Shares of German automotive supplier Leoni plummet after profit warning

BERLIN, March 18 (Xinhua) -- Following a profit warning, the shares of German automotive supplier Leoni dropped by nearly 20 percent on Monday.

Leoni was by far the biggest loser in the German SDAX stock index as shares fell to their lowest value in nearly nine years.

Leoni, a specialized producer of wires and cables, announced on Sunday evening that it would not achieve its business targets for 2019, which the company established in early February.

"The developments at the end of fiscal 2018 and especially in the first two months of 2019 have made it clear that we must act even faster and more decisively to bring Leoni back on track," said Chief Executive Officer Aldo Kamper.

Leoni would not be maintaining its business guidance for 2019 due to significantly greater costs incurred by ramp-up difficulties at a new plant in Mexico, persistently poor performance in the company's wiring systems division and a "further downturn in the market."

As one of the first measures following the profit warning, Leoni's former Chief Financial Officer Karl Gadesmann left the company "with immediate effect," the company announced. Leoni is also planning to shed a further 2,000 jobs worldwide.

Many German automotive suppliers are currently facing a difficult business situation as many drivetrain-related products, such as combustion engine components, gearboxes or clutches, will not be needed in electric cars.

In early March, Continental, one of Germany's largest automotive suppliers, announced that it is planning an initial public offering (IPO) of its drivetrain business.

Germany's largest carmaker Volkswagen is planning to build around 22 million electric cars in the next 10 years. Meanwhile, premium car makers BMW and Daimler have apparently settled their decades of rivalry and are planning to jointly develop a vehicle platform that could also be used in electric vehicles, according to media reports.