LEONI’s achievement enables it to go against the general recession, the signs of which are becoming increasingly apparent. The only area not included in this development was LEONI’S Wire Division, which makes a contribution of around 10 % to Group sales. It was hit by recession-induced decreases in US demand (and occasionally also in European demand), worse during the second quarter than in earlier months. Thus, it failed to reach the volume of sales it achieved during the first quarter. Against the same period in the previous year, sales fell by around 5 % to EUR 57 million (2000: EUR 60 million). Further, the key profits data of the previous year were not equaled.
Cable Division continues to show the strongest increases
In the second quarter, as in the first three months, the Cable Division attained the highest increase in sales of all three LEONI corporate divisions. Sales grew by 29.2 % to around EUR 222 million (previous year: EUR 171.7 million). In parallel with this, profits also went up significantly. This was mainly due to the results achieved by subsidiaries acquired in recent years.
The Wiring Systems Division increased its sales during the first half-year by 18 % to around EUR 281 million (previous year: EUR 239 million). It also managed to improve profit figures significantly. At the same time it is having to cope with the cost of immense preliminary services for future major products.
Continued large investments in the building and extension of production facilities
LEONI continues to invest heavily in future growth. At EUR 45 million, investments during the first half-year were virtually double those of the same period in the previous year (EUR 23 million). In particular, the construction of a new wire and cable plant in Poland and the expansion of production facilities in Mexico, Romania and Slovakia made all the difference to the figures.
Aerospace and China showing strong demand for wire and flexible conductors
For the second half of the financial year there are good prospects for the Wire Division in relation to special products for the aerospace and Chinese markets. Here, the commercial situation remains good. In the US market, on the other hand, no normalization in demand from the communications networks sector can be expected for the second half-year.
Preparations underway in China to construct new cable plant
China will expand its cell phone networks in the next few years and is considered accordingly to offer very good market opportunities. For this reason, a new plant for manufacturing special coaxial cables is being constructed in Changzhou.
In light of continued strong demand for the car models supplied by LEONI, the Wiring Systems Division remains optimistic. It is only in the commercial vehicle sector that the situation is unsatisfactory, above all in North America. Further, this branch constitutes just 9 % of LEONI’s total Wiring Systems business.
Scope for dividend increase in sight
Overall developments are so positive that the target of exceeding the EUR 1 billion sales threshold in 2001 – and thereby significantly and disproportionately increasing the LEONI Group’s annual surplus – now looks realistic. This should also create the scope necessary for the planned dividend increase.
