Matth. Hohner AG

Group Management Report for Fiscal Year 2010/2011
Sales Development – Percussion Instruments
Compared with the prior year, sales in this segment increased by 3.0 % from TEUR 16,997 to TEUR 17,507.
The share of this segment in total sales amounts to 27 % (prior year 29 %). When taking into account the
effects of the USD and CHF exchange rates, sales decreased by TEUR 47 (-0.3 %). With this, in the last quarter
of the fiscal year, the sales decline in the first 3 quarters of 3.1 % could be nearly completely compensated
due to the introduction of new products, however, the tense situation in this segment has not sustainably
improved so far. Nevertheless, the SONOR brand was able to maintain its position above average in an
extremely difficult market environment.
On the US market (18 % share of segment sales in 2010/2011) actual sales slightly decreased by 0.3 %. There
was a strong sales decline (-23 %) mainly with high-quality drums. However, in the area of beginner drums,
sales also decreased by 6 %. In contrast, in the area of Orff instruments, a sales increase of about 5 % could
be reached.
On the German market (39 % share of segment sales in 2010/2011) sales decreased by 2 %. Mainly sales
with Orff-instruments (-8 %) lead to this decline. The spent funds from business activity support programs
as well as the program of the federal government for the extension of day care places were crucial for this.
The result of this program is that public funds are currently invested in constructional measures and basic
equipment (furniture, playgrounds). In contrast, sales with high-quality drums could be increased by 14 %.
These increases could mainly be reached in the area of Special Edition Drums and Signature Snare Drums. In
the area of beginner drums sales slightly decreased by 1 %.
On the remaining European market (27 % share of segment sales) sales decreased by about 10 % adjusted
for exchange rate effects. Sales in Eastern Europe could be increased by 6 %, whereas in Western Europe
sales significantly decreased by 15 %. Mainly sales with France (-22 %), Great Britain (-38 %), Italy (-19
%) and Sweden (-45 %) were strongly declining. In Eastern Europe mainly sales in Russia (+61 %), Czech
Republic (+15 %) and Ukraine (+76 %) could be increased.
The remaining markets (South- and Central America, Canada, Asia and Africa) still play a minor role with a
share of about 16 % of segment sales in 2010/2011. However, sales in these markets could be increased by
about 30 %. This growth could be reached in all regions (Asia +23 %, Canada +44 %, South- and Central
America +37 % and Africa +78 %). Also in future further growth potential is expected here, in particular due
to the still small market share in these regions.
Due to the still noticeable effects of the worldwide economic and financial crisis, which mainly is seen from
the only slowly improving situation in the sales markets, an outlook for the future is still combined with a lot
of uncertainties. Taking into consideration all aspects and information, a sales growth in this segment of 15 %
is expected for the fiscal year 2011/2012. The key products for increasing sales are the new drum series in the
lower and medium price segment.
Sales Development – Stringed Instruments
According to plan, the Group increased its sales in the growth segment stringed instruments by TEUR 2,894
(+36.8 %) to TEUR 10,765 compared with prior year. The share of this segment in total sales hence amounts
to now 17 % (prior year: 14 %). After elimination of the exchange rate effects, sales increased by TEUR 2,432
(29.2 %). This success could be generated by the Group mainly due to the good market development of the
ukulele and the recovery of the Eastern European markets to a great extent.
The US market share in the segment sales amounted to 58 % (prior year 40 %). With the worldwide success
of the Lanikai brand for ukuleles, a sales growth of about 122 % could be reached in this area. Worth
mentioning is that sales with guitars could also be increased by 3 % adjusted for exchange rate effects in a
generally declining market.
Sales on the European market (35 % share of segment sales in 2010/2011) decreased by about 8 %. Sales
decreased due to supply bottlenecks in Russia (-18 %) as well as drops in orders in France (-15 %), Italy (-54
%) and Sweden (-67 %). In contrast, a growth in this segment could be reached in Great Britain (+10 %) and
Ukraine (+49 %).
With a share of about 7 %, the remaining markets (Germany, Asia, Africa as well as South- and Central
America) play a minor role in this segment. Here, sales have decreased by -14 %.
Based on the very strong demand as well as due to the measures taken for the diversification of supply
markets companies a weakened sales growth of 9 % is expected in this segment for the fiscal year
2011/2012.
Group ManaGeMent report Group ManaGeMent report
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