NUREMBERG (dpa-AFX) – In addition to day-to-day business, the coronavirus pandemic is also making the planned strategic reorganization more difficult for the ailing auto parts supplier and cable specialist LEONI. The sale of the cable division is now on hold because of the poor conditions on the financial markets, as CEO Aldo Kamper said in a conference call on Monday. The company also needs a lot of money from the state to survive the current difficult situation. Even without the outbreak of lung disease Covid-19, the Nuremberg population was in dire straits. In 2019, a loss of 435 million euros was incurred after a profit of 73 million euros a year earlier.
Leoni had already decided to apply for liquidity aid from the state. “We need this government aid to continue doing business,” said Kamper. “Otherwise, we would run into nothing at some point.” CFO Ingrid Jägering put the necessary amount at “a few hundred million euros” that would be requested.
At the moment, efforts to transfer claims to customers as part of so-called factoring to financial service providers and thus to make money, have come to nothing, without sales, she said. The liquidity injections would be applied to the Federal Government and the Free State of Bavaria. The recent restructuring report showed that the company had no perspective without Covid-19, which could be an advantage when filing the application, Kamper said.
Leoni’s share price fell 0.7 percent on Monday afternoon at EUR 6.68. Before the crisis on the stock market hit with full force on February 24, the paper listed in the SDAX was worth almost 13 euros. However, the stock has been descending for a long time, a good two years ago it was still ten times as much as it is today.
Leoni aggravated the market weakness, problems with large projects and start-ups also made life difficult for the company. Kamper is trying to counteract this with a savings and conversion program, but now the management of the new corona virus is getting in the way. On the one hand, Leoni manufactures wiring systems for the automotive industry, but also produces various types of wire and cables for the automotive industry and other industries in the cable division.
Already a week ago, the Franks had warned of the significant strain caused by the spread of the virus. The actual burdens caused by the pandemic are currently not reliably quantifiable – Leoni therefore currently expects clearly negative deviations from his original planning, the company said on Monday.
Originally, the group had expected sales to rise moderately to EUR 4.8 billion in 2020 due to several project launches. Adjusted for special effects and conversion costs, the operating result (EBIT) should have recovered from minus EUR 66 million in 2019 to a positive mid double-digit million amount.
Because the majority of customers from the automotive industry have currently shut down their plants for weeks, Leoni has also announced temporary plant closures in Europe, North Africa and America, and short-time working is also to be introduced in Germany. All of this should reduce costs quickly. The plants, especially in the wiring system division, remained closed as long as customers in the automotive industry started up their production again, said Kamper.
In previous years, the problems in the business had strained the balance sheet, in 2019 Leoni burned even more money with a cash outflow of 308 million euros than in the previous year. At the end of 2019, the available liquidity was around 550 million euros, said CFO Jägering. The company also repaid outstanding debts in the first quarter.
The savings program launched by CEO Kamper some time ago also initially costs money. In 2019, 86 million euros were incurred; in 2020, it should be another 35 million euros. In 2022, however, the total gross costs should be 500 million euros lower. 60 percent of the plan has already been implemented and the program is on track./men/mne/jha/
– .
