Letter from the Management

A year marked by increased economic volatility

“ Thanks to the acquisitions made in the United States and the rise of the dollar toward the end of the period, the Group's sales stood at € 1.64 billion, stable (+0.1%) compared to the previous year. ”

Emmanuel VIELLARD, Chief Executive Officer of LISI and Gilles KOHLER, Chairman of LISI

Chairman of LISI

Chief Executive Officer of LISI

Driven by the noticeable volatility of its markets, the Group's stock did not do well over the year. First, there was significant adjustment of aerospace demand in Europe. Then, the second half of the year saw a significant drop in automotive markets. Thanks to the acquisitions made in the United States and the rise of the dollar toward the end of the period, the Group's sales stood at € 1.64 billion, stable (+0.1%) compared to the previous year, and down -2.6% on a constant scope and exchange rate basis.

Such volatility in sales weighed heavily on the LISI Group's results with, in particular, a -21% decline in EBIT and ROCE (Return On Capital Employed) undergoing pressure at 10.6%, down -3.7 points. In this respect, both afore-mentioned striking economic factors were particularly difficult to handle:

  • The drop in inventories, combined with a structural change in demand from a major customer in the European aerospace industry, created a situation of under-activity at several industrial sites.
  • In the Automotive Division, the overheating of the first half of the year and the fall in activity since September 2018 resulted in both of these extra costs being impossible to absorb in full during the period.

The Group responded by taking appropriate action to adjust its costs to the new market conditions, particularly in the aerospace sector, to develop its most efficient production areas and to position itself on high value-added products, with in particular the acquisition of Hi-Vol Products in the United States. The contribution of the acquisition of Termax (United States) in 2017 was particularly beneficial for the continued contribution of the Automotive Division.

However, production adjustments initiated towards the year end were not sufficient to avoid a slight increase in inventories.

The Group pursued its progress and qualitative efforts across all its areas of development and mainly on the two pillars of strategic differentiation, namely innovation and operational performance.



Both in the aerospace and automotive sectors, developments in new innovative and technical products have never been so numerous and represent a significant future volume of business. These product developments are market-specific: 28 patents filed in 2018 for the entire Group, as well as all the joint developments of new products completed with customers in the aeronautical fastener and automotive segments, which amount to a very significant sales revenue. In the shorter term, the Group has focused on the following aspects:

  • A host of innovative assembly systems on the Boeing 777X in connection with composite applications;
  • New metal leading edges for the GE9X;
  • Innovative products for the Electrical Parking Brake (EPB) applications at leading global automotive OEMs;
  • Cross-synergies resulting from the sale of concepts and technology between Termax in the United States and the rest of Clipped Solutions Business Group in Europe;
  • New products incorporating original technologies in the segment of minimally invasive surgery for the medical sector.

Some of these examples of specific products created, developed and industrialized by the Group should generate business as of 2019.

Process innovation is also a major differentiator. On the one hand, thanks to its recent acquisitions, the Group offers its customers an efficient global production infrastructure across its divisions. On the other hand, the level of investment again reached a peak in 2018 at € 131 million, after an all-time high in 2017 (€ 140 million). A new movement is turning to the exploration of digital manufacturing with a dedicated team and clearly identified projects. In this respect, we must salute and applaud the appointment of the Saint-Ouen-l'Aumône plant as "Showcase Industry of the Future" and other initiatives that represent as many pilot workshops in different geographical areas as France, the United States or Germany.

Striving for operational excellence

Through its "LISI System" deployment model, the Group has reached reassuring maturity for all the performance areas and has been able to deploy them on the two acquisitions of 2017 and 2018.

In terms of security, LISI is now achieving a level of excellence close to the objective of a 10.0 TF1, which will allow it to roll out a full CSR (Corporate Social Responsibility) project in 2019.

Finally, in Controlling, all sites now deploy the same methods of monitoring and management rigor essential to drive performance.

All of these efforts are aimed at providing all LISI customers with product offerings at the expected level of service and at pursuing our approach of profitable growth and market share gains. The Group must be a key partner for all its customers and markets to consolidate its critical global size. There are still many areas of progress and a long way to go in this momentum, which has been going on for many years and does not seem to be slowing down.

Nevertheless, the Group and its divisions will remain attentive about the business cycle movements that might occur at any time in an unstable environment in order to better adjust the level of production and fixed costs.

This cautious attitude has incited us to opt for a dividend distribution in 2019 for the year 2018 of € 0.44 per share (down from € 0.48 in 2018).

The Group will pursue all of its progress initiatives by focusing on its employees' strong involvement and on the trust of its major customers while maintaining an attitude of respect for all stakeholders.

Chief Executive Officer

Chairman of the Board