Consolidated revenues € 1,223.1 million, up by 11.9% compared to first half 2022
Consolidated net income € 14.0 million
Significant growth in revenues and results of Sogefi
Ongoing sustained recovery of KOS’ activity
Further reduction in consolidated net debt to € 32.9 million (€ 81.8 million at 31 December 2022)
Net financial position of the parent company stable and positive for € 314.0 million
Milan, 31 July 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 Semi-Annual Financial Report as of 30 June 2023 presented by Chief Executive Officer Monica Mondardini.
Consolidated results
Although
the environment remained complex, in the first half of 2023 the adverse
phenomena that had in the last three years negatively affected the business
sectors in which the Group operates became decidedly less severe: the
healthcare emergency phase linked to the pandemic had ended, the tensions
regarding the availability and prices of commodities and energy, which had worsened
in the first half of 2022 with the onset of the Russian-Ukrainian conflict, but
which do nevertheless remain, are in a phase of partial resolution and, lastly,
the financial markets are showing a strong recovery after the very negative
performance of 2022. However, the general inflationary dynamic has led to a
significant increase in costs for services and personnel costs and the higher
interest rates have increased financial expense for the subsidiaries, mitigated
by the fact that a part of their funding is at a fixed rate and their overall
debt has declined.
During the first half of the year, the group’s social healthcare sector (KOS) has been continuing steadily along the road to recovery of its business activity, which began in the middle of 2021 after the shock caused by the pandemic, with the prospect of returning to full capacity in 2024.
The
group’s automotive sector (Sogefi), which was negatively affected by the market
collapse of 2020 and the commodities dynamics of 2021 and 2022, in the first
half of the year 2023, in a context of a recovering market, particularly the
European market, has reported strong growth of revenues and results, which in
2023 have been significantly above pre-pandemic levels.
The consolidated revenues of the Group came in
at € 1,223.1 million, up by 11.9% compared to the first half of 2022, with
positive dynamics in both sectors of the group’s business.
The consolidated gross operating margin (EBITDA) came to € 170.0 million, posting a rise of
15.4% on the same period of 2022, thanks to the higher revenues and
profitability of both sectors in which the group operates.
The net result was € 14.0 million
versus breakeven in the first half of 2022.
The consolidated net financial debt before IFRS 16
fell to € 32.9 million at 30 June 2023 from € 81.8 million at 31 December 2022 and
€ 95.6 million at 30 June 2022, thanks to the reduction of the net debt of the
subsidiaries, which in total amounted to €
346.9 million.
The net financial position of the Parent
Company of the Group (including the financial sub-holdings CIR Investimenti and
CIR International) was significantly positive, standing at € 314.0 million; the
slight reduction from the position of € 320.4 million at 31 December 2022 was
due to the buyback of own shares for € 7.7 million during the period.
The consolidated net debt including the IFRS 16
payables amounted to € 910.9 million at 30 June 2023, including rights of use
of € 878.0 million relating mainly to the subsidiary KOS (€ 812.7 million), which
operates mostly in leased facilities.
The shareholders’ equity of the Group stood at € 747.3 million at 30 June 2023 (€ 743.4 million at 31 December 2022).
KOS
KOS’s
business activity was strongly affected by the consequences of the pandemic in 2020
and 2021 but reported a gradual recovery as from the middle of 2021. In the
first half of 2023 the Functional Psychiatric Rehabilitation sector returned to
full operating capacity; the nursing homes sector has not yet reached full
capacity but the trend is positive both in Italy and in Germany.
The results of first half 2023 were
impacted by the rise in the cost of healthcare personnel and procurement,
particularly in Germany where this impact is currently being absorbed with
gradual adjustments to tariffs and with the deflation of energy costs.
Revenues for the first half of 2023 totalled
€ 370.7 million, with a rise 9.9% on the first half of 2022, thanks to the recovery
in all sectors: nursing homes (RSAs) in Italy, +13.2%, and in Germany, +15.8%, where
the increase in revenues was also driven by significant increases in tariffs, as
well as Functional and Psychiatric Rehabilitation (+6.4%).
EBIT came to € 20.8 million, posting an increase of €
10.1 million compared to the EBIT of the first half of 2022 (€ 10.7 million), thanks
to the increased business activity and the recovery of operating efficiency
despite the inflation of costs and the discontinuation of the significant support
guaranteed by the German healthcare system to healthcare operators until July
2022.
The net result was a
positive € 0.8 million, versus – € 2.9 million in first half 2022.
Free cash flow, before the application of IFRS16,
was positive for
€ 16.4 million; non-recurring
income of €
36.3 million was reported (from the sale of the Indian operation in the
Diagnostics and Oncological Treatments sector and of certain properties in
Italy), and a negative operating cash flow of approximately € 20.0 million, due
to the increase in working capital of approximately € 25.0 million, which should be absorbed at least
in part during the year.
Net
debt, excluding the payables resulting from application of
accounting standard IFRS16, totalled € 161.9 million at the end of
June 2023, down
from € 178.3 million at 31 December 2022 and € 192.9 million at 30 June 2022.
On 28 June 2023 the sale was completed of the Diagnostics and Cancer Care subsidiary in India, concluding the strategic refocusing process undertaken in 2020 with the sale of Medipass. The price, or equity value, of the sale was € 18.8 million.
Sogefi
In a context
of global growth in car production of 11.2% compared to the equivalent period
of 2022 with progress achieved in all geographical areas and a strong recovery
in Europe, in the first six months of 2023 Sogefi’s consolidated revenues
came in at € 852.4
million, recording growth of 12.8% and 14% at constant exchange rates. This
reflects the increase in production volumes (+9.4%) and selling prices (+4.2%).
Sogefi outperformed the market in NAFTA, China and
India.
EBIT, amounting
to € 54.8
million, increased by 35.6%, with an EBIT margin of 6.4% of revenues, up from 5.3%
in the first half of 2022. All business lines reported higher profitability
thanks to volumes and to the fact that margins held up despite the impact that
inflation had on costs.
Net
income was € 31.4
million (+51% from € 20.8
million in the first half of 2022).
Free
cash flow was positive for € 45.0 million, including factoring
(€ 41.2 million at 30 June 2022).
Net
debt (before IFRS16) stood at € 185.3 million at 30 June
2023 down from € 224.3 million at 31 December 2022.
The
customer portfolio also performed positively with 32% of the value of new
contracts destined for hybrid and electric platforms, with high growth
potential.
Financial
management
In
the first half of the year global equity and bond markets reported a recovery
after the very negative performances of 2022 and bond yields turned positive
again after the central banks raised interest rates several times in order to
counter inflation.
The management of the
financial assets of the parent company and the financial subsidiaries gave
slightly positive financial income (€ 0.9 million, with a return of 0.2% for
the period) that compares with a negative € 5.1 million in the first half of
2022. More specifically, the overall return on liquid assets (shares, bonds,
hedge funds) was 0.8%, while the remaining part of the portfolio (Private
Equityand minority shareholdings) recorded a negative return of 2.2%, due
partly to the unfavourable evolution of the euro/dollar exchange rate.
Significant events that
have occurred since 30 June 2023
Since
the close of the period there have been no significant events that could have
an impact on the economic, patrimonial and financial information reported.
Outlook for the year
Visibility
as to the trend of the businesses of the CIR Group in the coming months remains
limited due to the uncertainties regarding the evolution of the macroeconomic
scenario in a context of high inflation and still rising interest rates.
As
far as KOS is concerned, operations are expected to return to full capacity in the
Rehabilitation and Acute sectors during the current year while for nursing homes
in Italy and Germany the trend of increasing occupancy has yet to be consolidated
and it is expected that this will lead to full operational capacity between the
end of 2023 and the beginning of 2024. Because
of the inflationary dynamics that have characterized the sector and
particularly the rise in the cost of healthcare personnel, in order for
profitability to recover there needs to be a gradual adjustment of tariffs both
in Italy and in Germany, a subject currently under discussion between business
associations and the institutions affected. Assuming there are no further factors or
circumstances, unpredictable as of today, that could make the context even more
complex than it is at present, the operating results of KOS for the whole year
should be significantly higher than those of last year.
As
for Sogefi, visibility as to the automotive market trend in 2023 again remains
limited due to uncertainties regarding the evolution of the macroeconomic scenario.
For 2023 S&P Global (IHS) expects world car production to grow by 5.3% on
2022, with Europe at +11.8%, NAFTA at +8.2%, India at +7.2% and South America
and China substantially unchanged. As far as raw materials and energy are
concerned, since the beginning of the year 2023 prices have been trending
downwards but they remain high and very volatile. Assuming there are no further
factors that could cause a deterioration of the macroeconomic scenario from
today’s levels, for 2023 Sogefi expects to see mid-single-digit revenue growth,
in line with forecasts for the automotive market, and higher profitability,
excluding non-recurring charges, than that of 2022.
As for financial asset management, despite the better performance of the financial markets in the first half of the year, given the uncertainties linked to the macroeconomic and financial scenarios, it is expected that conditions of high volatility will remain in the second half of the year as well.
