Notes from Spyker’s Quarterly Results (and News Snippets)

Spyker’s Quarterly results were released this morning, and several details we already knew about were covered. Sadly as Rune covered earlier, Saab had an operating loss of €79 million and a €72 million net loss. This compares to last year when the operating loss for the entire year was €140 million.

On China:

We have opened up alternative routes to fund the company mid- and short-term including but not limited to discussions with Chinese car manufacturers, the discussions with some of which had already been ongoing for several months. We are hopeful that these discussions will result in a solution very shortly so we can resume production. We will make it our top priority to restore the confidence of our suppliers, dealers and partners and apologize to them as well as to our dedicated employees for the disruptions that occurred.

Keep in mind as Tim confirmed exclusively last night and the Wall Street Journal elaborated on this morning, Saab is in talks with three Chinese automakers– Great Wall Motor Co., China Youngman Automobile Group Co. and Jiangsu Yueda Group Co.

On the debt:

We have made a serious endeavour to carve out the Saab owned real estate from the collateral Saab provided to the National Debt Office (NDO) as security for the € 400 million loan from the European Investment Bank (EIB). By reducing the collateral value by € 67 million that loan would be reduced by no less than € I20 million to € 280 million. In spite of consent from NDO we have yet to reach agreement with EIB on the terms of their consent to this transaction.

Saab’s current cash position:

The total cash position amounts to € I29.9 million and comprises € 35.I million free available cash and € 94.8 million reserved cash (escrow for pensions, tooling payments and other items related to business operations).

Saab’s official statement about the supplier stoppage and cash crunch:

Due to tight liquidity at the end of QI 20II caused by seasonally low sales volumes (to the extent that these were not fully off-set by cost reductions and working capital improvements),  heavy investments in product  launches and future product development, the Group’s  cash position is tight and therefore continues to be monitored very closely by Management. To ensure adequate liquidity both in the short term and for the remainder of this year, Management is currently  raising funds from current  shareholders  and pursuing various initiatives to improve the Group’s  liquidity and strengthen the Group’s  balance sheet going forward,  including – but not limited to – below Saab Property  transaction.

The EIB provided a € 400 million loan to Saab Automobile as a project finance facility for funding of certain development projects. This loan is guaranteed  by the Swedish National Debt Office (NDO). At the end of QI 20II, € 2II million was drawn under this facility, leaving € I89 million as undrawn facility. Saab Automobile has reached agreement with the Swedish government  and the NDO to release collateral pledged to NDO in return  for a reduction of the guarantee amount from € 400 million to € 280 million. Saab Automobile intends to enter into a sale and lease back agreement of its Trollhattan based real estate to refinance this released collateral by selling shares  in Saab Automobile Property AB (Saab Property) to an investor. If this transaction  is to be completed Saab Automobile will still be able to draw up to € 280 million from the EIB loan, a € 29 million drawdown  is expected  during the beginning of Q2. The intended sale and lease back transaction of Saab Property  is subject to approval of the EIB, which has been granted on conditions not yet acceptable to Saab Automobile. Saab Automobile is still in discussions  with the EIB on these conditions and at this time it is unclear if and when  it can complete the Saab Property  transaction.

Also according to the previously mentioned WSJ article:

Spyker said its first-quarter earnings before interest and tax was a loss of EUR79.4 million and reiterated 2011 will be a loss-making year.

“It is unclear at this time what the consequence of the recent production stoppages and funding issues will be for our full year 2011 forecast but it is realistic to assume that realizing our 80,000 cars sales forecast is no longer feasible,” Muller said.

Ironically, the company said March had been the best month in terms of sales since Spyker acquired Saab in February 2010.

Spyker still is awaiting approval from the European Investment Bank to release collateral for loans so that it can ease its liquidity crisis. The company hopes to sell and lease back Saab’s real-estate assets so that it can raise cash.

“The talks with the EIB progress very slowly and I have no idea when a deal will be reached,” Muller told Dow Jones Newswires.

The collateral backs state guarantees to secure up to EUR400 million in EIB loans. Spyker wants to repay the EIB loans so that it is free to pursue its own strategy.

Muller expressed his regret for the disruption. “We will make it our top priority to restore the confidence of our suppliers, dealers and partners and apologize to them as well as to our dedicated employees for the disruptions that occurred,” he said.

 

Full text of the quarterly statement after the break, tables to follow. For the PDF version, click here.

SPYKER CARS  N.V. including SAAB AUTOMOBILE AB REPORTS  ITS INTERIM FIRST QUARTER RESULTS 20II

 

Saab Automobile: challenging first quarter but encouraging sales performance

 

Zeewolde,  the  Netherlands,  29  April  20II  –  Spyker  Cars  N.V.,  a  holding  company  that  owns  subsidiaries  which produce  and  sell  premium  automobiles  under  the  Saab  and  Spyker  brands  (together   referred  to  as  the  “Group”),  today announces  its  interim  results  for  the  first  quarter  20II  ended  3I  March  20II.  The  Group  is  listed  on  NYSE  Euronext Amsterdam (ticker symbol SPYKR). The figures disclosed in this press release are unaudited.

 

FINANCIAL HIGHLIGHTS QI 20II

  • QI 20II sales of € 257.I million
  • EBIT of € (79.4) million
  • Cash generated from operations amounts to € (I9.4) million

 

CORPORATE AND OPERATIONAL HIGHLIGHTS QI 20II

  • Sales performance continues to improve in several major markets (Sweden, US, UK) vs QI 20I0
  • March 20II best sales month for Saab Automobile since becoming independent company
  • 9,674 cars sold (wholesale) in QI 20II compared to 3,630 in QI 20I0, an increase of I67%
  • 9,393 cars sold (retail) in QI 20II, up 93% compared to 4,874 in QI 20I0
  • I0,888 cars produced in QI 20II, compared to 2,I53 in QI 20I0, an increase of 406%
  • Expansion of distribution network with new import agreements for Chinese and Russian markets
  • Global premiere of Saab 9-5 SportCombi, Saab PhoeniX concept  car, Saab Convertible Independence Edition and Saab 9-3 Griffin range at Geneva Motor Show
  • Global premiere of industry-first IQon ‘open innovation’ infotainment system at Geneva Motor Show
  • European premiere for Saab 9-4X at Brussels Motor Show
  • New sales and engineering structure implemented
  • Innovative supply agreement with ZF Chassis Systems signed
  • Production stoppages during the last three days of the First Quarter

Victor  R. Muller, CEO of the Group  and Chairman of Saab Automobile, said: “Although we have continued to make good progress during the first three months of 20II on many fronts, in what is the second build-up year towards  becoming a profitable independent premium car manufacturer, we have experienced painful production stoppages as of late. Everybody at Saab Automobile continues to work hard so as to solve these issues as soon as practically possible allowing us to move forward to establish a successful company. We have made a serious endeavour to carve out the Saab owned real estate from the collateral Saab provided to the National Debt Office (NDO) as security for the €  400 million loan from the European Investment Bank (EIB). By reducing the collateral value by € 67 million that loan would be reduced by no less than € I20 million to € 280 million. In spite of consent from NDO we have yet to reach agreement with EIB on the terms of their consent to this transaction.

In the mean time we have opened up alternative routes  to fund the company mid- and short-term  including but not limited to discussions with Chinese car manufacturers, the discussions with some of which had already been ongoing for several months. We are hopeful that these  discussions will result in a solution very shortly so we can resume production. We will make it our top priority to restore the confidence of our suppliers, dealers and partners and apologize to them as well as to our dedicated employees for the disruptions that occurred.

It is unclear at this time what the consequences of the recent production stoppages  and funding issues will be for our full year 20II forecast but it is realistic to assume that realizing our 80.000 cars sales forecast is no longer feasible .”

“Our sales performance  has been strong in the first quarter, especially the month of March which showed very encouraging signs,” said Jan Ake Jonsson, President & CEO of Saab Automobile. “March 20II was the strongest sales month for Saab Automobile since we became an independent company in February 20I0. We also plan to bring no less than four new products to the market  in the next couple of months, including the Saab 9-4X and the much-awaited Saab

9-5 SportCombi, that are expected to boost sales in the second  half of the year.”

 

SAAB  AUTOMOBILE OPERATIONAL REVIEW

Sales & production

Sales continued to develop positively during the first quarter, especially considering that typically January and February are seasonally lower sales months in the car industry in general. March 20II was the strongest sales month for Saab Automobile since it became an independent car manufacturer  in February  20I0, on the back of strong sales in key markets such as Sweden, the United States and Great Britain. Saab Automobile is currently  embarking on its largest ever product offensive, with new models such as the already launched Saab Convertible Independence Edition and Saab 9-3 Griffin range as well as the Saab 9-4X and Saab 9-5 SportCombi arriving in markets  later this year.

On 29 March, 30 March and 3I March, production was interrupted due to materials delivery interruptions  and shortages caused by a tight liquidity situation at Saab. More information on the recent production situation can be found under the header “Recent Events”.

 

 

I Jan – 3I Mar

(Saab Automobile AB)

 

 

 

QI 20II

 

 

 

QI 20I0

 

 

 

Change  %

 

 

 

Mar 20II

 

 

 

Mar 20I0

 

 

 

Change  %

Wholesale9,6743,630I67%4,728I,844I56%
Retail9,3934,87493%4,7432,279I08%
Production (units)I0,8882,I53406%4,80954678I%

NOTE: Wholesale comprises revenue generating sales to dealers, retail comprises dealer sales to end users

 

Business development

During the first quarter, Saab Automobile continued to develop its distribution and sales network.  Apart from implementing a new sales structure  in the first quarter, Saab Automobile announced on 25 March that it had signed up partners for the important growth markets of China and Russia. China Automobile Trading Co. Ltd. (“CATC”) was appointed to handle imports of vehicles and spare parts for the Chinese market, while an agreement was signed with Armand Import to be the distributor for the Russian market.

Saab Automobile also achieved significant progress  on the product side. At the Salon International d’Automobile in Geneva in March, Saab showed  no less than four world premieres: the Saab 9-5 SportCombi, the Saab 9-3 Griffin range, the Saab 9-3 Convertible Independence Edition and the Saab PhoeniX concept  car. Designed by Saab Automobile’s design chief Jason Castriota, the PhoeniX gives a clear indication of Saab Automobile’s design language for future models such as the successor to the current  Saab 9-3, which will be launched  in Q4 20I2.

As part of the development of the successor to the 9-3, Saab Automobile announced on I8 March that it has signed an innovative supply agreement with ZF Chassis Systems. Under the agreement, ZF will set up a sub-assembly plant close to the Saab Automobile factory for the supply of advanced front sub-frames and complete rear axles for installation  in the next generation of Saab cars, starting with the successor to the 9-3.

 

Jan Ake Jonsson, President and CEO of Saab Automobile, announced on 25 March that he would retire from his position effective as of the Group’s Annual General Shareholders meeting to be held on I9 May 20II. A search for a successor to Jan Ake Jonsson has been initiated; he has agreed to assist Saab Automobile’s Management with a smooth transition to his successor. He will remain available as such until I September 20II. Until a successor to Jan Ake Jonsson is appointed, Victor Muller will temporarily  assume the role of President and CEO of Saab Automobile in addition  to his role as Chairman of Saab Automobile’s Board.

In order to be able to fully focus on the Saab Automobile activities, the Group decided to pursue a sale of its Spyker Automotive sportscar business. On 24 February Spyker Cars signed a memorandum of understanding to sell virtually all assets of Spyker Automotive to the private UK holding CPP Global Holdings Limited, which is owned  by former Spyker Cars shareholder and investor Vladimir Antonov.  The transaction is expected  to close shortly.

 

GROUP  – SUMMARY INCOME STATEMENT

The QI 20II report of the Group continues to reflect the start-up and the restructuring process of turning Saab

Automobile into a successful independent company.

 

Group (unaudited), quarter ended per:                                3I March 20II                    3I March 20I0
€ (‘000)                                 € (‘000)
Net Sales                                                                                             257,I42                                  43,787
Costs of Sales                                                                                       (243,389)                                 (64,52I)
Gross Margin                                                                                          I3,753                                 (20,734)
EBIT (Operating result)                                                                              (79,370)                                   6,030
Financial Result                                                                                          9,7I0                                      932
Share of profit of associates                                                                           (765)                                       –
Result after tax from discontinued operations                                              (I,483)                                  (2,3I0)
Income Tax                                                                                                (I04)                                         –
Net Result                                                                                             (72,0I2)                                   4,652
Result per weighted average number of shares                      €                     (3.99)            €                       0.28

 

The QI 20II sales are considerably higher than the comparative figures of QI 20I0 due to the restart of Saab’s business as from 23 February 20I0. This caused also the difference in operational  expenses  which in QI 20II relate to a full 3 months of operation compared to only I month of operation in QI 20I0.

The operational result QI 20I0 is largely impacted by the gain on bargain purchase of € 55.9 million due to the acquisition of Saab Automobile.

The financial result of € 9.7 million consists of interest expenses on interest bearing borrowings (€ I7.0 million) and foreign exchange gains (€ 23.I million).

Result from discontinued operations of € (I.5) million includes the losses of the Spyker Automotive business and the effects of the planned sale to CPP Global Holdings Ltd.

 

GROUP  – SUMMARY BALANCE SHEET

 

Group (unaudited)                                                                                                            3I March 20II
€ (‘000)
– EIB loan                                                                                                                                         2II,248
– Convertible loans                                                                                                                              I6,4I6
– Other interest bearing debt                                                                                                            II0,865
– Reserved cash                                                                                                                               (94,765)
– Cash and cash equivalents                                                                                                                (35,I43)
Net debt position                                                                                                                        208,62I
Redeemable preference shares                                                                                                  I67,I44
Equity (under IFRS)                                                                                                                 (262,565)
Current receivables                                                                                                                           I23,577
Inventories                                                                                                                                       3I7,966
Accounts Payable & Accrued Expense                                                                                                 (7I5,5I0)
Net Working  Capital (excluding cash)                                                                                  (273,967)
Assets held for sale                                                                                                                              I7,396
Liabilities directly associated with the assets classified as held for sale                                                          3,298

 

The total cash position amounts to € I29.9 million and comprises € 35.I million free available cash and € 94.8 million reserved cash (escrow for pensions, tooling payments and other items related to business operations).

 

SHAREHOLDERS EQUITY

The negative equity position of the Group has no direct impact on the execution of the Saab Automobile business plan, nor does it imply that the Group  is legally required to issue new shares in its capital.

However, the Group  is in pursuit of improving its equity position. Management has full focus on this subject and works  on several initiatives to improve this situation. On 25 March 20II the Group  issued 5.5 million shares to several shareholders.

Spyker and Saab Automobile continue to work on securing funding, see “Funding”.

 

WORKING CAPITAL

The Group’s net working capital at the end of QI 20II was € (255.3) million. The Group aims for adequate management of working capital and has assigned internal resources  for improvement  in this area. As part of the improvement of the liquidity, Management is actively pursuing debt collection, negotiating improved terms and conditions with suppliers, improving logistics chains and aiming for strict inventory control.

 

FUNDING

Due to tight liquidity at the end of QI 20II caused by seasonally low sales volumes (to the extent that these were not fully off-set by cost reductions and working capital improvements),  heavy investments in product  launches and future product development, the Group’s  cash position is tight and therefore continues to be monitored very closely by Management. To ensure adequate liquidity both in the short term and for the remainder of this year, Management is currently  raising funds from current  shareholders  and pursuing various initiatives to improve the Group’s  liquidity and strengthen the Group’s  balance sheet going forward,  including – but not limited to – below Saab Property  transaction.

 

The EIB provided a € 400 million loan to Saab Automobile as a project finance facility for funding of certain development projects. This loan is guaranteed  by the Swedish National Debt Office (NDO). At the end of QI 20II, € 2II million was drawn under this facility, leaving € I89 million as undrawn facility. Saab Automobile has reached agreement with the Swedish government  and the NDO to release collateral pledged to NDO in return  for a reduction of the guarantee amount from € 400 million to € 280 million. Saab Automobile intends to enter into a sale and lease back agreement of its Trollhattan based real estate to refinance this released collateral by selling shares  in Saab Automobile Property AB (Saab Property) to an investor. If this transaction  is to be completed Saab Automobile will still be able to draw up to € 280 million from the EIB loan, a € 29 million drawdown  is expected  during the beginning of Q2. The intended sale and lease back transaction of Saab Property  is subject to approval of the EIB, which has been granted on conditions not yet acceptable to Saab Automobile. Saab Automobile is still in discussions  with the EIB on these conditions and at this time it is unclear if and when  it can complete the Saab Property transaction.

 

NEAR TERM MANAGEMENT PRIORITIES

Management will continue to focus on its strategy  in making Saab Automobile a profitable, independent niche premium car manufacturer,  while reducing risks in the execution of the plan. Upon successful completion of securing short-term funding to restart production, Management will continue to focus on strengthening its financial position  and stabilizing its operations through securing additional mid- and long-term  financing. Management is in talks with several parties to secure access to this funding. A major step forward in this respect  was made on 28 April 20II when the NDO approved Mr Vladimir Antonov  as a shareholder of Spyker (see hereafter under Recent Events) Further key management priorities remain:

  • Continue product  development  activities in order to refresh and expand the entire product portfolio
  • Continue to build up an independent  Saab distribution  organization
  • Continue to build up capabilities as an independent  company
  • Manage cash and control costs and capital expenditure tightly
  • Continue to focus on initiatives to further reduce the break-even point

In summary: all measures  to continue to restore confidence with our valued customers, dealers, suppliers, shareholders and other stakeholders  in order to support increasing sales and improved margins from a rejuvenated product portfolio.

In addition to driving the ongoing business operations, Management will continue to focus on execution of its long term business plan. Saab Automobile will continue to enhance its unique and strong brand, relying on its heritage of innovation, aircraft inspiration and Scandinavian values. In line with the objective to shorten product lifecycles and broadening of its portfolio, in 20II alone four new models will be launched into markets around the globe, among which the 9-5 SportCombi and the new Saab 9-4X (Saab’s first ever cross-over).

 

RECENT  EVENTS

On 5 April, production of Saab vehicles at the Trollhattan factory was again interrupted due to materials shortages caused by outstanding payment (terms) issues with a number of suppliers. On 6 April, Saab Automobile decided to halt production until further notice pending confirmation of additional funding for operations. Although this is a set back in the production and sales, Management is confident that with secured  funding the effect of lower production can be recovered during the course of the second and third quarter.

On 28 April 20II the Russian businessman Vladimir Antonov  was admitted by the NDO to become a shareholder of Spyker.

In addition, Saab Automobile continues to work on longer-term solutions to further strengthen  its financial position  and improve its capital structure  including but not limited to discussions with potential strategic Chinese partners.

 

Spyker Cars NV proposes to change its name into Swedish Automobile NV at the next Annual General Shareholders meeting I9 May 20II.

 

OUTLOOK

Management  is now fully focused  on securing the short and mid-term funding and restoring confidence among suppliers, customers, employees, shareholders and other stakeholders  given the recent  liquidity issues and production interruptions. However,  20II and 20I2 are build-up years for Saab Automobile and although volume and markets share are important, Management’s key objective is to secure  mid and long-term  financing, renew  and expand the product portfolio, enhance the distribution organization  and build an independent  company, while remaining within the financial boundaries set in its business plan.

The Group’s  medium term goal is to establish Saab Automobile as an independent,  financially viable, niche premium car manufacturer. Given the recent  liquidity and production situation, previously  communicated  sales and financial targets  will be reassessed as soon as the consequences of this situation on the Group’s operations become clearer. Management notes that Saab Automobile will be launching several new models into global markets later this year which should have a positive effect on sales volume during the second  half of the year. The Group foresees a net loss for 20II.

 

 

 

Zeewolde, 29 April 20II

 

For further information, please contact:

Saab Automobile Press Office

Tel: +46 (0)520 279797

 

biritter
Member
5 years 4 months ago

I’ll admit, I don’t the intricacies of Swedish/European accounting/reporting rules, but what concerns me is the negative cash flow & negative Net Working Capital (including all forms of cash & Assets held for sale). Seems like a recipe for running out of cash fast.

RS
Member
5 years 4 months ago
One piece of advice to SAAB. A niche brand don’t give out discount left and right. It will totally ruin the business. The MY12 can stand tall against all the competition. The 9-3 Griffin, 9-5 SC and 9-4X must make money this year. People want value and a Saab that’s doing fine. Incentives destroy everything. It doesn’t matter how many cars Saab sells in the end 40, 60, 80 or 150.000 if the margins don’t allow the company to become profitable. PS. I’d take minimum salary as the CEO until the company is in the black. Bonuses can wait for… Read more »
till72
Member
5 years 4 months ago

+1

davidgmills
Member
5 years 4 months ago
As I mentioned yesterday this looks more and more like a contrived financial crisis as an excuse to get Antonov back into Spyker. This is even more suspiciously so given the huge increase in both auto production and sales. All the big players are on the hook after a year of new ownership and now will have to agree to let Antonov in, especially since the US government does not have the control over GM it did a year ago. Starting to look like a classic case of contrived financial crisis to me. I hope so because that would bode… Read more »
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