Nuremberg – LEONI AG can look back on a successful 2004 financial year with significant increases in both sales and earnings. As already announced upon release of the preliminary figures, consolidated external sales from continued operations were up about 16 percent year on year, from EUR 1.08 billion to EUR 1.25 billion. LEONI generated a 25 percent gain in terms of earnings before interest and taxes (EBIT) in fiscal 2004, from EUR 49.6 million in 2003 to EUR 62 million. Consolidated net income was up about 50 percent on the like-for-like figure for the previous year, from EUR 22.1 million to EUR 33.2 million, which equates to earnings of EUR 4.07 per share. In order that the shareholders of LEONI AG participate in this success, the Management Board and Supervisory Board will propose to the annual general meeting on 3 May of this year that shareholders approve payout of a dividend for fiscal 2004 of EUR 1.25, up from the previous year’s EUR 1.15.
Capital expenditure amounted to about EUR 96 million and was therefore 2.6 percent below the figure of EUR 98 million spent in the previous year. Given that the new plants in the Ukraine and Romania were already largely completed at the end of 2003, significantly less capital, i.e. EUR 72 million, was spent on property, plant and equipment in fiscal 2004 than the previous year’s total of EUR 91 million. The 2004 investment in these facilities involved mainly expansion of production equipment. On 31 December 2004 LEONI Group employed 29,957 people, i.e. 8,565 more than on the previous year’s closing date (21,392). Facilities in low-wage countries, especially so in Eastern Europe, accounted for the majority of this growth. Nearly 90 percent of the workforce is meanwhile employed outside Germany. Yet in Germany too there was a small increase in the number of employees, specifically from 2,915 in the previous year to 3,011 people.
Wiring Systems Division makes gains
In absolute terms, the Wiring Systems Division made the greatest contribution to the growth of LEONI Group in the 2004 financial year. Wiring system production for new car models, in particular the Opel Astra, the Mercedes A-Class as well as BMW’s 1 and 3 Series, started up during the year made initial, substantial contributions to sales. Overall, the Wiring Systems Division increased its sales by about 22 percent, from EUR 558 million in the previous year to EUR 680 million. Earnings before interest and taxes (EBIT) improved from EUR 26.1 million to EUR 32.3 million despite further and substantial pre-production costs, especially so in terms of personnel. Particularly the eastern European facilities in the Ukraine, Romania and in Slovakia had to recruit on a massive scale in the past year. Compared with the closing date of the previous year, the number of people employed in LEONI’s Wiring Systems Division was up nearly 50 percent to 24,488.
Steady cable business
Despite difficult conditions in markets of significance to LEONI, such as the electrical appliance and communications industries, the Cable Division increased its external sales by about six percent from EUR 441 million in fiscal 2003 to EUR 468 million in the 2004 financial year. The bulk of this increase in sales is attributable to the increased price of copper. Earnings before interest and taxes (EBIT) were down almost twelve percent to EUR 31.6 million in the past year (from EUR 35.8 million in 2003). This was due above all to the sharply increased price of copper. A reduction in selling prices and simultaneous increase in the purchase prices for insulation materials also played a role in some respects. The workforce of the Cable Division was up by 534 on the previous year in 2004, to a total of 4,621 employees. This involved particularly the cable facilities in China as well as in Poland recruiting more personnel.
Recovery in the Wire Division
The Wire Division made a significant recovery in fiscal 2004 following an unsatisfactory previous year. Particularly the restructuring carried out in the preceding years made a positive impact in this respect. The external sales of the Wire Division were up about 22 percent year on year, from EUR 81 million in the previous year to EUR 99 million in the 2004 financial year. The increased price of copper accounts for about twelve percentage points of this sales growth. Problems involving utilisation of capacity to produce highly flexible copper stranded and braided conductors as well as charges incurred in the first quarter by restructuring LEONI Felisi prevented a better result. At the level of earnings before interest and taxes (EBIT), the result of LEONI’s Wire Division nevertheless improved from a loss of EUR 11.0 million to one of EUR 0.8 million. The number of the Wire Division’s employees was down by 56 compared with the closing date one year earlier, to 710.
Basis for further growth established
With the projects launched in the Wiring Systems Division in 2004, LEONI has already established the basis for further growth in the years ahead. Further, significant increases in consolidated sales to more than EUR 1.4 billion for 2005 and to at least EUR 1.5 billion for 2006 are therefore to be expected. In addition, the Company is continually looking into opportunities to strengthen especially its Cable Division by means acquisition and investment. One or two acquisitions of considerable size are planned for 2005. Based on the measures applied in 2004 to reduce costs as well as achieve further enhancement of efficiency, LEONI will be able in the years ahead to increase its earnings before interest and taxes (EBIT) to seven percent of consolidated sales.
