SOGEFI (CIR GROUP): REVENUES STABLE AT € 1 BLN
SOUTH AMERICAN MARKET AND RESTRUCTURING IN EUROPE HAVE NEGATIVE IMPACT ON EBITDA
NET RESULT -€ 5.8 MLN
The results of the first nine months negatively affected particularly by continuing weakness of the South American market, where revenues are down by 23.3%.
As well as by Mercosur, margins also affected by restructuring and resulting temporary industrial inefficiencies in Europe.
Growth continues in North America, albeit at a slower rate than in the recent past, and in Asia. The reduction in margins impacts the net result for the period
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CEO Fiocchi, in agreement with the company, leaves Sogefi.
At the proposal of the Chairman Rodolfo De Benedetti, Monica Mondardini has assumed the position of Executive Vice Chairman.
A new chief executive will be appointed
Consolidated results for the first 9 months of 2014
Revenues: € 1,010.2 million (unchanged from € 1,010.6 million in 9M 2013)
EBITDA: € 80.8 million (-25.5% from 108.4 million in 9M 2013)
EBITDA before restructuring: € 98.4 million (-10.8% from € 110.3 million in 9M 2013)
Net result: -€ 5.8 million (€ 23.8 million in 9M 2013)
Net debt: € 348.5 million (€ 340.8 million at 30/6/2014)
Milan, October 21 2014 – The Board of Directors of Sogefi SpA, which met today under the chairmanship of Rodolfo De Benedetti, has approved the Interim Financial Report of the group as of September 30 2014.
Sogefi, the automotive components company of the CIR group, is one of the main world producers of engine systems and suspension components with 42 production plants in 21 countries and 17 commercial offices.
Performance of operations
In the first nine months of the year world car production rose by 3.75%, with different performances in the various geographical areas.
More specifically, the car market performed positively in North America and in Asia, with growth in production volumes compared to the first nine months of 2013 of 5.3% and 7.5% respectively.
In South America, especially in Brazil and Argentina, the sharp slowdown of the market compared to 2013 continued, with the production of passenger cars and light commercial vehicles down in the nine month period by 17% compared to the same period of 2013.
In Europe the market continued the trend of slight growth with passenger car production up by 4.8% compared to the first nine months of 2013, although growth slowed in the third quarter (+1.5%), mainly due to the effect of the recovery from the low volumes of last year.
In this context Sogefi was particularly affected by the weakness in South America, which had a negative impact on revenues and more especially on margins in the first nine months of the year, particularly in the third quarter. The stability of revenues at just over € 1 billion compared to 2013 was guaranteed by the growth reported in North America and Asia and by the aftermarket business, while EBITDA and EBIT were impacted not only by the South American markets but also by the effect of the restructuring put in place mainly in Europe and by the resulting temporary industrial inefficiencies.
Consolidated results
In the first nine months of the year the Sogefi group achieved consolidated revenues of € 1,010.2 million, stable compared to the first nine months of 2013 (+4.6% at the same exchange rates). The significant decline in revenues reported in South America (-23.3% to € 135.8 million) was in fact offset by the growth achieved in North America, albeit at a lower rate than in the recent past (+12% to € 155.4 million), and in Asia (+40.5% to € 59.8 million). In Europe revenues were up slightly (+1.3% to € 656.7 million).
The Engine Systems Business Unit reported revenues that were up by 2.2% to € 633.3 million versus € 619.7 million in the first nine months of 2013 (+6.3% at the same exchange rates), while the Suspension Components Business Unit reported revenues of € 378.6 million, which were down by 3.5% from € 392.5 million in the same period of 2013 (+1.8% at the same exchange rates).
In the first nine months of 2014 EBITDA came in at € 80.8 million and was down by -25.5% from € 108.4 million in the first nine months of 2013. The decline was due mainly to the fall in volumes in South American markets, to the significant concentration in the period of restructuring costs in Europe (€ 17.9 million in the first nine months of 2014) and to the resulting temporary inefficiencies in the industrial structure of the Engine Systems Business Unit particularly in the third quarter.
EBITDA before restructuring came to € 98.4 million (€ 110.3 million in 2013; -10.8%), with a ratio to sales of 9.7% compared to 10.9% in 2013.
Consolidated EBIT amounted to € 36.5 million (€ 65.8 million in the first nine months of 2013). EBIT before restructuring was € 54.4 million (€ 67.6 million in the first nine months of 2013; -19.6%) with a ratio to sales of 5.4% versus 6.7% in 2013.
Regarding the restructuring costs of € 17.9 million reported in the nine months, € 13.8 million relate to the rationalization of production capacity while € 4.1 million are to do with the write-down of assets and sundry costs linked to the restructuring. In the first nine months of 2013 restructuring costs totalled € 1.9 million.
Net financial expense came to € 30 million in the first nine months of the year. This item includes financial expense of € 23.5 million (€ 20.4 million in the first nine months of 2013) and other expenses of € 6.5 million, of which € 2.8 million non-recurring as the repayment of bank borrowings after the cash inflow from the convertible bond issue and € 3.7 million as the fair value effect of interest rate hedging transactions.
This gave a positive result before taxes and minority interests of € 6.5 million (€ 45.4 million in the first nine months of 2013).
The consolidated net result was –€ 5.8 million which compares with net income of € 23.8 million in the first nine months of last year.
Net debt totalled € 348.5 million at September 30 2014 compared to € 340.8 million at June 30 2014 and € 339 million at September 30 2013.
Shareholders’ equity stood at € 192.5 million at September 30 2014 (€ 188.9 million at December 31 2013).
The Sogefi group had 6,704 employees at the end of the third quarter of 2014 (6,834 at December 31 2013).
OUTLOOK FOR THE REST OF THE YEAR
For the remaining months of 2014 the weakness in South America is expected to continue; business in Europe, North America and Asia should continue to follow the current trends.
Operating profitability in the last quarter is forecast to be in line with that of the third quarter as it will be influenced by the same factors in South America and Europe.
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Company positions
The Board of Directors of Sogefi has announced that Chief Executive Guglielmo Fiocchi and Sogefi have by common consent considered Fiocchi’s management experience to have come to an end. The company would like to thank Guglielmo Fiocchi and wish him every success in his future professional activity.
At the proposal of the Chairman Rodolfo De Benedetti, the Board has appointed as Executive Vice Chairman Monica Mondardini, Chief Executive of CIR. Ms Mondardini has been given a mandate by the Board of Directors to select a new chief executive officer with whom to formulate a strategic plan for the company.
Rodolfo De Benedetti said: “This moment of change reaffirms CIR’s commitment and ambitions with regard to Sogefi, which is the main industrial business of the group and can count on people, technologies and products of absolute excellence”.
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