LANDI RENZO S.P.A. INTERIM MANAGEMENT REPORT
AT 30 SEPTEMBER 2023
CONTENTS
- GENERAL INFORMATION
- Corporate officers and information
- Group Structure
- Landi Renzo Group Financial Highlights
- Significant events during the period
- DIRECTORS' OBSERVATIONS ON BUSINESS PERFORMANCE
- Performance and notes on the main changes in the consolidated financial statements as at 30 September 2023
- Significant events after the end of the quarter and likely future developments
- INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 SEPTEMBER 2023
- General accounting standards and consolidation principles
- Consolidated Statement of Financial Position
- Consolidated Income Statement
- Consolidated Statement of Comprehensive Income
- Consolidated Cash Flow Statement
- Consolidated Statement of Changes in Equity
THIS REPORT IS A TRANSLATION. THE ITALIAN VERSION PREVAILS
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1. GENERAL INFORMATION
1.1. CORPORATE OFFICERS AND INFORMATION
On 29 April 2022, the Shareholders' Meeting of the parent company Landi Renzo S.p.A. elected the Board of Directors and the Board of Statutory Auditors for the period 2022-2024. They will therefore remain in office until the Shareholders' Meeting called to approve the financial statements for the year ending 31 December 2024. On the same date, the Board of Directors confirmed Stefano Landi as Executive Chairman and appointed Sergio Iasi as Vice Chairman.
On 11 July 2023, following the resignation of Cristiano Musi, the Board of Directors co-opted Annalisa Stupenengo as Chief Executive Officer, also assigning her to the role of General Manager. On 23 October 2023, the Ordinary Shareholders' Meeting unanimously confirmed, without the application of the voting by list procedure, the appointment of Annalisa Stupenengo as the new member of the Board of Directors, whose term of office will come to an end when the financial statements as at 31 December 2024 are approved. The Board of Directors of Landi Renzo S.p.A., which met on that date, and subsequently the Shareholders' Meeting, confirmed Annalisa Stupenengo in her role as Chief Executive Officer and General Manager, conferring the same powers upon her as those conferred when she was co- opted.
On the date this Interim Management Report was drafted, the company officers were as follows:
Board of Directors | |
Executive Chairman | Stefano Landi |
Vice Chairman | Sergio Iasi |
Chief Executive Officer | Annalisa Stupenengo |
Director | Silvia Landi |
Director | Massimo Lucchini |
Director | Andrea Landi |
Independent Director | Pamela Morassi |
Independent Director | Sara Fornasiero (*) |
Independent Director | Anna Maria Artoni |
Board of Statutory Auditors | |
Chairman of the Board of Statutory Auditors | Fabio Zucchetti |
Statutory Auditor | Luca Aurelio Guarna |
Statutory Auditor | Diana Rizzo |
Alternate Auditor | Luca Zoani |
Alternate Auditor | Gian Marco Amico di Meane |
Control, Risks and Sustainability Committee | |
Chairperson | Sara Fornasiero |
Committee Member | Sergio Iasi |
Committee Member | Anna Maria Artoni |
Appointment and Remuneration Committee | |
Chairperson | Pamela Morassi |
Committee Member | Massimo Lucchini |
Committee Member | Anna Maria Artoni |
Committee for Transactions with Related Parties | |
Committee Member | Sara Fornasiero |
Committee Member | Pamela Morassi |
Committee Member | Anna Maria Artoni |
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Supervisory Board (Italian Legislative Decree 231/01)
Chairperson | Jean-Paule Castagno |
Board Member | Domenico Sardano |
Board Member | Filippo Alliney |
Independent Auditing Firm | PricewaterhouseCoopers S.p.A. |
Financial Reporting Manager | Paolo Cilloni |
(*) The Director also holds the office of Lead Independent Director | |
Registered office and company details | |
Landi Renzo S.p.A. | |
Via Nobel 2/4 | |
42025 Corte Tegge - Cavriago (RE) - Italy | |
Tel. +39 0522 9433 | |
Fax +39 0522 944044 | |
Share capital: Euro 22,500,000 | |
Tax ID and VAT Reg. No. IT00523300358 | |
This report is available online at: | |
www.landirenzogroup.com |
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1.2. GROUP STRUCTURE
% stake at | ||||
Description | Registered Office | 30 September 2023 | Notes | |
Direct | Indirect | |||
investment | investment | |||
Parent Company | ||||
Landi Renzo S.p.A. | Cavriago (Italy) | Parent Company | ||
Companies consolidated using the line-by- | ||||
line method | ||||
Landi International B.V. | Utrecht (The Netherlands) | 100.00% | ||
Landi Renzo Polska Sp.Zo.O. | Warsaw (Poland) | 100.00% | (1) | |
LR Indústria e Comércio Ltda | Rio de Janeiro (Brazil) | 99.99% | ||
Beijing Landi Renzo Autogas System Co. Ltd | Beijing (China) | 100.00% | ||
L.R. Pak (Pvt) Limited | Karachi (Pakistan) | 70.00% | ||
Landi Renzo Pars Private Joint Stock Company | Tehran (Iran) | 99.99% | ||
Landi Renzo RO S.r.l. | Bucharest (Romania) | 100.00% | ||
Landi Renzo USA Corporation | Wilmington - DE (USA) | 100.00% | ||
AEB America S.r.l. | Buenos Aires (Argentina) | 96.00% | ||
Officine Lovato Private Limited | Mumbai (India) | 74.00% | ||
OOO Landi Renzo RUS | Moscow (Russia) | 51.00% | ||
SAFE&CEC S.r.l. | San Giovanni Persiceto (Italy) | 51.00% | ||
SAFE S.p.A. | San Giovanni Persiceto (Italy) | 100.00% | (2) | |
Idro Meccanica S.r.l. | Modena (Italy) | 100.00% | (3) | |
IMW Industries LTD | Chilliwak (Canada) | 100.00% | (2) | |
IMW Industries del Perù S.A.C. | Lima (Peru) | 100.00% | (4) | |
IMW Industries LTDA | Cartagena (Colombia) | 100.00% | (4) | |
IMW Energy Tech LTD | Suzhou (China) | 100.00% | (4) | |
IMW Industries LTD Shanghai | Shanghai (China) | 100.00% | (4) | |
Metatron S.p.A. | Castel Maggiore (Italy) | 100.00% | ||
Metatron Control System (Shanghai) | Shanghai (China) | 84.00% | (5) | |
(*) | ||||
Associates and subsidiaries consolidated using the equity method | ||||
Krishna Landi Renzo India Private Ltd Held | Gurugram - Haryana (India) | 51.00% | (6) | |
Other minor companies | ||||
Landi Renzo VE.CA. | Caracas (Venezuela) | 100.00% | (7) | |
Lovato do Brasil Ind Com de Equipamentos | Curitiba (Brazil) | 100.00% | (7) | |
para Gas Ltda | ||||
EFI Avtosanoat-Landi Renzo LLC | Navoiy Region (Uzbekistan) | 50.00% | (6) (7) | |
Metatron Technologies India Plc | Mumbai (India) | 100.00% | (5) (7) |
Detailed notes on investments:
- Held indirectly through Landi International B.V.
- Held indirectly through SAFE&CEC S.r.l.
- Held indirectly through SAFE S.p.A.
- Held indirectly through IMW Industries LTD
- Held indirectly through Metatron S.p.A.
- Company joint venture
- Not consolidated as a result of their irrelevance
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1.3. LANDI RENZO GROUP FINANCIAL HIGHLIGHTS
(Thousands of Euro) | ||||
ECONOMIC INDICATORS FOR THE THIRD QUARTER | Q3 2023 | Q3 2022 | Change | % |
Revenue | 69,333 | 71,905 | -2,572 | -3.6% |
Adjusted gross operating profit (EBITDA) (1) | 653 | 2,163 | -1,510 | -69.8% |
Gross operating profit (EBITDA) | -810 | 1,762 | -2,572 | |
Net operating profit (EBIT) | -5,070 | -2,579 | -2,491 | |
Earnings before taxes (EBT) | -7,378 | -2,812 | -4,566 | |
Net profit (loss) for the Group and minority interests | -7,677 | -3,274 | -4,403 | |
Adjusted gross operating profit (EBITDA) / Revenue | 0.9% | 3.0% | ||
Gross operating profit (EBITDA) / Revenue | -1.2% | 2.5% | ||
Net profit (loss) for the Group and minority interests / Revenue | -11.1% | -4.6% |
(Thousands of Euro) | ||||
ECONOMIC INDICATORS OF THE FIRST NINE MONTHS | 30/09/2023 | 30/09/2022 | Change | % |
Revenue | 221,138 | 216,351 | 4,787 | 2.2% |
Adjusted gross operating profit (EBITDA) (1) | 4,573 | 8,704 | -4,131 | -47.5% |
Gross operating profit (EBITDA) | -1,122 | 7,070 | -8,192 | |
Net operating profit (EBIT) | -13,893 | -5,995 | -7,898 | |
Earnings before taxes (EBT) | -22,996 | -8,873 | -14,123 | |
Net profit (loss) for the Group and minority interests | -28,611 | -9,892 | -18,719 | |
Adjusted gross operating profit (EBITDA) / Revenue | 2.1% | 4.0% | ||
Gross operating profit (EBITDA) / Revenue | -0.5% | 3.3% | ||
Net profit (loss) for the Group and minority interests / Revenue | -12.9% | -4.6% |
(Thousands of Euro) | |||
STATEMENT OF FINANCIAL POSITION | 30/09/2023 | 31/12/2022 | 30/09/2022 |
Net fixed assets and other non-current assets | 144,582 | 155,331 | 155,856 |
Operating capital (2) | 61,467 | 54,683 | 65,311 |
Non-current liabilities (3) | -13,021 | -11,807 | -10,186 |
NET INVESTED CAPITAL | 193,028 | 198,207 | 210,981 |
Net financial position (4) | 114,427 | 92,323 | 100,270 |
Net Financial Position - adjusted (5) | 100,816 | 77,242 | 85,395 |
Shareholders' equity | 78,601 | 105,884 | 110,711 |
BORROWINGS | 193,028 | 198,207 | 210,981 |
(Thousands of Euro) | |||
KEY INDICATORS | 30/09/2023 | 31/12/2022 | 30/09/2022 |
Operating capital / Turnover (rolling 12 months) | 19.8% | 17.9% | 22.0% |
Adjusted net financial position (5) / Shareholders' equity | 1.3 | 0.7 | 0.8 |
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Adjusted net financial position (5) / Adjusted EBITDA (rolling | |||
12 months) | 9.06 | 5.06 | 5.52 |
Personnel (peak) | 969 | 951 | 977 |
(Thousands of Euro) | |||
CASH FLOWS | 30/09/2023 | 31/12/2022 | 30/09/2022 |
Gross operational cash flow | -13,049 | 5,831 | -6,309 |
Cash flow for investment activities | -6,423 | -39,020 | -6,260 |
Gross FREE CASH FLOW | -19,472 | -33,189 | -12,569 |
Variation in the consolidation area | 0 | 0 | -30,683 |
Non-recurring expenditure for voluntary resignation incentives | -916 | -439 | 0 |
Net FREE CASH FLOW | -20,388 | -33,628 | -43,252 |
Share capital increase | 0 | 58,554 | 58,598 |
Repayment of leases (IFRS 16) | -2,857 | -3,872 | -2,782 |
Overall cash flow | -23,245 | 21,054 | 12,564 |
- The data does not include the recognition of non-recurring costs. As EBITDA is not identified as an accounting measure under IAS/IFRS, it may be calculated in different manners. EBITDA is a measure used by the company's management to monitor and evaluate its operating performance. Management believes that EBITDA is an important parameter to measure the company's operating performance, as it is not influenced by the effects of the different criteria for determining the tax base, the amount and characteristics of invested capital and relative amortisation and depreciation policies. The company's way of calculating EBITDA may not be the same as the methods adopted by other companies/groups, and therefore its value may not be comparable with the EBITDA calculated by others.
- This is calculated as the difference between Trade Receivables, Inventories, Contract Work in Progress, Other Current Assets and Trade Payables, Tax liabilities, Other Current Liabilities (net of the payable for the purchase of equity investments).
- These are calculated by totalling Deferred Tax Liabilities, Defined Benefit Plans for employees and Provisions for Risks and Charges.
- The net financial position is calculated in accordance with the provisions of Consob Communication DEM/6064293 of 28 July 2006 as amended (as most recently amended on 5 May 2021, to adopt the new ESMA recommendations 32-232-1138 of 4 March 2021).
- Not including the effects of the adoption of IFRS 16 - Leases, the fair value of derivative financial instruments and the commitment to the acquisition of equity investments.
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1.4. SIGNIFICANT EVENTS DURING THE PERIOD
- In January 2023, the business combination with Idro Meccanica S.r.l. was completed through the acquisition of the remaining 10% of the share capital, which was already established in the contract, for an equivalent value of Euro 640 thousand. Idro Meccanica S.r.l., a company active in the production of innovative technologies and systems for the compression of hydrogen, biomethane and natural gas, which boasts of a full range of products and applications to manage hydrogen compression up to 800 bars, is a strategic investment for strengthening the Group in the hydrogen business.
- On 2 March 2023, the Board of Directors approved the Group's Economic-Financial Budget for the year 2023, which, taking into account economic trends emerging in the course of 2022, confirms the strategic development guidelines already set forth in the strategic plan. The Budget was later updated on the basis of new economic forecasts.
- On 13 March 2023, following negotiations with the financing institutions, all credit institutions underwriting the loans issued waiver letters with respect to the financial covenants as at 31 December 2022.
- On 26 April 2023, the Shareholders' Meeting of Landi Renzo S.p.A. approved the Financial Statements as at 31 December 2022, approving the coverage of the loss for the year of Euro 15,749,826.46 by using the share premium reserve; furthermore, the same Shareholders' Meeting approved the first section of the Report on the remuneration policy drafted pursuant to Article 123-ter of the Consolidated Financial Law and Article 84-quater of the Issuers' Regulation, and voted in favour of the second section pursuant to Article 123-ter of the Consolidated Financial Law.
- In June 2023, a commercial agreement was entered into for the revision of sale prices with the main Group customer operating in the OEM channel.
- On 11 July 2023, the Board of Directors of Landi Renzo S.p.A. co-opted Annalisa Stupenengo as Chief Executive Officer of the Landi Renzo Group, also assigning her to the role of General Manager. Annalisa Stupenengo has nearly thirty years of experience in the mobility industry, gained internationally with roles of increasing responsibility at the Iveco Group, CNH Industrial and FCA, and is currently a member of the Board of Directors and the Remuneration and Appointments Committee of Prysmian. The same Board of Directors appointed Paolo Cilloni as Group CFO, as well as Investor Relator and Financial Reporting Officer.
- On 11 September 2023, the credit institutions issued waiver letters, providing their consent to the one-off exemption from compliance with financial covenants (holiday period) with reference to the calculation dates of 30 June and 31 December 2023.
- As a result of the resignation of Cristiano Musi from his role as Chief Executive Officer of Landi Renzo S.p.A., on 28 September 2023 E.M.A. 2021 S.r.l., a vehicle company controlled by Cristiano Musi, transferred all 108,380 special shares it held in GbD Green by Definition S.p.A. to GbD Green by Definition S.p.A. Furthermore, on the same date:
- Girefin S.p.A., Gireimm S.r.l., Itaca Gas S.r.l., GbD Green by Definition S.p.A. and E.M.A. 2021 S.r.l. agreed to the consensual termination of the special shares agreement by signing a termination agreement;
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- some amendments were also made to the shareholders' agreement by signing a dedicated amendment in order to reflect the above-mentioned termination of the special shares investment agreement.
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2. DIRECTORS' OBSERVATIONS ON BUSINESS PERFORMANCE
Reference context
In the third quarter of 2023, the global economy continued to slow due to strong and repeated global tensions and the continuation of restrictive monetary policies, particularly by the US Federal Reserve (Fed) and the European Central Bank (ECB), which kept interest rates high with a view to combatting continuing inflation.
As recently published by the ECB research office, short-term growth outlooks have deteriorated for the Eurozone, while in the medium term, the economy is expected to gradually resume moderate expansion with a recovery in both internal and external demand.
These economic scenarios have strengthened the awareness on the part of world governments of the immediate need to accelerate all support and strengthening policies revolving around the green revolution, the energy transition and sustainable mobility, not only as focal points to mitigate climate change and global warming, but also as a source for the structural improvement of economic and social conditions, thanks to the creation of new jobs.
In this regard, the growing importance of hydrogen, biomethane and natural gas as energy sources for the future and possible solutions that guarantee greater environmental sustainability combine well, also due to recent strategic decisions, with the Landi Renzo Group's green mission and with its desire to play a leading role in the coming years in the energy transition value chain, as it is has all of the means and potential to meet market needs and be a top-tier player at global level.
The Landi Renzo Group's entire business is aimed at offering on one hand technological solutions for the infrastructure required to exploit natural gas, biomethane and hydrogen, and on the other technologies for transforming mobility towards more sustainable models or models generally aimed at the decarbonisation of passenger and cargo transport. Indeed, all of the various forms of gas, biomethane and hydrogen represent energy sources that reduce emissions compared to conventional sources, with different levels of penetration depending on geographical area and application type.
Performance in the first nine months of 2023
Overall, sales as at 30 September 2023, driven by rising volumes in the "Green Transportation" segment, increased by 2.2% compared with the same period of the prior year, reaching Euro 221,138 thousand. Nonetheless, there was a decline in profitability, due specifically to a particularly negative first quarter, as well as a slowdown in the production of the Clean Tech Solutions segment in the third quarter. Overall, the second and third quarters showed encouraging signs of a recovery in margins (net of non-recurring items), especially in the Green Transportation segment.
The turnover of the "Green Transportation" segment rose overall by 9.8%, or Euro 13,776 thousand, due to the increased demand of OEM customers for passenger cars as well as Mid&Heavy Duty vehicles, despite the drop in volumes in the After Market sales channel, which continues to be impacted by geopolitical tensions in Eastern European countries and economic and financial difficulties in several countries in the Latam region, particularly Argentina and Brazil.
The considerable rise in sales in the OEM channel (+33.2%), historically less remunerative than the After Market segment, was also accompanied by a sharp improvement in industrial margins recorded starting from the second quarter.
Turnover was down in the "Clean Tech Solutions" segment by Euro 8,989 thousand (-12%), linked to the slowdown
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Landi Renzo S.p.A. published this content on 17 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 December 2023 09:31:15 UTC.
