Subdued business prospects make for revision at Leoni

The Q3 earnings before interest and taxes (EBIT) of approx. EUR 30 million turned out significantly weaker than anticipated. This was due to surprisingly heavy charges in the Wiring Systems Division particularly in September when accelerated start-ups of complex projects combined with an unexpected rise in unit output figures resulted in increased costs and reduced efficiency. In addition, there were premature ends to profitable projects. Furthermore, the structural measures applied in the context of ongoing globalisation are not yet exerting the intended effect. By contrast, the Wire & Cable Solutions Division’s 3rd quarter sales and earnings performance was on the whole in line with expectations. The weaker performance in the Wiring Systems Division can be expected to continue to weigh on earnings in the fourth quarter. Leoni consequently now projects that the earnings before interest and taxes (EBIT) of EUR 200 million forecast for fiscal 2015 will not be achieved. Consolidated sales are still expected to be at a level of at least EUR 4.3 billion. Nor does Leoni retain its targets set for the 2016 financial year. Although the Company will continue to give top priority to raising profitability, the aforementioned adverse factors in the Wiring Systems Division will again weigh on earnings in the upcoming fiscal year. This will be aggravated by losses of sales that are now expected and the consequently missing earnings contributions: the Company’s business prospects are being affected by the worsened economic conditions in China and Russia, which will probably lead to reduced demand, while US business with the commercial vehicle industry as well as the amount of sales to some customers will likely not be at the previously budgeted level. Leoni has therefore lowered its sales forecast for 2016 from EUR 4.8 billion before to about EUR 4.6 billion now; the Company will be significantly short of the previously set target of a 7 percent EBIT margin. The Company is currently preparing a package of measures intended to ensure the targeted profitability of the Wiring Systems Division.