Leoni AG publishes preliminary figures for Q3: EBIT before exceptional items significantly impacted by volatile customer call-offs and provisions to cover contingent losses, triggered primarily by further expected cost inflation; Specification of the outlook for FY 2022

Nuremberg, 2 November 2022 – According to preliminary figures for the third quarter of 2022, Leoni AG, Nuremberg (ISIN: DE0005408884 / WKN: 540888) expects Group sales from continuing operations⁽¹⁾ of around EUR 955 million  (Q3 2021: EUR 893 million), EBIT before exceptional items⁽²⁾ from continuing operations of around EUR -56 million  (Q3 2021: EUR -3 million), reported EBIT from continuing operations of around EUR -71 million (Q3 2021: EUR -20 million) and free cash flow (FCF) from continuing operations of around EUR -63 million  (Q3 2021: EUR -85 million).⁽³⁾

Group sales in the third quarter of 2022 were around 7% higher than in the previous year. This was due to significant revenue growth in the Wiring Systems Division (WSD) due to organic growth, positive effects from copper price increases, FX and compensation payments made by customers for additional volatility costs and inflation-driven cost increases. This was offset by a significant decline in sales from continuing operations in the Wire & Cable Solutions Division due to consolidation effects.

In the third quarter, the highly volatile product call-offs resulting from ongoing supply chain disruptions on the customer side as well as higher raw material and logistics costs again had a significant impact on earnings. This negative impact on earnings was partially offset in the third quarter by agreements reached with customers over contributions to the cost increases incurred in previous quarters.  A one-off earnings effect of around EUR  -7 million also resulted from the change in FX positions as part of the carve-out of discontinued operations.

In addition, the recognition of non-cash provisions to cover contingent losses had a negative impact on earnings of EUR 31 million. This is triggered by expected further increases in material costs, increased personnel costs due to inflation-driven wage increases and negative FX effects from the 2023 financial year onwards. Leoni AG will work to compensate for this potential negative effect in the coming quarters.

The free cash flow from continuing operations in the third quarter 2022 of around EUR -63 million is mainly attributable to the negative result.

In addition, the Board of Directors of Leoni AG today decided to revise the forecast for the current financial year 2022 compared to the ad-hoc announcement of 14 March 2022 on the basis of continuing operations.

From today's perspective, Group sales from continuing operations are expected to be at around EUR 3.8 billion for the 2022 financial year. EBIT before exceptional items from continuing operations is expected to be in the high, negative double-digit million-euro range. From today's perspective, the FCF from continuing operations will be in the high positive double-digit million-euro range, including the FCF effect of EUR 278 million from the sale of the BG IN business unit. Not yet taken into account is the expected FCF effect from the disposal of the BG AM business unit, the closing of this transaction is expected in the fourth quarter.

The final results for the third quarter of 2022 will be published as scheduled on 15 November 2022.

(1) Following the sale of the automotive standard and specialty cables business agreed in May 2022, bundled in the Automotive Cable Solutions business group (BG AM), this business has been listed as a discontinued operation in the Group's reporting since H1 2022; continuing operations mainly comprise the wiring systems business with the WSD division; the prior-year figures have been adjusted accordingly.

(2) The indicator represents the adjustment of EBIT for exceptional one-off effects in order to enable better comparability between the periods and interpretation of operating profitability. Special effects include effects from the refinancing of the Group, restructuring measures, M&A transactions and extraordinary costs in connection with the war in Ukraine. Explanations of the key financial figures used can be found in the Annual Report 2021 of Leoni AG, in particular on pages 55, 56, 60 and 63.

(3) For  the third quarter of 2022, the consensus collected by Vara Research GmbH as of 31  October 2022 resulted  in the following figures  from continuing operations: sales EUR 954 million, EBIT before exceptional items EUR -13 million and free cash flow EUR -95 million.

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