Leoni strengthens its market position with a joint venture in China and adjusts 2016 forecast

Nuremberg-based Leoni AG  has agreed a joint venture with China's Beijing Hainachuan Automotive Parts Co Ltd (BHAP), a subsidiary of state-owned Beijing Automotive Industry Corporation (BAIC). The contracts were signed today. The Chinese State-owned Assets Supervision and Administration Commission (SASAC) approved the joint venture. It provides that Leoni will sell 50 percent of the shares in its wiring systems plant in Langfang to BHAP. This plant has to date exclusively been making cable harnesses for the car ranges of Beijing Benz Automotive Co Ltd (BBAC), the joint venture between Daimler AG and its Chinese partner BAIC.

Its equal joint venture in China will give Leoni the opportunity to gain new orders from BBAC and other carmakers. The joint venture will be a key element for Leoni with respect to expanding its business in Asia disproportionately strongly in line with its strategy of profitable growth. All of

Leoni's other activities in China are unaffected; they will continue to exist outside the new joint venture and will likewise be developed further.

Based on the IFRS accounting principles, the joint venture will be accounted for by the equity method in the consolidated financial statements of Leoni AG. There will be no notable effects on sales or operating profit during the current financial year. It will, on the other hand, mean consolidated sales of approx. EUR 4.8 billion in fiscal 2016 rather than the EUR 5 billion forecast previously. The target for a 7 percent EBIT margin remains unchanged. Long-term, the joint venture will contribute to further improvement of the Leoni Group's position in the Chinese market.

source : You are not allowed to view links. Register or Login