Record revenues for Zound Industries after a busy year
2019 was an all time high for Zound Industries with total revenues breaking the 2 billion barrier, an increase of 8 percent compared to 2018. The operating profit adjusted for items affecting comparability amounted to MSEK 44.3 for the full year.
2019 was a busy year for Zound Industries with, among many other things, the launch of the first products under the adidas brand, a generation shift in speakers and preparations for a possible IPO that has since been suspended. Total revenues for the year increased 8 percent to MSEK 2,008.2. Adjusted for items affecting comparability the operating profit amounted to MSEK 44.3 (MSEK 91.0).
“The entire team has worked really hard to deliver yet another year of profitable growth during a very busy period for the company. With the exit-process suspended, we are now fully focused on continuing to improve on our product portfolio and strenghtening our brands”, said Martin Axhamre, CFO and acting CEO.
Net sales increased by 8 percent to MSEK 1,997.0 driven by a balanced growth in the speaker segment (8 percent) and headphones segment (7 percent). Sales in the important fourth quarter 2019 amounted to MSEK 699.3 (MSEK 703.6) and adjusted operating profit amounted to MSEK 53.3 (MSEK 73.8). Although sales was almost on par with Zound’s strongest quarter ever, sales and earnings did not reach expectations, partly as a result of a decline in the speaker market in several key markets. In addition, the headphone market was characterized by a shift towards true wireless products, with Zound realeasing it’s first products in this category during 2020.
The lower than expected sales volumes during the fourth quarter had a significant impact on operating profit for the full-year, as the vast majority of the company’s profits, due to seasonality, are generated during the last months of the year. Also, comparing to last year, significant costs related to product development and organization for the adidas headphones has impacted results.
”We can conclude that we did not reach the high growth figures that we have achieved historically. We are focusing on increasing our speed to market and improving our product mix. But overall Zound Industries is in good shape for 2020, our core business is profitable and we have a strong line-up of new products coming”, said Martin Axhamre.
Sales in Zound Industries’ key markets; the Nordic countries, USA, France, Germany, China and the UK amounted to MSEK 1,243.2 during the year, an increase of 7 percent. Strong growth was reported in the UK, China and Germany, while the performance was negative in the Nordic countries. Other markets increased by 9 percent to MSEK 753.8.
Sales of Marshall products increased by 8 percent to MSEK 1,828.8 during the year and sales of adidas products amounted to MSEK 21.4 since the launch in late september. Urbanears’ sales decreased by 11 percent compared to the previous year and amounted to MSEK 146.8.
“We have ambitious plans for 2020 for all our brands and look forward to continue to scale up operations. At the same time, we expect a relatively weak first quarter partly due to high stock levels in the industry, but also due to the impact from the corona virus outbreak where we are closely monitoring the development”, said Martin Axhamre.
Financial highlights
| Full year | Oct-Dec | |||||
| MSEK | 2019 | 2018 | ∆ % | 2019 | 2018 | ∆ % |
| Total revenues | 2,008.2 | 1,863.0 | 8 | 703.0 | 710.0 | -1 |
| Net sales | 1,997.0 | 1,856.4 | 8 | 699.3 | 703.6 | -1 |
| Gross profit | 772.8 | 757.1 | 2 | 276.7 | 279.3 | -1 |
| Gross margin, % | 38.7 | 40.8 | - | 39.6 | 39.7 | - |
| Operating profit, EBIT | -16.6 | 76.4 | N/A | 35.5 | 65.9 | -46 |
| Operating margin, % | -0.8 | 4.1 | - | 5.1 | 9.4 | - |
| Adjusted operating profit, EBIT* | 44.3 | 91.0 | -51 | 53.3 | 73.8 | -28 |
| Adjusted operating margin, %* | 2.2 | 4.9 | - | 7.6 | 10.5 | - |
| Net profit/loss for the period | -34.3 | 45.4 | N/A | 34.5 | 45.1 | -24 |
| Equity/assets ratio, % | 36.5 | 38.1 | - | 36.5 | 38.1 | - |
| Interest-bearing net debt | 317.6 | 232.7 | 36 | 317.6 | 232.7 | 36 |
| Cash flow from operating activities | -60.4 | -142.9 | N/A | 80.9 | -20.2 | N/A |
*Adjusted for expenses affecting comparability of MSEK -60.9 (MSEK -18.8 related to a potential ownership change, MSEK -28.0 connected to a long-term incentive program and MSEK -14.1 in other costs) in the full year 2019 and MSEK -14.6 in the full year 2018.
Significant events during and after the year
- In May, Zound successfully launched the biggest brand campaign for Marshall so far – ’Hit the road’, while upgrading and adding to the range of portable speakers.
- On 25 September 2019, Zound launched their first adidas Sport headphones; the FWD-01, a wireless in-ear headphone, and RPT-01, a wireless on-ear headphone.
- On 27 January 2020, it was announced by the Board of Directors that Pernilla Ekman will leave her position as CEO of the company, and that the owners and Board of Directors have decided to suspend the company’s exit plans. Martin Axhamre will remain in the position of Acting CEO until the recruitment of a new CEO is completed.
- On 18 February 2020, Zound unveiled the Marshall Monitor II a wireless over-ear headphone featuring active noise cancellation, up to 30 hours wireless playtime and Google Assistant.
The 2019 Annual Report will be published before the AGM later this spring.
For more information, please contact:
Gustav Dahlgren, Director of Communications, Zound Industries
gustav.dahlgren@zoundindustries.com | +46 704 96 93 13
About Zound Industries International AB
Zound Industries designs and develops speakers and headphones under the brand names adidas, Marshall and Urbanears. With a strong focus on innovative technology and user-centered design, Zound has launched a wide range of iconic, award-winning products. Zound currently has around 250 employees, with offices in Stockholm, New York, London, Paris, Shenzhen and Hong Kong. In 2019 turnover reached about SEK 2.0 billion.