Audio specialist Sennheiser electronic GmbH & Co. KG concluded financial year 2004 with worldwide sales of EUR 261.7 million, which corresponds to an increase of 10.3 per cent on the previous year. In addition to the positive development of the economic climate, this success can also be attributed to the company's consistently high investments in production technologies and research & development; other contributory factors were decisive improvements to its logistics processes and efficient marketing strategies.

The Sennheiser Group, which in the year under report consisted of the parent company plus four domestic and 13 foreign subsidiaries, and the joint venture Sennheiser Communications A/S, raised its sales by EUR 24.5 million in 2004 to a figure of EUR 261.7 million. Profits increased to EUR 13.6 million, which already takes into account a special effect resulting from a fire at the Tullamore production plant in Ireland. "Last year, Sennheiser benefited in particular from the general upturn in the global economy," commented Rolf Meyer, President Marketing and Sales and speaker of the Executive Committee, on the 2004 figures. "We achieved substantial growth rates in all markets. New and innovative products in all business areas further enhanced that positive trend."


The Sennheiser Executive Committee (l/r): Stefan Junker, Peter Tschirner, Volker Bartels, Rolf Meyer and Dr. Heinrich Esser.

High Growth in All Regions
Sennheiser boasted especially good growth in the sales regions of the Americas and Asia and Australia, at 16.7 and 16.6 per cent respectively. The regions of Northern and Eastern Europe (up 7.5 per cent), Central Europe (up 6.9 per cent) and Western & Southern Europe and Africa (up 6 per cent) also showed thoroughly positive trends. Once again, the American continent was the highest growth region, with sales of EUR 77.3 million, followed by Western & Southern Europe and Africa (EUR 68.4 million) and Central Europe (EUR 51.3 million). Northern and Eastern Europe generated sales of EUR 41.0 million, while the sales figure for Asia and Australia amounted to EUR 23.7 million. In Germany, sales increased by EUR 2.5 million to EUR 43.7 million, which means that 83 per cent of all sales were made outside Germany. At 28.8 per cent, wireless microphones accounted for the largest share of sales, followed by headphones at 19.4 per cent and wired microphones, at 11.6 per cent. Sales with Sennheiser Communications products increased from EUR 4.2 million to EUR 9.3 million. The joint venture has meanwhile established itself as No. 3 in the telecommunications headsets market.

To counteract the adverse effects of the euro/dollar exchange rate which has impaired consolidated sales for years, Sennheiser is applying a systematic policy of increasing its purchasing and production activities in the US dollar region. "As a result of new supply sources in the US dollar region and changing invoicing over to dollars with some of our existing suppliers, we have already succeeded in increasing the US dollar proportion of the purchasing volume to around 50 per cent," explained Rolf Meyer.

High Flexibility in Manufacturing
The fire at the Irish production plant in Tullamore, where high-volume headphone manufacturing for the Sennheiser Group is concentrated, cast a shadow over the year 2004. "Thanks to the great commitment of our Irish workforce and vigorous support from Germany, we managed to resume production sooner than originally expected," commented Volker Bartels, President Manufacturing. "The flexible deployment of all employees at the different plants helped to compensate for a large part of the negative effects of the fire." In the course of rebuilding and refurbishing the factory, which the company had only moved into in 2002, Sennheiser invested in state-of-the-art manufacturing technology, including a fully automatic capsule production line, which will ensure the future viability of Sennheiser Ireland.

At the Albuquerque plant in the US state of New Mexico, the course has been set for expansion of the manufacturing activities. "Increasing our manufacturing activities in the US dollar region will make us more independent of the unfavorable euro/dollar exchange rate," explained Bartels. "Our competitors produce exclusively in the US dollar region and have enjoyed substantial cost advantages for years as a result of exchange rate trends. Our plant in the USA enables us to take effective counteraction."

During financial year 2004, Sennheiser also focussed on optimizing its logistics processes. "We have initiated a project to review the entire supply chain at Sennheiser. In 2004, this already generated highly positive results which will continue in 2005."

Successful research & development
Thanks to consistently high investments in research & development - amounting to EUR 15.7 million in 2004 - the company could introduce even more attractive products to its portfolio last year. The share of new products (= products in the year of launch plus the following year) in the total sales figure rose from 27 to 44 per cent. "Particularly successful new products include the evolution wireless G2 radio microphone series, and the evolution 900 wired microphones," summed up Dr. Heinrich Esser, President Research & Development. "In the consumer sector, new wired and wireless headphones were developed for the medium and lower price segments, while new GuidePort software packages now provide museums and theme parks with a wide range of visitor guidance options and the possibility of generating statistical data. At the end of 2004, we launched new headset microphones for the broadcasting and MI markets, which were successfully used, for instance, at the Eurovision Song Contest 2005."

Esser believes that the latest CAD and simulation technologies are the key to success in his sector: "In order to offer top-class products even for segments with short product life cycles, our engineers work with state-of-the-art development tools. As our products are designed for the international market, worldwide development networks will also play an increasingly important role in future."

	Workforce The number of employees rose by 4.4 per cent over the preceding year to an average of 1648. 59% of the total workforce was employed at the two German locations, 41% at the production plants in Ireland and Albuquerque and at the foreign subsidiaries. The workforce is expected to continue to rise over the following years, amongst other things as a result of increased recruitment at the Albuquerque location.
Prof. Dr. Jörg Sennheiser, Chairman of the Supervisory Board of Sennheiser electronic GmbH & Co. KG

Outlook
The company's strong investment activities, combined with further product launches, e.g. in the wireless microphone and telecommunications segments, mean that the prospects for anniversary year 2005 are looking good. Moreover, Sennheiser expects to see further growth from the new group company K+H Vertriebs- und Entwicklungsgesellschaft mbH. "The innovative PA systems and studio monitors of Klein + Hummel have opened up further attractive product segments for us. The opportunities for healthy growth in the national and international market remain good for 2005; the primary growth regions will be the American and Asian markets."

For further information, please contact:

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