Sennheiser 2010 Annual Report Download - page 27

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CON SOLI D ATED MANA GEME N T RE P ORT 2010
I. PRELIMINARY REMARKS
As a parent company, Sennheiser electronic GmbH & Co. KG is obliged to draw up consolidated
financial statements.
The company’s production sites are located in Wennebostel (Germany), Tullamore (Ireland) and
Albuquerque (New Mexico, USA). While Wennebostel chiefly manufactures wireless and wired
microphones and microphone capsules, monitoring systems and headsets, the plant in
Albuquerque concentrates on wireless microphones and monitoring systems. The Tullamore
facility manufactures headsets and headset transducers. The company has a branch office in
Singapore that manages the functions of product management, marketing, purchasing and
part of product development for the consumer electronics area.
Besides the parent company Sennheiser electronic GmbH & Co. KG, the Sennheiser Group
includes six subsidiaries within Germany and 18 subsidiaries abroad, as well as the joint venture
Sennheiser Communications A/S, based in Copenhagen, Denmark.
II. ECONOMIC DEVELOPMENTS DURING THE 2010 FINANCIAL YEAR
Overall Business Developments and Development of the Industry
2010 global economy
In 2010, the global economy continued to recover from the serious recession, but economic
performance developed very differently in individual regions. Numerous emerging markets
recorded enormous growth in the past year. They were the backbone of the global economy,
and industrialized countries such as the USA, Japan and Europe, which were slow to emerge
from the crisis, benefited from their development. Positive cyclical effects like the end of the
crisis-induced demand bottleneck as well as government’s economic stimulus packages have
slowly stopped impacting the global economy since the middle of last year and by now the up-
turn is in all likelihood gaining momentum on its own. The USA however has still not managed
to sustain an all-encompassing economic recovery. Until now, the upturn has barely had any
positive effect on the US labor market, and unemployment is remaining at a high level.
The situation in the majority of emerging markets was extremely positive. The Asian emerging
markets China and India, in particular, grew at a rapid pace, not the least bit hampered by the
weakness of most Western markets. Japan started the year with a positive first half, then
slowed down considerably and in the end fell short of expectations like other highly industrial-
ized nations. Although the US dollar was weakened by the extremely expansive fiscal policies of
the US Federal Reserve and the relatively slow economic recovery in 2010, it profited from its
status as a global and reserve currency. The US dollar particularly gained on the euro, which had
come under pressure during the Greece crisis in the second quarter as well as during the spread-
ing debt crisis in the Eurozone.
The global economic recovery will cool off somewhat in 2011. The world is still divided into fast-
growing emerging markets, especially in Asia and South America, and slow-growing or even
stagnating Western markets. The risk of inflation remains subdued in most Western industrial-
ized nations, whereas in Asia further measures will have to be taken to curb rising prices. The
commodities markets also play their part in this development, as average prices will continue
rising on account of strong demand coming from Asia.
The European Union
The economy of the European Union recovered earlier, and with more momentum than anticipat-
ed from the global economic crisis, for two main reasons: Firstly, governments adjusted their
economic policies unusually quickly after the collapse of the Lehman Brothers investment bank
in September 2008. The fiscal policies of most European countries were extremely expansive as
from the end of 2008. Secondly, the growth rates of Asian and Latin American emerging
markets recovered and reached pre-crisis levels much more quickly than expected, partly on
account of governments increasing their spending quite considerably. Consequently, European
exports recovered significantly as from mid-2009, in turn driving economic growth. The weaken-
ing of the euro provided even more momentum on the demand side in 2010.
Development
Development
Outlook
Consolidated Management Report
2010