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Harman: Q3 Home, Multimedia Sales Up 17%

Stamford, Conn. –Harman reports that home audio and multimedia products grew 17 percent in the company’s fiscal third quarter ending March 31.

Chairman Dinesh Paliwal said operating margins hit the high single digits in the three-month and nine-month periods, but did not reveal specific dollar volumes.

Paliwal did note the segment’s nine-month operating margin hit a record-high 8 percent. He also said he expects full-year home/multimedia sales to be “close to $600 million.”

Sales of consumer products carried over “strong momentum” during the holiday selling season into the latest quarter, he said. “I am very pleased with the turnaround in this business,” Paliwal said during an analyst’s conference call.

He attributed much of the growth to expanded distribution in the U.S. and emerging markets. In the U.S., Harman launched multimedia products through Sprint-owned stores, which number about 1,000. Harman will also enter into relationships with AT&T and Verizon Wireless, Paliwal added.

During the past six months, he also noted, the company sold more than 1 million wireless-audio products, marking a record.

 Going back as many as 10 years, Paliwal said, the home/multimedia segments were “loss makers” or “at best” delivering low-single-digit margins. “No one in this space makes money” except for Harman and Bose, he claimed.

Declines in third-quarter OEM car audio and infotainment-system sales, however, offset the home product gains, which account for a minority of Harman sales. As a result, the company’s net sales, operating income, and net income fell in its fiscal 2013 third quarter and for the nine-month period, including currency fluctuations. Harman cited declining car sales in Western Europe.

Net sales were down 3 percent in the quarter to $1.06 billion and down 5 percent for the year-to-date to $3.12 billion.

Operating income fell in the third quarter by 36 percent to $38 million and by 19 percent in the three-quarter period to $186 million.

Net profits fell 80 percent in the quarter to $35 million and by 51 percent to $137 million in the nine-month period.