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Leoni’s sales and earnings substantially impacted by Covid-19 pandemic – implementation of VALUE 21 on track

Group sales down 28 percent on the previous year in the first half and 46 percent in the second quarter of 2020

“The Covid-19 pandemic has hit the global automotive industry and its suppliers hard. Despite the immediate measures we have taken and the important progress made in implementing VALUE 21, our operating business was significantly impacted in the second quarter. We expect to have reached the low point in the current phase of the pandemic in April, and we have since seen a gradual recovery in our customers’ production. Nevertheless, the rest of the year remains extremely challenging.” Aldo Kamper, CEO of Leoni AG

  • Leoni’s business performance significantly impacted by Covid-19 pandemic: Group sales down 28 percent on the previous year in the first half and 46 percent in the second quarter of 2020
  • Sales decline impacts earnings: EBIT before exceptional items as well as before VALUE 21 costs falls to EUR -112 million in the first half (previous year: loss of EUR 35 million) and to EUR -96 million (previous year: loss of EUR 14 million) in the second quarter
  • Free cash flow after six months continues to improve year-on-year, at EUR
    -244 million (previous year: EUR -382 million) – balanced in the first three months, strongly impacted by the coronavirus crisis in the second quarter
  • Gradual recovery following the shutdown and restart of production in line with expectations; largely normalised output at around two-thirds of plants by the end of June; business in China already back to nearly pre-crisis level
  • Market recovery currently in line with the assumptions of our restructuring plan; further development remains uncertain and depends on the resumption of production at our customers after the summer break; at present and considering Covid-19, it is not possible to provide a more precise forecast than that included in our combined management report 2019 for the 2020 financial year
  • VALUE 21 remains on track, a large number of initiatives implemented by the end of June; initiatives already implemented will yield annual gross cost savings of around EUR 450 million or 90 percent of the overall potential from 2022; costs of EUR 12 million incurred in relation to implementing VALUE 21 in the first half of 2020 (H1/2019: EUR 18 million)
  • Signed a EUR 330 million guaranteed working capital credit line with a term until the end of 2022 in April 2020 to secure the continuation of business operations against the backdrop of the burden resulting from Covid-19; from today’s perspective, Leoni is thus fully financed until the end of 2022 taking into account possible Covid-19 impact; this is contingent on continuing systematic implementation of our restructuring plan that is largely based on VALUE 21, and gradual recovery of the market in line with expectations during the year
  • WCS: Investors have signalled interest in individual parts of our WCS Division due to its wide range of skills and variety of customers. Leoni is therefore establishing the conditions for a partial sale and is preparing to carve out some sub-units accordingly; Leoni will only separate from units if a fair value can be achieved and there are viable plans for the respective subdivisions

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SOURCE: Leoni 

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