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 % |
| Wholesale | 9,674 | 3,630 | I67% | 4,728 | I,844 | I56% |
| Retail | 9,393 | 4,874 | 93% | 4,743 | 2,279 | I08% |
| Production (units) | I0,888 | 2,I53 | 406% | 4,809 | 546 | 78I% |
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
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.
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 the good times.
+1
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 well for Saab long term.
If it’s all a conspiracy, it was very well executed, timed to perfection, and extremely risky. I seriously doubt that’s the case, but it’s not our job to speculate. Before this all happened, many were saying (including GM) that Antonov’s issues had been resolved and it was only a matter of time before he would be let in as an owner. It’s a shame that people think he was so contaminated that the only way he could get in was through a crisis, I choose to believe that he would have been let in regardless of whether Saab was in dire financial straights. After all, just as he said from the beginning, his money is just as clean as anyone else’s who wants to invest, and he’s the only one stepping up to the plate to put his honor and wealth on the line to reinvigorate the company, that has to count for something. If only there were 10 Vladimir Antonovs.
First of all conspiracy is not the right word.
Engineered or planned financial crisis is a much better term for what I think happened. The original sale was highly political both in the US and Sweden. The US government was highly involved in all of GM’s affairs at the time, due to a huge bailout, which was opposed by many Americans, primarily by right wing Americans.
The problem was never about Antonov personally; the problem was his Russian credentials. Unfortunately there are many in the US military, and in right wing factions, who still think everything Russian is either either bad, communist or socialist, or all three. The last thing the US government needed, under the circumstances, was to be accused by the right wingers, of coddling to the Russians.
Antonov had to go, at least temporarily, because he was a huge political liability, and a potential deal killer if his involvement made the news. So I think plans were put in place for his return as soon as the political situation allowed it, and as soon as all the political scrutiny had died down. The bailout of GM is no longer a hot political or hot media topic and now Antonov can quietly slip in under the radar.
Everybody knew they needed his money all along; it just wasn’t politically feasible to allow him to be a major player at the time of the original sale. This present “financial crisis” along with the recent proclamation of a “clean bill of health after many months of scrutiny,” just now gives cover to bring Antonov back in, and to make it appear he was legitimately left out in the first place.