Leoni AG Rises To a Two-Year High With "Better-than-Expected" Orders From the Car Industry

Leoni AG rose to a two-year high after the German maker of cables and wires raised its full-year sales forecast 2.7 percent on "better-than-expected" orders from the car industry.

Leoni increased as much as 6.7 percent to 41.26 euros, the highest intraday price since July 2011, and was trading up 5.4 percent at 1:01 p.m. in Frankfurt, valuing the company at 1.33 billion euros ($1.77 billion). Trading volume was more than double the three-month daily average.

The company is predicting that sales in 2013 will total approximately 3.8 billion euros this year, compared with an earlier forecast of 3.7 billion euros, the Nuremberg, Germany-based manufacturer said today in its second-quarter earnings report. Leoni benefited from the expansion of the car industry in China and the U.S., while sales in Europe were down "significantly," it said.

"Growth in sales of wiring systems, cable harnesses and automotive cables more than compensated for weak business involving industrial wire and cable products" in the quarter, the company said. The wire and cable solutions unit's new orders in the first half rose 3 percent to 840 million euros, it said.

"The many orders are mainly from the car industry and will show up positively in 2014," including sales contracts that Leoni received from two German producers in China, Frank Biller, an analyst at LBBW in Stuttgart, Germany, said by phone.

Earnings Decline

Second-quarter earnings before interest and taxes fell 23 percent from a year earlier to 39.3 million euros, missing the 42.3 million-euro average of 11 analyst estimates compiled by Bloomberg.

Leoni needed to scale down capacity at a plant in Stolberg, Germany, after cable projects for the petrochemical industry in Iran were canceled because of international trade sanctions, the wiremaker said. The manufacturer also shifted a production line to Mexico from Morocco and reduced some output of household-appliance cables in China.

source from wireworld