A press release said that expansion of the plant in Cuauhtémoc, which opened in 1998, was made to meet the increasing market demand. Over the next five years, Leoni will invest approximately $16.8 million for additional production equipment. The expansion is expected to result in at least 30 new jobs.
During the opening ceremony, Bill Livengood, president of Leoni Cables North America, expressed his gratitude for the excellent cooperation with the state of Chihuahua and the city of Cuauhtémoc. Guests at the celebration included the Governor of Chihuahua, Maria Eugenia Campos; the Secretary of State for Economic Affairs, Maria Angelica Granados; and local officials.
The Cuauhtémoc plant has become an important player in the automotive cables business in NAFTA. It manufactures a broad product portfolio ranging from simple single-core cables to complex multi-core cables for driver assistance systems and data cables for autonomous driving is answering the needs of Tier 1 and Tier 2 customers in North America.
In 2020, Phase I of a project called EMOMEX (E-Mobility Mexico) was accomplished. It included an investment of $27 million in equipment and machines for the design, development and production of high-voltage cables and cables for charging systems. More than 120 new employees were hired.
May 12, 2021 – Leoni AG continues positive trajectory in the first quarter of 2021, which saw the initial WCS carve-out achieved.
“We continued our operational recovery of the preceding quarters in the first quarter of 2021,” stated Leoni AG CEO Also Kamper. “We reached initial milestones in the improvement of our portfolio with the sale of Leoni Schweiz AG as well as the agreement on the disposal of business units of Leoni Kerpen GmbH. Overall, our progress in operational and strategic terms gives us confidence that we have embarked on the right course to stabilise our business on a sustainable basis. Our focus continues to be on diligently implementing all measures needed to further improve LEONI’s performance and efficiency in the future.” He cited the following positive news.
• Consolidated sales well up on the previous year in the first quarter of 2021
• EBIT before exceptional items as well as before VALUE 21 costs was, with earnings of €39 million, up substantially from the level of same quarter of the previous year (a loss of € 7 million) thanks to a sales increase and operational improvements
• Resolute implementation of our VALUE 21 performance and strategy programme; about €600 million of the gross cost savings potential realised as of 31 March 2021
• As expected, negative free cash flow of € 100 million substantially below the previous year’s neutral figure, which benefited considerably at the time from sale-and-leaseback transactions; free cash flow in the first quarter of 2021 was weighed down by the trend in net working capital related to the operational recovery
• Progress made with respect to strengthening our portfolio by having closed the sale of the first WCS unit, namely LEONI Schweiz AG, at the end of March 2021
• Agreement signed with a consortium of buyers on sale of LEONI Kerpen GmbH’s low-margin business units based in Stolberg; more than 160 jobs could be saved by continuing to operate these units in the hands of new owners at the site
• Sales and earnings outlook for fiscal 2021 raised: despite the persisting Covid-19 pandemic and bottlenecks in our global supply chains, outlook for Group sales now lifted to a significant increase (previously only a low double-digit percentage range); EBIT before exceptional items as well as before VALUE 21 costs should also improve significantly and now reach at least the break-even point
Germany’s Leoni announced that it is considering plans to either sell or float a stock market listing for its Wire and Cables Solutions (WCS) business, based on a broad review of the company’s group structure, and a decision to focus on its Wiring Systems Division (WSD).
A press release said that the company had considered the optimal future ownership structure of both the WCS and its Wiring Systems Division (WSD) to determine how both divisions could achieve their full potential.
The WCS serves a wide range of growing end markets, such as healthcare, factory automation, transportation and automotive. The release noted that with its LEONiQ technology, "WCS is well positioned to become the front runner for intelligent cable solutions."
The WSD, which supplies engineered cables and interconnect solutions, and is anchored by the automotive field, "is on the way to sell not only products, but increasingly provide services in engineering, architectural design and simulation," the release said.
Leoni’s Board of Directors found very limited synergies between both divisions, and intends to increase their operational independence, the release said. In this context, corporate support functions will transfer from the holding company to the divisions.
"We believe that both divisions will benefit from a separation," said Leoni Chief Executive Aldo Kamper. "This creates two clearly focused businesses, whose individual market and technological developments as well as investments can be better and more quickly implemented."
The decision to separate WCS from the group and focus resources on WSD will strengthen our ability to further strategically develop this business, Kamper said. "This would create two clearly focused businesses, whose individual market and technological developments as well as investments can be better and more quickly
implemented."
With its focus on WSD, Leoni expects to be in a better position to focus on operational improvements and continue to build on its leading position in automotive wiring systems. It could concentrate its resources on being a global solutions provider for the automotive sector while seeking emerging opportunities on the energy and data side. With its WSD becoming a systems supplier and development partner to its customers, Leoni is on the way to sell not only products, but increasingly provide services in engineering, architectural design and simulation.
Bruno Fankhauser, a member of the Board of Directors of Leoni with responsibility for the WCS division, agreed that the split made sense. "We have shown strong growth in recent years and have maintained a leading position as a provider of intelligent cable solutions and services. With today’s decision, we want to put the WCS division in a position to realize its full potential more quickly with a different ownership structure."
While either a sale or stock market exit is envisioned, a partial sale is also possible, the release said. "To date, no final decision has been taken in this regard. However, following a potential separation, Leoni’s primary focus would be on the development of its WSD division. To this end, Leoni has begun to mandate respective advisors."
The company notes that implementation of its VALUE 21 program is on track to achieve sustainable gross cost savings targets of €500 million per year by 2022, with 75% of the savings expected to be realized in WSD.
Citing a weaker market and persistent problems at their plant in Merida, Mexico, Leoni AG reported significant organizational changes that it deemed necessary to stabilize the business and prepare it for its future.
A March 18 press release said that the company will no longer maintain its prior stated financial projections for sales of €5.2 billion for 2019. It also plans a headcount reduction of up to 2,000 "indirect" employees worldwide, meaning those not working production, such as "white collar" staff. Those cuts include "500... in high-wage countries, particularly in indirect functions." Other cited personnel-related measures include a group-wide hiring freeze and a freeze on raises for non-tariff employees and managers.
The largest single problem was related to the company’s plant that opened two years ago in Merida. Part of the Wiring Systems Division (WSD), the site has experienced ramp-up problems that persisted "to an unexpected extent" the first two months of 2019, the release said. There were high personnel and freight costs that impact division earnings by about €50 million. Other WSD plants in Hermosillo and Durango did not achieve "anticipated performance improvements," but the Merida plant was the source of the biggest loss.
In the Feb. 7 press release, Leoni AG CEO Aldo Kamper said that he and CFO Karl Gadesmann would actively engage in the operations of WSD. "We are immediately implementing a stricter cost discipline at the company," he said, with the focus being to stabilize the company, "with a particular focus on Mexico." A dedicated team of experts is on site to further this goal. The problems, it said, extend beyond Mexico, as the market, especially in China, remains challenging, as some OEMs have cut back on expected orders for the coming months.
In the March 18 release, Kamper said that the situation had worsened, and that "developments… have made it clear that we must act even faster and more decisively to bring Leoni back on track." Personnel changes included the resignation of Gadesmann, whose duties Kamper assumed on an interim basis. Martin Stüttem will assume the responsibilities of WSD COO. The division’s current CFO will be leaving his function and the head of operations has already left. Staffing changes at Merida are also part of the changes.
Kamper said in the release that Leoni has "a clear roadmap" to address its problems. He observed that it was important for Leoni to develop into a systems provider and that its products and services to be aligned with viable and profitable markets as well as technologies involving a high degree of integration. Leoni is using outside experts to help assess "the most important project ramp ups."
"Leoni will focus more on cash generation as well as profitability and intends to restrict organic growth in its Wiring System Division to the level of market growth," the release said. The corporate structure will be changed "into a financial holding company that is lean and geared to functions relevant to the capital market with two divisions that operate entrepreneurially and are managed on a stand-alone basis. ... The divisions will take on full direct cost responsibility for their own businesses."
The release also said that a range of initiatives, part of the company’s VALUE 21 program, is expected to have an impact. "As of 2022, (it) is expected to deliver full-run rate structural savings of around EUR 500 million annually compared with 2018." Savings will be offset some by factors such as wage cost increases and price reductions. Restructuring costs are likely to amount to about EUR 120 million, half of it related to headcount, most of which will incur in the 2019 and 2020 financial years."
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