* Firm looking for fresh capital to boost growth
* Will be hard for company to do so - analysts
* Shares rise 8.5 percent
(Adds details, analyst comment, share price)
By Shida Chayesteh
COPENHAGEN, June 19 Denmark's Bang & Olufsen
said on Thursday it was considering raising capital via
the stock market, a move key for funding its plan for growth,
particularly in the United States, China and emerging markets.
It is the second time in three months that the company has
said it is investigating such a move, to try to overcome
difficulties in Europe, where a long recession and austerity
budgets put consumers off buying luxury items such as the
expensive, high-quality audio systems and televisions Bang &
The group, which issued two profit warnings during its
2012/13 financial year because of sluggish European sales, is
fighting back with restructuring efforts, growth in emerging
markets and new, cheaper products
Bang & Olufsen, which was loss-making in the last financial
year, said fourth quarter revenue was 801 million Danish crowns
($145.80 million), compared to 740 million crowns in the same
quarter in the 2012/13 financial year a year ago, adding that it
still expected to break even this year but now expects a rise in
operating profit margin next year.
The company did not give any profit numbers but said fourth
quarter gross margin was significantly higher than in the same
quarter a year earlier.
Shares in the company jumped 8.5 percent in early trade and
were up 7 percent at 69 crowns by 1024 GMT, though volume was
thin. The Danish benchmark index was flat.
However analysts remained cautious.
"We continue to find B&O aggressively valued and do not
believe that the release supports the very positive share price
reaction today," brokerage Nordea said in a note to clients.
Aanalysts from both Sydbank and Alm Brand Bank said they
expected the company would struggle to raise money despite its
improving results outlook.
"The results are better, yes, but it's not enough to say
they have overcome all hurdles," Sydbank analyst Soren Lontoft
Although the economic outlook is improving in Europe and
elsewhere, analysts say Bang & Olufsen's new, more affordable
brand, still lacks innovative products.
"If Play (B&O's cheaper brand) is to generate growth, we
must soon see some new products," Lontoft said, adding that the
challenge for B&O is to get the younger generation into their
As an example of how tough business in the sector is B&O's
German competitor in the high-end TV market, Loewe AG
, filed for insolvency in October last year and agreed
in March to be taken over by Munich-based investor Stargate
"(Bang & Olufsen) tried to increase the capital base three
month ago without luck. I don't see anything in this statement
that can change that, so I expect it will be difficult for the
company," said Alm Brand analyst Jesper Christensen.
($1 = 5.4938 Danish crowns)
(Additional reporting by Ole Mikkelsen; Editing by Sophie