14 May 2019 [ Inside information (Ad-hoc release) ]

Leoni AG: First-quarter business figures: Leoni burdened by one-time effects - tangible improvement in EBIT and free cash flow in the course of the year expected

Leoni AG / Key word(s): Quarter Results
Leoni AG: First-quarter business figures: Leoni burdened by one-time effects - tangible improvement in EBIT and free cash flow in the course of the year expected

14-May-2019 / 19:59 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

First-quarter business figures: Leoni burdened by one-time effects - tangible improvement in EBIT and free cash flow in the course of the year expected

Nuremberg, 14 May 2019 - Leoni AG of Nuremberg (ISIN DE 0005408884 / WKN 540888) had to absorb exceptional items that weighed on the Group result by a non-recurring, total amount of EUR 102 million. Against the backdrop of the changed economic conditions, the weaker market for the automotive industry and its realignment towards strategic customer relationships as part of its VALUE 21 programme, Leoni has reassessed the WSD order book and its market prospects. This reassessment led to non-cash write-downs in the first quarter of tangible and intangible assets by EUR 67 million as well as to provisions of EUR 35 million primarily for losses expected on existing orders in the future, which could become cash relevant over a period of several years.

Furthermore, there were increased personnel and freight costs related to the project ramp-up at the new production facility in Merida, Mexico, at the start of the year. As a result, earnings were negatively impacted by EUR 37 million in the first quarter. Leoni expects a further negative EBIT-impact of approximately EUR 20 million largely to be booked in Q2 2019.

Adjusted for the non-recurring items and the charges incurred in Merida, Leoni's Group-wide EBIT stabilised compared with the 4th quarter of 2018 - in operating terms - to a figure of EUR 14 million.

Reported EBIT for the first quarter was a loss of EUR 125 million (Q1/2018: earnings of EUR 63 million).

EBITDA amounted to a loss of EUR 76 million (Q1/2018: EUR 101 million) and sales amounted to EUR 1.262 billion (Q1/2018: EUR 1.327 billion). As reported, the Group result was a loss of EUR 132 million, compared to a profit of EUR 44 million in the previous year.

Investment in property, plant and equipment as well as intangible assets amounted to EUR 78 million in the period from January to March 2019 (Q1/2018: EUR 57 million). Primarily this pertained to the Wiring Systems Division in order to provide capacity in Eastern Europe, North Africa and Central America for projects already booked in the preceding years.

Free cash flow amounted to negative EUR 313 million at the end of the first quarter of 2019 (Q1/2018: negative EUR 111 million). In addition to capital expenditures, free cash flow was primarily affected by the negative result for the reported period as well as reversals in net working capital.

Leoni expects to have reached the inflection point in terms of EBIT and cash usage and compared with the first quarter will tangibly improve earnings and, in particular, free cash flow throughout the course of the year. It is further intended, before VALUE 21 related effects, to achieve a neutral free cash flow in the Group in the coming financial year as well as a positive contribution to the Group result from the Wiring Systems Division,

On 31 March 2019, the Company had available liquidity of EUR 740 million (31/12/2018: EUR 1 billion), of which about EUR 620 million in unused credit lines, more than three quarters of which firmly committed, and EUR 120 million in cash and cash equivalents. Particularly with respect to Leoni's refinancing requirements, the Company is considering all options for ensuring its long-term financing basis. Due to the quarterly loss and an accounting-related enlargement of the balance sheet by approx. EUR 153 million, the equity ratio was 25.2 percent compared with 31.2 percent at the end of 2018.

The Wiring Systems Division's EBIT declined to a loss of EUR 139 million (Q1/2018: earnings of EUR 42 million). Excluding the one-off effects and exceptional items from Merida, the Wiring Systems Division's result was balanced. The segment's sales were down by 6 percent to EUR 793 million (Q1/2018: EUR 842 million), caused by the weaker demand for the automotive industry in China and Europe.

In the Wire & Cable Solutions Division (WCS), sales dipped by 4 percent year on year to EUR 469 million in the first quarter of 2019 (Q1/2018: EUR 486 million). Above all, this reflected the weaker automotive cables business in China because of the slowing economy as well as the lower price of copper. Due to the sales decrease, the unfavourable product mix and costs related to expanding its digitalization portfolio, the division's EBIT declined to EUR 14 million (Q1/2018: EUR 22 million).


This announcement contains certain forward-looking statements that are based on the current assumptions and forecasts of Leoni AG's management. Various known and unknown risks, uncertainties and other factors could cause Leoni's actual results, its financial position, growth or performance to differ materially from the estimates presented herein. Leoni assumes no responsibility whatsoever to update such forward-looking statements or to conform them to future events or developments. Explanations of and reconciliations with key financial figures used can be found in the Annual Report 2018 of Leoni AG (accessible at https://www.leoni.com/fileadmin/corporate/publications/reports/2018/annual_report_2018.pdf), particularly on pages 137, 159, 170 et seq. and 240.

Contact person responsible for the announcement
Sven Schmidt
Corporate Public & Media Relations
Phone +49 (0)911-2023-467
Fax +49 (0)911-2023-10467
E-mail presse@leoni.com

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