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Home >> Harman Reports Lower Sales, Profits; To Layoff 500
Stamford, Conn. — Harman International Industries reported lower sales and income during its fiscal first quarter, ended Dec. 31, 2012, and said it would issue layoffs of 500 employees.
Net sales for the second quarter were $1.056 billion, a decrease of 6 percent compared with the same period last year. In local currency, net sales decreased by 4 percent compared with the same period last year, primarily as a result of the economic slow-down in Europe, which significantly impacted automotive production.
Net income in the quarter was $41 million, down from the prior year’s $60 million.
Second-quarter operating income was $68 million, compared with $95 million in the same period last year. Excluding restructuring and non-recurring charges, operating profit in the second quarter was $57 million, compared with $96 million in the same period last year.
Harman said it would implement restructuring initiatives, which will reduce approximately 500 jobs in high-cost countries, resulting in annual operational savings of approximately $30 million to $35 million beginning in fiscal year 2014, the company said. Harman expects to record a restructuring charge of approximately $30 million to 35 million in the second half of fiscal year 2013.
The company is also evaluating the sale or closure of a manufacturing site in Europe, which would reduce an additional 500 jobs.
Harman also announced plans to launch an infotainment services business. Harman Infotainment Services will leverage the installed base of more than 15 million Harman infotainment-equipped vehicles on the road today to create a fast-growing, recurring revenue stream with high margins, it said.
OEMs and car owners are seeking to keep their vehicle infotainment systems current and connected. Harman Infotainment Services will offer 4G/LTE connected head-unit upgrades for vehicles currently on the road; Cloud-based services to the car (such as Aha by Harman); and customer relationship management (CRM) services for automakers using vehicle-specific aggregated data, the company said.
Harman expects the service business to grow fivefold within the next five years from current levels of approximately $100 million.