Commenting on the Groups results for fiscal 2003, Claude Cocozza, Carbone Lorraines Chairman and Chief Executive Officer said:In persistently depressed business conditions, Carbone Lorraine delivered further proof of its strong resilience at operating level during 2003.Its net loss was attributable entirely to provisions covering the fine meted out by the European Commission and to an impairment charge related to the Magnets division. As a result of these decisions, we have now put these two issues behind us.
2004 will mark the beginning of a new period of earnings growth for Carbone Lorraine. We forecast improvement in the Groups margins this year, even if business conditions remain the same. And if the economic recovery does occur, our earnings growth will be even stronger.
Consolidated sales: 629 million
Primarily as a result of a volume contraction, 2003 sales showed a decline of 7% on a like-for-like basis compared with the previous year. Excluding Magnets and Anti-corrosion equipment, which benefited from special conditions in 2002, the decline in sales came to just 3%.
Operating income: 39 million
Carbone Lorraines operating income held up well in spite of the volume contraction owing to the successful implementation of the savings plan. The plan produced a complementary contribution of 12 million to the operating income on top of the 9 million already saved in 2002, a total figure higher than expected. As a result, the operating margin contracted by just two percentage points to 6.2% even though sales fell by 7 points.
Net non-recurring items: 55 million
Non-recurring items were high and showed a net charge of 55 million, but these charges will enable the Group to start 2004 with a clean slate and in good shape. The principal non-recurring items were as follows:
- a provision for anti-trust litigation of 25 million covering the full amount of the European Commissions fine, which the Group is vigorously contesting;
- an impairment loss of 17 million recognized on the Magnets division;
- 19 million in restructuring charges related to implementation of the savings plan;
- 7 million in capital gains on asset disposals.
Net loss: 38 million
Net income before non-recurring items came to 22 million. Owing to the heavy non-recurring charges, the Group posted a net loss of 38 million.
To avoid drawing on reserves, the Board of Directors will not propose payment of a dividend to the General Meeting of the Shareholders in respect of 2003. The Group intends to resume dividend payments from next year.
Net debt: down 23%
Strong cash generation coupled with currency fluctuations contributed to the 23% reduction in net debt to 183 million at December 31, 2003 from 236 million at year-end 2002.
A new period of earnings growth is set to start for the Group in 2004, even if economic conditions remain on a par with those prevailing last year. This earnings growth will be driven by the full benefits of the savings plan that has been implemented since 2002.
The pace of earnings growth will be even stronger if the first signs of an economic recovery turn into a full-fledged upswing.