Sennheiser has confirmed that it plans to cut 650 jobs by 2022, following the announcement of its 2019 financial results.
The Sennheiser Group’s financial results for the fiscal year 2019 reveal that the company generated turnover of €756.7 million, which is €46.0 million or 6.5 per cent more than in 2018, while EBIT of €18.5 million was slightly below the previous year’s level of €21.2 million.
The Group’s professional division generated turnover of €363.3 million, an increase of 9.2 per cent over the previous year. Growth was driven in particular by the product categories of live music, studio recording and business communication. The consumer division generated turnover of €393.4 million. Although turnover increased by 4.1 per cent, or €15.4 million, this was significantly below the growth of the headphone market as a whole.
However, while Sennheiser’s fiscal year results are described by the company as ‘mixed’, the impact of the Covid-19 pandemic and a slowing of the headphones market means that the company expects a major decline in turnover and earnings. As a result, it has announced that around 650 jobs – approximately 300 in Germany – will be cut over the next 18 months. The job losses will be felt most across Sennheiser’s corporate functions, such as supply chain and operations, according to the company.
“We look back on a rather mixed fiscal year 2019,” said Daniel Sennheiser, co-CEO of Sennheiser. “In addition, we face major challenges this year due to massive changes in the consumer market and the declining demand for audio products because of the COVID-19 crisis. In order to position the company for a successful future, we will adapt our organizational structure to the changing conditions and align it with the new requirements.“
Dr. Andreas Sennheiser, co-CEO of the company, added: “We will continue to focus on our core competencies and further strengthen both our consumer and professional divisions by transferring operational responsibility completely to these two business areas. Sennheiser has always stood for excellent sound quality and extraordinary audio experiences since its foundation 75 years ago – this is what we will continue to stand for in the future.“
The company stated that the staff reduction ‘is to be implemented in the most socially responsible manner possible’. Measures being considered include not filling open positions, a voluntary redundancy scheme and severance options in addition to opportunities for partial and early retirement.
“We are a family-owned company and every single one of our employees is part of the team,” said Dr. Andreas Sennheiser. “Together we share a passion for audio. With this in mind, these have been very difficult decisions to make and it is important to us primarily to avoid redundancies and to find individual solutions together with employees.”
Covid-19 and its impact on the audio biz
Commenting on the widespread effects of the Covid-19 pandemic on the audio industry, Daniel Sennheiser said: “With the cancellation of live events all over the world, the entire event and music industry has been practically brought to a standstill and is only slowly getting back on track. The future of many rental companies, and other service providers is under threat. This is having a significant impact on sales of microphones, which will continue to be reflected in our business performance next year. Exceptions are studio microphones.“
Sennheiser’s consumer division has also been hit by the outbreak. The global headphone market has declined by 30 to 40 per cent in recent months, with sales in bricks and mortar retail outlets in many countries not possible. Sales of Sennheiser headphones also decreased to the same extent. To offset the negative impacts, Sennheiser started implementing measures in March by initiating cost reductions and reduced working hours in Germany.
Meanwhile, EMEA continued to deliver the highest turnover in 2019 with €382.7 million, representing growth of of 6.4 per cent or €22.9 million. In its domestic market, Sennheiser saw turnover rise by 1.8 percent, or €1.9 million, for a total of €103.1 million. The APAC region recorded the highest increase in percentage terms with 10.6 per cent. Total turnover in the region totaled €175.3 million – up €16.8 million on the previous year. Growth was driven in particular by the markets in China, Japan and South Korea. In the Americas region, turnover increased by €6.3 million, or 3.3 per cent, year on year to €198.7 million.
Dr. Andreas Sennheiser concluded the company’s report by pledging to invest further in its development activities: “To create innovative audio experiences for our customers and to shape the future of the audio industry, we are continuously investing in our development activities. We will continue to invest in development in the coming years and work closely with our customers and partners.”
Sennheiser Group’s investments in 2019 increased by 4.1 per cent to €63 million compared to the previous year, which corresponds to 8.3 per cent of turnover.