Leoni achieved sales of EUR 4.8 billion in the 2019 financial year (2018: EUR 5.1 billion). The company achieved earnings before interest and taxes (EBIT) before exceptional items as well as before VALUE 21 costs of EUR -66 million (2018: EUR 157 million) and a free cash flow of EUR -308 million (2018: EUR -140 million, adjusted). The company was in line with its guidance for the 2019 financial year. In a mostly challenging financial year, Leoni made progress in implementing the performance and strategy programme VALUE 21: By the end of the year, Leoni had already implemented more than 60 percent of the planned initiatives. Additionally, an expert opinion issued in mid-March confirmed the company’s course and its financing. In light of the major challenges caused by the Covid-19 pandemic, considerable burdens on sales, earnings and liquidity are to be expected for the current financial year.
“Our most important success from the past financial year was the stabilisation of our business. This was driven in particular by the significant progress made in the implementing the VALUE 21 performance and strategy programme. The positive free cash flow development shows that we are overall on the right track,” says Aldo Kamper, CEO of Leoni AG. “Nevertheless, we expect significant challenges in the current financial year in connection with the rapid spread of Covid-19. We have reacted quickly and have already implemented a number of measures in recent weeks to contribute to the continuation of business operations,” Kamper added.
Challenges in the first half of the year weigh on consolidated earnings in 2019
The decline in sales to EUR 4.8 billion in financial year 2019 (2018: EUR 5.1 billion) is primarily due to weaker demand from the automotive industry which led to volume reductions for both wiring systems and automotive cables. Business with specialty cables and cable systems for the industry sector also declined. The negative EBIT before exceptional items as well as before VALUE 21 costs of EUR -66 million (2018: EUR 157 million) is not only due to declining demand in the automotive and industrial sectors, but also to operational burdens, particularly from the ramp-up of a project in Mexico at the beginning of the year.
The reported Group EBIT amounted to EUR -384 million (2018: EUR 144 million). In addition to costs for VALUE 21 of EUR 86 million (2018: EUR 2 million), this figure also includes non-cash write-downs of fixed assets and provisions for expected losses on existing contracts that could affect liquidity over a period of several years. Further exceptional items resulted from measures in connection with the refinancing and preparations for the carve-out of the Wire & Cable Solutions division.
The VALUE 21 performance and strategy programme strengthened the company over the course of the year and is on track to achieve annual gross cost savings of EUR 500 million from 2022 onwards.
The progress made in the implementation of the programme resulted in higher costs in 2019. Simultaneously, measures such as the significantly improved receivables and inventory management led to a positive free cash flow development in the second half of the year. For 2020, the company expects costs related to VALUE 21 of approximately EUR 35 million.
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