»We managed to keep up the positive momentum from 2021, focusing on the professional audio business just as we had strategically planned.«
A conversation about the 2022 financial year with Dr. Andreas and Daniel Sennheiser
How would you summarize the financial year 2022? Are you satisfied with it?
Daniel Sennheiser: We are very satisfied with the results of 2022. We managed to keep up the positive momentum from 2021, focusing on the professional audio business just as we had strategically planned. At the beginning of 2022, as announced, we sold the Consumer Business and have since concentrated on the Pro Audio, Business Communication, and Neumann business units. This focus is paying off: We have been able to generate significantly more growth, while at the same time increasing profitability.
When you look back on the year 2022: In a year in which so much has changed, what was ultimately decisive for success?
Daniel Sennheiser: Several aspects played a role in our success in 2022: On the one hand, there was a significant market recovery, which we naturally felt. On the other hand, we also experienced an incredible willingness to act on the part of all employees within the company. The new focus and the clear strategy certainly contributed to the fact that all employees knew where we wanted to go and how each individual could make a contribution to achieving our goals.
Andreas Sennheiser: In the process, our teams have done an incredible job. On the one hand, we got straight back to business once most of the Corona regulations had been lifted. On the other hand, we realized the Carve-Out together in parallel. At the same time, we were also able to guarantee our ability to deliver at all times, thanks to our high level of vertical integration.
Last year, you announced that you wanted to grow sustainably by your own power. Did you succeed in doing that?
Andreas Sennheiser: Our sales have not halved — despite the sale of the Consumer Business; instead, we have grown strongly in the professional segment. We therefore expect the company to return to its original size much faster than we had previously assumed.
Daniel Sennheiser: We have seen a boom in Business Communication with hybrid conferences and solutions for universities. At the same time, we have been able to achieve disproportionate growth in all market segments in the Pro Audio area. Artists and performers want to get back on stage. There is a huge pent-up demand, both from musicians who want to play and from people who want to attend concerts to finally experience live music again. The Neumann area has stabilized at a high level in 2022 after nearly two years of growth that led to almost a doubling of business. For 2023, we already see that we are returning to a growth course here as well.
How have the individual regions developed?
Daniel Sennheiser: The positive sales development was reflected in all regions. However, we can clearly see that the largest market for audio products, America, was also the most dynamic. In the APAC region, we are seeing a slower recovery, which is due to the much longer lasting restrictions of the Corona pandemic. Therefore, the recovery is delayed there, which is now having a positive impact during 2023. Europe remains a very stable market, with continuous growth particularly in the area of Business Communication.
»In line with our announced strategy of investing further in Sennheiser's core competencies, we are building up the corresponding resources and thus also the number of employees — particularly in the areas of research and development, but also in the production facilities in Germany and Romania.«
– Andreas Sennheiser
Growth is not only reflected in sales, but also in the number of employees. Along with the sale of the Consumer Business, you handed over 650 employees. How big is the company today and what development do you see for the future?
Andreas Sennheiser: In line with our announced strategy of investing further in Sennheiser's core competencies, we are building up the corresponding resources and thus also the number of employees — particularly in the areas of research and development, but also in the production facilities in Germany and Romania. Of course, we are acting prudently and are planning for the long term. But it is always our goal to offer our customers technologically high-quality solutions, and this requires a large number of passionate employees.
Daniel Sennheiser: In the process, we can offer increasingly high-quality jobs. This applies to production, but also to other areas, because we are increasingly using electronical support for simple and routine tasks — whether in accounting, where software robots are used for evaluations, or in production, where mechanical robots take over monotonous tasks. In particular, in the development areas, we need complex system architecture profiles. Thus, jobs in all areas of the company are becoming more demanding and more attractive.
You have already mentioned your strategy and the focus on the professional business. What does this strategy look like for the company, as well as for the individual business units?
Daniel Sennheiser: As a company, we remain committed to the vision of providing the world with better audio experiences. This vision is reflected in the different strategies of the business units in different ways. For Business Communication, the focus is on bringing good audio to the world of collaboration and learning. Strategic collaborations with other companies such as Microsoft, Cisco or QSC are crucial there. In this area in particular, the ability to cooperate with partners is essential for the best possible solution, because our technology is only one part of the overall system.
Andreas Sennheiser: In the area of Pro Audio, we have returned to our old strengths: We want to enable musicians, content producers and broadcasters to showcase their artistic expression with our products. The key here is to always offer artists new technologies and maximum security with a working tool that they can rely on.
At Neumann, the strategy is to set the benchmark and be the reference in all areas in which we work. We are proud that we have recently succeeded in doing just this with our first audio interface, the MT48. By adding Merging Technologies' expertise in AD/DA conversion to Neumann’s deep knowledge in microphones and monitoring, we have created a product that is truly exceptional in terms of sound quality, functionality, and ease of use.
Where do you see the greatest growth potential for the next few years?
Daniel Sennheiser: The greatest growth potential is clearly in the area of Business Communication. Our goal is to be present in the majority of all meeting rooms worldwide with our microphones and audio solutions. We will continuously expand our portfolio in this area. At the same time, there is a huge potential in higher education: both in the field of collaboration, i.e., hybrid learning spaces, and in the field of assistive listening. For example, our Sennheiser Connect system continues to expand and is being used both for live audience engagement and also to enable accessibility and inclusion with mobile hearing assistance.
Sennheiser Mobility is a new area for business. In recent months, there have already been interesting projects with Morgan Motors, but also with the CUPRA Tavascan model. What exactly are the future plans for Sennheiser Mobility?
Andreas Sennheiser: Sennheiser stands for excellent audio experiences and the car has always been a place where we spend a lot of time and enjoy listening to good music, the news, or have phone calls. Especially with e-cars, where sounds are no longer primarily generated by the engine or the exhaust, but are produced by the speakers, we saw an opportunity to position Sennheiser. In the field of e-mobility, it's all about saving weight — our audio solutions, some of which even do without loudspeakers altogether, can offer great added value here. To begin with, we deliberately focused on bold — perhaps even disruptive — brands, such as Morgan and CUPRA, which take a new look at the market and want to address the customer group differently. We are very confident that we will be represented in further models with our innovative audio solutions over coming years.
»Audio is already ubiquitous, but it will become even more prevalent in all areas of life in the future. The quality will continue to increase, especially through immersive formats.«
– Daniel Sennheiser
How do you see the future of your markets? What will come, what will go, what will stay?
Daniel Sennheiser: Audio is already ubiquitous, but it will become even more prevalent in all areas of life in the future. The quality will continue to increase, especially through immersive formats such as our AMBEO program, which allows participants to be spatially located in virtual meetings, among other things. This has been proven to reduce fatigue and increase focus in meetings. The same applies to playback or live events, where more and more immersive formats are being integrated. This resembles the natural hearing of humans a lot more and thus generates stronger emotions.
Basically, products have to be intuitive to use, they have to function simply. The technology, which is becoming more and more complex, will continue to fade into the background, so that customers will no longer perceive it in the way that would correspond to its complexity.
»In summary: In the future, we see constant change on the technological side to provide customers with more and more functions while maintaining ease of use.«
– Andreas Sennheiser
What were the most important areas of investments last year? What projects are currently underway and what are you planning for the future?
Andreas Sennheiser: For us, it is clear that our own production is a strategic added value. On the one hand, this makes us more independent of supply chains, and on the other hand, it also allows us to guarantee the famous Sennheiser and Neumann quality. In recent years, but especially in 2022, we have invested massively in this area: at the site in Wedemark, we have invested in new automated PCB assembly systems and automated manufacturing methods. In Romania, the expansion of the plant is proceeding as planned. When the project is completed, the plant will be three times as large as it is now.
Daniel Sennheiser: On the other hand, we are also investing greatly in development, particularly in the area of software. Our entire development organization has been restructured to enable us to drive our software portfolio forward better and more effectively. Simultaneously, we are continuing to drive forward the conversion of our entire IT infrastructure and reviewing it in light of digital business models.
What is happening at the Sennheiser plant in Romania right now sounds impressive — what do the actual developments on site look like?
Andreas Sennheiser: Romania is our factory, where over 25,000 wireless microphones are produced per month. Our passionate team produces the proven Sennheiser quality there every day. Since the opening of the plant in 2017, we have been writing a success story with sales and employee numbers increasing year after year.
You have also heavily invested in the site in Germany. What are the respective focus topics now? What is happening in Romania and what is happening in Germany?
Daniel Sennheiser: The German plant specializes in high-precision, automated processes and complex manufacture. This includes fully automated assembly, but also the partially automated production of KE 10 capsules, for example. Our factory in Brasov, Romania, has been manufacturing products for the Pro Audio market since 2018, including the evolution wireless G4 and evolution wireless Digital microphone systems. The plant has its focus on manual manufacturing as well as final product testing and packaging.
Are there any more plans to strengthen the sites in Europe?
Daniel Sennheiser: In 2022, we started to build our Shared Service Center in Poznan. This was officially opened at the beginning of June and will provide a great many automated backend processes — whether in accounting, IT or HR — for the entire global organization. Here, we now have a team of around 50 people. The goal is for all systems and processes that can be offered repetitively and centrally to come from this service center. In that way, we ensure much higher efficiency worldwide.
Another topic about the future: the World Radiocommunication Conference is taking place this year. Can you tell us what Sennheiser’s stance on this is and what goals you are pursuing?
Andreas Sennheiser: The frequency spectrum is the basis for wireless communication, because without frequency spectrum there is no radio connection. In this respect, it is important for us that there is enough time for us to plan for it if any changes are to be made here. This is particularly important for our customers, so that they don't have to replace products they have invested in just a few years later. That’s why we are advocating for the longest possible stability. At the moment, there are efforts to obtain mobile radio applications — e.g., public mobile communications or government radio — on the basis of a secondary or co-primary allocation for the TV UHF spectrum. This can lead to significant limitations for wireless microphones and in-ear monitoring solutions. Therefore, it is even more crucial to define sufficiently long transition periods at an early stage and to enter into agreement with the mobile network providers. Together, we must define the rules under which co-primary access to this frequency spectrum will operate in the future.
One topic that is no less crucial for the future of the Sennheiser Group is sustainability. What does sustainability mean for Sennheiser?
Daniel Sennheiser: As a family-owned company, Sennheiser has always been very responsible —sustainability and environmental protection are the central issues of our time and we at Sennheiser are meeting this challenge head-on. To shift our goals into action, we have defined four key focus topics, based on the UN Sustainable Development Goals, in which we can have the greatest impact as a company.
On the one hand, there is diversity. Diversity unlocks Sennheiser's creativity, innovation culture, and idea generation. We believe in the uniqueness of people and are convinced that a diverse team achieves better results, has higher innovation power, and makes the company more profitable in the long term. We have already made very good progress in this regard and are gradually becoming an increasingly diverse team. At the same time, however, we want and need to go much further to create an attractive environment for our employees in the future.
Andreas Sennheiser: Furthermore, we focus on our supply chains. There is the upcoming Supply Chain Act, which we are preparing for. Simultaneously, we want to optimize our global supply chain.
In the area of climate protection, we measure our carbon footprint and derive clear targets from this, which we then want to measure ourselves against in the future. For example, we are working on sustainable guidelines in regard to business travel and office commute. We have installed solar cells on our own buildings where possible, for example in Romania, which will cover 50% of our local electricity needs with solar cells.
The topic of Circular Economy is not just about avoiding waste: we are investing in the longevity of our products and are aligning our new product portfolio with circular principles. We are already well positioned in this respect with our products, some of which have been in use for up to 60 years and are repairable. But we know that there certainly is much more to be done.
Climate change is real and you have already set concrete goals. What are they exactly? How do you plan to achieve them in order to further reduce emissions?
Andreas Sennheiser: Specifically, we want to be climate neutral by 2030. At the moment, we are focusing very strongly on scope one and scope two in order to reduce our carbon footprint there by 25 percent by 2025 with suitable measures. We will then define the measures that will lead to neutrality. Our Business Communication products themselves provide us with a great deal of leverage, because through virtual collaboration and the use of our conference microphones we can also significantly reduce air travel, so that we also make a noteworthy contribution to reducing our footprint in scope three.
»To fulfill our strategy of shaping the future of the audio industry, we need the best team in the industry. That’s why we continuously invest in our team.«
– Daniel Sennheiser
You have set your sights high for the future. What role does the Sennheiser Group team play in your corporate strategy?
Andreas Sennheiser: The entire backbone of what we can offer our customers on the market is based on the experience, knowledge, culture and passion that our employees bring to the table. In this respect, it is about preserving the good Sennheiser culture. At the same time, however, we are always questioning whether what we know together as a team, what we do, and what we can do is still up to date. We continuously ask ourselves whether we need to acquire new skills, and if so, which ones. So, it's an ongoing process that we as CEOs are working on with special focus.
Daniel Sennheiser: To fulfill our strategy of shaping the future of the audio industry, we need the best team in the industry. That’s why we continuously invest in our team.
In times of a shortage of skilled workers, it is certainly not always easy to put together the best team. The demands of people looking for a new employer have also changed. How is this development of New Work reflected in Sennheiser's day-to-day work?
Daniel Sennheiser: There are basically two aspects that are important for us in this area.
The first is that we are completely open to flexible working hours and locations. This has many advantages: Firstly, it allows us to increase the catchment area of people who want to work for Sennheiser; for example, we don’t just appeal to those who want to move to the development sites in Wedemark, Hamburg and Duisburg. We also have individual employees who live in southern Germany or partly in San Francisco and work for us. In addition, the flexibility we offer our employees also makes it easier for them to balance family and career. We allow up to 100% remote work — of course, that always depends on the job — and are currently in a learning process in which we ask ourselves: how much physical presence in the team is necessary and how much remote working is possible? What is certain is that we are now able to put together even better, multifunctional and international teams.
The second, very important aspect is that we invest in our employees — for one, through dedicated training and support, an in-house daycare center, for another, through company events such as Diversity Day or regional activities where we look to the future together and celebrate our successes together. There are also numerous initiatives that come from the employees themselves.
You started 2023 with news in terms of leadership: a new Executive Management Board was launched. Why did you decide to take this step? What are the goals?
Daniel Sennheiser: It was important for us to establish a strong, diverse management team that could take care of day-to-day operational issues in the broadest sense. With the integration of the business units into the EMB, we are focusing even more on our customers. Their very different needs will in future be represented at the highest management level and included in all decisions, enabling us to act even more closely to the market. Our efforts to align innovations and new technologies even more closely to the market are reflected in the fact that the development department is now also represented in the EMB. By dovetailing all central functions with the business areas, the different perspectives are brought together in a new, strong management team.
Andreas Sennheiser: For us, it is crucial that everyone can work in the positions where they actually have the greatest impact. That also applied to Daniel and me. After many years of strong operational work, we now want to focus our energies where we can have the greatest influence as representatives of the entrepreneurial family and as name bearers — and that is with the customers. We would like to focus on maintaining and expanding the network of our customers. At the same time, however, it is also important to drive forward the company's strategy. We want to ensure that we preserve what makes our team tick, while driving innovation where we need to break new ground.
»We see success in all business units — and we have good strategic plans in all areas. What matters now — with the best team in the audio industry — is to create the future we envision, day by day and week by week. This is how we create tomorrow's solutions for our customers through our motivation and skills.«
– Andreas & Daniel Sennheiser
What do you want to achieve with the Sennheiser team in the next few years? What do you wish for the team and the company?
Andreas Sennheiser: We see success in all business units — and we have good strategic plans in all areas. What matters now — with the best team in the audio industry — is to create the future we envision, day by day and week by week. This is how we create tomorrow's solutions for our customers through our motivation and skills.
Here you can find the annual report 2022.