Luxury TV, stereo maker Bang & Olufsen suffers fourth-quarter operating loss

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B&O now expects single-digit sales growth in the 2019-2020 year. (File/Shutterstock)
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Shares in the Danish company have fallen more than 70% over the past year. (File/Shutterstock)
Updated 11 July 2019

Luxury TV, stereo maker Bang & Olufsen suffers fourth-quarter operating loss

  • The company reported a fourth-quarter operating loss of $9.97 million
  • Sales for the financial year ending in May dropped 13.6 percent to $422.70 million

COPENHAGEN: Struggling luxury TV and stereo maker Bang & Olufsen (B&O) on Thursday swung to a fourth-quarter operating loss, but said it expected to return to sales growth this year with a plan to open more sales points and launch new products.
Shares in the Danish company have fallen more than 70 percent over the past year, reflecting weak TV sales and slow progress in its turnaround plan at a time when subdued consumer spending has hit retailers across Europe.
“Our unsatisfactory results were primarily due to difficulties related to the transition of our sales and distribution network and fewer product launches compared to last year,” said Chief Executive Henrik Clausen in a statement.




The company says the loss is in part due to a smaller amount of product launches this year compared to the last. (File/Shutterstock)

The company reported a fourth-quarter operating loss of $9.97 million, compared with a profit of $8.03 million in the same period a year earlier.
Full-year earnings before interest and tax (EBIT) fell roughly 50 percent to $8.91 million.
Sales for the financial year ending in May dropped 13.6 percent to $422.70 million, in line with the company’s revised expectations. It had initially forecast 10 percent growth.
B&O now expects single-digit sales growth in the 2019-2020 year and an EBIT margin above the 2.1 percent achieved in 2018-19.


Cathay Pacific shelves US dollar bond plans amid Hong Kong unrest

Updated 21 min 10 sec ago

Cathay Pacific shelves US dollar bond plans amid Hong Kong unrest

SINGAPORE: Cathay Pacific Airways has shelved plans for its first US dollar debt deal in 23 years, the airline said on Friday, after sources told Reuters that global investors had questioned the pricing due to civil unrest in Hong Kong.

The airline, the biggest corporate casualty of widespread anti-government protests in the Asian financial hub, on Friday lowered its second-half profit expectations, citing “incredibly challenging” conditions in its home market.

Cathay had started meeting investors in Hong Kong and Singapore on Sept. 24 after it mandated four banks to explore carrying out a US dollar denominated bond, according to a term sheet issued at the time, seen by Reuters.

It would have been the first US dollar debt deal for Cathay since 1996 and had been touted as a landmark transaction for the airline given all of its debt is denominated in Hong Kong dollars.

The issuance was to be unrated, and two sources with knowledge of the matter said that Cathay was willing to pay 200 basis points over the US Treasuries rate to secure three-year or five-year funding, with the size and term of the placement dependent on demand.

FASTFACT

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Cathay has only carried out 12 bond transactions in the past decade and all were priced in Hong Kong dollars.

However, investors demanded a higher price of at least 300 basis points over US Treasuries, which made the deal more expensive for Cathay, said the sources, who were not authorized to speak publicly about the matter. Cathay’s term sheet had said the transaction would be reliant on market conditions. A Cathay spokesman on Friday said the Hong Kong dollar private placement market was providing more funding opportunities and a debt issuance in that market was completed last month. “We will continue to monitor the US dollar bond market in future,” he said in a statement.

Dealogic data showed that Cathay raised $102 million in October and $64 million in May through Hong Kong dollar denominated deals.

The airline has only carried out 12 bond transactions in the past decade and all were priced in Hong Kong dollars.

Cathay had mandated Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank and HSBC to work on the shelved US dollar bond deal.