LISI 2012 FINANCIAL REPORT
22
2
Financial situation
The LISI MEDICAL division still remains marginal in size and its
results are down.
However, all management indicators are up, particularly
in absolute value. Gross operating profit was up 26.8% to
€154.8m, which is 14.3% of sales revenues. EBIT is up more
significantly at €100.4m (+28.6%), which was 9.3% of sales
revenues, as against €78.1m in 2011, despite write-downs
of €55.6m, compared with €47.7m in 2011. So thanks to the
excellent performance of LISI AEROSPACE as compared with
the low point in 2010, the operating margin was up almost 1.0
point from one year to the next. At 9.3%, it was close to the
nominal target of 10%.
Non-current expenses were fairly high for the 2012 financial
year and reflect the consequences of the difficult and possibly
long-term situation in the European automobile market. This
has led to an impairment of intangibles of €3.4m in the clipped
fasteners business. In addition, the Group has also made
provisions for several environmental risks for getting up to
standard and for some pockets of "historical pollution", which
led to an additional provision of €5.6m.
Non-operating revenues are made up on the one hand of the
cost of financing, which shows almost €1m in savings due to
a drop in the rates of the non-hedged part, and on the other
hand, foreign exchange fluctuations, which generated a profit
for non-operating income in this financial year of €2.3m. This
figure includes the positive effect of foreign exchange hedging
of €1.2m. It should also be noted that effective hedging
permitted maintaining operating income at €3.2m.
The tax bill reflects an average tax rate of 30.19% (excluding
surplus and the Contribution on Companies’ Added
Value (CVAE), taking into account that the "Employment
Competitiveness Tax Credit" economic tax measures in France
do not affect the 2012 financial year and a certain number
of provisions are not immediately deductible. This rate is
accordingly up on 2011 (29.71%).
At €57.3m net income is accordingly virtually stable, while
in 2011 it included almost €9.8m of capital gains from the
disposal of LISI COSMETICS; on a comparable basis, it was up
18%.
Earnings per share were €5.47 as against €5.70 in 2011.
The financial structure is strengthening while allowing a
very high level of investment
At €78.4m, which was 7.3% of sales revenues, the level of
investment outlays has reached a high point that reflects the
many new product development projects in the 3 divisions:
• increased capacity in the aerospace division
• renewal of the equipment and productivity efforts in the
automotive division
• expanded technological capabilities in medical.
Consolidated working capital requirements remained virtually
stable in absolute terms, and improved slightly in relative terms
to less than 85 days. With cash flow at a good level at €119.7m,
investments could be easily handled while maintaining a
positive net Free Cash Flow of €38.5m, as compared with
€6.4m in 2011.
The Group has accordingly been able to continue to reduce
its borrowings, to post net borrowings of €76.7m (as against
€102.6mat the endof 2011). Its financial structure is particularly
strong since the ratio of net debt to equity of €576.0m
("gearing") stood at 13.3% against 19.1% last year.
Capital employed, even if it continues to increase to €738.3m
(as against €709.9m in 2011), has been optimized: profitability
has continued to rise for 3 successive years. ROCE is now 15.5%
(as against 13.3% in 2011).
OUTLOOK: Ongoing dynamic outlook in aerospace, but
more uncertain in automotive and in the recovery in
medical
The American platform of LISI AEROSPACE Fasteners should
take over from the European operations through the effect of
the increased implementation of the newcontract with Boeing.
At the same time, LISI AEROSPACE's Structural components
business ought to see growth at the same rate as the
production of themajor manufacturers. On the other hand, the
automotive industry, on account of its heavy exposure to the
European market, has an uncertain outlook, which, however,
is nuanced by opportunities to take market share in Germany
and new projects in general. The medical business ought now
to demonstrate its full potential with the launch of major new
developments.
The Group has just passed a strategic milestone by going
beyond sales revenues of €1 billion. It has to continue
to improve operating conditions to achieve a double-digit
consolidated operating margin and keep Free Cash Flow clearly
positive.
The deployment of the "LEAP" plan within the Group has
facilitated implementation of "lean manufacturing" methods
at all the sites with encouraging results at the pilot plants.
The Group's three divisions have to contribute to the target of
improving operating profitability in 2013:
• The aerospace division still has growth potential in the USA
and in the structural components business. Better use of
production capacity at the Torrance plant should therefore
