What does the Sennheiser restructure mean for the business? Co-CEOs Daniel and Andreas speak out

“We were greatly equipped for everything we do on the pro side, but saw that we would be better off partnering with somebody who brings competency in the field of visibility and marketing on the consumer side”.

Sennheiser co-CEOs Daniel and Andreas Sennheiser have spoken to Audio Media International about the division of the company’s professional and consumer business units and what the restructure means for its customers and staff.

Yesterday (February 16) saw the German audio giant reveal that it would be separating its professional and consumer business units, with an investor being sought for the latter to accelerate growth and development. As a result, the freed-up resources will be poured back into the professional division, which is made of three strands – pro audio, business communications and the iconic Neumann microphone brand.

Audio Media International editor Daniel Gumble spoke to Daniel and Andreas Sennheiser to find out what the repositioning means for the pro audio business and how an investment partner could reshape the Sennheiser brand as we know it…

What prompted this repositioning?

Daniel: We see great growth opportunities in all business segments – pro audio, business communication, Neumann and the consumer business. After years of focusing on our customers and delivering superior audio competence, we realised that the customer segment is quite different. So we started to organise ourselves internally into these four segments. As a result, we developed strategies for all four business units and found that we were greatly equipped for everything we do on the pro side, but saw that we would be better off partnering with somebody who brings competency in the field of visibility and marketing on the consumer side so we can also participate in that growth.

Last year, Sennheiser announced mass redundancies (650) that would take place across the company from 2020-2022. Did these staff cuts influence your decision to reposition the business units?

Andreas: That restructuring was meant to add clarity as to what customers could expect from the different divisions – we realised we had to do some things differently, especially in the not so customer facing parts but in the corporate area. So, we streamlined those parts in order to have four more or less independent effective and lean organisations, which would address every customer’s needs. You can see we now have four strong business units. It was later that we realised that growth opportunities across all four divisions would be increased if we partnered with an investor on the consumer side.

How much of an impact has the pandemic had on the repositioning?

Daniel: The decision was made as part of our long-term strategy and was independent of the pandemic. Of course, the pandemic is a catalyst for change. A lot of businesses need to change, we as well, because different business areas are affected in different ways. We’ve seen a strong impact in the live performance business, which is not happening at all. On the other side, we see business like Neumann and our podcast side all growing. On the consumer side, we initially saw a big impact from COVID but that has come back to normal growth very quickly. So, we can see that pandemic has an impact, but the strategic repositioning of our business had nothing to do with it.

Has the pandemic affected sales of studio gear? 

Andreas: On all home audio products we’ve seen a significant increase in demand – that’s true for Sennheiser headphones and Neumann microphones, so that’s offset some of the missed sales we had on the live side.

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What does the repositioning mean for the pro audio side of the business? 

Daniel: More resources will be available, which means we’ll invest more in R&D, more into understanding our customers better and marketing our products. On the business comms side, we’ll invest more into products – we see a great opportunity to expand our portfolio. Neumann, which is a legendary audio brand, is really benefitting from more funds which will fuel growth and bring new products to market.

How will staff on the consumer side be affected? Will current jobs be protected?

Andreas: We are only at the beginning of the partner search, so there is no precise answer to this. We believe that an investor who believes in everything we’ve built up until now would be very much interested in keeping the competency and the company that can fulfil the promise that the Sennheiser consumer brand has made over the past decade.

The sound bar range that you introduced recently has been very successful. Will that remain a key part of the consumer unit you seek investment for?

Daniel: Absolutely. The sound bar has been extremely successful, and we believe we can be even more successful with an increased injection of money and competency.

What opportunities are there for potential investors?

Andreas: For decades we have built a reputation as a brand that delivers delightful audio experiences. A partner would bring the fuel that accelerates this and puts our capabilities onto a higher level of visibility. We have a very attractive consumer business that has everything it takes to be successful, and if the right fuel is being injected it will be even more successful in the future.

Is there a time scale for a partner to be found?

Daniel: We’re not under time pressure, but it doesn’t make sense to drag out a process like this for too long. So our current plan is to have found a partner initially by summer, and if everything goes well, have a closing of the partnership by the end of the year.

Have you begun negotiations yet?

Andreas: We’ve just started to reach out to potential partners, but in the meantime, we cannot give any updates for confidentiality purposes.

What is your message to the rest of the audio community, some of which may be unsure as to what this repositioning means for the company?

Daniel: We are seeing great growth opportunities across all four business divisions. Our new set up allows us to invest in all of those areas and at the same time grasp the growth opportunities in all four areas. This is good news for the customers, as it means more Sennheiser products, more Neumann products and a higher investment in all those areas.

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