FRANKFURT (Reuters) -- German supplier Leoni missed its 2008 operating profit target, in part because of inventory writedowns due to falling metal prices.
Earnings before interest and tax more than halved to 55 million euros ($71.7 million) from the previous year's 130 million euros and fell far short of Leoni’s 95 million euro forecast for 2008.
Beyond a severe decline in demand from the automotive industry late last year, the cable and wiring specialist marked down the value of its copper stores by 21 million as a result of a plunge in the metal's price in the fourth quarter.
Leoni said the company is "well-equipped for the future" after cutting its workforce by 3,000 people or about 6 percent in the fourth quarter.
"The current start-up of new car models, in particular in the small and compact car segment as well as in the low and upper middle class, will lead to a partial suspension of the decline in sales and further increased market share in Europe," Leoni said.
Leoni said its net debt is expected to rise 12 percent versus end-December 2007 to 531 million euros at the end of last year since it will have ended up burning 58 million euros in cash following dividends, share buybacks and acquisitions.
Consequently it will cut its proposed dividend payout to just 0.20 euros per share from 0.90 euros a year previously.