What’s Going On Here?

• Danish luxury electronics company Bang & Olufsen (B&O) reported not-so-shining results.
• Investors sent the stock down 17%.

What Does This Mean?

B&O’s financial situation

• Annual update showed B&O’s sales fell 14% compared to last year (more than the forecasted 10% decline), where lower-than-expected sales to European customers were primarily to blame.
• Pprofit margin also shrank more than expected.

B&O’s demand

• Demand for B&O’s high-end speakers and $20,000 televisions seems to be slowing down.
• Partly the reason why B&O’s stock has fallen into poverty, down 70% last year, is its original forecast of 10% sales growth last year.

Why Should I Care?

For markets: Buyers, speak up.

• B&O’s share price decline could spark takeover bids, it might be a desirable discounted target for a buyer able to reignite customer demand and lower costs.
• Some of B&O’s shareholders might prefer to rewire the company in private – although B&O rejected a takeover attempt from its largest shareholder in 2016.
• It’s not just European luxury companies losing their shine, US jeweler Tiffany & Co is also in the same situation.

A takeover bid refers to the purchase of a company (the target) by another company (the acquirer)

The bigger picture: Where there’s smoke…

• This slowdown in high-end spending might be symptomatic of a weaker global economic environment – especially in Europe.
• Fresh data showed that inflation in May rose more slowly than expected. As a result, the European Central Bank may further delay raising eurozone interest rates next year.

Content source: Finimize. (2019) Bang & Olufsen Lowers The Volume. Available from: https://www.finimize.com/wp/news/bang-olufsen-lowers-volume/ [Accesed 9 June 2019]