- Strong growth in revenues (+13.9% on 2021) to € 2,235.6 million, thanks to the positive evolution of the subsidiaries Sogefi and KOS
- Consolidated EBITDA at € 295.7 million (higher on a recurring basis)
- Consolidated net result at overall breakeven (-€ 0.2 million), negatively affected by returns on financial assets, due to the negative market trends
- Net financial position of the parent company positive for € 320.3 million
Milan, 13 March
2023 – The Board of Directors of CIR S.p.A. – Compagnie
Industriali Riunite (“CIR”, the “Group” or the “Company”),
which met today under the chairmanship of Rodolfo De Benedetti, has approved the
proposed financial statements for the year and the consolidated accounts of the
group as of 31 December 2022 presented by Chief Executive Officer Monica
Mondardini.
Consolidated
results
During 2022, the
Company and its subsidiaries operated in a complex environment that was still suffering
the effects of the pandemic, although to a lesser extent, and the high cost of
raw materials and energy, aggravated by the conflict between Russia and Ukraine
and by the negative performance of the financial markets. Only in the last
quarter of the year did the tension in the financial, energy and commodity
markets ease.
The consolidated
revenues of the Group came in at € 2,235.6 million, posting a rise of 13.9%
on 2021, with positive dynamics in both areas of activity (healthcare and
automotive components), which recovered considerably after two years that were
strongly impacted by the effects of the Covid-19 pandemic.
The consolidated gross operating margin (EBITDA) came to € 295.7 million, 13.2% of revenues (€ 300.7 million in 2021). Excluding the non-recurring items reported in the two years, consolidated EBITDA increased by 5.4% compared to 2021.
The consolidated operating result
(EBIT) was € 81.7 million (€ 80.2
million in 2021). Excluding, in this case too, the
effect of the non-recurring items, consolidated EBIT rose by 40% on a recurring
basis.
The management of financial assets, which were worth a total of €
393.1 million at the end of 2022, produced a negative result of € 5.0 million
(+€ 24.4 million in 2021), with an average return of -1.3%; it should be noted
that the return obtained compares with performances of between -10% and -20%
for the main equity and bond indexes.
Thus the consolidated net result came to -€ 0.2 million versus net
income of € 18.0 million in 2021.
The recurring
operating results of the subsidiaries showed growth while the consolidated net
result was impacted by the return on the financial investment portfolio, which
was affected by the negative performance of the markets; the net result of the
financial subsidiaries of the group (CIR, CIR International and CIR
Investimenti) was in fact negative for € 16.5 million, after a positive
contribution of € 16.1 million in 2021.
Consolidated net
financial debt before IFRS 16 stood at € 81.8 million at 31
December 2022, almost unchanged from € 85.6 million at 31 December 2021:
- The net debt of the subsidiaries declined to €
402.2 million from € 418.0 million at 31 December 2021;
- the net financial position of the Parent Company(including
the subsidiaries CIR Investimenti and CIR International) is still very
positive, at € 320.3 million, but is slightly lower than at 31 December 2021 (€
332.3 million), due to the buyback of own shares for € 6.4 million and to the
lower financial results.
Consolidated net financial debt, inclusive of
IFRS 16 payables, amounted to € 950.6 million at 31 December 2022, with rights
of use of € 868.8 million, referring mainly to the subsidiary KOS (€ 798.2 million),
which operates largely in leased premises.
The shareholders’ equity of the Group stood at € 743.4 million at 31 December 2022 (€ 740.4 million al 31 December 2021).
KOS
The effects of
the Covid-19 pandemic caused a reduction in the activity of KOS as from the
second quarter of 2020 until the early months of 2021; from the second quarter
of 2021 and for the whole of 2022 the business reported an improvement, thanks
to the pandemic situation becoming less critical, although it still has not
reached pre-Covid levels.
KOS’ revenues came
in at € 683.5 million, posting growth of 6.5% compared to the previous year,
thanks especially to the recovery of the nursing home sector in Italy (+16.3%) and
in Germany (+6.6%).
EBIT came
to € 30.4 million; in 2021 KOS had reported EBIT of € 31.8 million, which
included non-recurring income of approximately € 12.0 million; the recurring
operating result has therefore increased, thanks to the gradual recovery in
levels of activity and operating efficiency, and despite the considerable rise
in healthcare personnel costs and energy costs.
The net
result for the year was one of overall breakeven (-€ 0.8 million versus € 1.4
million in 2021, which contained the non-recurring income mentioned above).
Operating Free Cash Flow before IFRS 16 was a positive €
5.0 million; KOS is continuing to pursue its plan for developing and acquiring
new facilities and invested € 23.0 million in greenfield sites, for which the
cash flow, including investments in new facilities, came to -€ 18.1 million.
Net debt at the
close of 2022, excluding payables from the application of IFRS 16, stood at € 178.3
million (€ 160.2 million at year-end 2021); total net debt, including the IFRS
16 payables, came to € 976.4 million.
Sogefi
Global
production of motor vehicles recorded growth of 6.2% compared to 2021, with a
contribution from all geographical areas: +5.7% in Europe, +9.7% in NAFTA, +8.3%
in Mercosur, +6.1% in China and +22.7% in India. As for production costs, the
first nine months of 2022 saw continuing tension in the commodity and energy
markets, which was exacerbated by the conflict between Russia and Ukraine, but which
eased in the last quarter of the year.
Sogefi’s revenues
were up by 17.5% compared to 2021, thanks to growth in production volumes
(+4%), the increase in selling prices linked to the rise in the cost of raw
materials, and to the evolution of exchange rates (+12.6% at constant exchange
rates).
Economic results
were positive, posting a distinct improvement: in fact EBIT came in at €
68.3 million (4.4% of revenues), up by 17% from € 58.4 million in 2021.
Net income was €
29.6 million (€ 2.0 million in 2021).
Free Cash Flow was
positive for € 29.3 million (€ 32.4 million in 2021).
Net debt before IFRS 16 was lower at € 224.3 million at 31 December 2022, compared to € 258.2 million at 31 December 2021.
Financial
management
As a result of
the shock to the financial markets caused by the conflict between Russia and
Ukraine and the hike in interest rates adopted by central banks to counter
inflation, during 2022 the financial markets reported one of the worst
performances of the last few decades.
Against this
backdrop, the management of financial assets, which totalled € 393.1 million at
year end 2022, reported a negative result of € 5.0 million (+€ 24.4 million in
2021), with an average return of -1.3%; it should be noted however that the
return obtained compares with performances of between -10% and -20% for the
main equity and bond indexes.
On 22 December
2022 the parent company CIR signed a binding preliminary agreement, subject to
certain conditions precedent, for the sale of a real estate property complex
not instrumental to the business, which has a carrying value in the accounts of
€ 11.0 million, for a total amount of € 38.0 million. The amount of € 5.0
million has been received as a deposit, while the remaining amount will be paid
on completion of the deal (indicatively by the end of 2023), when the capital
gain will be recognized.
ESG plans and performance
In
2022 the CIR group achieved the sustainability objectives set out in the
2021-2025 plans of the Company and its subsidiaries.
Progress
has been made on the de-carbonization front, with a reduction in energy
intensity in all the group’s businesses and a mix of energy sourcing with a
growing percentage of green energy.
Waste
management has also improved significantly, with an increase of almost 10p.p.
in the percentage of waste recycled, especially by Sogefi. The latter has also
continued to develop products for sustainable mobility with more than 50% of
new orders being for hybrid or electric platforms.
With
regards to the management of human resources, the number of hours dedicated to
personnel training has increased and action continues to be taken to guarantee
that equality of treatment is monitored in all countries in which the group
operates.
Significant
events that have taken place since 31 December 2022
Since the close
of the year 2022 there have been no significant events that could have an
impact on the economic, patrimonial and financial information given herein.
Outlook for the
year
Visibility as to
the performance of the Group’s businesses in coming months remains low due to
the continuing uncertainty regarding the evolution of the Russian-Ukrainian
conflict, macroeconomic developments and the prices of raw materials,
particularly energy.
As far as KOS is
concerned, in a context with fewer critical operational issues relating to the
pandemic, return to pre-Covid levels of activity is expected during this year
for Rehabilitation and Acute and in 2024 for nursing homes in Italy and
Germany, after a gradual increase in saturation during 2023, reaching levels
close to those of 2019. In the absence of events or circumstances that could
make the environment more complex than it is at present, the operating results
of KOS for the whole year should be improving vs. the past year.
As for the automotive
market, in which Sogefi operates, visibility for 2023 remains limited due to
the uncertainty linked to the Russian-Ukrainian conflict, the macroeconomic
trend, and the availability and cost of raw materials and energy. For 2023,
S&P Global (IHS) is forecasting growth in world car production of 3.6%
compared to 2022, with Europe at +7.1%, Nafta at +5.4%, South America at +4.9% and
China at +1.1%. As far as commodity and energy prices are concerned, in 2022
the rising trend came to an end, although volatility remains high. In some
geographical areas there are still inflationary pressures on labour costs. Provided
there is no serious deterioration in the geopolitical and macroeconomic
scenario from today’s levels, for 2023 Sogefi expects to see mid-single-digit
revenue growth and an operating result, excluding non-recurring expense, which
is at least in line with that of 2022.
As for the
financial asset management of the holding company, given the uncertainty linked
to the geo-political, macroeconomic and financial climate, volatile conditions
are expected to continue throughout 2023 although there should be an
improvement in the returns on financial assets.
Dividend
proposal
The Board of
Directors will put forward to the Annual General Meeting of the Shareholders
the proposal that no dividend be distributed.
Annual General
Meeting of the Shareholders
The Annual General Meeting of the Shareholders will be held, in an ordinary session and at a single calling, on 28 April 2023. The Board of Directors at today’s meeting has voted, among other things, to put the following proposals before the Annual General Meeting of the Shareholders:
- The cancellation (for the part not utilized) and renewal of the authorization of the Board of Directors, in the light of the rules stated in Articles 2357 and following articles of the Civil Code, of Art. 32 of D.Lgs no. 58/98 (the “TUF”), of Art. 144-bis of CONSOB Resolution no. 11971/1999, of EU Regulation no. 596/2014 (the “MAR”), of EU Delegated Regulation no. 2016/1052, of Consob Resolution no. 20876 of April 3 2019 and Consob Guidelines of July 2019, for a period of 18 months to buy back a maximum of 220,000,000 of its own shares; it should also be taken into account that, including in the calculation any own shares already owned even through subsidiaries, the number of shares bought back must not in any case exceed a total number of shares representing one fifth of the share capital of CIR; that the buyback transactions may take place at a unit price that must not be more than 15% higher or lower than the benchmark price recorded by the Company’s shares in the Stock Exchange trading session preceding each single buyback or preceding the date on which the price is fixed in the event of purchases made in accordance with points (i), (iii) and (iv) of the following paragraph. In any case, when the shares are bought back with orders placed in the regulated market, the price must not be higher than the higher of the price of the last independent transaction and the highest current independent bid price on the same market.
The buyback must take place in the market, in compliance with the terms of Art. 132 of the TUF and with the terms of the law or the regulations in force at the moment of the transaction and more precisely (i) through a public tender offer to buy or exchange shares; (ii) on regulated markets following operating procedures established in the rules for organizing and managing the said markets, which do not allow bids and offers to be matched directly; (iii) through the assignment pro-rata of put options to the shareholders to be assigned within 15 months of the date of the AGM resolution authorizing the same with exercise within 18 months of the same resolution; (iv) through the purchase and sale of derivative instruments traded on regulated markets that involve physical delivery of the underlying shares in compliance with the further provisions contained in Art. 144-bis of the Rules for Issuers issued by Consob, and as per the terms of Articles 5 and 13 of the MAR. As far as the disposal (alienation) of the own shares is concerned, the resolution being submitted includes am authorization to carry out any act of disposition, including the right to use the shares thus bought, without any time limits or constraints, even for compensation plans based on the Company’s shares.
The main reasons why this authorization is being renewed are the following: (a) to fulfil obligations resulting from possible stock option plans or other awards of shares of the Company to employees or members of the Board of Directors of CIR or its subsidiaries, or to fulfil any obligations resulting from debt instruments that are convertible into or exchangeable with equity instruments; (b) to have a portfolio of own shares to use as consideration for any extraordinary transactions, even those involving an exchange of shareholdings, with other parties within the scope of transactions of interest to the Company (a so-called “stock of securities”), all within the limits of the regulations in force at the time (c) to engage in action to support market liquidity, optimize the capital structure and remunerate shareholders in particular market conditions, all within the limits established by current rules and regulations; (d) to take advantage of opportunities for creating value, as well as investing liquidity efficiently in relation to the market trend; (e) for any other purpose qualified by the competent Authorities as admitted market practice in accordance with applicable European and domestic rules, and with the procedures established therein;
- The approval of a stock grant plan for 2023 aimed at employees of the Company and its subsidiaries, in terms to be defined by the Board of Directors and communicated to the market in sufficient time for any legal obligations to be carried out. The stock grant plan has the aim of rewarding the loyalty of the beneficiaries to the companies of the Group, giving them an incentive to increase their commitment to improving the performance of the Company.
- The renewal of the Board of Directors, whose mandate ends with the approval of the financial statements as of 31 December 2022;
- The renewal of the Board of Statutory Auditors, whose mandate ends with the approval of the financial statements as of 31 December 2022.
