– Sales up 36 percent year on year
– Seven percent EBIT margin target exceeded
– Consolidated net income up 149 percent year on year
– Targets for 2006 firmly in sight
Nuremberg – Underpinned by favourable conditions, LEONI AG maintained its course of growth in the first three months of the 2006 financial year as well. Compared with the first quarter of 2005, consolidated external sales were up by 36 percent to EUR 476.9 million (from EUR 350.0 million in the previous year). LEONI generated the majority of this growth – 20 percentage points – with its own resources. The subsidiaries acquired after the first quarter of 2005 accounted for approximately nine percentage points, while about eight percentage points of the sales growth is attributable to the sharply increased price of copper. Based on the larger volume of business and as a result of productivity increases, LEONI Group’s earnings situation also improved significantly in first three months of 2006. Compared with the first quarter of 2005, consolidated earnings before interest and taxes (EBIT) nearly doubled from EUR 17.2 million to EUR 34.2 million, thereby reaching an EBIT margin of 7.2 percent (4.9 percent in the previous year). Consolidated net income increased by 149 percent in the first quarter of 2006, from EUR 7.9 million to EUR 19.7 million.
The number of people employed in the LEONI Group was up only slightly, by 252 to 33,244, on 31 March 2006 compared with the same day one year earlier. As a result of including the subsidiaries Kerpen and neumatic with 636 and 179 employees respectively, most of whom work in Germany, the workforce in Germany grew by 23 percent to 3,690 people (3,000 in the previous year).
Wiring Systems Division posts 20 percent sales increase
In the Wiring Systems Division, external sales rose to EUR 242.0 million in the period under report, which equates to an increase of more than 20 percent on the corresponding figure of the previous year (EUR 201.1 million). The ongoing major projects with customers BMW, DaimlerChrysler, General Motors and Land Rover account for the overwhelming proportion of the business volume. Sales to component suppliers and commercial vehicle manufacturers, especially to the US companies Caterpillar and Cummins, also increased appreciably. Due to the growing volume of wiring systems for trucks and special vehicles, the facility in Arad, Romania is being expanded as a centre for commercial vehicles systems. Given that the maximum output in the aforementioned major projects was in the meantime and for the most part reached, production processes were systematically optimised in the first quarter and productivity was thus raised. EBIT was therefore up by about 66 percent to EUR 17.9 million (from EUR 10.8 million in the previous year), which equates to an improved EBIT margin of 7.4 percent (5.4 percent in the previous year).
Wire & Cable Division expands business volume by 58 percent
The external sales of the Wire & Cable Division recorded strong growth of about 58 percent to EUR 234.9 million in the period under report (EUR 148.9 million in the previous year). After adjusting for the impact of the sharply increased price of copper, the growth comes to about 40 percent. The division benefited, among other factors, from the acquisitions made in 2005, through which LEONI tapped additional high-growth areas of business. Overall, LEONI significantly expanded its sales of special cables compared with the previous quarter. LEONI also made gains in sales of automotive and standard cables. Among other factors, this reflected the resumption in early 2006 of rising demand in China. LEONI’s wire business also grew, especially so in China because many cable manufacturers operating at the international level are expanding their production in this region. Thanks to expansion of activity in profitable market niches, the earnings before interest and taxes of the Wire & Cable Division increased by almost 155 percent in the period under report, from EUR 6.4 million to EUR 16.3 million. The EBIT margin consequently widened from 4.3 percent to 6.9 percent.
Both divisions expected to generate growth in 2006
The business performance of the Wiring Systems Division will as the year progresses be driven mainly by the ongoing major projects. The focus here is on continual improvement of production processes to achieve further increases in efficiency. LEONI projects a moderate sales increase in this division for 2006, to about EUR 900 million. There are, moreover, realistic chances of gaining new orders from the international car and commercial vehicle industry. The Wire & Cable Division is expected to record strong growth in 2006, with an increase in sales of about 20 percent to roughly EUR 800 million. This division has tapped additional, profitable market segments with business acquisitions and joint ventures, and will continue this policy of targeted acquisitions this year as well. LEONI should thus to meet its target for 2006 of generating sales of € 1.7 billion and thus to record about ten percent growth. It should also be possible to achieve the EBIT margin target of seven percent, which corresponds to a figure of about EUR 120 million. With respect to consolidated net income, the Company again forecasts disproportionately strong growth compared with sales, estimating a 25 percent increase to about EUR 70 million. Possible acquisitions are not included in these figures.
