Nuremberg, Germany – Leoni AG aims to streamline its structure with a plan to either sell off or list its Wire and Cable Systems (WCS) business on the stock market.
The German automotive cables specialist aims to separate WCS, which is focused on cable solutions, from its other core business Wiring Systems Division (WSD) which specialises in energy and data systems.
Amongst others, the Leoni business supplies TPE-based and elatomeric cables to the automotive sector.
In a 10 July statement, the company said it saw "very limited synergies" between the two business units and believed that separation would allow each to “realise its full potential”.
The group, which must still decide whether to sell or list WCS, will then concentrate resources and development on WSD to continue building on Leoni’s leading position automotive wiring systems.
“We believe that both divisions will benefit from a separation. This creates two clearly focused businesses whose individual market and technological development… can be better implemented,” explained Leoni’s chief executive officer Ado Kamper.
The Nuremberg-based firm decided to separate its operations after an in-depth structural review of the group.
This was one of several urgent measures the firm has taken to stabilise its business after it reported persistently poor performance.
Earlier this year, Leoni revealed plans to lay off 2,000 workers globally, ordered a group-wide hiring freeze, and delayed salary increases for non-tariff employees and managers.
In March, the group reported a significant dip in annual 2018 pre-tax profits to €144m from a figure of €227m achieved in 2017.
Leoni blamed the setback largely on “exceptional” costs and a “disappointing performance” at a newly launched wiring systems plant in Merida, Mexico in the fourth quarter 2018.
Higher raw material prices and inefficiency in its wiring systems business also contributed to the decline.
The company has admitted that “urgent measures” were required as it faced challenging market conditions, especially in China and demand for its auto wiring systems had fallen substantially.