LISI (EPA:FII) - LISI Q1 2020 Sales

Transparency directive : regulatory news

23/04/2020 17:40

FINANCIAL INFORMATION

The LISI Group generated sales of EUR397.9 million in the first quarter of
2020, down 10.6% compared with 2019

The COVID-19 global pandemic significantly weighed on the Group's activity in
the second half of March, resulting in a fall in Q1 sales, with contrasting
impacts on the divisions:

- LISI AEROSPACE: Sales down 10.3%. The Structural Components
activity was the most affected.

- LISI AUTOMOTIVE: Sales down 12.6%, with nearly three quarters of the decrease
attributable to Threaded Fasteners, partially offset by the sound performance
of Safety Mechanical Components.

- LISI MEDICAL: Sales down 4.2%. Notable growth at LISI MEDICAL Remmele (United
States) helped mitigate the impact of lower activity levels in other sites.

                                                 Changes
In EURm               2020     2019     2020 /              2020 / 2019
                                        2019        on a like-for-like basis(1)
1st Quarter ended
March 31,            397.9     445.0  - 10.6 %               - 7.9 %

At EUR397.9 million, consolidated sales for the first quarter of 2020 fell by
10.6%, down 27.4% for March alone. It can be explained by the following
factors:

. A favorable foreign exchange effect of +EUR4.7 million (1.2% of sales )
linked to the strengthening of the US dollar against the euro,

. A scope effect of -EUR17.9 million, reflecting the deconsolidation of
Indraero Siren and LISI AEROSPACE Creuzet Maroc which came into effect on June
30, 2019, and the disposal of the screw, chassis stud and ball joint activity
by LISI AUTOMOTIVE Former in Saint-Florent-sur-Cher on November 29, 2019,

. A strong COVID-19 impact, which was particularly dramatic in March, with
a low point in the final week of March.

At constant scope and exchange rates, the consolidated sales was down 7.9% in
the first quarter of the year (23.4% fall in March).

(1) The change at constant scope and exchange rates is calculated:

- by converting the sales of the companies whose financial statements are
denominated in foreign currencies at the average rate of the year N-1 or the
month M-1;
- by converting the sales invoiced in currencies other than the local currency
at the average rate of the previous year or previous month M-1;
- by restating the entries into or exits from the scope to ensure comparability
of data.

Quaterly Consolidated Sales

In million euros

     2020             2019

Q1   398              445
Q2                    441
Q3                    412
Q4                    431

EBIT* & Net Profit in EURM

      EBIT             NET PROFIT

2017  171,4              108,0
2018  135,6               92,1
2019  155,1               69,8

* After participation and profit-sharing expenses

COMMENTS BY BUSINESS LINE

LISI AEROSPACE (57% of the consolidated total)

                                        Changes
In EURm      2020     2019     2020 /              2020 / 2019
                               2019        on a like-for-like basis(1)
1stQuarter  226.7    252.6   - 10.3 %                - 6.8 %
ended
March 31,

As a consequence of the collapse in global air traffic, the major customers of
the LISI AEROSPACE Division have decided to either suspend or considerably
reduce the production of commercial aircraft.

At EUR226.7 million, the division's sales were down 10.3%, including a
perimeter effect of -5.1%, compared to the same period of the previous year,
with the fall reaching 31.4% in March.

The Structural Components activity posted the biggest drop, due to the combined
effect of the slowdown in LEAP-1B engine production for the Boeing B737 MAX
over several quarters, and reduced demand caused by the COVID-19 crisis. This
phenomenon has been amplified by supply chain adjustments made by LISI's main
engine manufacturing customer. The Fasteners activity benefited from a very
short-term lag effect, and therefore recorded a more moderate decrease in
March.

                                                 Changes
In EURm              2020     2019     2020 /              2020 / 2019
                                       2019        on a like-for-like basis(1)
1st Quarter ended
March 31,           136.3    156.0   - 12.6 %               - 10.2 %

Global car sales were down 23.9% in the first quarter, and 37.9% in March
alone. The European market suffered the biggest collapse in March, down 51.8%
(down 26.3% year-on-year), followed by China with a 45.6% decline (44.2%
decline year-on-year) and the NAFTA region with a drop of 38.5% (down 13.4%
year-on-year).

In Europe, Italy (down 85.4%), Spain (down 69.3%) and France (down 72.2%) were
hit hardest in March. It should be noted that the effects of the crisis were
felt later in the Canada/United States/Mexico (NAFTA) region than in Asia and
Europe.

Car manufacturers were the divisions's most severely affected customers and the
first to drastically reduce production volumes.

Sales in million euros
End of March

AEROSPACE
2019   2020
252.6  226.7

AUTOMOTIVE
2019   2020
156.0  136.3

MEDICAL
2019   2020
36.6   35.1

At EUR136.3 million, the LISI AUTOMOTIVE Division's sales were down 12.6%
compared to the same period a year ago. Sales for March fell by 26.2%. The
Clipped Solutions and Safety Mechanical Components activities proved to be the
most robust.

These sectors benefited from the fact that, unlike car manufacturers,
automotive equipment manufacturers were able to delay production stoppages,
from the growth in new product sales as well as from a gradual resumption of
activity on the Chinese market. However, the Threaded Fasteners activity posted
the biggest fall, given that its main customers among car manufacturers slowed
down their production at a very early stage, before the first lockdown measures
came into effect.

LISI MEDICAL ( 9% of the consolidated total)

                                                 Changes
In EURm              2020     2019     2020 /              2020 / 2019
                                       2019        on a like-for-like basis(1)
1st Quarter ended
March 31,            35,1     36,6    - 4,2 %                - 5,9 %

At EUR35.1 million, sales for the quarter were down 4.2% compared to the same
period a year ago. It was primarily supported by the ramping up of new products
in the minimally invasive surgery sector (LISI MEDICAL Remmele in the United
States), and, in March, by the delayed impact of COVID-19 in the United States
compared to Europe.

CRISIS ADAPTATION MEASURES

In the second half of March, the LISI Group implemented a global crisis
adaptation plan to protect the health of its employees and preserve its cash
flow.

Following a temporary period of partial or total closure, the Group has
implemented strict health and safety guidelines to enable the Group's employees
to continue working. These include separating staff into teams, adapting
workstations to facilitate social distancing, cleaning and disinfection, and
wearing of masks from April onwards as well as the implementation of
teleworking where possible.

Under these circumstances, the Group has prioritized the protection of cash
flow. The Group has therefore implemented stringent management processes which
include adapting production resources to customer orders, stricter monitoring
of working capital requirements (particularly inventories and customer credit)
and, drastic cost adaptation measures (deferral or cancellation of
non-strategic expenditure and non-priority investment projects, furloughing,
exceptional schemes to reduce operations and contract of temporary workers).
Most of the Group's production sites around the world are currently operating
with reduced workforce.

OUTLOOK AND COMMENTS ON THE FINANCIAL IMPACT OF BUSINESS

The COVID-19 crisis is a major event that will impact the Group's entire
operations for months to come, and will require significant cash outflows. The
LISI Group can count on confirmed available bank facilities to strengthen its
financial position, which has improved over the first quarter. Indeed, as of
March 31, 2020, net debt had dropped considerably as a result of a very
sustained generation of Free Cash Flow(1). For the record, at end-December
2019, the Group had access to EUR435 million in financing, of which EUR237
million in available cash, and posted a gearing ratio of 32.5%. On this basis,
and assuming current market conditions, all the tests conducted by the Group
point to strong business continuity for future quarters.

The decline in activity noted in the first quarter of 2020 should not be used
as a baseline on which to extrapolate future declines, and particularly that of
the second quarter, which is likely to be far greater. The Group is not
currently in a position to make projections about its various markets that
would allow it to provide a more accurate outlook for the whole of the current
financial year.

The Group is currently focusing its efforts on cash management, adapting its
cost structure, rolling out new products and ensuring long-term market share
gains.

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

(1) Free Cash Flow : capacité d'autofinancement diminuée des investissements
industriels nets et des variations des BFR

TRADING AGREEMENT: ODDO BHF CORPORATE - +33 (0)1 44 51 86 80

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