Harman cuts outlook, jobs on weak European car audio sales
By Sruthi Ramakrishnan and Neha Alawadhi
(Reuters) - Audio systems maker Harman International Industries Inc slashed its full-year outlook and said it would cut up to 9 percent of its workforce after second-quarter profit missed Street estimates due to lower sales to European carmakers.
Harman shares plunged 14 percent to $42.49 in morning trade on the New York Stock Exchange.
"We expected European production to be lower, but the accelerated slowdown in the month of December really surprised us," Chief Executive Dinesh Paliwal told Reuters.
Harman, which owns brands such as JBL and Harman Kardon, said it would shed about 500 jobs in high-cost countries. It is also considering the sale or closure of a manufacturing site in Europe, which could cut a further 500 jobs.
"We are reducing 500 permanent jobs in high cost countries in Europe and America," Paliwal said.
The company has been reducing its footprint in "high-cost" countries such as Germany, US, France and the United Kingdom, and moving to China, India, Brazil, Ukraine, Hungary and Mexico.
The shut-down of the manufacturing plant could take two to three years due to compliance approvals from the European Works Council, "but this decision is made," he added.
The company slashed its per-share earnings forecast for the year to between $2.70 and $2.90 from between $3.67 and $3.92. It also cut its revenue forecast to between $4.18 billion and $4.25 billion for the year ending June from the earlier range of $4.3 billion to $4.6 billion. Continued...