Sennheiser electronic GmbH & Co. KG increased its worldwide sales last year by 3.6% to €237.2 million, once again going against the generally disappointing trend in the industry. With numerous new products, the company underlined its innovative power and consolidated its position as one of the leading international producers of high-quality audio products and electroacoustic system solutions.

The Sennheiser Group increased its sales by €8.1 million in fiscal year 2003 compared to the previous year. That equals a growth rate of 3.6%, from €229.1 million to €237.2 million. This stable growth was achieved in spite of the continued weakness of the dollar and unfavorable exchange rate effects. "In most regions, Sennheiser succeeded in achieving considerable growth rates last year," said Rolf Meyer, President Marketing and Sales, at the presentation of the Sennheiser Group's balance sheet on June 29 in Wedemark. "Our innovative product developments especially in the music industry and in the field of consumer electronics ensured significant momentum for growth."

Growth canceled out by exchange rates
This positive growth is essentially due to Sennheiser's foreign business activities: around 80% of the Sennheiser Group's total sales were achieved abroad, of which 30% were in the US dollar region.  Once again, the largest percentage of Sennheiser's sales volume was in the American sales region, at €66.2 million (previous year: €66.3 million).  In local currency, the sales development in the American and Asian markets showed substantial growth, although this was canceled out by unfavorable exchange rates.  In the Asian and Australian region, sales were almost at the level of the previous year, at €20.3 million (previous year: €20.4 million).

The second strongest market region is Southern/Western Europe and Africa, where sales rose by about 5% to €64.6 million (previous year: €61.5 million).  Expressed in percentage terms, growth at Sennheiser was strongest in the Northern and Eastern European market.  Here, sales went up by 12.7% to €38.1 million (previous year: €33.9 million). Central Europe saw slight growth to €48 million (previous year: €47 million).  Unfortunately, weak consumption in Germany continued to have a negative effect on the electronics market.  Here, the company had to accept a slight decline in sales from €43 million in 2002 to €41.2 million in 2003.

Sennheiser sound for the whole world
Sennheiser once again delighted its customers in 2003 by supplying outstanding microphone technology.  One highlight was the Nelson Mandela AIDS Awareness Concert "46664".  Top international stars like Beyoncé, Peter Gabriel, Bono, Anastacia and Queen performed together with well-known African artists like Ladysmith Black Mambazo on November 29 in Cape Town.  More than two billion people were able to watch the charity concert live or as a recording, for example on World Aids Day.  Sennheiser and Neumann were the exclusive suppliers of the entire wireless and wired microphone equipment, once again demonstrating their tremendous expertise and experience in such huge music events.

Wireless microphones provided Sennheiser with sales of €70.2 million (previous year: €71.7 million), which represents 30% of total sales. Sales of wired microphones were just under €30 million (previous year: 31.5 million), making up 13% of total sales.

New headphones make the press keen to listen
Sennheiser was able to dramatically increase sales in the headphones sector, from €39.2 million in 2002 to €44.9 million. This means that headphones now account for an almost 20% share of total group sales.  "We see this increased demand for our headphones as a clear signal that the consumer sector is picking up momentum," said Meyer, commenting on this development.  In addition to the new flagship, the audiophile HD 650 headphones, it was above all the much-lauded PX Series, winner of numerous awards, that was particularly successful.

Your personal tour guide: GuidePort
Innovative products impressed customers throughout the world in other sectors too. For example, the digital RF-based visitor guidance system GuidePort was exceptionally successful in 2003, earning its inventors a nomination for the prestigious German Future Award. More than three dozen theme parks and museums throughout the world already make use of GuidePort's audio transmission to provide their visitors with completely individualized information. The sectors audiology, conference and information technology, aviation and products supplied by the subsidiary Georg Neumann GmbH, Berlin, each accounted for less than 10% of total sales.

Successful start in the new telecommunications sector
Sennheiser Communications A/S, a joint venture formed in January 2003 with the Danish company William Demant Holding A/S, made a very successful entry into the telecommunications market.  Even in the very first year, their innovative headsets for offices, call centers and PCs had sales of €4.2 million, accounting for 1.8% of total sales.

Overall improvement in productivity and efficiency
The worldwide success of the Sennheiser group is due in particular to the sharply increased productivity of its manufacturing companies.  There were also further advancements in group working, with the establishment of five new groups at the German Burgdorf site in 2003.  Production at the German plants in Burgdorf and Wennebostel is focused on the manufacturing of wired and wireless microphones as well as on visitor guidance and conference systems. For the German plants, production output on the same level is planned for 2004.

Sennheiser's headphones production is concentrated in Tullamore.  The Irish facility raised its productivity by more than 20% compared to the previous year.  This increase was a result of the optimization of production processes made possible by the move to a new building.  In addition to its production activities, the Irish site was also responsible for the logistics requirements of Sennheiser Communications A/S.

At the Albuquerque, New Mexico, plant, production of wireless products for the American market rose by 15.5% last year. "With the introduction of our new evolution wireless G2 product series, we are planning a further sharp increase in production volume for 2004," said Volker Bartels, President Manufacturing. "Due to the low dollar exchange rate, expansion of production at this site for the Group will be accelerated."

Research and development increase capacities
Last year, Sennheiser invested a total of €14.3 million in research and development.  One of the new products was the next generation of the "evolution wireless" radio microphone series, and the range of wired microphones was also consistently expanded.  In the field of consumer electronics, Sennheiser continued to set standards worldwide with its audiophile HD 650 headphones.

"This tremendous output of innovative products would not be possible without highly qualified engineers and software developers," said Dr. Heinrich Esser, President Research and Development of the Sennheiser Group. "For this reason, we took on 13 new employees in the R&D sector last year." This sector is supplemented by the ten-strong R&D team of Sennheiser Communications A/S in Copenhagen.

Altogether, the workforce of the Sennheiser Group in 2003 was 1,579 employees on average, an increase of 7.3% over the previous year (1,493). The number of trainees and apprentices increased from 35 to 45.
Investment in tangible and intangible assets remained approximately at the level of the previous year at €10.8 million.

Outlook
"The expansion of our organizational structures and investment in the R&D sector will allow us to further increase growth in the current year," said Rolf Meyer. "We are already witnessing positive signs of an upswing in the world economy in some sales regions. If the economy continues to stabilize, I expect a sharp increase in sales in 2004."

For further information, please contact:

Sennheiser electronic GmbH & Co. KG
Press Officer - Edelgard Marquardt
Am Labor 1 - 30900 Wedemark
Tel: +49 (5130) 600-329 - Fax: +49 (5130) 600-295
E-Mail: marquare@sennheiser.com