The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

Saft Groupe SA Reports Quarterly Financial Information for the Third Quarter of 2008


PHOTO

PARIS, November 6, 2008: Saft, leader in the design, development and manufacture of high-end batteries for industry and defence, announces its sales for the third quarter of 2008.

John Searle, Chairman of the Management Board, commented:

"Saft's performance in the third quarter continued to show the company's overall resilience with Q3 sales growth of 4.9% YoY at constant exchange rates. The SBG Division's continuing strong sales in the civil market and recovery in the military sales are the main growth drivers in the third quarter. The IBG Division also experienced sales growth despite a slowdown in the telecom network market, with the 2007 price increase effect being neutral during the quarter. RBS Division's sales were satisfactory, noting that the selling prices within Rechargeable Battery Systems were indexed to a falling nickel price.

In the third quarter, we saw no important changes in the level of activity in our main markets, with the single exception being the telecom network market. Saft's overall market share in this market is small and we have announced the production launch of a new range of telecom network batteries to broaden our customer base and range of addressable applications.

I can confirm that our 2008 full year guidance for sales and EBITDA remains unchanged.

Finally, the progress being made by Johnson Controls-Saft was highlighted during the recent Paris Motor Show, with the first viewing of the new BMW 7 series hybrid, and the announcement by Mercedes of the launch of an S Class diesel hybrid for 2010. Johnson Controls-Saft is now working on production contracts with Daimler, BMW and Chery Automotive, which highlights the progress being made to establish Johnson Controls-Saft as the leading Western provider of batteries for hybrid and electric vehicles."

The average exchange rate in Q3 2008 was EUR1 to $1.50 (compared with EUR1 to $1.37 in Q3 2007).

There was no change in perimeter between Q3 2007 and Q3 2008.

Q3 2008 sales of EUR139.9m were up 1.0% as reported and up 4.9% at constant exchange rates, compared with Q3 2007.

The average exchange rate in YTD September 2008 was EUR1 to $1.52 (compared with EUR1 to $1.34 in YTD September 2007).

There was no change in perimeter between YTD September 2007 and YTD September 2008.

Sales for the 9 months to September 2008 of EUR446.3m were up 1.3% as reported and up 6.5% at constant exchange rates, compared with the same period in 2007.

Industrial Battery Group (IBG)

In the third quarter, IBG sales decreased by 0.3% YoY as reported to EUR67.1m, but increased by 3.1% at constant exchange rates. The growth was essentially driven by volume with no impact from pricing.

In the first 9 months of 2008, IBG sales increased by 5.7% as reported to EUR216.2m, and by 10.7% at constant exchange rates compared to the same period in 2007.

During the quarter, there was strong growth in sales in all markets with the exception of the telecom network market. A key telecom client significantly reduced its purchases during Q3 and sales are expected to remain low during Q4 with limited visibility of the requirements for 2009. This reduction will be progressively offset by growing sales of the Tel.X range of batteries to be launched during Q4.

Following the reduction in the price of nickel during Q3, when the LME spot price averaged $18.9k/t, Saft took advantage of this to hedge approximately 70% of the needs of the Division for 2009, giving improved visibility of the profitability of the Division during the coming year.

Specialty Battery Group (SBG)

The Division saw strong quarterly sales growth of 7.4% YoY as reported to EUR55.0m, and an increase of 13.1% at constant exchange rates.

The main drivers of this excellent performance were the continued high demand for Primary Lithium batteries in the civil markets, in conjunction with a recovery in military sales following the successful contract wins during the previous quarter.

During the first 9 months, sales have decreased by 0.2% as reported at EUR172.9m, which represents a growth of 6.4% at constant exchange rates.

Rechargeable Battery Systems (RBS)

In the third quarter, RBS sales decreased by 11.4% YoY as reported to EUR17.8m, and by 9.7% YoY at constant exchange rates, compared with Q3 2007. In the first 9 months, the sales are down 9.0% YoY to EUR57.5m and down 6.5% YoY at constant exchange rates.

RBS sales, net of nickel surcharge effect, increased slightly in the third quarter. The RBS Division has successfully recovered some business that had been lost in 2007 and early 2008, especially in the UK, that will impact sales volumes in 2009.

A number of announcements were made during the quarter that should help Saft's competitive position. In particular, the Chinese Government announced the end of the 13% tax credit on Ni-Cd battery exports and a reduction in the tax credit to 5% for Ni-MH batteries. Ni-Cd batteries are used in emergency lighting systems. These changes take effect on new orders effective from the 1st August 2008, but in reality will only have an impact from the beginning of 2009.