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UPDATE 2-Bang & Olufsen outlook disappoints as posts profit

Published 08/24/2010, 06:45 AM
Updated 08/24/2010, 06:48 AM

* March-May EBIT 28 million vs consensus 22 million

* Sees lower sales in Q1 than Q4, on par with year ago

* Sees 2010/11 sales up, pretax in black

* Shares down 4.5 percent

* Analysts say new guidance weak, highlights uncertainty

(Adds detail, background, analyst, share price)

COPENHAGEN, Aug 24 (Reuters) - Luxury television and stereo maker Bang & Olufsen forecast its first-quarter sales would match the previous year after it said sales of its new products helped it swing to a profit in the fourth quarter.

B&O shares were down 4.5 percent to 48.70 crowns by 1043 GMT, underperforming the Copenhagen bourse, which was down 1.1 percent.

"The (fourth-quarter) results confirm that B&O is on the right track," Jyske Bank said in a note to clients. "Therefore, we are very disappointed they expect a first-quarter turnover at last year's level."

Luxury goods makers were slammed by the global recession as the rich tightened their purse strings. However sales are expected to recover this year along with the global economy.

B&O, which has made big restructurings and job cuts, in May posted its first quarterly profit in nearly two years, for the third quarter.

Despite posting fourth-quarter growth, B&O forecast fiscal first-quarter sales to drop from the fourth and would match the 565 million posted in the previous year.

"GUIDANCE SOFT"

For the full-year, B&O said it expected rising sales, a positive pretax result and a gross margin roughly matching that of 2009/10, "based on a continuing high activity level within product development and an increased marketing effort".

Nordea analyst Dan Wejse said in a note to clients: "Though better earnings than expected, the absolute numbers are still small."

"Guidance is soft as B&O just states that it expects positive 2010/11 revenue growth and a positive pretax result," said Wejse, whose estimates are for full-year revenue growth of 10 percent and a pretax profit of 51 million crowns.

"Usually B&O gives a specific guidance, so guidance is a bit disappointing," he said. "It highlights the large uncertainty and the fact that B&O has developed a record for guidance downgrades."

The company said sales growth in the second half of the fiscal year was mainly driven by important product launches, and most of the company's markets -- of which Germany, Denmark and Britain are the biggest -- showed progress in the fourth quarter.

Operating profit in the quarter to May was 28.2 million crowns ($4.79 million), against a year-earlier loss of 107 million and a mean forecast of 22 million in a Reuters survey of analysts.

Sales rose 26 percent to 779 million crowns, against the average forecast of 771 million in the Reuters poll.

Analysts have said that B&O, which also sells stereos for such luxury sportscars as Aston Martin and Mercedes, will face fierce competition from lower-cost producers such as Samsung, Sony, Panasonic and Loewe. ($1=5.892 Danish Crown) (Reporting by Anna Ringstrom; Editing by Simon Jessop and Karen Foster)

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