LISI (EPA:FII) - Financial Information: Q3/2020

Transparency directive : regulatory news

21/10/2020 17:40

FINANCIAL INFORMATION

The LISI Group achieved consolidated sales of EUR 923 million in the first nine
months of 2020, with an uptick in sales between Q2 (- 45.9%) and Q3 (- 30.4%)
driven by the Automotive division

* LISI AEROSPACE: - 30.1% on a cumulative basis, - 41.4% in Q3, compared to
- 39.4% in Q2

o Lower demand for "Fasteners" in Europe and North America in Q3,
o "Structural Components" segment still adversely affected by the double effect
of the COVID-19 crisis and the suspension of the Boeing B737-Max production,

* LISI AUTOMOTIVE: - 29.1% on a cumulative basis, - 14.3% in Q3, compared to
- 60.1% in Q2

o Significant recovery in activity in Q3,
o Firm resilience of high added value " Safety Mechanical Components" and
"Clipped Solutions" segments confirmed thanks to new market share gains,

* LISI MEDICAL: - 19.2% on a cumulative basis, - 21.5% in Q3 compared to
- 32.2% in Q2

o Demand still marked by significant volatility due to the global health
crisis.

In EURm                                        Changes
                      2019   2019    2020 / 2019  On a like-for-like
                                                      and constant
                                                      exchange rate
                                                         basis(1)
Q1                   397.9   445.0    - 10.6 %           - 7.9 %
Q2                   238.8   441.3    - 45.9 %          - 43.7 %
Q3                   286.7   411.9    - 30.4 %          - 27.4 %
3rd quarter ended
September 30,        923.4 1 298.1    - 28.9 %          - 26.2 %

At EUR 923.4 M, consolidated sales for the first nine months of 2020 are down
by 28.9% and take into account the following factors:
  a 30.4% decline in activity in Q3, reflecting an improvement compared to
the previous quarter (- 45.9%) which saw the closures of almost all the sites
of the Group's main customers from March 15, 2020,
  at the end of September, a scope effect of - EUR 45.2 M (i.e. - 4.9% of
sales) reflecting the disposal:

o of the screws, chassis studs and ball joints segment by LISI AUTOMOTIVE
Former of the Saint-Florent-sur-Cher unit on November 29, 2019,
o of 100% of the shares of the German subsidiary LISI AUTOMOTIVE Mohr +
Friedrich GmbH on June 26, 2020,
o of the companies Indraero Siren and LISI AEROSPACE Creuzet Maroc, effective
since June 30, 2019,

(1) The change on a like-for-like and constant exchange rate basis is
calculated by:

* Converting sales of companies whose accounts are denominated in foreign
currencies to the average rate of year N-1 or month M-1
* Converting sales invoiced in currencies other than the local currency to the
average rate of year N-1 or month M-1
* restated to reflect consolidation scope entries and exits to allow for
period-to-period comparison.
* an unfavorable foreign currency effect of - EUR 0.9 M,  linked to  the
weakening of the US dollar against the euro.

Quaterly Consolidated Sales

In million euros

2020     2019

398      445   Q1

239      441   Q2

287      412   Q3

         431   Q4

EBIT* & Net Profit in EURM

EBIT

171.4   2017
135.6   2018
155.1   2019

Net Profit

108.0   2017
92.1   2018
69.8   2019

* After participation and profit-sharing expenses

On a like-for-like and constant exchange rate basis, consolidated sales
decreased by - 26.4% in the first nine months of the year.

COMMENTS BY DIVISION

LISI AEROSPACE (56% of consolidated sales)

In EURm                                        Changes
                      2020   2019    2020 / 2019  On a like-for-like
                                                      and constant
                                                      exchange rate
                                                         basis(1)
Q1                   226.7  252.6    - 10.3 %           - 6.8 %
Q2                   154.3  254.4    - 39.4 %          - 36.2 %
Q3                   137.5  234.8    - 41.4 %          - 39.6 %
3rd quarter ended
September 30,        518.5  741.8    - 30.1 %          - 27.5 %

Aucun des acteurs du marché aéronautique mondial, qu'il s'agisse des
compagnies None of the players in the global aeronautics market, whether
airlines or aircraft manufacturers, recorded a positive development compared to
the trends prevailing at the end of the first half of the year. Global air
traffic thus stood at -75.3% at the end of August(2).
At EUR 137.5 M, the Q3 sales of the LISI AEROSPACE division were down - 41.4%
compared to the same period of the previous year. This decline is amplified by
the deconsolidation of Indraero Siren and LISI AEROSPACE Creuzet Maroc since
July 1, 2019, which represents a decrease in sales of - EUR 28.7 M.
The "Fasteners" segment, which had enjoyed good momentum before the COVID-19
pandemic, posted a - 34.7% sales decline in Q3 compared to the same period of
the previous fiscal year. In North America, markets outside commercial aviation
(business, military, and helicopters) could not offset the collapse in demand
for commercial aviation.
The contraction was most marked in the "Structural Components" segment, at -
64.8% in Q2 and stabilizing at - 54.8% in Q3. It should be noted that this
activity is exposed both to the LEAP-1B engine intended for the Boeing B737-Max
and to the COVID-19 crisis.
On a like-for-like basis and restated for the currency effect, the sales of the
LISI AEROSPACE division are down - 39.6% in the third quarter and - 27.5% in
the first nine months of the year.
From an operational point of view, the division is responsive and adjusts its
production capacities to customer demand while preserving service continuity.
Thanks to the various government support measures, the workforce could be
adjusted to the severe drop in business, which is expected to last well into
the future. It should also be noted that the drastic action on fixed costs
significantly lowers the breakeven point.

LISI AUTOMOTIVE (34% of consolidated sales)

In EURm                                        Changes
                      2020   2019    2020 / 2019  On a like-for-like
                                                      and constant
                                                      exchange rate
                                                         basis(1)
Q1                  136.3   156.0      - 12.6 %        - 10.2 %
Q2                   60.4   151.2      - 60.1 %        - 58.4 %
Q3                  121.0   141.2      - 14.3 %         - 8.7 %
3rd quarter ended
September 30,       317.7   448.3      - 29.1 %        - 26.0 %

(2) Source IATA

Sales in million euros
End of September

2019

741.8   AEROSPACE
448.3   AUTOMOTIVE
108.8   MEDICAL

2020

518.5  AEROSPACE
317.7  AUTOMOTIVE
87.9   MEDICAL

After a sharp collapse in demand in the first weeks of the COVID-19 crisis, the
global automotive market benefited from the success of measures designed to
support the automotive industry, especially in Europe. Global sales thus came
out at - 5.4% in  Q3, a marked improvement compared to Q2 (- 31.8%).

At EUR 121.0 M, the quarterly sales of the LISI AUTOMOTIVE division recovered
to -14.3% compared to the same period of the previous year, after the - 60.1%
drop recorded in Q2.

In the first nine months of the year, they were down - 29.1%, compared to a
decline in global production of - 27.9% over the period under review. The high
value-added "Safety Mechanical Components" and "Clipped Solutions" segments are
are the most resilient in the health crisis. They are supported by the gradual
ramp-up of new products intended for electric, hybrid and plug-in hybrid
vehicles, whose market share has more than doubled in one year in Europe (7.5%
in Q2 2019; 16.8% in Q2 20203).

The scope effect was negative at - EUR 16.4 M over the first nine months of the
year. It corresponds to the sale of the screw, frame stud and ball joint
activity by LISI AUTOMOTIVE Former of the Saint-Florent-sur-Cher unit on
November 29, 2019 and of 100% of the shares of the German subsidiary LISI
AUTOMOTIVE Mohr + Friedrich GmbH on June 26, 2020. On a like-for-like basis and
restated for the currency effect, sales for the quarter were down - 8.7% and -
26.0% on a cumulative basis.

In terms of operations, the LISI AUTOMOTIVE division took adaptation measures
to make the most of the rebound in Q3 while continuing to deploy the cost
reduction plan launched in the first weeks of the crisis. Inventory levels have
fallen sharply and only strategic capital expenditures have been maintained.

LISI MEDICAL (10% of consolidated sales)

In EURm                                        Changes
                      2020   2019    2020 / 2019  On a like-for-like
                                                      and constant
                                                      exchange rate
                                                         basis(1)
Q1                    35.1  36.6       - 4.2 %          - 5.9 %
Q2                    24.4  36.0      - 32.2 %         - 32.9 %
Q3                    28.4  36.2      - 21.5 %         - 17.9 %
3rd quarter ended
September 30,         87.9 108.8      - 19.2 %         - 18.8 %

The postponement of non-urgent surgical procedures, in order to increase
capacity for Covid-19 patients, continues to weigh on the medical market. In
this regard, published studies estimate that the reconstruction surgery market
could fall by around - 17% to - 19% in 2020.

At EUR 28.4 M, Q3 sales were down - 21.5% compared to the same period of the
previous year,  a positive trend effect compared to the - 32.2 % declined
observed  in Q2.

On a like-for-like basis and restated for the currency effect, sales for Q3
were down - 17.9% and - 18.8% for the first nine months of the year.

From an operational point of view, and in a context of persistent volatility in
demand, adaptation is continuing on the two smaller sites of the LISI MEDICAL
Fasteners division and LISI MEDICAL Jeropa. Relations with major clients  are
being strengthened with market share gains for the benefit of LISI MEDICAL
Orthopedics and LISI MEDICAL Remmele.

(3) Source ACEA

OUTLOOK AND COMMENTS ON THE FINANCIAL IMPACT OF BUSINESS

LISI AEROSPACE

In response to the long-lasting weakness of global air traffic and in view of
the further declining order book of LISI AEROSPACE, the actions undertaken as
part of the  NEW DEAL plan will be pursued vigorously in two areas:

- on the industrial level: resizing, in particular adjusting the cost structure
to market conditions as much as necessary,

- on the commercial level: redeploying, in order to secure structuring
contracts for the division (renewal of the Airbus contract) and gain market
share with major customers in commercial (compressor blades for the Pratt &
Whitney engine for the MTU customer) or military aeronautics (fasteners for the
F-35 program for the Lockheed Martin customer).

LISI AUTOMOTIVE

In order to benefit until the end of fiscal 2020 from the rebound in activity
recorded in Q3, the Automotive division is prioritizing the following
actions:

- increase in production capacity to meet the short-term needs generated by the
implementation of the support plans dedicated to the automotive industry,

- support for the ramp-up of new programs in the "Safety Mechanical Components"
and "Clipped Solutions" segments for electric, hybrid and plug-in hybrid
vehicles. In addition, faced with the decline of combustion engines and the
rise in vehicle electrification, a project to diversify the product offer of
the "Screwed Fasteners" Business Group is targeting a new range of products
with high potential: namely the components used for the transmission of power
from an electric motor to a comfort component in the passenger compartment of
the vehicle of the future. This "Leadscrew" project helped win a subsidy from
the French State as part of the automobile modernization fund (cf. Press
release of 09/15/2020).

LISI MEDICAL

The division must continue to adapt to significant variations in demand from
its main customers who are facing uncertainties caused by the global health
crisis.

LISI CONSOLIDE

In a global economic environment still marked by the sanitary and economic
crisis  with a low short-term visibility, the Group confirms the objectives it
announced in the first half:

- refocusing on high added value business,
- cost reduction measures which will have an impact in particular on the net
income in the second half of the year,
- maintaining positive operating profitability and a good level of Free Cash
Flow(4).

Thanks to its financial strength, LISI's strategic ambitions for medium and
long-term growth remain intact.

CONTACT

Emmanuel VIELLARD
CEO
Mail: emmanuel.viellard@lisi-group.com
Tel. : +33 3 84 57 00 77 - Website: www.lisi-group.com

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

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

LISI's latest news

22/02/2024 17:41

LISI (EPA:FII) - Financial Information: Q3/2020

Transparency directive : regulatory news

LISI's latest news

Other stories