Bang & Olufsen: One Year On

Bang & Olufsen: One Year On

We track more than 60,000 corporate insiders at 2iQ and many of these investors gradually increase or reduce their holdings. This is why it’s important to analyze an insider’s decision to buy or sell over a long time period.

Bang & Olufsen (BO:DC) is an interesting example of this type of analysis. 

Around this time last year, 2iQ’s analysts released this insider buying report on the company. Much has happened since July 2020 so we are returning to the company once again.    

Strong Nordics

Firstly, why Bang & Olufsen? 

For starters, companies in the Nordic region are thriving at the moment. It is worth taking note of what we have covered for this sector recently here and here. 

Danish luxury audio and visual company Bang and Olufsen is no exception to this trend. Since the depths of the pandemic, the consumer electronics brand has resurged strongly.

This mirrors the general global appetite for consumer electronics in 2020 and 2021. According to Statista, consumer spending on digital entertainment in the United States on digital distribution reached a record 30 billion U.S. dollars in 2020, which is up by over 21% on the previous year. 

B&O’s Previous Year and Insider Transactions 

Despite consumer spending having increased in recent months, FY 2019/2020 was not that great for B&O, with revenue declining 29% in its local currency. 

However, insider transaction data showed a more positive sentiment, especially when we last covered the company.

On July 7 2020, three insiders purchased B&O shares. Buyers included:

  • Chairman Juha Christensen (85,000 shares)
  • CFO Nikolaj Wendelboe (44,000 shares)
  • Director Claire Chung (26,000 shares)

This was a bullish signal at the time. Insiders were clearly confident in the company and believed things could turn around.

B&O One Year On: A Return to Profitability 

One year on, B&O has improved its financial performance as a result of a turnaround strategy. In the company’s annual report, financial highlights for the FY 2020/21 show that revenue grew by 31% in local currencies, mainly driven by product sales.

Product sales increased across all categories, and all three regions delivered solid growth. Sales in EMEA, Americas and Asia grew by 27%, 42% and 43% respectively.

CEO Kristian Teär said: 

“We are pleased with the progress we have made this year as we completed the first phase of our turnaround. We delivered double-digit growth, returned Bang and Olufsen to profitability and improved our liquidity position."

“Our financial results for 2020/21 demonstrate that our strategy is working. We reduced our cost base, improved our sales and marketing, and strengthened our digital capabilities and platforms. At the same time, with the launch of 14 new products in the past year, we have created a much stronger product portfolio. All in all, we are in a stronger position as we enter the second phase of our strategy.” 

What’s more, B&O saw a double-digit share price rise of more than 10% in April 2021 while analysts elsewhere believe the stock may be undervalued.

Last year, B&O (OMX Nordic Exchange - Copenhagen) had a market capitalization of 1.5 billion DKK. This has increased to nearly 4 billion DKK since our last insider report on the company. Shareholder returns have also increased by 239% over one year.

A Notable Insider Transaction

And then there’s Chairman Juha Christensen’s insider activity. 

On July 12 2021 Christensen spent close to $550,000 on 100,000 shares, signalling continued belief in the company’s positive trajectory and growth prospects. This is worth noting considering the progress B&O is making.

This report is another example of how insider transaction data can be used. Follow 2iQ’s blog for more retrospective analysis.

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