Saft Groupe SA Reports Second Quarter and Half Year 2006 Sales28 July 2006
Saft, leader in the design, development and manufacture of high-end batteries for industry and defence, announces its sales for the second quarter and first half of 2006.
TURNOVER (EUR millions, under IFRS)
Second quarter
At actual exchange rates
Period Q2 2006 Q2 2005 Growth / decline,
Exchange rate actual 2006 actual 2005 year-on-year,
Perimeter As reported As reported as reported
(i.e., including AMCO- (i.e., including
Saft India Ltd and ASB/MSB)
excluding ASB/MSB)
SBG 61,4 66,1 -7,1%
IBG 61,8 64,8 -4,6%
RBS 20,7 21,8 -5,0%
Total 143,9 152,7 -5,8%
At constant exchange rates* and constant perimeter
Period Q2 2006 Q2 2005 Growth / decline,
Exchange rate actual 2006 actual 2006 year-on-year,
Perimeter Excluding AMCO- Excluding ASB/MSB at constant
Saft India Ltd and perimeter
excluding ASB/MSB and at constant
exchange rates
SBG 61,4 63,8 -3,8%
IBG 61,7 64,8 -4,8%
RBS 20,7 21,8 -5,0%
Total 143,8 150,4 -4,4%
(*) The average exchange rate in Q2 2006 was EUR1 : $1.26 (which was the same as in Q2 2005).
Q2 2006 sales of EUR 143.9m were down 5.8% as reported and down 4.4% at constant exchange rates and constant perimeter, compared with Q2 2005.
First half
At actual exchange rates
Period H1 2006 H1 2005 Growth / decline,
Exchange rate actual 2006 actual 2005 year-on-year,
Perimeter As reported As reported as reported
(i.e., including AMCO- (i.e., including
Saft India Ltd and ASB/MSB)
excluding ASB/MSB)
SBG 119,9 132,3 -9,4%
IBG 120,7 116,9 3,3%
RBS 40,3 44,9 -10,2%
Total 280,9 294,1 -4,5%
At constant exchange rates* and constant perimeter
Period H1 2006 H1 2005 Growth / decline,
Exchange rate actual 2006 actual 2006 year-on-year,
Perimeter Excluding AMCO- Excluding ASB/MSB at constant perimeter
Saft India Ltd and and at constant
excluding ASB/MSB exchange rate
SBG 119,9 131,6 -8,9%
IBG 119,7 118,6 0,9%
RBS 40,3 45,3 -11,0%
Total 279,9 295,5 -5,3%
(*) The average exchange rate in H1 2006 was EUR1 : $1.23 (compared with EUR1 : $1.29 in H1 2005).
H1 2006 sales of EUR 280.9m were down 4.5% as reported and down 5.3% at constant exchange rates and constant perimeter, compared with H1 2005.
As previously indicated, there have been two changes in perimeter between 2005 and 2006:
1) As announced on 15th February 2006, Saft has acquired a controlling 51% stake in an Indian industrial NiCd battery manufacturer, AMCO-Saft India Ltd, effective from 1 January 2006. This acquired business contributed incremental revenues of EUR 0.1m in Q2 2006, and EUR 1.0m in H1 2006, reported within IBG.
2) There has been a change in accounting principle regarding the ASB/MSB joint venture, which is now accounted for under the equity method. This joint venture was proportionately consolidated in 2005 and contributed revenues of EUR 2.4m in Q2 2005, and EUR 4.2m in H1 2005, reported within SBG.
Specialty Battery Group
In the second quarter, SBG sales were down by 7.1% as reported to EUR 61.4m, and by 3.8% at constant exchange rates and constant perimeter, compared with Q2 2005. This EUR 2.4m fall at constant exchange rates and constant perimeter comprised a EUR 9.3m fall in sales to the US Army and net growth of EUR 7.0m across other segments, with Satellites and New Defence Systems both having exceptional quarters.
In the first half, SBG sales were down by 9.4% as reported to EUR 119.9m, and by 8.9% at constant exchange rates and constant perimeter, compared with H1 2005. This EUR 11.7m fall at constant exchange rates and constant perimeter comprised a EUR 21.5m fall in sales to the US Army and net growth of EUR 9.8m across other segments, all of which have performed strongly.
The decline in sales to the US Army in Q2 and H1 2006 was in line with expectations and Saft continues to expect sales to this customer of approximately EUR 20m for the full year 2006.
Industrial Battery Group
In the second quarter, IBG sales decreased by 4.6% as reported to EUR 61.8m and by 4.8% at constant exchange rates and constant perimeter, compared with Q2 2005. The quarterly comparison was challenging because Q2 2005 was the strongest quarter in 2005, partly due to some extraordinary additional sales in the Electric Vehicle segment. All IBG segments performed in line with expectations. AMCO-Saft India Ltd only contributed a net EUR 0.1m of incremental sales due to high inter-company purchases in the quarter.
In the first half, IBG sales increased by 3.3% as reported to EUR 120.7m and by 0.9% at constant exchange rates and constant perimeter, compared with H1 2005. All segments performed in line with expectations, with aviation and telecom growing particularly strongly. This was partly offset by a fall in sales to railway customers after an exceptional performance in H1 2005, essentially due to the phasing of contract deliveries.
Rechargeable Battery Systems
In the second quarter, RBS sales fell by 5.0% as reported (and at constant exchange rates) to EUR 20.7m, compared with Q2 2005.
In the first half, RBS sales fell by 10.2% as reported to EUR 40.3m and by 11.0% at constant exchange rates, compared with H1 2005.
The fall in sales for both the second quarter and the first half were entirely accounted for by the non-strategic telecom and consumer segment. Emergency lighting sales continue to show modest year-on-year growth with the professional electronics segment being broadly stable.
The redundancy plan at the Nersac site has been implemented as planned.
Raw material costs
Nickel has accounted for the largest proportion of Saft's purchases of traded metals. In 2005, Saft purchased approximately 1,300 tonnes of nickel. Nickel costs have increased significantly since April 2006. The average London Metal Exchange ("LME") cash prices per metric tonne were approximately $15k in 2005, $15k in Q1 2006 and $21k in Q2 2006. Since April 2006, nickel prices have also been very volatile with a minimum LME cash price of $16k and a maximum of $30k.
Saft monitors nickel prices on a daily basis, consults regularly with industry analysts and targets making forward purchases to secure up to 66% of the next 12 months' requirements. Saft has a variety of nickel hedging contracts in place for 2006, but is not fully covered for the remainder of 2006, and therefore a proportion of purchases will be made at LME cash prices.
This increase in nickel costs has not had a material effect on margins in H1. However, Saft has reacted promptly to this increase in costs and volatility. IBG has implemented a general price increase, and RBS has introduced a surcharge relating to the LME cash price of nickel, both of which have been applied from 1 July 2006. SBG does not use nickel to any material extent.
John Searle, President of the Management Board, commented "Saft has performed well in the first half of 2006. The impact of the previously announced decline in sales to the US Army has been partly offset by the good performance of the rest of the Specialty Battery Group, where all segments have performed very well. Sales in the Industrial Battery Group suffered in comparison with a strong second quarter last year, but were as expected. Finally, RBS sales have stabilised following the decline in 2005 in the telecom and consumer segment.
I can confirm that Saft's full guidance for 2006, given at the time of our 2005 results announcement, remains unchanged. The sales guidance of EUR 545m to EUR 555m based on the 2005 perimeter, approximates to EUR 540m to EUR 550m based on the new 2006 perimeter, and I now expect full year 2006 sales to be towards the top of this range.
Based on the new 2006 perimeter, and despite the recent increase in nickel costs, Saft's guidance for EBITDA[1] (EUR 97m to EUR 101m) and EBIT[2] (EUR 71m to EUR 75m) also remains unchanged. Nickel costs would have to average more than $25k per tonne throughout H2 for EBITDA and EBIT to fall below their respective guidance ranges."
About Saft
Saft (Euronext : Saft) is a world specialist in the design and manufacture of high-tech batteries for industry. Saft batteries are used in high performance applications such as industrial infrastructure and processes, transportation, space and defence. Saft is the world's leading manufacturer of nickel-cadmium batteries for industrial applications and of primary lithium batteries for a wide range of end markets. The group is also the European leader for specialised advanced technologies for the defence and space industries. With approximately 3,800 employees worldwide, Saft is present in 18 countries. Its 18 manufacturing sites and extensive sales network enable the group to serve its customers worldwide.
For more information, visit Saft at http://www.saftbatteries.com
Press and Investors Contacts:
Saft
Jill LEDGER,
Corporate Communications and Investor Relations Director
Tel. : +33-1-49-93-17-77, jill.ledger@saftbatteries.com
FINANCIAL DYNAMICS
Elodie MARCHAND, Tel. : +33-1-47-03-68-17: elodie.marchand@fd.com
Laurent Wormser, Tel. : +33-1-47-03-68-55: laurent.wormser@fd.com
IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS
Certain statements contained herein are forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans, objectives or results of operation. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and Saft's plans and objectives to differ materially from those expressed or implied in the forward looking statements.
[1]EBITDA defined as net income from operations, before depreciation, amortisation, restructuring costs and other income and expenses
[2]EBIT defined as net income from operations, before restructuring costs and other operating income and expenses.
Source: prnewswire
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