Leoni expects impact on sales following the war in Ukraine
Leoni AG has decided to adjust its guidance for the 2022 financial year as a result of the war in Ukraine and the related economic impact.
The company states in an update that it – based on the current perspective – expects lower sales, lower EBIT before exceptional items and a lower free cash flow for 2022 compared to its previously announced guidance; all as a result of the war in Ukraine and the related economic impact.
The company doesn't expect that the reduced production volumes and the partial production losses at its two sites in Ukraine will be fully compensated in the course of 2022. Leoni Group's local Russian business is also expected to be affected by geopolitical consequences, such as sanctions. Adding to this are indirect effects such as production interruptions on customer and supplier side – which will affect the course of business – cannot yet be estimated.
”The Board of Directors is intensively examining various measures to compensate for these effects, including among others the possibility of duplicating production volumes. To this end, Leoni is working closely and constructively with its customers and suppliers to manage this exceptional situation. However, a reliable quantification of the direct and indirect impact of the war in Ukraine on the 2022 financial year is currently impossible due to high uncertainty, and the forecasting ability is significantly impaired,” the company writes in the update.
For the current financial year, production of the two plants in Ukraine was planned to generate combined sales of less than USD 300 million. For Leoni Group's activities in Russia, sales of less than USD 100 million were budgeted.
Core assets in the companies of both markets are property, plant and equipment and inventories – which is around USD 125 million – could be at least partially impaired.