SOGEFI (CIR GROUP): REVENUES AT OVER € 1.3 BLN, +1.2%
(+5.5% AT SAME EXCHANGE RATES)
OPERATING RESULT: € 107.8 MLN (+16.6%), RATIO TO REVENUES 8.1%, +1.1 % ON 2012
Revenues and margins are up driven by a better geographical and product mix, even in a climate of negative exchange rates and with an acceleration of cost-cutting actions in Europe (restructuring charges at € 19.2 mln in the year, of which € 17.3 mln in the fourth quarter)
Growth continues in non-European markets thanks to North America,
with sales in the region of € 190 million (+24.5%), and Asia (€ 59 million, +27%)
Net income at € 21.1 million (€ 28.2 million in 2012), affected by higher financial expense and restructuring costs
The Board of Directors has decided not to propose the distribution of a dividend in order to preserve the financial solidity of the company given the structural efficiency-enhancing actions put in place in 2013 and to be continued in 2014, which will involve disbursements concentrated in the current year
Consolidated results for financial year 2013
Revenues: € 1,335 million (+1.2% from € 1,319.2 in 2012; +5.5% at same exchange rates)
Operating result: € 107.8 million (+16.6% from € 92.4 million in 2012
EBIT: € 69.1 million (+9% from € 63.4 million in 2012)
Net income: € 21.1 million (€ 28.2 million in 2012)
Net debt: € 304.6 million (€ 339 million at 30/9/2013)
Milan, February 25 2014 – The Board of Directors of Sogefi SpA, which met today under the chairmanship of Rodolfo De Benedetti, has approved the proposed statutory financial statements and the consolidated financial statements of the company for
financial year 2013.
Sogefi, the automotive components company of the CIR group, is one of the main world producers of engine systems and suspension components with 43 production plants in 21 countries and 17 commercial offices.
Performance of operations
In 2013 Sogefi achieved growth in revenues to over € 1.3 billion (+1.2% on 2012 but +5.5% with the same exchange rates) combined an improvement in margins, even in a climate of negative exchange rates and with an intensification of restructuring actions.
More specifically, despite having accelerated efficiency-enhancing actions through the rationalization of production capacity in France (restructuring charges of € 19.2 million, +24% compared to 2012, of which € 17.3 million in the fourth quarter), the group reported an EBIT figure that was up by 9% with a ratio to sales of 5.2% up from 4.8% in 2012.
This result was obtained thanks to a better product mix and to the strategy of focusing on countries outside Europe, particularly on the North American market and on Asia, but also thanks to the stabilization of the European market especially in the second half of the year.
As for the overall performance of the car market in 2013, there was a significant rise in new registrations in the United States (+7.5% on 2012) and in China (+17%) with more modest growth in Mercosur (+1.6%), all of which offset the weakness of Europe (-1.7%).
Consolidated results
Sogefi closed 2013 with consolidated revenues of € 1,335 million, slightly up from the figure of € 1,319.2 million in 2012 (+1.2%, +5.5% at the same exchange rates). This result benefited particularly from the positive performance in non-European markets, especially in North America and Asia, where revenues were up by 24.5% (€ 187.4 million) and 27.1% (€ 59.2 million) respectively on 2012 and from the performance obtained in the fourth quarter, which saw consolidated revenues up by 3.3% to € 324.4 million (+8.6% at the same exchange rates) compared to last year.
The impact of non-European countries on the total revenues of the Sogefi group was 36%, 2 percentage points higher than in 2012 (it would have been 38% net of the exchange rate effect). Performance was also positive in South America, where revenues – net of the exchange rate effect – would have risen more than the market thanks to the good competitive positioning of Sogefi. In Europe the group posted revenues of € 859.3 million, down by 2.0%, but substantially in line with the market.
The consolidated operating result came in at € 107.8 million in 2013 and was up by 16.6% on the previous year reaching a ratio to sales of 8.1%, with an improvement of 1.1 percentage points.
In 2013 the group intensified its efficiency-enhancing initiatives made necessary by the continuing weakness of European markets with the aim of aligning production to the lower level of demand. In the Engine Systems Business Unit, in particular, the group started negotiations for the closure of the Saint Père factory and the transfer of production from the Argentan plant to Vire. This involved higher restructuring costs than in previous years of € 19.2 million, of which € 17.8 million relating to the rationalization of production capacity and € 1.4 million linked to the writedown of the assets affected by the restructuring (€ 12.2 million and € 3.2 million respectively in 2012).
Consolidated EBITDA was € 129.5 million, up by 2.3% compared to 2012 (€ 126.7 million). Consolidated EBITDA before restructuring came to € 147.3 million and was up by 6.1% on the previous year with a ratio to sales of 11% (10.5% in 2012).
Consolidated EBIT came in at € 69.1 million and was up by 9% (€ 63.4 million in 2012), with a ratio to sales improved to 5.2% from 4.8% in 2012. EBIT before restructuring rose in 2013 by 12% to € 88.3 million compared to the previous year (€ 78.8 million).
The result before taxes and minority interests for 2013 was € 40.5 million compared to € 44.9 million last year. This figure was affected not only by the higher restructuring costs but also by higher financial expense following the recent refinancing of the debt which led to the replacement of credit lines established before 2009 with new agreements entered into at current market conditions.
The consolidated net result for 2013 was a positive € 21.1 million (€ 28.2 million in 2012).
During the year, in line with Sogefi’s strategy of expanding its presence in markets outside Europe, the following projects were put in place: the start of construction work on two new plants for suspension components and engine systems in Wujiang (China), the inauguration of an engine systems factory in Pune (India) and the extension of the production capacity of the Monterrey plant (Mexico).
The net debt stood at € 304.6 million at December 31 2013 (€ 339 million at September 30 2013 and € 295.8 million at December 31 2012). The reduction during the quarter was due to the seasonal optimization of working capital together with the positive performance of operations. Since the restructuring was concentrated mainly in the fourth quarter, the main part of the resulting cash disbursement will take place in 2014.
At December 31 2013 consolidated equity including minority interests amounted to € 188.9 million (€ 200.2 million at December 31 2012).
The Sogefi group had 6,834 employees at the end of 2013 compared to 6,735 at December 31 2012. The increase in personnel in Asia, Nafta and Mercosur was partly offset by the reduction in Europe.
Engine Systems Business Unit
In 2013 the Engine Systems Business Unit reported revenues of € 818.6 million, up by 3.3% (+7.4% at the same exchange rates) compared to 2012 and by 4.7% just in the fourth quarter with revenues of almost € 200 million. In the period the Business Unit benefited from the growth of business in markets outside Europe – mainly the US, China and India – and from the positive contribution from the Aftermarket sector.
The operating result of the Business Unit came to € 71.1 million (+25.7% on 2012) with a ratio to sales rising by 1.5 percentage points to 8.7% of revenues versus 7.1% in the previous year.
EBITDA and EBIT were both up at € 78.9 million (€ 74.7 million in 2012) and € 45.7 million (€ 39 million 2012) respectively, with a ratio to sales improving to 9.6% from 9.4% in 2012 for the EBITDA and to 5.6% from 4.9% for the EBIT.
EBITDA before restructuring came to € 94.5 million in 2013, up by 9.2% from the previous year with a ratio to sales of 11.5% (10.9% in 2012).
Suspension Components Business Unit
The Suspension Components Business Unit closed 2013 with revenues of € 518.6 million (€ 528.6 million in 2012), down by 1.9% (+2.6% at the same exchange rates).
A better product mix made it possible to obtain an operating result that was 7.9% higher at € 44.6 million with a ratio to sales of 8.6%, up from 7.8%. An improvement was also seen in EBITDA and EBIT which came in at € 58.8 million (€ 56.9 million in 2012) and € 35.7 million (€ 32.3 million in 2012) respectively, with a ratio to sales higher at 11.3% from 10.8% in 2012 for EBITDA and at 6.9% from 6.1% for EBIT.
Results of the parent company Sogefi SpA
In 2013 the parent company Sogefi SpA reported net income of € 15.9
million up from € 6.2 million in the previous year. The higher dividend flow from subsidiaries in 2013 (€ 34.9 million versus € 21.4 million in 2012) was partly offset by the rise in net financial expense.
The net debt figure was € 304.9 million at December 31 2013, posting a net rise of € 21.6 million compared to the figure at December 31 2012.
Shareholders’ equity at the same date stood at € 155.8 million (€ 154 million at December 31 2012).
Outlook for the year
In 2014 the car market is expected to grow at global level, driven mainly by the Chinese market and supported by more modest growth in the North and South American markets and by further stabilization in Europe.
In this context the Sogefi group aims to:
– continue to increase the presence of the group outside Europe, leveraging its competitive positioning in the various geographical areas;
– increase its focus on innovation and on improving its product mix- boost the integration of the group;
– continue the acceleration phase of the structural efficiency-enhancing actions in Europe.
Proposed dividend
The Board of Directors will propose to the Shareholders’ Meeting that there be no dividend distribution. This in order to preserve the financial solidity of the company in view of the intensification of the restructuring action that the company carried out in the year 2013 and that it intends to continue in 2014 in order to reach a production presence more in line with current levels of market demand.
The cash disbursement for these actions will be concentrated in 2014.
Shareholders’ Meeting
The Meeting of the Shareholders of Sogefi has been convened at the first call for April 23 2014 and at the second call for April 24 2014.
The Board of Directors has specifically resolved:
– To propose that the Shareholders Meeting cancel and renew its authorization of the Board of Directors for a period of 18 months to buy back a maximum of 10 million of the Company’s own shares (including the 3,678,722 shares already held as of today, corresponding to 3.12% of the share capital) at a unit price that cannot be more than 10% higher or lower than the official price of the shares recorded at the trading session on the regulated market prior to that of each individual transaction. The main reasons why this authorization is being renewed are the possibility of investing in shares of the company at prices below their actual value, based on the real economic value of its equity and its income generating prospects, and also of being able to use the shares bought back for the Company’s share-based compensation plans;
-To put forward for approval by the Shareholders’ Meeting a stock grant plan for 2014 for employees of the company and its subsidiaries for a maximum of 750,000 conditional rights, each of which will give the beneficiaries the right to be assigned 1 Sogefi share free of charge. The shares assigned will be taken from the own shares held by the Company as treasury stock;
-To propose that the Shareholders Meeting, at its extraordinary session, cancel and renew its authorization of the Board of Directors to effect capital increases up to a maximum amount of 250 million euro, for capital increases in favour of directors and employees of the company and its subsidiaries for a maximum amount of 5.2 million euro, and to issue, even without the option right, in which case in favour of institutional investors, convertible bonds or bonds with warrants attached.
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The documentation and information contained in this area of the website are not, and must not be sent by, or transmitted to or distributed to, directly or indirectly, persons resident or physically present in the United States of America, Australia, Canada, Japan, and do not constitute and cannot be interpreted as an offer to purchase or a solicitation of an offer to sell financial instruments addressed to U.S. Persons - as defined under the U.S. Securities Act of 1933, as amended, or to persons resident in Other Countries. The shares of COFIDE – Gruppo De Benedetti S.p.A. – which will change its company name to “CIR S.p.A. – Compagnie Industriali Riunite” on the effective date of the merger by incorporation with CIR S.p.A. – Compagnie Industriali Riunite - referred to in this area of the website have not been and will not be registered under the U.S. Securities Act of 1933, and may not be offered or sold in the United States of America absent registration or an applicable exemption from registration thereunder.
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