In a shock move leading JB Hi Fi headphone brand Sennheiser is looking to get out of the consumer market or at least find a new consumer partner to fund the struggling business.
The German Company who are among the top three headphone brands at JB Hi Fi alongside Sony and JBL is openly shopping for an investor for their consumer business after deciding to concentrate on business communication and its professional audio business which includes the Neumann microphone division.
Originally distributed by Sydney based Syntec the German audio Company set up their own subsidiary in Australia in 2016 now they are looking to partner or sell their consumer business a move that could see a major audio brand or a Chinese Company take control of the brand which is seen as one of the best headphone brands in the world.
In a press release, Sennheiser says it wants to increase visibility in the competitive headphone and soundbar markets, and it thinks its products can be popular amid “strong competitive pressure.” But it needs an investor to make that happen. It also says that talks with potential partners will start soon.
Currently the Australian audio market is facing a major shakeup with Harman the owner of JBL and Harman Kardon, Voxx International the owner of Klipsch and Sound United the owner of Polk, Marantz and Denon set to slug it out for dominance in the Australian market.
Daniel and fellow co-CEO Andreas Sennheiser, have admitted that the Company was “slow” in getting into the wireless headphone market as the category took off.
The brothers who have admitted that they are now exploring selling the Sennheiser consumer business which is under constant pressure both in Australia and worldwide.
In the 2019/2020 financial year the Company restructured their management team with the axing of key staff, after losses of $780,000. They also claimed that their Australian business was set to be affected by COVID-19 despite several of their competitors reporting record demand for headphones and soundbars.
Sennheiser Australia is operated via two entities a parent Company that reported a $228,574 profit in December 2019 after a loss in the prior year of $17,214 and via a Consolidated Group operation which reported profits of $1,027,120 after prior losses of $785,259.
Sennheiser Australia claim that revenues for the Consolidated Company were $55.4M at December 2019 vs $51.5M in 2018.
They claimed revenues for a parent Company of $52.4M at December 2019 Vs $51.9M in 2018.
Despite admitting that they were late to jump onboard with true wireless headphones, Sennheiser achieved 2019 sales of approximately A610 million, representing 52 percent of its 2019 sales, it ended up slightly negative after taxes and interest.
Daniel Sennheiser said, “To be best able to exploit the potential in each of these markets, we are concentrating our own resources on the three business areas in the Professional division and are looking for a strong partner to invest in our Consumer business,” Daniel Sennheiser, co-CEO of Sennheiser, said in the press release.
He admitted that recently, headphone sales haven’t been as good as expected”.
He claimed, “Competitive pressure has increased significantly,” and profit margins are “under pressure.” It also cut 650 jobs worldwide, leaving the company with around 2,800 employees currently.
Sennheiser’s press release makes it seem like the company is interested in partners to fund its consumer audio business, but it isn’t opposed to selling it off completely.
The Sennheiser brothers have admitted that “all options are open,” and that “it is important to us that all business areas emerge stronger from the realignment.”