Leoni on operating target after three quarters in 2016

Adjusted EBIT up slightly on previous year's level

Nuremberg – Leoni, the leading European provider of cables and cable systems to the automotive sector and other industries, in operating terms performed as expected in the first nine months of 2016: The Company generated modest organic growth, but this was more than offset by the negative effects of changes in the price of copper and exchange rates. The consolidated sales of EUR 3,309 million were thus about 2 percent below the previous year’s figure (previous year: EUR 3,376 million), of which third quarter accounted for EUR 1,071 million (previous year: EUR 1,112 million). A case of fraud uncovered in August 2016 diminished earnings before interest and taxes (EBIT) by about EUR 40 million, taking the result down to a loss of EUR 12.7 million in the third quarter (previous year: earnings of EUR 29.8 million).

EBIT for the first nine months also included heavy restructuring charges of EUR 23.5 million (previous year: EUR 1.5 million) and amounted to EUR 49.2 million (previous year: EUR 115.3 million); consolidated net income was down to EUR 11.6 million (previous year: EUR 67.5 million). In purely operating terms, profitability matched expectations: adjusted EBIT edged up to EUR 125.6 million in the period from January to September 2016 (previous year: EUR 124.7 million) and to EUR 34.8 million in the third quarter (previous year: EUR 32.2 million).

The Company’s internal investigations into the fraud case have meanwhile advanced a long way. The external investigations are still ongoing. Leoni continues to examine options for claiming compensation, but this is unlikely to be resolved in the current financial year.

WSD: Nine-month sales up slightly to EUR 2 billion

Sales in the Wiring Systems Division (WSD) rose by about 1 percent to EUR 2,005 million in the first three quarters of 2016 (previous year: EUR 1,987 million), of which the third quarter provided EUR 638 million (previous year: EUR 650 million). Thanks to the consistently good demand from European and Asian carmakers as well as the international automotive supply industry for wiring systems and cable harnesses, the Wiring Systems Division generated growth of about 4 percent from its own resources during the period under report. However, adverse effects involving the price of copper and currency translation lessened this gain. Furthermore, the sales of the joint venture in Langfang, China, which have been included at equity in the consolidated financial statements since December 2015, were, unlike the previous year, no longer included in the amount of business. The division’s EBIT amounted to EUR 26.6 million for the period from January to September 2016 (previous year: EUR 58.7 million). This included substantial restructuring expenses of EUR 22.1 million (previous year: EUR 1.1 million) for comprehensive reorganisation of the division. Third-quarter EBIT amounted to EUR 4.5 million (previous year: EUR 5.8 million). 

WCS: 11 percent EBIT growth to the end of September

The Wire & Cable Solutions (WCS) Division generated organic growth both in the third quarter and over the first nine months of 2016, but this was more than offset by negative copper price and currency translation effects. The division’s sales for the period from July to September 2016 of EUR 433 million (previous year: EUR 462 million) and for the first three quarters of EUR 1,304 million (previous year: EUR 1,389 million) were therefore in each case below their 2015 benchmarks. Good business involving special automotive cables as well as cable solutions for medical technology and robotics applications led to a significant improvement in the division’s EBIT of about 11 percent to EUR 62.5 million for the first nine months (previous year: EUR 56.5 million), of which the third quarter accounted for EUR 22.8 million (previous year: EUR 24.1 million).

Full-year sales and EBIT forecasts reaffirmed

The Management Board of Leoni AG still expects to report fiscal 2016 consolidated sales of about EUR 4.4 billion (previous year: EUR 4.5 billion) and EBIT of approximately EUR 65 million (previous year: EUR 151.3 million). This result includes budgeted restructuring expenses of about EUR 30 million and the charges of approximately EUR 40 million due to the fraud case, whereas the previous year’s figure included non-recurring income of EUR 19.6 million from the sale of shares in the subsidiary in Langfang, China.

Leoni performance overview

Group key figures 3rd quarter1st - 3rd quarter
Sales [€ million] 1,071.5 1,111.7 (3.6) % 3,309.0 3,376.2 (2.0) %
EBITDA [€ million] 23.6 67.1 (64.8) % 159.1 220.5 (27.8) %
EBIT [€ million] (12.7) 29.8 ->100 % 49.2 115.3 (57.3) %
Adjusted EBIT * [€ million] 34.8 32.2 8.1 % 125.6 124.7 0.7 %
EBT [€ million] (18.6) 23.8 ->100 % 32.2 95.4 (66.2) %
Consolidated net income [€ million] (24.4) 15.7 ->100 % 11.6 67.5 (82.9) %
Capex incl. acquisitions [€ million] 47.8 63.5 (24.7) % 138.9 162.2 (14.4) %
Equity ratio [%] 31.8 34.5 -- 31.8 34.5 --
Earnings per share [€] (0.75) 0.48 ->100 % 0.35 2.06 (83.0) %
Employees [as at 30 September] 77,013 74,973 2.7 % 77,013 74,973 2.7 %

* Earnings adjusted for the impact of revaluation as part of allocating the prices of major acquisitions, restructuring, impairment of non-current assets, gains on business disposals and on business combinations including related derivatives as well as the burden associated with the fraud case.