© Leoni Electronics Production | March 23, 2020
Leoni expects a heavy hit from COVID-19
Leoni AG says that the company expects considerable burdens on sales, earnings and liquidity stemming from the economic uncertainties associated with the spread of COVID-19. The level of this impact is not foreseeable at this stage.
Against the backdrop of the expected burdens, the Leoni has decided on a number of measures to ensure the continuation of business operations. These include plant closures in Europe, North Africa and the Americas, the introduction of short-time work in Germany as well as comparable measures at further European locations. The implementation of these measures will significantly reduce material and personnel costs. In addition, the company plans to apply for financial aid to increase its financial flexibility. Over the last few days, the spread of the coronavirus has increasingly led to the termination of production at major automobile manufacturers. In view of the associated expected decline in sales to many customers and products, Leoni has decided to temporarily significantly limit production at European, North African and American Wiring Systems locations. The measures are to be upheld for the duration of the production restrictions of the car manufacturers, which are currently indicated to last up to four weeks and possibly longer. The situation at the Wiring Systems facilities in China, however, has largely normalised, the company states in a press release. Leoni also expects the automotive business of the Wire & Cable Solutions Division to suffer subsequent declines and production limitations. For the time being, production for the industrial business of the Wire & Cables Division will be maintained, although some losses are to be expected. Leoni says that it is responding to its customers’ interruptions in production by introducing short-time work at its plants and administrative locations in Germany and with similar measures at further European locations. The company and the employee representatives reached an agreement that will allow production in Germany to be scaled down in a controlled manner while partially safeguarding the income of employees. Leoni says that it is looking at comparable measures for its production sites outside Germany.