Harman Reports Fiscal Q2, 1st-Half Losses - Twice

Harman Reports Fiscal Q2, 1st-Half Losses

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Harman International posted operating and net losses in its fiscal second quarter and first half, compared with year-ago gains, as sales declined during both periods in its automotive OEM, consumer electronics and professional-audio divisions.

Automotive OEM is Harman's largest division, accounting for 68 percent on net sales in the second quarter, ended Dec. 31.

For the quarter, total net sales slipped 29 percent to $756 million, producing an operating loss of $367 million compared with the year-ago $61 million operating income and a net loss of $317 million compared with a year-ago net income of $43 million.

For the half, net sales slid 19 percent to $1.63 billion, producing an operating loss of $334 million compared with a year-ago income of $102 million and a net loss of $294 million compared with the year-ago $79 million net income.

The losses, which include the effects of currency fluctuations, are likely to continue for awhile if sales remain as low as they have been, said chairman/CEO Dinesh Paliwal. “The realization of savings [from restructuring] takes a good nine to 12 months,” he said. “If sales remain at such low levels, it will be a challenge to do something magical here.”

In the consumer division, second-quarter net sales slid 35 percent to $120 million, and first-half sales were down 26 percent to $226 million. The division posted operating losses in both periods compared with operating profits in the year-ago periods. Second-quarter operating losses came to $25 million compared with a year-ago operating income of $17 million. First-half- operating losses came to $26 million compared to a year-ago operating income of $14 million.

Excluding one-time items, the company would have posted a $16 million operating loss and $10 million net loss in the second quarter compared with year-ago profits of $70 million and $46 million, respectively. First-half operating and net income would have come to $27 million and $20 million, respectively, down 77 percent and 79 percent from the year-ago periods.

In the automotive division, beset by declining new-car sales, net sales dropped 28 percent for the quarter to $517 million. Second-quarter operating losses came to $320 million compared to year-ago operating income of $34 million.

As previously reported Harman cut more than 900 jobs in the first half, will eliminate another 1,100 during the remainder of the fiscal year ending in July and close its Woodbury, N.Y., offices.

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