LISI (EPA:FII) - LISI : Q3/2016 Financial information

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26/10/2016 17:40

FINANCIAL INFORMATION

LISI Group posts +7.2% revenue growth to EUR 1,174.0 million in the first nine
                  months of 2016 compared to the previous year

Quarterly Consolidated sales
In million euros

2016   388    406    380
2015   382    374    339    350

        Q1     Q2     Q3     Q4

EBIT* & Net Profit in EURM

EBIT       128.9   131.7   146.5
Net profit  74.6    81.4    81.8

            2013    2014    2015

* After participation and profit-sharing expenses

* The Group benefited from the consolidation of LISI MEDICAL Remmele (USA)
  acquired in May and to a lesser extent from the majority stake in Ankit
  Fasteners (India)

* On a constant perimeter and currency ("like-for-like"), Q3 saw an
  acceleration of growth to +6.9%, confirming the strong momentum recorded in
  Q2 (+5.4%) after a lackluster start of the year (+1.8% in Q1)

* LISI confirms its value progression target for its 2016 earnings

Revenue in EURm                                              Changes
                                                                  2016 / 2015
                                                                 on a like for
                                    2016      2015    2016/2015    like basis

Q1                                 388.0     381.6     + 1.7 %       + 1.8 %
Q2                                 406.2     374.2     + 8.6 %       + 5.4 %
Q3                                 379.9     339.2    + 12.0 %       + 6.9 %
Cumulative. as of September 30   1 174.0   1 095.1     + 7.2 %       + 4.6 %

The difference in progression between reported revenue and the sales revenue on
a like-for-like basis can be attributed to:

In Q3:

> The positive impact of the consolidation of the acquisitions:
* LISI MEDICAL Remmele (USA) was consolidated as of May 1st, contributing, as
   expected, EUR 16.8 million or 4.4% of consolidated revenue,
* Ankit Fasteners (India), whose retroactive consolidation as at January 1,
   2016 following the purchase of a majority stake by the LISI Group,
   contributed EUR 1.3 million, or 0.3% of consolidated revenue.

> The currency impact is almost neutral at EUR 0.3 million, representing only
  0.1% of sales.

On a cumulative basis:

> Positive impact related to the consolidation of:
* LISI MEDICAL Remmele (USA) which contributed EUR 27.5 million or 2.3% of
   consolidated revenue,
* Ankit Fasteners (India), which contributed EUR 4.1 million or 0.4% of
   consolidated revenue.

> The currency impact was negative for - EUR 2.5 million, or 0.2% of Group
  sales.

At 64% of the consolidated total, or EUR 746.8 million, the proportion of sales
generated outside France remained stable.

                           REVIEW BY DIVISION

LISI AEROSPACE (63 % of total consolidated revenue)

* Continued strong organic growth supported by a dynamic European market and  a
  strong ramp-up of new programs

* Sligth pick-up in Boeing's orders in August and September

* Market outlook remains robust

Sales in million euros

End of September

693.8   738.4    345.8    353.2    56.2     82.8
2015     2016     2015     2016    2015     2016
  AEROSPACE        AUTOMOTIVE         MEDICAL

Revenue in EURm                                              Changes
                                                                  2016 / 2015
                                                                  on a like for
                                    2016      2015    2016/2015    like basis

Q1                                 248.5     240.4     + 3.4 %      + 3.5 %
Q2                                 254.1     236.9     + 7.3 %      + 6.7 %
Q3                                 235.7     216.5     + 8.9 %      + 8.5 %
Cumulative. as of  September 30    738.4     693.8     + 6.4 %      + 6.2 %

At EUR 235.7 million, sales in Q3 2016 rose by +8.9% compared with the same
period of the previous year. The division benefited from the ramp-up of new
programs in the European market. The "Fasteners" business thus increased by
+9.1%.  The "Fasteners" North America business recorded an increase of
deliveries to Boeing in August and September, the first upturn after several
months of disruption caused by the reorganization of the manufacturer's
logistics (- 23% on a cumulative basis since the beginning of the year). The
"Structural Components" business,  whose products are mainly sold in the
European market, is also experiencing satisfactory growth at +8.9%.

At +6.4% over the first nine months of the year, revenue of LISI AEROSPACE have
increased continuously since the beginning of the year. On a like-for-like
basis sales rose by + 6.2%.

At the production sites for the "Fasteners" segment operations benefited from a
favorable currency impact, as well as from productivity gains achieved through
the implementation of the LEAP Plan (LISI Excellence Achievement Program).
However the operational improvement of the "Structural Components" business was
penalized by technical difficulties in a phase of strong ramp-up of new
programs.

Transformational projects launched by the Division are on track with the
roadmap with, in particular:

* commissioning of plants at Villefranche-de-Rouergue (first phase of the
relocation occurred during the summer) and Saint-Ouen-l'Aumône (start of a new
production workshop),

* deployment on all sites of the LEAP continuous improvement approach.

The sale of the "Floor covering - Interior improvement" activity (2015 revenue
of EUR 8 million) to the DAHER Group became effective on August 1st and the
disposal of Précimétal Fonderie de Précision is expected to be finalized in Q4.

Comments on performance and outlook

Visibility on the commercial aircraft segment remains high especially for
single-aisle and new programs (A350, B787, etc.). Other market segments served
by LISI AEROSPACE were more mixed, including helicopters, certain segments
such as the US military or the business aircraft segment.

In the short term, the brutal acceleration in LEAP engine production and the
concomitant decline of some programs will continue to weigh on the "Structural
Components" business. The confirmation of Boeing's business resumption in the
United States for the "Fasteners" segment will remain an area of focus over the
coming months.

Given the forecasts to date, the activity expected in the fourth quarter should
be more intense than last year.

Regarding results, the ambitious industrialization programs that will drive
growth in revenues in the coming years remains to be achieved, even if ramp-up
has already been anticipated. Costs incurred by poor quality and
industrialization of technically complex parts dedicated to new programs
(Airbus and Safran) at various sites, remain significant and will continue in
the same proportions as in the 1st half of 2016.

LISI AUTOMOTIVE (30% of total consolidated revenue)

* Organic growth in a still very dynamic European market

* Continued product portfolio rationalization (application screws)

* Good momentum in the Safety Components business

% Sales Variation per division / N-1

Revenue in EURm                                              Changes
                                                                  2016 / 2015
                                                                 on a like for
                                    2016      2015    2016/2015    like basis

Q1                                 120.9     122.8     - 1.5 %      - 1.5 %
Q2                                 122.8     118.3     + 3.8 %      + 4.0 %
Q3                                 109.5     104.7     + 4.6 %      + 4.8 %
Cumulative. as of September 30     353.2     345.8     + 2.1 %      + 2.3 %

The global automotive market is growing for the third consecutive quarter
(+6.3%).

The European market experienced strong growth in September (+7.3%), confirming
the good performance of August (+9.5%) after a disappointing month of July. The
quarter ended up +4.7% (+7.7% in the first 9 months of 2016). Southern Europe
recorded the largest increase (+11.9% in Italy and +9.7% in Spain).

After three months of growth exceeding 20% the Chinese market, boosted by
government incentives to purchase new vehicles, ended the quarter at +22.8%.
The Russian market remained depressed and further declined in the quarter
(- 15.1%).

Among car manufacturers, Renault (+13.9% in the quarter), GM Opel (+13.2%) and
Daimler (+12.4%) were the most dynamic. Volkswagen (+0.4%) and PSA (- 6.5%)
were significantly behind the market.

On a like-for-like basis, LISI AUTOMOTIVE sales were up 2.3% in the first nine
months, a pattern similar to that of the production of  European manufacturers
(+2.7%). In the 3rd quarter, the +4.8% increase was mainly driven by the
"Security Mechanical Components" and "Clipped Solutions", in line with the
strategic objectives of the division.

Comments on performance and outlook

In terms of operations, all "Business Groups" improved their performance
compared with last year. The French sites of the "Screwed Fasteners Business
Group", particularly the site at St-Florent-sur-Cher, have improved
considerably without however reaching yet the levels targeted by the Group.
Improvement actions will continue to be implemented

Furthermore, the careful management of the summer shutdown period allowed for a
resumption of activity without extra costs or delays in September. Logistics
are well under control. Teams can now focus on the rationalization of the way
the production portfolio is organized ("Screwed Fasteners") and on the
implementation of the LEAP plan.

The level of new business order intake remains very steady across "Business
Groups" and accounts for more than 10% of the division's consolidated
revenue.
The market outlook remains robust, and Q4 should show a further increase over
the previous year. However, the Chinese market is expected to experience a
slowdown at year-end with the end of government incentives in December.

The good level of order intake at the Monterrey site (Mexico) confirms the
interest of LISI AUTOMITIVE customers for its location in this geographical
area. The same goes for projects launched in China (Shanghai plant).

LISI MEDICAL (7% of total consolidated revenue)

* Dynamic market and many developments underway

* Activity level up in Q3

* Smooth integration of LISI MEDICAL Remmele

Revenue in EURm                                              Changes
                                                                  2016 / 2015
                                                                 on a like for
                                    2016      2015    2016/2015    like basis

Q1                                  18.7      18.6      + 0.2 %      + 0.1 %
Q2                                  29.4      19.2     + 52.8 %      - 2.3 %
Q3                                  34.8      18.3     + 90.1 %      + 0.9 %
Cumulative. as of September 30      82.8      56.2     + 47.5 %      - 0.5 %

The global orthopedic market has remained buoyant for several years with growth
in line with the long-term trend (+4% to +5% per year). LISI MEDICAL estimates
that the segment of contract manufacturing, where it operates from its four
production sites, is growing faster than the retail market, enabling the
consolidation of inventories and orders in the pipeline. The segment of
minimally invasive surgery, LISI MEDICAL Remmele's area of expertise, displays
even more attractive dynamics.

However, prices of implants remain a concern for end users with a continuous
strengthening of quality requirements.

Q3 like-for-like revenues are improving compared to previous quarters (+ 0.9%),
confirming the development of existing products and the rise  of new customer
programs. Cumulative growth in sales remained slightly lower compared to 2015
at - 0.5%.

On reported basis and in line with expectations, the division benefited from
the consolidation of LISI MEDICAL Remmele, which contributed EUR16.8 million to
revenue for the quarter (EUR 27.5 million since consolidation in May).

The division's French sites confirmed the operational improvements achieved
over several months. The US sites of LISI MEDICAL Remmele reached consistent
performance levels. The Jeropa (USA) site however experienced some disruptions
related to changes in its product portfolio that were recently initiated.

Comments on performance and outlook

After a rather slow start to the year, the division continues to build on its
fundamentals and on its positioning as key supplier for its customers.The
consolidation of LISI MEDICAL Remmele also provided higher visibility on the
market and opened up new prospects for organic growth. Continuous improvement
action plans, further investments in different technologies and the
industrialization of new products, are all expected to consolidate this
positive trend.

PROSPECTS AND COMMENTS ON THE FINANCIAL IMPACT OF THE BUSINESS

All the divisions of the LISI Group operate in buoyant markets with prospects
for strong development.

In terms of operations and profitability, the "Screwed Fasteners" business of
the LISI AUTOMOTIVE division in France shows tangible signs of improved
performance. For LISI AEROSPACE, the main point of focus for the coming months
will remain the control over industrialization costs of the "Structural
Components" segment in the phase of rapid acceleration of new programs.

The Group confirms its objectives of revenue growth and increase in current
operating profit in absolute terms and in Free Cash flow(1) for 2016, with a
more balanced contribution from all divisions.

(1) Free Cash Flow: net operating cash flow minus net CAPEX and changes in
working capital requirements

CONTACTS

Emmanuel VIELLARD
Deputy CEO
Mail : emmanuel.viellard@lisi-group.com

Tel : +33 3 84 57 00 77 -  Fax : +33 3 84 57 02 00
Website: www.lisi-group.com

TRADING AGREEMENT: ODDO CORPORATE - Tel : +33 (0)1 40 17 52 89

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