Harman International Reports Second Quarter FY 2009 Results, Quarterly Dividend
STAMFORD, Conn.--(BUSINESS WIRE)--Harman International Industries, Incorporated (NYSE: HAR):
Harman International Industries, Incorporated (NYSE: HAR) today announced results for the second quarter ended December 31, 2008. Net sales for the second quarter were $756 million, a 29 percent decrease compared to $1.066 billion for the same period last year. Loss per diluted share in the second quarter was ($5.41) compared to earnings of $0.68 in the same period last year. Excluding restructuring, merger-related costs and preliminary goodwill impairment charges, non-GAAP loss per diluted share was ($0.18) for the second quarter compared to non-GAAP earnings of $0.74 for the same period last year.
“We are clearly feeling the impact of the current economic turmoil and its effect on buyer confidence,” said Dinesh C. Paliwal, Chairman and CEO. “To align our costs and capacity with this lower demand, we have reduced employment by more than 900 during the first half of this fiscal year – mostly in the US and UK. We intend to reduce another 1,100 jobs within this fiscal year. Simultaneously, we are strengthening our footprint in the emerging markets, shifting some of the manufacturing and engineering activities to our newly-established operations in China, India, Hungary and Mexico. We continue to invest in new products and R&D, and we intend to emerge as a more competitive company as we carefully manage our strong balance sheet and execute on our $400 million STEP Change cost savings program.”
Automotive net sales for the quarter ended December 31, 2008 decreased $203 million, or 28 percent compared to the same period last year. Foreign currency translation had a negative impact on net sales of $52.4 million during the quarter. Sales were impacted by lower production volumes and extended plant shut downs by some major automakers. The previously disclosed change in sourcing strategy at Mercedes Benz also negatively affected sales.
Automotive gross profit as a percentage of net sales, on a non-GAAP basis, was 19.9 percent compared to 25.7 percent in the same period last year. The margin decline was primarily due to under-absorption of production resources as sales volumes declined faster than cost savings could be realized. Product mix due to new product launches also impacted margins.
SG&A expenses, on a non-GAAP basis, were down $25.1 million compared with the prior year ($151 million vs. $126 million), of which $11.6 million was due to foreign exchange.
The Automotive division continues to execute on its order backlog. Our recently launched infotainment system for the Peugeot 407 Series was officially introduced into the European Market during the second quarter. Our new mid-level infotainment systems for the next generation Mercedes E-Class was released for production in December 2008. This new E-Class system will be the first mid-system in the market with full map navigation. A test phase evaluation of new infotainment systems for the BMW 7 Series drew praise from customer officials. Harman’s Porsche Communications Management System was selected by the Association of German Engineers as the “Friendly User Award Winner 2008” for its intuitive user interface. Hyundai’s flagship Genesis sedan, equipped with the Company’s Lexicon sound system and fully integrated premium infotainment systems won the coveted “North American Car of the Year” award.
Harman was selected by Mercedes-Benz to supply a hybrid mid-level navigation system combining the benefits of a conventional Portable Navigation Device with the complete functionality of a fully integrated in-dash infotainment system. The Company will supply this innovative system solution for eight Mercedes models starting in the latter half of 2010. The Company was also selected to provide the branded audio systems for the next generation Land Rover Discovery and Range Rover Sport models, scheduled for dealer showrooms in 2011.