Leoni lowers guidance for 2022

NUREMBERG, Germany—Leoni A.G. has adjusted its guidance for the 2022 financial year as a result of the war in Ukraine and the related economic impact.

The German automotive wiring systems supplier now forecasts earnings (EBIT before exceptional items) to come in within the "mid double-digit-million-euro range," against an earlier estimate of at least €100 million ($110 million).

Sales will roughly stay the same with an estimate to "slightly exceed" $5.5 billion, against the earlier guidance of "a significant increase to at least" $5.5 billion, Leoni said March 14.

"From today's perspective, Leoni expects lower sales, lower EBIT before exceptional items and a lower free cash flow for 2022 compared to the previous guidance (published in February)," it said.

In particular, the German group said that it expected that reduced production volumes and partial production losses at its two sites in Ukraine could not be "fully compensated for" during the 2022 financial year.

Leoni also expects its local Russian business to be affected by geopolitical consequences such as sanctions.

Added to that are indirect effects such as production interruptions on the customer and supplier side, which Leoni says cannot yet be estimated.

"The board of directors is intensively examining various measures to compensate for these effects, including the possibility of doubling production volumes," Leoni said.

The company said it was working closely with its customers and suppliers to manage the situation.

"However, a reliable quantification of the direct and indirect impact of the war in Ukraine on the 2022 financial year is currently impossible due to high uncertainty, and the forecasting ability is significantly impaired," it said.

Leoni had previously estimated to generate combined sales of less than $332 million from its two production plants in Ukraine.

For activities in Russia, Leoni budgeted sales of less than $110 million.