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      1. Simona wins Magna fuel tank contract

        Automotive components supplier Magna is preparing to produce twin-sheet thermoformed automotive fuel tanks for an undisclosed European OEM and has placed a plastics sheet supply contract with Simona of Germany.

        Magna has agreed a €40m supply contract for the project with specialist plastic sheet and pipe producer Simona, who will supply the multi-layer HDPE sheets required. The contract was announced by Simona CEO Wolfgang Moyses at the company’s annual results presentation earlier this week. Production is expected to start during 2010.

        Magna has not responded to requests from European Plastics News for confirmation of the contract.

        It will be Simona’s second project supplying multilayer sheet for twin-sheet thermoformed fuel tanks. It started up its first multilayer sheet line – built around Kuhne equipment - in February 2004 to supply material to Delphi for the BMW X3 SUV vehicle.

        BMW currently manufactures the X3 model in Germany but Moyses said the carmaker is going to transfer production to its US plant in Spartanburg in 2010.

        Dirk M"ller, COO for technology and logistics at Simona, told European Plastics News that he sees twinsheet thermoforming as the optimum solution for modern fuel tanks because it enables much more complex designs and can easily integrate fuel system components within the tank.

        M"ller confirmed widespread industry reports that VW is no longer using thermoformed tanks for the Passat model manufactured at its Emden and Mosel plant. These were supplied by Visteon using multilayer sheet supplied by Spartech from its plant at Donchery, in France. Spartech is Simona’s major competitor in this market sector.

        Some weight is given to M"ller’s viewpoint by the recent developments within conventional blow moulded fuel tank producers. Kautex Textron, Solvay Automotive and most recently TI Automotive have all adapted their production processes to combine the benefits of blow moulding and thermoforming production technology.

        The Magna contract is welcome business for Simona, which has suffered from slowing order intake since the final quarter of 2008. Moyses said 2008 overall was a good year for the company, with turnover up by 4.5% over the first three quarters. But the situation deteriorated in the fourth quarter, with “a collapse in incoming orders and turnover that we have never seen before”.

        As a consequence of the 9% year-on-year decline in sales in the final quarter, 2008 ended with a modest 1.3% increase in turnover to a new record of €303.7m. Semi-finished products accounted for €219.3m while pipes and mouldings accounted for €85.7m.

        Cash flow from operating business rose during 2008 from €17.1m to €44.7m, while the company increased investments by €7.4m to €21.2m. These investments included process enhancements as well as completion of production locations in the Czech Republic and China.

        Moyses said turnover had declined by 31.7% to €53m in the first quarter 2009, although he said profitability has been maintained and the company still expects to realise a profit (EBITDA) for the full 2009 year while on a predicted turnover of €200m.

        The ability to hold the company’s earnings ratio (EBIT) within Simona’s planned long term 7-10% range is due to the implementation of a “stringent cost reduction programme”, he said. This includes cutting temporary and non-permanent contract employees and introducing short-time working in most German plants. Further actions are likely.

        “Structural change will have to come,” said Moyses. “Some plants may have to be closed if the situation continues as it is now. It does not please us but the main shareholders are interested in long term growth in value. Closure is better than simply making redundancies with the infrastructure costs still remaining”.

        Moyses said there is no doubt that the company’s long term aim of achieving a turnover of €500m by 2012 will now be delayed. But he remains confident.

        “Simona will master the crisis and come out of it stronger than before. We have a solid financial basis in terms of capital ratio, cash flow and liquidity, we are independent of third parties, have strong worldwide premium brands and highly qualified and loyal staff,” he said.

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