STAMFORD, CT – HARMAN, the premium audio and infotainment group (NYSE:HAR), today announced that it was reorganizing its businesses in order to accelerate earnings growth opportunities and better align with consumer lifestyle preferences. While the Company’s Professional Division will remain largely unaffected, the Company will reorganize its Automotive and Consumer Divisions to create two new Divisions, Lifestyle and Infotainment.
Dinesh Paliwal, Chairman, President and CEO, commented “Consumers want simplicity, seamless portability and sound integration that fits their lifestyle. There is a clear convergence happening among consumer devices in the home, office, car and everywhere in between. Consumers no longer view these locations and personal mobile devices as separate domains, but as one, continuous ecosystem where the delivery of information and entertainment should flow seamlessly between them, anytime, anywhere, anyplace. While this is made possible by, among other things, the dramatic increases in available bandwidth and cloud-based serving of content, HARMAN is in a unique position to tie these technologies together and deliver products that provide the seamless digital ecosystem consumers are demanding.”
Mr. Paliwal continued, “Over the past few years we have made great progress in creating efficiency throughout our organization and in developing a world-class infrastructure. We have eliminated over $400 million of unnecessary costs, optimized our global footprint, and positioned our business for growth. It is now time to align our company to best address a future that will be driven by advanced technologies in content creation, aggregation, distribution, and seamless delivery and connectivity among multiple devices. HARMAN continues to invest in creating software-driven solutions that distinguish us from our competitors combined with the strength of a world-class portfolio of consumer brands.”
With more than $1 billion in revenue, and double-digit operating margins, HARMAN’s new Lifestyle Division, with the AKG®, Harman Kardon®, JBL®, Mark Levinson®, Infinity®, and Lexicon brands®, has the scale and resources to generate additional growth opportunities. As a result of this reorganization, the new global Lifestyle Division will be able to create both operating and revenue synergies. From an operational perspective, the Company will better leverage consumer research, technology trends, R&D, and procurement. From a revenue perspective, the Company will integrate its brand marketing across vertical markets, channels, and customers in all geographies focused on serving the same end-user, the consumer.
The Company believes that it will create additional growth by combining the infrastructure and capabilities of its luxury home audio business with its market-leading position in branded car audio systems, which are featured in the premium vehicle segments of: BMW, Chrysler, Ferrari, Fiat, GM, Harley-Davidson, Hyundai, Jaguar, Land Rover, Lexus, Mercedes Benz, Rolls Royce, Subaru and Toyota.
To increase automotive audio take rates and lifestyle product sales, the Company will launch a new, integrated marketing campaign that creates synergy between its automotive and consumer products and brands, featuring global celebrity artists using Harman products. More details on the campaign and the artists involved will be presented at the IFA show in Berlin, Germany early September 2011.
The Company’s new Infotainment Division encompasses technology solutions for navigation, hands free telephony, Internet and wireless connectivity, and a myriad of in-vehicle safety systems including camera, infrared, and laser technologies. HARMAN’s leadership in mobile device and systems integration as well as applications that safely enable social media in the car environment positions the company for increased penetration in the growing infotainment market. Strategy Analytics predicts that one in every five cars produced worldwide in 2015, or 21M new vehicles, will have an infotainment system. This is almost double the 11M infotainment-equipped vehicles produced in 2010. This represents a 5-year compound annual growth rate of 14%.
This stand-alone division, with revenues of approximately $2.1 billion, will benefit from a focused management structure that will further improve operating profitability. Harman is a market leader in premium infotainment systems, serving Audi, BMW, Chrysler, Ferrari, Fiat, Hyundai, Mercedes Benz, Porsche, Peugeot, Toyota, Volvo and Volkswagen.
On an unaudited basis, giving effect to the new segments, the Company believes that in Fiscal 2011 it would approximately have reported: Lifestyle revenues of $1.1 billion with 10% EBIT; Infotainment revenues of $2.1 billion with 4.2% EBIT; and Professional revenues of $0.6 billion with 15.8% EBIT.
HARMAN (www.harman.com) designs, manufactures and markets a wide range of audio and infotainment solutions for the automotive, consumer and professional markets – supported by 15 leading brands including AKG®, Harman Kardon®, Infinity®, JBL®, Lexicon® and Mark Levinson®. The Company is admired by audiophiles across multiple generations and supports leading professional entertainers and the venues where they perform. More than 20 million automobiles on the road today are equipped with HARMAN audio and infotainment systems. HARMAN has a workforce of about 12,000 people across the Americas, Europe and Asia, and reported sales of $3.8 billion for the twelve months ending June 30, 2011. The Company’s shares are traded on the New York Stock Exchange under the symbol NYSE:HAR.