Having closed its fiscal year in June, the family-owned Sennheiser Group has announced its financial results for 2019, and while sales were only slightly down overall for the year, the company is preparing for the worst. Citing the effects of the COVID-19 pandemic on its consumer and professional businesses, as well as a slowdown in the headphone market, Sennheiser will cut roughly 650 employees by the end of 2022, with about 300 of those jobs in Germany.
Daniel Sennheiser, co-CEO of Sennheiser, noted in a statement, “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.” As a result, the company will be looking to make cuts in corporate functions such as supply chain and operations. Aiming to enact the reduction in what it termed a “socially responsible manner,” Sennheiser will consider measures such as not filling open positions, a voluntary redundancy scheme and severance options in addition to offering 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, co-CEO. “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.” He 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’s fiscal year 2019 saw the company grow in its professional division while it landed below expectations in the consumer business. In total, the Sennheiser Group generated turnover of $863 million — 6.5% more than in 2018.
The company attributed much of its slide on the consumer side to the global headphone market, which has declined by 30 to 40% in recent months, largely due to physical retail outlets worldwide being closed or operated under shortened hours. Accordingly, sales of Sennheiser headphones also decreased to the same extent. In order to mitigate those effects, in March, the company introduced cost reductions and reduced working hours in Germany. Measures to reduce personnel costs and material costs were implemented to the same extent at Sennheiser’s international locations.
The effect of COVID-19 has also been felt in the company’s live sound microphone sales, as Daniel Sennheiser explained: “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.”
In the fiscal year 2019, the professional division generated turnover of $414.4 million, an increase of 9.2% 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 $448.7 million. Although turnover increased by 4.1%, that landed below the growth of the headphone market as a whole, despite the launch of new headphone models in the premium segment.
Playing to a hometown crowd continued to be Sennheiser’s forte when it came to sales — EMEA continued to be the region with the highest turnover in 2019 with $436.4 million, garnering an increase of 6.4%. In its home market Germany, Sennheiser was able to increase turnover by 1.8%. The APAC region recorded the highest increase in percentage terms with 10.6%. Growth was driven in particular by the markets in China, Japan and South Korea, while in the Americas region, turnover increased by $7.2 million, or 3.3%, year on year to $226.6 million.
With imminent job cuts and an expected continued downturn ahead, Sennheiser added that it fully intends to keep funding its R&D efforts going forward, including the development of its AMEBO immersive audio technology. “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, “ said Dr. Andreas Sennheiser. Sennheiser Group’s investments in 2019 increased by 4.1% to $71.8 million, which corresponds to 8.3% of turnover.