LISI (EPA:FII) - Q3 Financial Information

Transparency directive : regulatory news

24/10/2018 17:42

FINANCIAL INFORMATION

The LISI Group posted sales of more than EUR 1.2 billion in the first nine
months of 2018, stable compared to the previous year (-0.8%) in a complex
economic environment

. LISI AEROSPACE: - 9.4% in the first nine months and - 0.6% in Q3

Confirmation that the economic environment remains difficult:

o Slowdown in the "Europe Fasteners" segment

o Very sustained ramp-up of new programs in the "Structural Components"
   segment

o Encouraging signs of recovery in the business jets and helicopter segments

  LISI AUTOMOTIVE: + 18.5% in the first nine months and + 12.8% in Q3

o Organic growth down - 2.8% in Q3, a collateral consequence of the new
   anti-pollution standards and of the Worldwide Harmonized Light Vehicle Test
   Procedure (WLTP) for automotive manufacturer customers, effective from
   September 1, 2018, and of the US/China trade war

o Strong contribution from Termax, the US company acquired in October 2017

  LISI MEDICAL: - 6.5% in the first nine months and + 9.3% in Q3

o Rebound driven by ramp up of new products in the "Minimally Invasive
   Surgery" segment and good performance of the "hips" segment

in EURM                                 Changes
                     2018    2017      2018/2017       2018 / 2017
                                  on a like-for-like
                                        basis(1)

Q1                  419.5    444.3      - 5.6 %         - 4.4 %
Q2                  415.6    417.4      - 0.4 %         - 2.6 %
Q3                  386.3    369.7      + 4.5 %         - 1.0 %

3rd quarter ended
September 30,     1 221.4  1 231.4      - 0.8 %         - 2.8 %

(1) The change on a like-for-like basis is calculated by:
- Converting the sales revenues of companies whose accounts are denominated in
foreign currencies to the average rate of year N -1 or month M-1
- Converting sales revenue invoiced in currencies other than the local currency
to the average rate of year N-1 or month M-1
- Restoring the consolidations and deconsolidations in order to find a
comparable base.

On a like-for-like basis, the sales declined was contained to - 2.8% in the
first nine months. It benefited in the third quarter from a less adverse
comparison base effect and marks a new quarter of sequential improvement in
2018 (Q1: - 4.4%; Q2: - 2.6%; Q3: - 1.0%).

Quaterly Consolidated Sales
In million euros

2018            2017

420    Q1      444
416    Q2      417
386    Q3      370
       Q4      412

EBIT* & Net Profit in EURM

EBIT               Net Profit
146,5     2015         81,8
157,5%    2016        107,0
171,4     2017        108,0

After participation and profit-sharing expenses

The difference between reported and like-for-like sales is explained by:

  The unfavorable impact of currencies (- EUR 26.8 million or - 2.2%) with a
less adverse effect in the third quarter due in particular to the rise of the
US  dollar against the euro,

  The disposal of Précimétal Fonderie de Précision (Belgium) on February
2, 2017 (- EUR 1.5 million),

  The positive impact (+EUR 54.2 million) of the consolidation within LISI
AUTOMOTIVE of U.S. company TERMAX since November 1, 2017.

COMMENTS BY DIVISION

LISI AEROSPACE (56% of consolidated sales)

in EURM                                 Changes
      2018    2017    2018/2017     2018 / 2017
                                on a like-for-like
                                      basis(1)
Q1   235.6    277.5    - 15.1 %       - 8.1 %
Q2   230.1    258.3    - 10.9 %       - 7.7 %
Q3   221.4    222.6     - 0.6 %       - 1.4 %
3rd quarter ended
September 30,
     687.1    758.4     - 9.4 %       - 6.0 %

After two quarters of sharp decline, sales for the third quarter of 2018 were
down - 0.6% compared with the same period last year.

The decline in the "Europe Fasteners" segment slowed down in the quarter, which
may suggest that a low point had been reached.

The "North American Fasteners" segment is gradually benefiting from the
acceleration of sales linked to the development of new products achieved in
recent years by its main American client. At the same time, the business jets
and helicopter segments are showing tangible signs of recovery, which will have
to be confirmed in the coming months.

The "Structural Components" segment recorded significant progress in the third
quarter with sales up 8.0% against the comparable period in the prior year, as
supply needs for the LEAP engine, where production ramp up continues at a fast
pace, more than compensated for lower orders in the "Aerostructure" segment.

Thus, the decline in sales on a like-for-like basis was -1.4% in the third
quarter, compared to -7.9% for the first half of 2018.

Cost reduction measures initiated in the second half of 2017 in order to
mitigate the consequences of the activity slowdown, continue to be deployed.

Sales in million euros
End of September

AEROSPACE

2017    2018
758,4   687,1

AUTOMOTIVE
2017    2018
368,7   437,1

MEDICAL
2017    2018
104,6    97,8

LISI AUTOMOTIVE (36 % of consolidated sales)

in EURM                                 Changes
      2018    2017    2018/2017     2018 / 2017
                                on a like-for-like
                                      basis(1)
Q1    153.9   128.9    + 19.4 %       + 5.6%
Q2    152.1   123.7    + 23.0 %      + 8.2 %
Q3    131.1   116.2    + 12.8 %      - 2.8 %
3rd quarter
ended
September 30,
      437.1   368.7    + 18.5 %      + 3.8 %

At the end of the period under review, the Automotive division was affected by
the initial consequences of the new anti-pollution standards and the Worldwide
Harmonized Light Vehicle Test Procedure (WLTP) that became effective on
September 1, 2018. As a consequence, the division's main manufacturer customers
have had to implement changes to the engines that equip their vehicles, which
resulted in a sharp contraction of their sales. The introduction of
anti-dumping taxes by the United States has also had negative impact on the
global automotive markets and more particularly in China.

Growth in reported sales thus slowed down to + 12.8% in the quarter (+ 21.2% in
the first half).

On a like-for-like basis, third quarter sales were down - 2.8% (+ 6.8% in the
first half)

With respect to operations, the division will have to adjust its cost structure
downward due to the sudden deterioration in market conditions in the third
quarter.

LISI MEDICAL (8% of consolidated sales)

in EURM                                 Changes
      2018    2017    2018/2017     2018 / 2017
                                on a like-for-like
                                      basis(1)
Q1     30.2   37.9     - 20.3 %       - 14.9 %
Q2     33.6   35.6      - 5.5 %        - 2.8 %
Q3     34.0   31.1      + 9.3 %        + 9.0 %
3rd quarter ended
September 30,
       97.8  104.6      - 6.5 %        - 3.7 %

At EUR 34.0 million, revenue for the quarter increased by + 9.3% compared with
the same period last year. As expected, the division is therefore gradually
benefiting from the ramp-up of new products in the area of minimally invasive
surgery and from the satisfactory performance of the "hip" segment.
The Medical division has returned to positive territory with organic growth of
+ 9.0% for the third quarter.

% Sales Variation per division / N-1

OUTLOOK AND COMMENTS ON THE FINANCIAL IMPACT OF BUSINESS

For LISI AEROSPACE, while the economic environment could well remain under
pressure in the medium term, it may however have bottomed out in the third
quarter. "Europe Fasteners" plants will therefore remain focused on adjusting
their production levels and costs as orders decline and until normal operating
conditions prevail again.

The increase in orders from Boeing in North America, the encouraging signs of
recovery in the other market segments served by LISI AEROSPACE, including
helicopters and business jets, have yet to be confirmed in the months to
come.

However, a number of new products are being developed in both Europe and the
United States. The "Structural Components" segment will continue to expand in
order to continue to support the ever-increasing pace of new programs.

In the LISI AUTOMOTIVE division, order intake for new products in the "Clip
Fasteners" and "Safety Mechanical Components" segments remains  dynamic and
accounts for over 10% of the sales generated since the beginning of the year.
This fundamental trend, combined with the intensification of commercial
synergies with Termax and Hi-Vol, the American specialist in safety components
consolidated since September 21, 2018, are major opportunities supporting the
international expansion of the division.

However, in 2018, this progress will not offset the impact of the sharp and
sudden deterioration in market conditions caused by the new WLTP-Euro 6
standards in Europe and the decline in demand in China after several years of
sustained growth, all of which are affecting the entire automotive industry
supply chain. In this context, which currently offers little visibility, it is
imperative that LISI AUTOMOTIVE adjusts its cost base.

After a period of market share gains and new product developments, all LISI
MEDICAL division sites must now focus their efforts on meeting production
ramp-up requirements as industrial production begins for the new products
developed in recent years.

While in the medium-to-long term, the growth prospects of all the divisions of
the LISI Group remain robust, the third quarter of 2018 confirms the complexity
of the challenges in the short term. Adjustment measures will be maintained in
the two largest divisions and will continue to weigh on profitability in the
coming months.

The Group thus maintains the targets announced with the half-year results: the
operating margin is expected to show a marked decline compared to 2017, while
Free Cash Flow(1) should be once again largely positive.

(1) Free Cash Flow: cash flow from operations minus net capital expenditures
and changes in working capital requirements

CONTACT

Emmanuel VIELLARD
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 BHF CORPORATE - +33 (0)1 44 51 86 80

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LISI (EPA:FII) - Q3 Financial Information

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