Sogefi (CIR group) results for the first nine months of 2011

Board of Directors approves results as of September 30 2011


Sales up in all geographical areas and contribution of Systèmes Moteurs acquired in the third quarter drive results of the group

Launch of the new Engine Systems Division which includes filters and the new activities in air intake and engine cooling systems

Debt at September 30 2011 of 325.3 million euro includes the enterprise value of Systèmes Moteurs (approx. 150 million euro)

Results of 9M 2011
with Systèmes Moteurs consolidated as of 1/08/2011:

Revenues: € 829.8 million (+20.8% from € 687 million in 9M 2010) Operating income: € 67.8 million (+34.2% from € 50.5 million in 9M 2010) EBITDA: € 76.5 million (+18.6% from € 64.5 million in 9M 2010) Net income: € 18.8 million (+40% from € 13.5 million in 9M 2010) Net debt: € 325.3 million (€ 182.6 million at September 30 2010)

Results of 9M 2011 with the same basis of consolidation as in 2010:

Revenues: € 776.2 million (+13% from € 687 million in 9M 2010)
Operating income: € 63.4 million (+25.5% from € 50.5 million in 9M 2010)
EBITDA: € 71.6 million (+11% from € 64.5 million in 9M 2010)

Milan, October 18 2011 – The Board of Directors of Sogefi SpA, which met today under the chairmanship of Rodolfo De Benedetti, approved the Interim Financial Report of the group as of 30 September 2011.

Sogefi, the automotive components company of the CIR group, is one of the main operators worldwide in engine systems and suspension components with 43 production sites in 18 countries and 14 commercial facilities. 

Performance of operations

On August 1 2011 Sogefi began the full consolidation of the activities of Systèmes Moteurs following the acquisition completed on July 29 2011. Systèmes Moteurs is one of the main world operators in air intake and engine cooling systems. 

On completion of this deal the group set up the new Engine Systems Division, which includes the traditional activities in filtration and the new product lines acquired with the entry of Systèmes Moteurs into the consolidation. The other division of the group, Suspension Components and Precision Springs, remains unchanged.

In the first nine months of 2011 the Sogefi group reported double digit growth of all its economic indicators compared to 2010 thanks to the growth of business in its main markets and to the contribution in August and September of the Systèmes Moteurs businesses.

In the third quarter global vehicle production confirmed the increase in volumes reported in the first half of the year, with higher growth in non-European markets. In the BRIC countries (Brazil, Russia, India and China) production levels continued to rise. The Brazilian market reported a slowdown in the month of September due to the reduction in the stock levels of vehicle manufacturers and their distribution chain. In Europe the lacklustre performance of new registrations was more than compensated for by the positive trend of exports, especially in the higher end of the range and for German manufacturers, with a total rise in production of over 7%. Even the recovery of the European industrial vehicle sector, which began in mid 2010, picked up speed although it has not yet returned to the pre-crisis levels of 2007. By contrast, in the period demand weakened in the independent aftermarket, which is affected by the economic difficulties in many European countries (Italy, Spain, Greece, Britain and Portugal).

Consolidated results

Against a favourable backdrop in all markets except for the European aftermarket, in the first nine months of the year the Sogefi group reported revenues of 829.8 million euro (+20.8% on the figure of 687 million euro for the same period of 2010). On the same basis of consolidation, net of the revenues of Systèmes Moteurs, in the two months of August and September sales came in at 776.2 million euro (+13%).

The highest growth (+21.9%) was reported by the Suspension Components Division with revenues of 413.5 million euro, while the Engine Systems Division posted sales of 418.2 million euro (+19.7%). With the same consolidation as last year the Engine Systems Division would have had sales of 364.7 million euro, with growth of 4.4%.

The group reported double digit revenue growth in all the markets in which it is present: Europe +18.2%, Latin America +12.9%, United States +155.1%, China +30.1% and India +35.1%.

During the period the group continued successfully to transfer higher commodity costs on to selling prices. As in previous years, the rise in the costs of the main commodities was mostly recovered with a time delay of a few months. In coming months commercial action will continue to recover further costs by the end of the year. At the end of September, the ratio of variable costs to sales was 68.7% and was slightly worse than a year ago partly because of higher labour costs and the lower sales mentioned above in the most profitable aftermarket.

Operating income for the first nine months came in 67.8 million euro, and was up by 34.2% from the figure of 50.5 million at September 30 2010, with a ratio to sales up to 8.2% from the previous 7.4%. In the third quarter operating profitability reached 8.7% of sales. With the same consolidation operating income would have been 63.4 million (8.2% of sales)

In the month of July restructuring began of the Welsh filtration plant at Llantrisant, which envisages the downsizing of production activities and the closure of the logistics warehouse. The process ended with a positive outcome on October 7 2011 with costs of 6.8 million euro. Restructuring costs in the first nine months of the year thus totalled 8.2 million euro, to which non-operating costs of 3.4 million euro must be added for the write-down of fixed assets. The results for the first nine months also included non-operating costs of 4.3 million euro as consulting fees for the acquisition of the Systèmes Moteurs group. In the last quarter of the year there are not expected to be any other significant restructuring costs.

EBITDA came to 76.5 million euro (9.2% of sales revenues) and was up by 18.6% from 64.5 million euro (9.4% of sales) in 2010. On the same basis of consolidation EBITDA would have been 71.6 million euro (9.2% of sales).

EBIT was 41.6 million euro (5% of sales) and was up by 32.7% from 31.3 million euro (4.6% of sales) in the first nine months of 2010. With the same consolidation EBIT would have been 38.7 million euro (5% of revenues).

The result before taxes and minority interests rose from 23.8 million euro at September 30 2010 to 33.2 million euro in the first nine months of 2011.

The net income of the group came in 18.8 million euro (2.3% of sales) and was up by 40% from 13.5 million euro (2% of sales) in the first nine months of 2010.

The net debt at September 30 2011 included the enterprise value of Systèmes Moteurs (approximately 150 million euro) and came to 325.3 million euro compared to 167.6 million euro at June 30 2011 and 182.6 million euro at September 30 2010.

At September 30 2011 consolidated equity including minority shareholders’ equity stood at 208.4 million down from 214.4 million euro at December 31 2010. The consolidated equity of the Sogefi group amounted to 190.5 million euro at September 30 2011 (after dividends of 14.9 million euro) down from 197.2 million at December 31 2010.

Following the growth in ordinary operations and more especially with the acquisition of Systèmes Moteurs, the number of employees of the group at September 30 2011 – including temporary contracts but excluding those subject to some form of flexibility – rose to 7,543 (5,841 at December 31 2010).

Outlook for the whole year

The positive results obtained by the group in the first nine months should be confirmed for full year 2011. Despite the fears of a worsening of the economic scenario in 2012, at present no significant clients are making any announcements or forecasting a slowdown in their demand for components in the last part of the year. It is felt, therefore, that if there is a slowdown it will not be to an extent that could affect the group’s full year performance in any substantial way.

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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