Linn's radical move to digital brings profits back on stream

LINN Products, the Scottish hi-fi manufacturer that pioneered the concept of high-end audio, said a rise in sales and profits had "vindicated" its move into the digital streaming marketplace.

• Gilad Tiefenbrun says the improved results have 'vindicated' the move into the digital streaming market – and out of CD players

The firm has staked its future on a new generation of digital stream (DS) products that store an entire music collection in one slim box. It believes they will make CD players redundant.

Gilad Tiefenbrun, managing director of Glasgow-based Linn, said the company had "just scratched the surface of a global megatrend" that will see people hook up their DS players, iPads and TVs in a single home entertainment network.

"There has never been a better time to get into digital streaming. We pioneered it and we have got the best sound," Tiefenbrun said.

The move into DS was led by 38-year-old Tiefenbrun, son of the company's owner and founder Ivor, in 2008 after one of the biggest crises to hit the firm in its near-40-year history saw its sales and workforce cut in half. In an effort to save the business, Tiefenbrun discontinued making CD players in a dramatic turn to a new and unproven marketplace.

Although the firm's size and performance are still well below the pre-2006 crisis, Linn bucked the recession with a 5 per cent increase in turnover in the year to 30 June, to 17 million. Profits increased 13 per cent to 1.6m.

Newly filed accounts also reveal that Linn has slashed its debt with Lloyds Banking Group from a high of 6.8m to having a modest net cash balance.

Tiefenbrun added: "As we chose to do less in consumer electronics like the CD player, a lot of which you have to buy in from the US, Korea or China, we replaced that with all our own streaming technology that means we are adding value rather than buying in stuff and packaging it."

He said he saw "huge potential" in expanding sales in fast-growing Asian markets.

Japan - home to huge electronics brands such as Sony and Panasonic - is already the Scots firm's number one overseas market outside of Europe. Linn has signed up new partners in Korea, Malaysia and Thailand and has plans to target Taiwan, Singapore, Vietnam and Indonesia.

He said Scottish manufacturing has a "great heritage" in the Far East and is "synonymous with quality".

"If we stick to our principles as an economy, we can rebalance," added Tiefenbrun. "I believe Scotland can be a manufacturing and engineering leader if we stick to rigid quality principles and do what we do best, which is great design and engineering."

The annual report showed that Tiefenbrun enjoyed a 36 per cent increase in his salary to 465,175.