Leoni’s sales and earnings substantially impacted by Covid-19 pandemic – implementation of VALUE 21 on track
- 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
Further information can be found in the corresponding quarterly statement at https://www.leoni.com/en/financial-publications
Leoni performance overview
| Q2/2020 | Q2/2019 | Change | H1/2020 | H1/2019 | Change | |
|---|---|---|---|---|---|---|
| Consolidated sales [€ million] | 673 | 1,247 | (46.0)% | 1,802 | 2,509 | (28.2)% |
| EBITDA [€ million] | (76) | 20 | (46.0)% | (80) | (56) | (43.9)% |
| EBIT [€ million] | (129) | (30) | >(100.0)% | (186) | (155) | (20.0)% |
| EBIT before exceptional items as well as before VALUE 21 costs (1) (2) [€ million] | (96) | (14) | >(100.0)% | (112) | (35) | >(100.0)% |
| Consolidated net result [€ million] | (123) | (44) | >(100.0)% | (190) | (176) | (7.8)% |
| Earnings per share [€] | (3.75) | (1.35) | >(100.0)% | (5.80) | (5.38) | (7.9)% |
| Free cash flow (3) [€ million] | (244) | (71) | >(100.0)% | (244) | (382) | 36.2% |
| Capital expenditure [€ million] | 69 | 102 | (31.8)% | 167 | 180 | (6.9)% |
| Equity ratio [%] | 11.7 | 23.7 | -- | 11.7 | 23.7 | -- |
| Employees (as at 31 March) | 90,932 | 94,863 | (4.1)% | 90,932 | 94,863 | (4.1)% |
(1) This key figure represents adjustment of EBIT for exceptional, non-recurring factors to facilitate better comparability between the periods and interpretation of operating profitability. Exceptional items comprise significant impairment of goodwill, intangible assets, property plant and equipment as well as other assets, major expenses for contingent losses on customer contracts, costs in preparation for carving out the Wire & Cable Solutions Division (excl. internal costs), refinancing costs (incl. consultant, bank and solicitor fees; apart from the costs that are attributed to interest expenses) as well as other expenses incurred by strategic decisions and external additional expenses in connection with the Covid-19 pandemic. Costs for the VALUE 21 programme comprise all the related restructuring and severance costs as well as third-party consultant fees.
(2) From the first half of 2020 onwards, exceptional items are expanded to include external additional expenses to protect staff in connection with the Covid-19 pandemic, for example for additional shuttle transport, protective clothing, face guards and disinfectant.
(3) Prior-year figure adjusted (presentation change: interest paid and received is classified in full as a financing)19-Pandemie.