Harman, Samsung Electronics’ automotive and audio subsidiary, has seen its goodwill exceed 5 trillion won even amid the electric vehicle chasm (temporary demand slump). Goodwill is an indicator linked to a company’s intangible assets, and a larger goodwill implies a higher corporate value in the market. This increase in goodwill is attributed to Harman’s significant improvement in profitability, surpassing 1 trillion won in operating profit over the past two years, as well as mergers and acquisitions of startups to enhance business competitiveness.
According to the Financial Supervisory Service’s electronic disclosure system on May 2, Harman’s goodwill recorded 5.1462 trillion won, a 15.2% increase compared to 2023 (4.4691 trillion won). This is the highest since its acquisition by Samsung Electronics in 2016, surpassing 5 trillion won for the first time. Goodwill refers to the right (premium) of a specific company to have excess profitability compared to other companies in the same industry. It is calculated by including intangible assets such as a company’s location conditions, brand loyalty, technology, and organizational excellence.
Harman’s goodwill recorded 4.4367 trillion won in 2017, the first year after the acquisition, and then hovered in the mid-4 trillion won range. It fell to 4.1993 trillion won in 2020 due to poor performance influenced by COVID-19, but has maintained an upward trend for four consecutive years since then.
The increase in goodwill value was largely due to Harman’s successive acquisitions of promising startups since the 2020s. Harman acquired Savari (V2X solutions) in 2021, and Apostera (AR software) and Caaresys (mobility) in 2022. In 2023, it also acquired Flux (immersive audio software) and Roon (audio platform) in succession.
The restructuring of the business through a “selection and concentration” strategy also played a role. Harman focused on the digital cockpit, which refers to the digitalized interior driving space, among its automotive businesses. This was a choice to maximize synergy with Samsung Electronics, which has extensive experience in semiconductor, display, and wireless communication businesses. As a result, orders from famous automakers such as BMW, Mercedes-Benz, Volkswagen, and Ferrari followed.
Harman also accelerated profitability expansion through restructuring, reducing its subsidiaries from over 100 at the time of acquisition to about half over several years. At the same time, it entered new markets by establishing new corporations in strategic locations such as Thailand, a hub for electric vehicle production in Southeast Asia. As a result, Harman surpassed 1 trillion won in operating profit for the first time in 2023 and recorded its highest-ever operating profit (1.3076 trillion won) last year.
In the fourth quarter of last year, Harman’s operating profit margin even surpassed that of the VD·DA business division, which is responsible for TVs and home appliances. The securities industry expects Harman to have achieved an operating profit of around 400 billion won in the first quarter of this year.
Harman’s influence within Samsung Electronics is also growing. At the end of last year, Samsung Electronics changed the Automotive Business Team under the Device Experience (DX) division to the Harman Cooperation Team directly under the CEO through organizational restructuring. This is interpreted as a strategy to actively grow the automotive business centered on Harman.
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