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Saft Groupe SA Reports 2009 First Half Sales and Earnings

Posted on: Wednesday, 29 July 2009, 00:00 CDT

PARIS, July 29 /PRNewswire-FirstCall/ -- Saft, leader in the design, development and manufacture of advanced batteries for industry and defence, announces its sales and earnings for the 6 month period ended 30 June 2009.

First half sales and earnings highlights - H1 2009 sales of EUR287.4m, a reduction of 6.2% YoY as reported, 9.9% YoY at constant exchange rates. - Q2 sales of EUR141.8m, down 13.4% at constant exchange rates. - EBITDA margin of 17.9% of sales in H1 2009, at EUR51.5m. In line with annual guidance. - Net income down by 4.0% YoY to EUR21.6m. - Earnings Per Share of EUR1.14 in H1 2009 compared to restated EPS of EUR1.20 in H1 2008. - Strong cash generation with a free cash flow of EUR31.1m before a EUR10.2m debt repayment. Outlook for FY 2009 FY 2009 sales guidance revised but profitability guidance maintained. - 2009 revised sales guidance is expected to be 7 to 10% lower compared to 2008, at constant exchange rates. - Based on H1 performance, 2009 EBITDA guidance is unchanged at 18% of sales or above.

John Searle, Chairman of the Management Board, commented: "Market conditions have been challenging during H1, but overall I am pleased with the financial performance of the Group in the first half year. Despite continued growth in some of Saft's activities, overall sales have declined by close to 10% YoY. Today, there are few signs that the weak markets will recover rapidly but Saft will benefit from a more favourable base of comparison during H2. Despite the reduced sales, Saft has delivered a level of profitability in line with guidance and 2008, due to cost cutting.

Following the H1 performance and as a result of the review which I announced in June, it is necessary to revise our sales guidance for 2009, but I remain confident that profitability will continue to be in line with both our original guidance and that achieved in 2008.

Finally, with its debt refinanced until 2012, and continuing strong cash flow, the company has solid finances and continues to invest in the future.

Consolidated sales and results - first half 2009 In euro million First half Growth 2009 2008 Sales 287.4 306.4 (6.2)% Gross profit 82.6 85.6 (3.5)% Gross profit % 28.7% 27.9% EBITDA 51.5 54.8 (6.0)% EBITDA % 17.9% 17.9% EBIT 35.7 40.6 (12.1)% EBIT % 12.4% 13.3% Profit before income tax 27.4 27.9 (1.8)% Net income 21.6 22.5 (4.0)% EPS (EUR per share)* 1.14 1.20 (5.0)%

(*) 2008 EPS has been adjusted in order to take into account new shares issued as a result of the 2008 dividend payments in shares. H1 2008 EPS before adjustment was EUR1.22.

Notes:

1. There have been no changes in the consolidation perimeter between 2008 and 2009.

2. EBIT is defined as net income from operations, before restructuring costs and other income and expenses.

3. EBITDA is defined as net income from operations, before depreciation, amortisation, restructuring costs and other income and expenses.

4. Average exchange rate during H1 2009 was EUR1 = $1.33 compared with EUR1 = $1.53 during H1 2008.

5. Profit before tax includes accelerated amortisation of bank fees of EUR0.6m linked to current bank debt which has been refinanced in July.

Key figures - Sales were EUR287.4m in H1 2009, compared with EUR306.4m in H1 2008, a decrease of 6.2% at actual exchange rates and 9.9% at constant exchange rates. - Gross profit margin increased by almost 1% at 28.7% in H1 2009 compared to 27.9% in H1 2008, due to metals, components and labour cost reductions. - At 17.9% of sales, EBITDA margin has been maintained at the same level as in H1 2008. EBITDA was EUR51.5m in H1 2009 as compared with EUR54.8m in 2008. - Net income during H1 was EUR21.6m, down 4.0% compared with 2008. - Earnings Per Share was EUR1.14 compared to restated EPS of EUR1.20 in H1 2008. - Net debt at June 30, 2009 was EUR265m, compared with EUR281.1m at December 31, 2008. Leverage ratio reduced to 2.48 as of end of June 2009, compared with 2.55 as at end December 31, 2008. - Group cash position is EUR69.2m on June 30, 2009, showing a slight increase as compared to December 31, 2008, after EUR10.2m debt repayment and significant investments in H1 2009. The increase in the cash position results from increased cash from operations and lower interest and tax payments, as the overall working capital remains under strict management. - Investments in fixed assets and capitalised R&D costs for H1 2009 were EUR9.9m, compared with EUR13.9m in H1 2008. Investment in the Johnson Controls-Saft joint-venture was EUR21.8m, compared with EUR3.8m in H1 2008. Second quarter sales by product line In euro million Growth / decline Product line Q2 2009 Q2 2008 at actual at constant exchange rates exchangerates IBG 69.0 76.6 (9.9)% (13.9)% SBG 59.0 60.6 (2.6)% (7.1)% RBS 13.8 19.3 (28.5)% (30.8)% Total 141.8 156.5 (9.4)% (13.4)%

Sales numbers are at actual exchange rates.

The average exchange rate in Q2 2009 was EUR1 to $1.32 (compared with EUR1 to $1.56 in Q2 2008).

There was no change in perimeter between Q2 2008 and Q2 2009. Results by product line Product line 6 months ended 30 June 2009 6 months ended 30 June 2008 EBITDA EBITDA Sales Sales growth EBITDA margin Sales EBITDA Margin EURm % EURm % EURm EURm % IBG 133.5 (14.1)% 28.8 21.6% 149.2 29.9 20.0% SBG 125.0 2.2% 27.4 21.9% 117.6 25.4 21.6% RBS 28.9 (29.5)% (1.9) (6.4)% 39.6 1.1 2.8% Other 0.0 (2.8) 0.0 (1.6) Total 287.4 (9.9)% 51.5 17.9% 306.4 54.8 17.9%

All at actual exchange rates, except sales growth % which is at constant exchange rates.

Industrial Battery Group (IBG)

In the first half of 2009, IBG sales decreased by 14.1% at constant exchange rates to EUR133.5m, down by 10.5 % as reported, compared with H1 2008.

Q2 2009 sales were down 13.9% YoY at constant exchange rates. The reduction in Q2 sales continues to be driven by a weak aviation market and low demand in the telecom market.

The decrease in telecom sales represented 95% of the overall decrease in H1 2009 sales compared to H1 2008, although Saft expects an improved performance in H2 with increasing sales of the new telecom product range.

The industrial standby market continued to see good growth in Q2 and remained the strongest market segment of the division in H1 2009. In addition, the rail market also continued to grow and is expected to remain positive during H2, supported by continued investment in urban transport systems.

EBITDA margin for the division increased by 160 bps to 21.6% compared to 20.0% in H1 2008. Cost reduction measures have enabled the division to increase the gross margin strongly during the first half while maintaining investment in future developments.

Specialty Battery Group (SBG)

SBG sales in the first half increased by 2.2% at constant exchange rates to EUR125.0m, up 6.3% as reported compared with H1 2008.

Q2 sales decreased by 7.1% YoY at constant exchange rates. Q2 sales have been impacted by the sharp and sudden slowdown in the civil lithium market, in particular the US metering business. Q2 sales in the civil lithium market segment decreased by more than 20% YoY at constant exchange rates.

Military sales remained very strong in all market segments in Q2, compared with a weak H1 2008.

The EBITDA margin for the division has slightly increased by 30 bps to 21.9% of sales in H1 2009.

Rechargeable Battery Systems (RBS)

In the first half, RBS reported sales of EUR28.9m, a decrease of 29.5% at constant exchange rates, down by 27.1% as reported, compared with H1 2008.

The sales reduction in Q2 was 30.8% at constant exchange rates, close to that reported in Q1.

Volumes have reduced by approximately 25% YoY, with an additional negative pricing effect due to the nickel surcharge.

This large fall in volumes resulted in the division recording a negative EBITDA at 6.4% of sales during the half year. Fixed cost reduction plans have been implemented linked to the merger of the RBS/IBG divisions effective July 1st, 2009. The initial benefits will be seen in H2.

Finally, the RBS division has seen some signs of stronger demand at the end of Q2 and market share gains as competitors exit the market.

Other activities

Costs of "Other activities" are costs not allocated to operational divisions and include costs of central functions such as IT, research and central management, finance and administration, a proportion of which is recharged to each of the product lines.

EBITDA of other activities for the first half year is EUR(2.8)m compared to EUR(1.6)m in 2008, mainly due to reduced service fees from operational divisions and increased R&D costs in H1 2009 compared to 2008.

Johnson Controls - Saft Advanced Power Solutions LLC ("JC-S")

Two new production contracts were announced during the first half: A 5 year contract with Ford to develop and supply batteries for its first series production of Plug-In Hybrid vehicles in 2012 and a five year supply agreement with Azure Dynamics for Lithium-Ion batteries for fleets of commercial vehicles in North America.

As of today, the JV has received production contracts from five different car manufacturers and its Nersac production facility has now been delivering lithium batteries for several months for the Mercedes S400, launched on the market last June.

Saft's share in operational losses at Johnson Controls-Saft was recorded in the first half Consolidated Financial Statements for a total amount of EUR4.8m, compared to EUR5.1m in H1 2008.

Saft has contributed EUR21.8m ($27.1m) of equity to the venture in H1 and anticipates contributing an additional $10m cash provisions for operations in the second half. The higher contribution during the first half is mainly due to the decision to strengthen the balance sheet of the JV but also due to increased working capital needs.

Johnson Controls-Saft has applied for 50% cost share funding to build a plant in North America under the American Recovery and Reinvestment Act provisions. If successful, future additional contributions will be required to fund a share of the cost of the facility to build Li-ion batteries for hybrid and electric vehicles. Important additional support has already been agreed with the State of Michigan. The US Department of Energy's decision is expected in the next few months.

Outlook

Based on the H1 performance and the business review announced in June, Saft has decided to revise its FY09 sales guidance but is maintaining its 2009 profitability guidance as follows:

FY 2008 H1 2009 FY 2009 FY 2009 Actual EUR m February 09 Revised Estimate Estimate Sales 609.5 287.4 0 to -5% -7 to -10% EBITDA margin % 18.1% 17.9% greater than greater than or equal or equal to 18.0% to 18.0% EUR / $ rate 1.47 1.33 1.47

The revised guidance assumes sensitivity of sales and EBITDA to exchange rates is unchanged as follows:

- a 10 % change in EUR/$ exchange rates results in a 4% change in sales - a 10 % change in EUR/$ exchange rates results in a 6 to 7% change in EBITDA. Financial calendar 2009 2009 Q3 turnover 2 November 2009

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.

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 4,000 employees worldwide, Saft is present in 18 countries. Its 15 manufacturing sites and extensive sales network enable the group to serve its customers worldwide. Saft is listed in the SBF 120 index on the Paris Stock Market.

This press release includes the main Financial Statements as appendices. Also available on Saft's website http://www.saftbatteries.com are: - Saft's 2009 Interim Report, including the Interim Condensed Consolidated Financial Statements, - A presentation on Saft's interim results. Appendices Consolidated balance sheet ASSETS In euro million 30/06/2009 31/12/2008 31/12/2007 Non-current assets Intangible assets, net 231.9 236.0 242.2 Goodwill 106.2 107.3 103.5 Property, plant and equipment, net 110.7 112.6 108.0 Investment properties 0.2 0.2 0.4 Investments in joint undertakings 34.7 19.5 17.2 Deferred income tax assets 9.3 13.3 10.5 Other non current financial assets 1.2 1.3 2.6 494.2 490.2 484.4 Current assets Inventories 72.3 79.2 78.5 Trade and other receivables 143.8 153.8 156.7 Derivative financial instruments 1.4 0.1 0.3 Cash and cash equivalents 69.2 68.8 42.3 286.7 301.9 277.8 Total assets 780.9 792.1 762.2 Consolidated balance sheet Liabilities and equity In euro million 30/06/2009 31/12/2008 31/12/2007 Shareholders' equity Ordinary shares 18.5 18.5 18.5 Share premium (40.3) (27.7) (15.1) Treasury shares (1.0) (1.0) (0.7) Cumulative translation adjustment 7.5 7.6 (3.0) Fair value and other reserves 12.0 9.1 16.5 Group consolidated reserves 168.9 146.7 109.9 Minority interest in equity 0.8 0.6 0.8 Total shareholders' equity 166.4 153.8 126.9 Liabilities Non-current liabilities Debt 322.3 324.3 332.4 Other non-current financial liabilities 6.2 5.5 6.1 Deferred income tax liabilities 66.4 66.8 68.5 Pensions and other long-term employee benefits 7.9 9.5 9.5 Provisions for other liabilities and charges 38.1 38.5 37.5 440.9 444.6 454.0 Current liabilities Trade and other payables 146.9 152.9 153.1 Taxes payable 4.2 2.3 5.6 Debt 11.9 25.6 7.7 Derivative instruments 4,0 5.6 1.3 Pensions and other long-term employee benefits 0.7 0.2 0.2 Provisions for other liabilities and charges 5.9 7.1 13.4 173.6 193.7 181.3 Total liabilities and equity 780.9 792.1 762.2 Consolidated income statement In euro million 30/06/2009 30/06/2008 30/06/2007 restated * Revenues 287.4 306.4 302.1 Cost of sales (204.8) (220.8) (220.3) Gross profit 82.6 85.6 81.8 Distribution costs (17.1) (15.9) (15.9) Administrative expenses (21.4) (21.7) (20.9) Research and development expenses (8.4) (7.4) (7.6) Restructuring costs (0.5) 0,0 (0.1) Other operating income and expenses 2.0 0.1 (2.3) Operating profit 37.2 40.7 35.0 Finance costs-net (5.6) (8.3) (9.1) Share of profit / (loss) of (4.2) (4.5) (3.6) associates Profit before income tax 27.4 27.9 22.3 Income tax expense (5.8) (5.4) (6.5) Profit for the period 21.6 22.5 15.8 Attributable to: Equity holders of the company 21.4 22.5 15.9 Minority interest 0.2 0,0 (0.1) Earnings per share (in EUR per 1.14 1.20 0.85 share): Basic Earnings per share (in EUR per 1.14 1.20 0.85 share): Diluted

* Restated to reclassify Research Tax Credit of EUR2.8 million from "Other operating income and expenses" to "Research and development expenses".

Consolidated statement of income and expenses recognised in the period In euro million 30/06/2009 30/06/2008 30/06/2007 Profit of the period 21.6 22.5 15.8 Other comprehensive income Fair value gains / (losses), cash flow hedge 3.0 (0.7) (2.3) Fair value gains / (losses), net investment hedge 0.2 4.5 0.4 Actuarial gains and losses recognised against SORIE 0.9 0,0 0,0 Currency translation adjustments (0.2) (4.9) 2.7 Tax effect on income / (expenses) recognised directly in equity (1.1) (1.0) 0.6 Other comprehensive income for the period, net of tax 2,8 (2,1) 1,4 Total comprehensive income for the period 24.4 20.4 17.2 Part for shares 24.2 20.4 17.2 Part for minority interests 0.2 0,0 0,0 Consolidated cash flow statement In euro million 30/06/2009 30/06/2008 30/06/2007 Net profit for the year (including minority interests) 21.6 22.5 15.8 Adjustments : Earning of equity basis companies (net of dividends) 4.7 5.0 3.7 Income tax expense 5.8 5.4 6.5 Tangible and intangible assets amortisation and depreciation 15.8 14.2 14.1 Finance costs-net 5.6 8.3 9.1 Net movements in provisions (1.6) (4.7) (3.7) Other 1.4 0.1 (1.2) 53.3 50.8 44.3 Change in inventories 6.9 -8.1 (15.8) Change in trade and other receivables 7.6 3,0 (17.3) Change in trade and other payables (18.6) (1.2) (1.7) Changes in working capital (4.1) (6.3) (34.8) Cash generated from operations before interest and tax 49.2 44.5 9.5 Interest paid (8.5) (11.9) (9.7) Income tax paid 0 (2.0) (3.2) Net cash provided by operating activities 40.7 30.6 (3.4) Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired (21.8) (3.8) 0,0 Purchase of property plant and equipment (7.7) (10.9) (8.8) Purchase of intangible assets (2.2) (3.0) (2.6) Proceeds from sale of property, plant and equipment 0.2 1.2 0.1 Proceeds from sale of available-for-sale financial assets (1) 0.1 2.4 1.2 Purchases of short-term securities (1) 0 (2.1) (1.2) Interest received 0 0,0 2.3 Net cash generated from investing activities (31.4) (16.2) (9.0) Cash flows from financing activities (Purchase) / Sale of treasury shares 0 0,0 (0.1) Increase / (decrease) in debt (10.2) 0,0 0,0 Increase/(decrease) in other long-term liabilities 0 0.4 (0.3) Dividends paid to company shareholder's 0 0,0 0,0 Net cash used in financing activities (10.2) 0.4 (0.4) Net increase/(decrease) in cash (0.9) 14.8 (12.8) Cash and cash equivalents at beginning of period 68.8 42.3 61.6 Exchange gain / (loss) on cash and cash equivalents 1.3 (0.6) (0.6) Cash and cash equivalents at end of period 69.2 56.5 48.2 (1) Proceeds from sale of available-for-sale financial assets and purchase of short-term securities in 2007 and 2008 are relating to Saft share purchases and sales as part of the liquidity contract operated by a brokerage firm in order to improve the liquidity of Saft Group SA shares. Statement of changes in consolidated shareholders' equity In euro Attributable to equity holders Minority Shareholders' million of the company interest equity Share Share Consolidated Capital Primium reserves and retained earnings Balance at January 1, 2007 18.5 (2.6) 90.8 0.7 107.4 Employee stock option scheme (value of employees' services) 0,0 0,0 1.5 0,0 1.5 Dividend paid 0,0 (12.5) 0,0 0,0 (12.5) Treasury shares 0,0 0,0 (0.1) 0,0 (0.1) Net income for the year 0,0 0,0 30.5 0.1 30.6 Balance at December 31, 2007 18.5 (15.1) 122.7 0.8 126.9 Employee stock option scheme (value of employees' services) 0,0 0,0 0.8 0,0 0.8 Dividend to be paid 0,0 (12.6) 0,0 0,0 (12.6) Treasury shares 0,0 0,0 0,0 0,0 0,0 Net income for the year 0,0 0,0 20.5 (0.1) 20.4 Balance at June 30, 2008 18.5 (27.7) 144.0 0.7 135.5 Employee stock option scheme (value of employees' services) 0,0 0,0 0.9 0,0 0.9 Dividend paid 0,0 0,0 0,0 0,0 0,0 Treasury shares 0,0 0,0 -0.3 0,0 -0.3 Net income for the year 0,0 0,0 17.8 (0.1) 17.7 Balance at December 31, 2008 18.5 (27.7) 162.4 0.6 153.8 Employee stock option scheme (value of employees' services) 0,0 0,0 0.8 0,0 0.8 Dividend to be paid 0,0 (12.6) 0,0 0,0 (12.6) Treasury shares 0,0 0,0 0,0 0,0 0,0 Net income for the year 0,0 0,0 24.2 0.2 24.4 Balance at June 30, 2009 18.5 (40.3) 187.4 0.8 166.4 For more information, visit Saft at http://www.saftbatteries.com Press and Investor Contacts: Saft Jill Ledger, Corporate Communications and Investor Relations Director Tel.: +33-1-49-93-17-77, jill.ledger@saftbatteries.com Financial Dynamics Stephanie Bia, Tel.: +33-1-47-03-68-16, stephanie.bia@fd.com Yannick Duverge, Tel.: +33-1-47-03-68-10, yannick.duverge@fd.com Clement Benetreau, Tel.: +33-1-47-03-68-12, clement.benetreau@fd.com

SOURCE Saft

Source: PR Newswire

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