As the company announced, Leoni AG no longer expects to attain the targets set for the 2008 financial year. The Management Board now projects sales of at least EUR 2.9 billion (previous forecast: at least EUR 3.0 billion) and earnings before interest and taxes (EBIT) of between EUR 110 and 120 million (previously approx. EUR 140 million). Main reason for this revised forecast is that the Wiring Systems division is expecting a distinctly weaker 4th quarter. It is to be feared that the automotive industry will make further cuts in addition to the scaling back or suspension of production already announced in the last two weeks.
Noticeable decline in sales has been recorded now in the Wire & Cable Solutions division as well, in particular in its segments automotive cables and cord sets for electrical appliances. There is still a steady trend of business though in most areas of this division. This is due to ongoing strong demand for special cables, for instance in the capital goods industry, in the petrochemical business and the medical equipment sector.
Besides lacking gross margins resulting from reduced sales, it has to be expected that some writedowns on inventory in the Wire & Cable Solutions division as at the 31 December 2008 reporting date will be required because of the sharp drop in the price of copper in past weeks to the most recent level of about EUR 4 per kilogramme. This, too, adds to the adjusted EBIT guidance.
Leoni AG adjusts, in response to current developments, its flexible processes for producing wiring systems, which are all made outside Germany, to the changed conditions. The requirement for adjustments, however, will be toned due to the fact that early in 2009 setting up capacities for series production start-ups of new car projects will become necessary.
Comprehensive interim reporting with more detailed statements will follow with presentation of the 3rd quarter figures on 5 November 2008.
Furthermore, Leoni AG intends to launch a share buy-back programme. This will involve buying back own shares in the Company of up to 10 percent of share capital, equating to a maximum of 2,970,000 shares. The shares will be bought back particularly for resale to third parties in the context of acquiring businesses, parts of businesses or investing in companies. The buy-back will be carried out via the stock market and will be funded from the Group's operating cash flow.
By launching the programme the Management Board makes use of the Annual General Meeting's authorisation of 15 May 2008 to buy back own shares. It entitles the Company to buy back shares up to 10 % of its share capital until 14 November 2009, either via the stock market or by means of a public offer to all shareholders. The per-share purchase price must not exceed by 10 % or fall more than 50 % short of the average daily trading volume-weighted closing prices of the share on the three trading days in the XETRA trading system of the Frankfurt Stock Exchange preceding the respective purchase.
If the authorisation to buy back own shares was to be replaced at the next Annual General Meeting on 14 May 2009 by fresh authorisation, the share buy-back could be continued on the basis of such new authorisation.
The buy-back will be carried out in appropriate application of Commission Regulation (EC) no. 2273/2003 dated 22 December 2003. The announcements concerning the share buy-back programme will be published on the Company's website as well as in the electronic Bundesanzeiger and in Börsen-Zeitung.