Board of Directors approves results of first quarter 2012
CIR GROUP: NET INCOME UP AT 15.2 MILLION EURO (+5.5%)
The result benefits from the contribution of the subsidiaries and more especially from the positive fair value adjustment of the securities portfolio of the group thanks to the recovery of the financial markets in the first quarter
Consolidated results of Q1 2012
Revenues: € 1,244.9 million (+11.6% from € 1,115.5 million in Q1 2011)
EBITDA: € 99.2 million (-20.6% from € 124.9 million in Q1 2011)
Net income: € 15.2 million (+5.5% from € 14.4 million in Q1 2011)
Aggregate net financial surplus: € 24.6 million (€ 10.8 million at 31/12/2011)
Consolidated net financial debt: € 2,437.9 million (€ 2,335.1 million at 31/12/2011)
Milan, April 27 2012 – The Board of Directors of CIR-Compagnie Industriali Riunite SpA, which met today under the chairmanship of Stefano Micossi, has approved the Interim Financial Report for the first quarter of 2012. The CIR group operates in five sectors: energy (Sorgenia), media (Espresso), automotive components (Sogefi), healthcare (KOS) and non-core investments (private equity, venture capital and other investments).
Performance of operations
Despite the gradual worsening of the economic climate, the CIR group closed the first quarter of 2012 with a rise in earnings of 5.5% on the same period of 2011. The result benefited from the positive contribution of the main operating subsidiaries and above all from the recovery of the financial markets which made it possible to post significant gains on the fair value of the securities portfolio compared to the end of 2011. The revenues of the group rose by 11.6% to over 1.2 billion euro thanks to the growth reported by Sorgenia, Sogefi and KOS, while the lower margins were due essentially to the decline in the profitability of Sorgenia and Espresso, only partly offset by the rise in the results of Sogefi.
Consolidated results
The revenues of the CIR group in the first quarter of 2012 came in at 1,244.9 million euro, posting double-digit growth (+11.6%) from the figure of 1,115.5 million euro in the same period of 2011 thanks particularly to the higher sales reported by Sorgenia, Sogefi and KOS.
EBITDA was 99.2 million euro (8% of revenues) and was down by 20.6% from 124.9 million euro (11.2% of revenues) in the first quarter of 2011. The operating result (EBIT) came to 47.3 million euro, down from 76.8 million euro in 2011. The reduction in margins, despite the significant increase reported by Sogefi, was due mainly to the lower profitability of Sorgenia and Espresso as a result of the negative economic situation in Italy.
The net result of financial management was a negative figure of 12.3 million euro (a negative 22.4 million euro in the first quarter of 2011) and was made up of net financial expense of 28 million euro partly offset by dividends and net gains from trading and valuing securities of 15.7 million euro.
The net income of the CIR group for the quarter was 15.2 million euro and was up by 5.5% from the figure of 14.4 million euro for the same period of 2011.
The result was determined by the contribution of the main operating subsidiaries, which was positive although lower than in first quarter 2011, and by the favourable adjustment of the fair value of the securities portfolio, which thanks to the recovery of the financial markets during the quarter made it possible to recoup a significant amount of value compared to the end of 2011.
The net financial debt of the CIR group at March 31 2012 amounted to 2,437.9 million euro, up from 2,335.1 million euro at December 31 2011. The consolidated net financial debt figure is a combination of the following:
– An aggregate net financial surplus at holding level of 24.6 million euro (10.8 million euro at December 31 2011). The rise was due mainly to the positive adjustment to the fair value of the securities portfolio;
– Total net financial debt of the operating companies of 2,462.5 million euro (2,345.9 million euro at December 31 2011). The change compared to the figure at the end of last year was attributable essentially to Sorgenia on account of the investments made in new production capacity and the rise in working capital, due partly to seasonal factors.
Total consolidated equity stood at 2,480 million euro at March 31 2012 versus 2,479.7 million euro at December 31 2011. The group’s equity amounted to 1,447.3 million euro compared to 1,438.1 million euro at December 31 2011.
At March 31 2012 the CIR group had 14,050 employees (14,072 at December 31 2011).
Industrial businesses
Energy: Sorgenia
The revenues of the Sorgenia group in the first quarter of 2012 totalled 601.9 million euro and were up by 9.5% on the figure for the same period of 2011 (549.7 million euro). Adjusted EBITDA came to 26.8 million euro, down by 41.1% on the figure for the first quarter of 2011 (45.5 million euro). EBITDA was 27.5 million euro versus 51.1 million euro in 2011.
The significant fall in operating results compared to last year was due essentially to three factors: the reduction in thermoelectric generating margins, negatively affected in particular by the sharp slowdown in demand, the rise in the prices of gas for the power plants, the overcapacity of the electricity system as a whole in terms of production, and the competition from renewable sources at peak times of day; higher provisions set aside for client receivables because of the worsening economic situation; the lower volumes of natural gas sold and thus the lower margins on the same. The net result of the group was a loss of 14.7 million euro compared to net income of 6.8 million euro in the same period of 2011.
Media: Espresso
The revenues of the Espresso group in the first quarter of 2012 totalled 206.5 million euro and were down by 7.1% on the figure for the same period of 2011 (222.2 million euro) mainly because of the decline in collateral products. Circulation revenues, excluding optional products, came to 64.1 million euro and were substantially in line with the previous year.
Advertising revenues, which came to 120.8 million euro, were down by 5.3% compared to first quarter 2011 while in the period January-February the whole market declined by 5.7% (Nielsen Media Research figures). However the performance of internet advertising was very positive (+16%), confirming the brilliant dynamics of recent years even in a particularly bad general climate.
The revenues from optional products amounted to 14 million euro and were down sharply (-40.9%) on first quarter 2011, while sundry revenues came to 7.6 million euro and were up by 20%.
EBITDA was 29.6 million euro, down by 19.5% compared to 36.8 million euro in first quarter 2011. Excluding the effect of collateral products, EBITDA would have been stable. Net income came to 10.1 million euro versus 13.1 million euro in 2011 (-23.2%).
Automotive components: Sogefi
The revenues of Sogefi in the first quarter of 2012 totalled 346.9 million euro and were up by 35.6% on the figure of 255.8 million euro for the same period of 2011 thanks to the consolidation of the businesses of Systèmes Moteurs as from August 1 of last year. With the same consolidation as last year, revenues would have been 254.1 million euro, substantially in line with 2011. The most significant figure was the continuing growth in North America, where Sogefi achieved revenues of 36.8 million euro, which were up fourfold on 2011. North America now contributes 10.6% of total revenues compared to 6.2% at the end of 2011. Growth is also continuing in India (revenues +75%), while in the Mercosur region there was a contraction of 4.3% due to the trend of the local market in the period. In Europe Sogefi reported revenues of 243.6 million euro, up by 32% on last year as a result of the contribution of Systèmes Moteurs (stable at 184.1 million euro with the same consolidation, despite the contraction in the market).
EBITDA for the quarter came in at 34.3 million euro (9.9% of revenues) and was up by 37.3% from 25 million euro for the same period of 2011 (9.8% of revenues). With the same consolidation the ratio of EBITDA to revenues would have been 9.5%. Net income came to 9.2 million euro, posting growth of 37.5% on the figure for the same period of last year (6.7 million euro).
Healthcare: KOS
The revenues of KOS for first quarter 2012 amounted to 88.3 million euro and were up by 1.5% compared to the figure for the corresponding period of 2011 (87 million euro), thanks to the development of its three business areas (nursing homes, rehabilitation units and hospital management) and to the acquisitions made in 2011.
EBITDA came to 11.9 million euro, which was substantially in line with the figure reported for the first three months of 2011 (12.1 million euro) despite the higher costs for leases generated by the sale of three instrumental properties in the third quarter of last year. Net income came in at 1.9 million euro compared to 2.8 million euro in the previous year. Net financial debt stood at 171.5 million euro at March 31 2012, up from 165.1 million euro at December 31 2011. The KOS group today manages some 60 facilities, mainly in the centre and north of Italy, with a total of over 5,700 beds in operation plus more than 1,000 under construction.
Non-core investments
The group’s non-core investments are venture capital and private equity initiatives and other investments. In particular CIR has a diversified portfolio of funds and minority holdings in the private equity sector (with a fair value at March 31 2012 of 89.6 million euro) as well as the venture capital fund CIR Ventures (with a fair value at March 31 2012 of 14 million dollars). Among the other investments is a 20% interest in the company Swiss Education Group, a world leader in the training of managerial staff in the hospitality sector. Lastly, the CIR group also has a portfolio of non-performing loans: the net value of the investment in this business amounted to 63.7 million euro at March 31 2012.
Outlook for the year 2012
The performance of the CIR group in 2012 will be influenced by the evolution of the macroeconomic environment, which is currently characterized by a recessionary scenario the intensity and duration of which cannot at the moment be predicted, and by the performance of the financial markets.
In this scenario the main operating subsidiaries of the group will continue their strategy of combining action to improve their operating efficiency with business development initiatives.
Bonds maturing in the 24 months following March 31 2012
The company, which has a BB rating with a stable outlook issued by Standard&Poor’s, has no bonds maturing in the 24 months following March 31 2012.
Significant events which have occurred since March 31 2012
On April 20 2012 the Board of Directors of KOS approved a share capital increase of 17.5 million euro that will be subscribed by the shareholder AXA Private Equity. This deal, which is to fund the development of the business, is part of the agreement signed by the shareholders of the KOS group at the end of 2010. After the capital increase, CIR will remain the principal shareholder of KOS with 51.26% of its capital, AXA Private Equity will rise to 46.70% while the part held by management and other shareholders will be 2.04%.
The executive responsible for the preparation of the company’s financial statements, Gerardo Benuzzi, hereby declares, in compliance with the terms of paragraph 2 Article 154-bis of the Finance Consolidation Act (TUF), that the accounting figures contained in this press release correspond to the results documented in the company’s accounts and general ledger.
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