Bang & Olufsen A/S, the Danish maker of sleek sound systems and high-priced TVs, slashed its profit forecast for a second time in three months on Friday, triggering a 20 percent plunge in its shares.
Blaming a difficult market in Europe and the United States, B&O forecast full-year pretax profit of between 200 million Danish crowns ($41.8 million) and 250 million, nearly halving its January prediction of 360 million to 400 million for the year to the end of May.
By 1040 GMT, B&O shares traded down 19 percent at 248 crowns. They fell as low as 230 crowns, their lowest since November 2003. The company also cut its sales expectation to between 4.25 billion crowns and 4.35 billion, from 4.45 billion to 4.55 billion.
B&O Chief Operating Officer Peter Thostrup said the company was hurting in all three of its largest markets. "In Denmark, sales are closely linked to the housing market, which is suffering," he said in a telephone interview. "In Britain we're hit by a lasting setback in the retail sector, while Germany is more of a puzzle. We should have done better in Germany."
The three countries account for about 10 percent each of B&O's sales. The company gave no further details of its US performance. "It's clear that B&O feels the effects of the economic downturn," said Rune Moller, an analyst at Jyske Bank. "Private consumption is really slowing and B&O is suffering." He said new products is what B&O needs to boost its revenues.
The company, whose high-end TVs can retail for more than $30,000, is still looking for a new chief executive after it sacked Torben Sorensen a day after January's downgrade. "The safest way for us to escape the crisis is to launch new quality products to boost sales and to have a well-diversified product portfolio," Thostrup said.
"We're trying to tell the market that we'll invest our way through the crisis and the cuts we've announced will not affect product development." Moller said the company will need at least a year before its fortunes brighten. "The newsflow is not going to be good in the coming period," he said. "There is uncertainty about the macroeconomic situation, the coming CEO and the company's strategy."
Another analyst saw more guidance warnings ahead. "I have a hard time believing that their new sales forecast holds," said Stephen Rammer, an analyst at Alm Brand Markets. "I think we'll get another downgrade on that."