Sogefi (Cir): 1H 2011 results

Board of Directors approves results as of June 30 2011


Business grows in all markets and for all kinds of vehicles.
Significant rise in sales in the United States (+73%) while more progress is made in emerging countries (Brazil, China and India).
Sales up in Europe too, especially in industrial vehicles

Margins show double-digit growth, despite commodity price rises,  thanks to the rise in revenues and to the control of cost dynamics

Agreement signed in the first half for the acquisition of Mark IV Systèmes Moteurs:
for Sogefi this is an important opportunity for international growth and technological integration

Consolidated results for the first half of 2011

Revenues: € 526.6 million (+15.1% from € 457.6 million in H1 2010)
Operating result: € 41.4 million (+29.3% from € 32 million in H1 2010)
EBITDA: € 52.8 million (+16.6% from € 45.3 million in H1 2010)
Net income: € 15.3 million (+54.6% from € 9.9 million in H1 2010)
Net debt: € 167.6 million (€ 166.6 million at 03/31/2011)

Milan, July 21  2011 – The Board of Directors of Sogefi SpA, which met today in Milan under the chairmanship of Rodolfo De Benedetti, examined and approved the Semi-annual Financial Report as of June 30 2011.

Sogefi, the automotive components company of the CIR group, is one of the main world producers in the sectors of filters and flexible suspension components.

Performance of operations

In the first half of the year the Sogefi group continued the trend of significant growth in its economic indicators thanks to the improvement of production levels in all of its most important markets and for all kinds of vehicles. The first half of 2011, in particular, was characterized by the now traditional sustained sales growth in the Brazilian and Chinese markets, as well as by the strong improvement of business in India and the United States. A rise in sales was reported in Europe as well especially thanks to the recovery in production in the sector of suspension for industrial vehicles. The rise in selling prices and the control of the dynamics of structure costs made it possible to contain the effect of the increase in the cost of commodities in the market.

During the first half Sogefi signed an agreement to acquire the car components group Mark IV Systèmes Moteurs, one of the main world producers of air intake and engine cooling systems with revenues of approximately 270 million euro in 2010. The deal was concluded on the basis of an enterprise value of the Mark IV Systèmes Moteurs group of approximately 150 million euro. Thanks to this agreement, which is expected to be finalized in the third quarter, Sogefi has an important opportunity for international development and technological integration. The activities of Mark IV Systèmes Moteurs will be consolidated in the financial statements of Sogefi as from the finalization date of the agreement.

Consolidated results

The consolidated revenues for the first half came in at 526.6 million euro, posting a rise of 15.1% on the figure for the same period of 2010 (457.6 million euro). The greatest increase was reported in the United States (+72.8%), thanks to the fact that the production plants launched in 2010 are now fully up and running. Revenues also posted double-digit growth in Brazil (+13.9%), China (+18.4%), Europe (+13.2%, with the significant contribution of industrial vehicles, sales of which rose by 49%) and India (+29.9%).

The rise in sales was most significant in the Suspension Components Division (+24% on the first half of 2010, to a total of 281.8 million euro). The Filter Division, with total sales of 246.2 million euro, reported a more modest rise (+6.3%) as more than 60% of the revenues came from the aftermarket segment (independent aftermarket and OES), which reported lower growth than the original equipment market. Especially in Europe the negative economic environment caused a decline in sales in the independent spares aftermarket (-5.7%).

The higher revenues, associated with a lower impact of structure costs, brought about a significant rise in the operating margins of the group, despite the higher cost of all the main materials used and especially of steel, paper and rubber.

The consolidated operating result was considerably better than in the previous year (+29.3%), coming in at 41.4 million euro (7.9% of revenues) versus 32 million (7% of revenues) in the first six months of 2010. In the second quarter of 2011 the operating result was 8.7% of revenues, up from 7% in first quarter 2011 and 8.1% in second quarter 2010.

The income statement for the period includes restructuring costs of 1.6 million euro (compared to 4.3 million in the same period of last year) and costs of 3.3 million euro for legal, financial and fiscal due diligence services for the acquisition of the French automotive components group Mark IV Systèmes Moteurs.

The consolidated gross operating margin (EBITDA) was 52.8 million euro (10% of revenues), up by 16.6% from 45.3 million in the first half of 2010 (9.9% of revenues). Consolidated EBIT was 30.6 million euro (5.8% of revenues), and was up by 34.2% from 22.8 million euro (5% of revenues) in first half 2010.

The income before taxes and minority interests of 25.9 million euro (17.7 million euro in the first half of 2010), also benefited from lower financial expense (4.7 million euro, down from 5.1 million euro in the first half of 2010) thanks to the lower average debt for the period.

Consolidated net income was 15.3 million euro (2.9% of revenues), and was up by 54.6% from 9.9 million euro (2.2% of revenues) in the same period of 2010.

Consolidated equity, including minority interests, stood at 209.6 million euro at June 30 2011 (206.8 million euro at June 30 2010 and 214.4 million euro at December 31 2010).

Consolidated net debt at June 30 2011 totalled 167.6 million euro and was significantly lower than the figure for the corresponding period of last year (182.5 million euro). The slight rise from the figure at December 31 2010 and March 31 2011 (164.9 million euro and 166.6 million euro respectively) was due partly to the distribution of dividends for 14.9 million euro in April 2011.

The group had 5,777 employees at June 30 2011 (5,574 at December 31 2010).

Result of the parent company of the Group

In the first half of 2011 the parent company Sogefi SpA reported net income of 20.8 million euro, up from 8.4 million euro in the same period of the previous year. The company benefited mainly from a greater dividend flow (+14.6 million euro) compared to the first half of 2010. Net debt stood at 108.9 million euro at June 30 2011 and was down significantly from 121.4 million euro at March 31 2011 and 119.5 million euro at December 31 2010.

Outlook for the whole year

In the second part of the year demand  is expected to show a similar trend to that seen in the first half. Therefore, despite the higher cost of the main commodities and the restructuring charges forecast with the partial closure of a plant in Wales, the company should confirm for the whole year the levels of operating profitability achieved in the first half.

The executive responsible for the preparation of the company’s financial statements, Giancarlo Coppa, 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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