Nuremberg, Germany – Cables and wiring specialist Leoni AG has reported a net income loss of €264 million in the first nine months of 2019, compared to the positive €108 million figure registered a year ago.
Sales for the nine months to end of September fell 5.1% to €1.15 billion, while earnings (EBITDA) plunged into red, going from €279 million in 2018 to negative €72 million, Leoni said in its third quarter results 13 Nov.
The company cited lower volumes, operational performance issues in its Wire and Cable Systems (WCS) business, salary inflation as well as planned ramp-up costs as the main reason for the poor results.
Leoni said the market environment continued to remain challenging with demand weaker from both automotive and industrial sectors during the period.
The Nuremberg company also stated that it was on track with its Value 21 restructuring plan, which aims to save €500 million annually from 2022.
The scheme, which was announced earlier this year, will see the company laying off 2,000 workers and carving out its WCS business.
Leoni has also ordered a group-wide hiring freeze and delayed salary increases for some employees and managers.
According to the German manufacturer, 35% of the planned initiatives in Value 21 were implemented by the end of September, incurring a total cost of €72 million over the nine-month period – and €53 million over the third quarter.
The majority of the costs incurred in the third quarter, Leoni said, were connected to the initiated headcount reduction of more than 500 jobs in high-wage countries, such as Germany.
“We continue to make important progress in the stabilisation of our business, which is already reflected in the notable improvement in free cash flow,” said Aldo Kamper, CEO of Leoni AG.
Leoni manufactures high-temperature automotive cable & wiring based on a range of materials, including thermoplastic elastomers, silicone rubber, PVC and thermoplastic polyurethanes.