strengthen our distribution
SEVERAL INITIATIVES IN PLACE TO STRENGTHEN OUR DISTRIBUTION Looking ahead • Rolling out direct distribution to key multibrand retail partners EMEA 2017/18 • Roll‐out of shop‐in‐shops and branded space throughout the region – targeting revenue DKK 1,737m 53% department stores, airport retailers and s
Slide 16: Brand partnerships & brand collaborations
BRAND PARTNERSHIPS & BRAND COLLABORATIONS ‐ AN INTEGRATED PART OF THE BUSINESS MODEL PA R T N E R S H I P S C O L L A B O R AT I O N S Awareness Awareness Technology Brand equity amplification Licensing Distribution Hewlett‐Packard Harman LG Saint Laurent David Lynch Supreme 16
Slide 17: Competencies & processes
COMPETENCIES & PROCESSES D I G I TA L T R A N S F O R M AT I O N G L O B A L S U P P LY C H A I N E N H A N C E C A PA B I L I T I E S • Strengthen brand experience in consumer‐ • Optimise processes to reflect the changed • Product creation and design facing touchpoints (app, web etc.) operating mod
Slide 18: Agenda
AGENDA • Introduction to Bang & Olufsen • F i n a n c i a l p e r fo r m a n c e a n d o u t l o o k • Questions & answers 18
Slide 19: Transformation of business model supported by sound financial development
TRANSFORMATION OF BUSINESS MODEL SUPPORTED BY SOUND FINANCIAL DEVELOPMENT Revenue EBIT1 Free cash flow2 DKKm DKKm DKKm 3.3% CAGR 11% Margin 3,285 91 85 Successful transformation 110 driven by: 2,954 2,633 • Transformation to asset‐light ‐2.6% ‐1.1% 2,356 business model (i.a. divested 2,162 non‐core
Slide 20: Revenue guidance for 2018/19 adjusted in Q2
REVENUE GUIDANCE FOR 2018/19 ADJUSTED IN Q2 Q2 key financials Drivers of revenue outlook change >10% REVENUE Q2 (≈50%) DKK 909m H2 Same level ‐9% growth (‐7% in local currencies) (≈50%) as 2017/18 • Impacted by transformation of the sales and distribution network and challenges related to the new gl
Slide 21: Transformation of the sales and distribution network – multibrand retail development
TRANSFORMATION OF THE SALES AND DISTRIBUTION NETWORK – MULTIBRAND RETAIL DEVELOPMENT Strategy Q2 development Addressing challenges Positive reception from all key retailers Prioritise luxury‐lifestyle retail (Department stores, travel retail, >1,000 non‐performing POS closed, with insignificant
Slide 22: Guidance for FY 2018/19
GUIDANCE FOR FY 2018/19 2018/19 2018/19 O u t l o o k ( P r e v. ) Outlook (Adj.) Expectations Group >10% Same level as 2017/18 Regain growth momentum in H2 2018/19 • EMEA >5% Same level as 2017/18 Revenue • Asia >10% Same level as 2017/18 • Americas >20% Same level as 2017/18 Brand Moderate growth
Slide 23: 2020/21 end goal
2020/21 END GOAL Brand strength confirmed • Consumer demand for our key products BRAND • Appetite for collaboration from retailers, brand partners and others S T R AT E G I C T H E M E S 3Y financial targets Products and Innovation on track (2018/19 – 2020/21) • Strong product pipeline in place acro
Slide 24: Agenda
AGENDA • Introduction to Bang & Olufsen • Financial performance and outlook • Q u e st i o n s & a n s we rs 24
Slide 25: Questions?
Q U EST I O N S ?
Slide 26: Thank you for your attention
T HAN K YOU FOR YOU R AT T E N T I O N INVESTOR RELATIONS CONTACT Malene Richter +45 29741609 investors@bang‐olufsen.dk
Slide 27: Backup slides – Q2 figures
BACKUP SLIDES – Q2 FIGURES 27
Slide 28: Revenue development
REVENUE DEVELOPMENT Revenue split Comments Q2 H1 Group 1 1 DKKm 2018/19 2017/18 ∆ (%) ∆ LCY (%) 2018/19 2017/18 ∆ (%) ∆ LCY (%) • 9% decline (7% in local currencies) vs. LY in Q2 Group 909 999 -9% -7% 1,510 1,591 -5% -4% • 5% decline (4% in local currencies) vs. LY in H1 9 0 9 9 9 9 1 ,5 1 0 1 ,5 9
Slide 29: P&L highlights
P&L HIGHLIGHTS GROSS MARGIN C A PA C I T Y C O S T S EBIT % DKKm % revenue DKKm % Margin ‐4% +6.0pp +5.1pp 647 620 +7 +77 47.2% 45.8% 41.2% 40.7% ‐2% 95 83 90 346 339 8.3% 9.9% 40.7% 41.1% 6.3% 34.6% 37.3% 18 1.1% Q2 Q2 H1 H1 Q2 Q2 H1 H1 Q2 Q2 H1 H1 2017/18 2018/19 2017/18 2018/19 2017/18 2018/19 20
Slide 30: Net working capital, capex and free cash flow
NET WORKING CAPITAL , CAPEX AND FREE CASH FLOW N E T W O R K I N G C A P I TA L CAPEX FREE CASH FLOW DKKm DKKm DKKm Tangible Intangible % revenue LTM +198 ‐128 ‐50 44 391 117 ‐75 +13 193 83 67 171 12.2% 50 ‐84 37 40 ‐114 20 5.4% 5.9% 20 30 34 27 17 ‐189 Q2 Q1 Q2 Q2 Q2 H1 H1 Q2 Q2 H1 H1 2017/18 2018/
Slide 31: Capital structure, distribution to shareholders and shareholder overview
C A P I TAL ST R U C T U R E , D I ST R I B U T I O N TO S H A R E H O L D E RS AN D S HAR E HO LD ERS OV E RV I E W Capital structure and distribution Bang & Olufsen share(FY 2017/18) DKKm Stock exchange: NASDAQ Copenhagen A/S Net cash (DKKm) ‐105 Identification code (ISIN): DK 0010218429 741 636 S
Slide 32: Backup slides – Brand awareness
BACKUP SLIDES – BRAND AWARENESS 32
Slide 33: The steps in order to achieve the goal in becoming the most desired brand
The steps in order to achieve the goal in becoming the most desired brand STAGE Aided awareness is required before a consumer can mentioned the brand AIDED AWARENESS 01 unaided, have an opinion of the brand and consider it. CONVERSION The conversion illustrates the amount of consumers who knows the
Slide 34: Aided awareness funnel across all markets and categories
Looking across all markets and categories, 39% knows B&O which is significant higher for Creative Curators than the broad target group. 89% of those who knows B&O also likes B&O. Whereas 73% of those who likes B&O also consider buying the brand F U N N E L S | A C R O S S A L L M A R K E T S A N D C
Slide 35: Brand funnels by product category
If we dive into the different categories, B&O has the strongest position within the speaker category, with the highest level of awareness, liking, consideration and conversions F U N N E L S | A C R O S S A L L M A R K E T S | 2 0 1 8 | C R E AT I V E C U R AT O R S Aided awareness Aided awareness A
Slide 36: Headphone category versus competitors
Compared with the competitors within the headphone category, Bose has the highest awareness. B&O has a higher awareness than Marshall and Bowers & Wilkins. Likewise B&O has the second highest conversion from awareness to liking – but all brands are at a high level. Compared with Marshall, JBL and Bo
Slide 37: Speaker category versus competitors
Looking at the speaker category the picture is somewhat the same. Bose, Apple and JBL performs better than B&O but B&O performs better than Sonos, Devialet and Bowers & Wilkins FUNNELS | SPEAKERS | ACROSS ALL MARKETS| Aided awareness Aided awareness Aided awareness 2018 | CREATIVE 71% (64%) 30% (22%
Slide 38: TV category versus competitors
Within the TV category the competitors have an awareness level that are considerable higher than B&O’s. Only Loewe has a lower awareness – and B&O performs better than Loewe on all the other parameters. Sony is the market leader, who performs the best within all parameters FUNNELS | TV | ACROSS Aide
Slide 39: Brand funnels in London
Looking at the different cities - B&O is performing the best in London with the speaker category having the strongest performance on all parameters F U N N E L S | L O N D O N | 2 0 1 8 | C R E AT I V E C U R AT O R S Aided awareness Aided awareness Across categories 47% (40%) 51% (44%) Unaided awar
Slide 40: Brand funnels in Paris
In Paris it is also the speaker category which has the strongest position but the conversion from liking to consideration is lower than average across markets F U N N E L S | PA R I S | 2 0 1 8 | C R E AT I V E C U R AT O R S Aided awareness Aided awareness Across categories 37% (24%) 45% (31%) Unai
Slide 41: Brand funnels in Shanghai
In Shanghai the level of awareness is lower than average across markets but the conversion from awareness to liking is still on a very high level – meaning those who know B&O also likes the brand F U N N E L S | S H A N G H A I | 2 0 1 8 | C R E AT I V E C U R AT O R S Aided awareness Aided awarenes
Slide 42: Brand funnels in Tokyo
The low level of awareness in Tokyo has a large negative impact on the following levels in the funnels F U N N E L S | T O K Y O | 2 0 1 8 | C R E AT I V E C U R AT O R S Aided awareness Aided awareness Across categories 10% (5%) 12% (6%) Unaided awareness 0% (0%) Unaided awareness 1% (0%) Aided awa
Slide 43: Brand funnels in New York
In New York the levels within the TV category is lower than average across all markets F U N N E L S | N E W Y O R K | 2 0 1 8 | C R E AT I V E C U R AT O R S Aided awareness Aided awareness Across categories 24% (13%) 28% (15%) Unaided awareness 1% (0%) Unaided awareness 2% (1%) 90% 93% Aided aware