Board of Directors approves results as of December 31 2017
SOGEFI (CIR GROUP):
Revenues up by 6.2% at € 1,672.4m (+7.3% at constant exchange rates)
EBITDA at € 165.8m (+8.6%)
Net income at € 26.6m (€ 9.3m in 2016)
Net debt reduced to € 264m (€ 299m at 31/12/2016)
Milan, February 26 2018 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, approved the proposed statutory financial statements and the consolidated financial statements of the company for financial year 2017.
Sogefi, a company of the CIR Group, is a leading global manufacturer of automotive components in three business segments: Air&Cooling, Filtration and Suspensions.
Laurent Hebenstreit, Chief Executive of Sogefi, said:
“In 2017 Sogefi outperformed the market. The results obtained confirm that the actions aimed at increasing profitability and cash generation have been effective despite steel price increases”.
Revenues up by 6.2% and by 7.3% at constant exchange rates
In 2017, the global automotive market reported an increase in production of 2.1% with growth in Europe (+1.1%) thanks to a strong fourth quarter (+6.0%), 2.7% growth in Asia despite a slowdown in China, and strong growth in South America (+20.9%). In North America, as expected, the market declined by 4.0%.
In this environment, in 2017 Sogefi reported revenues of € 1,672.4 million, up 6.2% compared to € 1,574.1 million in 2016 (+7.3% at constant exchange rates). After the sustained growth of the first quarter (+12.6%) and the more moderate growth of the second (+4.5%) and third quarters (+2.0%), in the last quarter growth was in line with expectations (+6.0%). At constant exchange rates, the quarterly growth was +11%, +4.6%, +4.2% and +9.4% respectively.
Revenues grow in all geographical areas
All geographical areas contributed to the increase in sales in 2017. In Europe revenues increased 4.3%, outperforming the market (+1.1%). Business continued to develop in North America (+2.1%) despite the expected market decline (-4.0%) and in Asia (+20.9%). In Asia and South America revenues increased by 20.9% and 13.2% respectively.
Positive performance for the three Business Units
All three business units contributed to the development of the Group. Suspensions posted growth of +7.8% (+8.9% at constant exchange rates), Filtration of 5.7% (+7.1% at constant exchange rates) while the Air & Cooling sector reported +5.0% growth (+5.6% at constant exchange rates).
Operating results and net income
EBITDA, in 2017 came to € 165.8 million and was up by 8.6% compared to € 152.7 million in 2016. The increase was due to the revenue growth and the improvement in profitability, which rose to 9.9% from 9.7% in 2016.
The increase in profitability was achieved despite the negative impact (€ 13 million) of the increase in steel costs. The ratio of total labour costs to revenues declined from 21.4% in 2016 to 20.8% in 2017.
EBIT increased by 14.6% to € 85.4 million, compared to € 74.5 million in 2016 and represents 5.1% of total sales. The result includes write-downs of the fixed assets of the Brazilian operations of € 6.2 million in 2017 and € 4.8 million in 2016.
Net income before taxes and non-controlling interests was a positive € 53.7 million (€ 46.6 million in 2016) after financial expense of € 31.7 million (€ 31.5 million in 2016). Cash interest expense was down € 5.3 million.
The net result was a positive € 26.6 million (€ 9.3 million in 2016) after tax expense of € 23 million, down from € 32.6 million in 2016. The reduction in tax refers for € 6.7m to a non-recurring tax charge recorded in the previous year (in relation to the Sogefi Air & Cooling S.A.S claims).
Regarding the risks resulting from the claims made against Sogefi Air & Cooling S.A.S. (formerly Sogefi Air & Refroidissement France S.A.S.), in 2017 there were no significant developments.
Performance by Business Unit
In 2017 the Air & Cooling business unit reported revenues of € 504.0 million, up by 5.0% (+5.6% at constant exchange rates) on 2016. The business unit reported a positive performance in Asia and Europe, which more than compensated for the less favourable outcome in North America. EBIT amounted to € 28.3 million, showing growth compared to 2016 (€ 23.3 million).
In 2017 the Filtration business unit posted sales of € 565.7 million, up by +5.7% on 2016 (+7.1% at constant exchange rates). Sales increased in Europe and Asia while in South America growth in Brazil offset the weakness of the Argentine market. EBIT amounted to € 24.1 million versus € 25.1 million in 2016. The EBIT number includes an increase of € 1.9 million in asset write-downs (€ 8.2 million versus € 6.3 million in 2016).
In 2017 the Suspensions business unit reported revenues of € 606.8 million, up by +7.8% on 2016 (+8.9% at constant exchange rates). Sales grew in North and South America and in Europe. EBIT came to € 38.0 million, higher than in 2016 (€ 35.6 million) despite the € 13 million of higher costs from the increase in steel prices.
Net debt
Free Cash Flow in 2017 was a positive € 34.4 million compared to € 31.2 million in the previous year, which included € 15.3 million of non-recurring inflows from product warranties and from the favourable outcome of a tax dispute. Net of these extraordinary items, Free Cash Flow rose from € 15.2 million in 2016 to € 34.4 million in 2017. The improvement was achieved despite an increase in tangible asset investments to € 68.1 million in 2017 (€ 58.8 million in 2016).
Net financial debt at December 31 2017 stood at € 264 million, showing a reduction of € 35 million compared to December 31 2016 (€ 299 million) and of € 2.7 million compared to September 30 2017 (€ 266.7 million).
Shareholders’ equity
At December 31 2017 shareholders’ equity, excluding minority interests, amounted to € 189.0 million (€ 172.9 million at December 31 2016).
Employees
The Sogefi group had 6,947 employees at December 31 2017 compared to 6,801 at December 31 2016.
Results of the parent company Sogefi S.p.A.
In 2017, the parent company Sogefi S.p.A. reported net income of € 11.5 million (€ 27.7 million in the previous year). The difference was mainly due to lower dividends from subsidiaries for € 7.4 million and to the fact that in the previous year the company had posted non-recurring gains of € 6.0 million relating to the favourable outcome of a legal dispute with the French tax authorities.
Net debt stood at € 257.8 million at December 31 2017, down by € 22.3 million compared to the figure at December 31 2016 (€ 280.1 million). Shareholders’ equity at December 31 2017 amounted to € 214.5 million (€ 197.9 million at December 31 2016).
Outlook for the year
In 2018 the global automotive market is expected to grow by around 1.5%.
In this scenario Sogefi is expecting to moderately outperform the market at constant exchange rates, thanks particularly to the growth initiatives in Mexico and Morocco and a higher result, despite the further increase in steel costs.
Proposed dividend
The Board of Directors will propose to the Annual General Meeting of the Shareholders that no dividend be distributed.
Annual General Meeting of the Shareholders
The Annual General Meeting of the Shareholders of Sogefi has been convened at the first call for April 23 2018 while the second call will be on April 24 2018.
The Board of Directors has voted to put the following proposals before the ordinary session of the AGM:
– The cancellation and renewal of the power assigned to the Board of Directors for a period of 18 months to buy back a maximum of 10 million own shares (including 2,669,076 own shares held today, corresponding to 2.22% of the share capital) at a unit price that must not be more than 10% higher or lower than the benchmark price recorded by the shares in the stock exchange trading session preceding each single buyback transaction or the date on which the price is fixed, and in any case, when the purchases are made on a regulated market, at a price that is no higher than the higher of the price of the last independent transaction and the current independent bid price in the same market, in accordance with what is stipulated in EU Delegated Regulation no. 2016/1052.
The main reasons for renewing this authorization are the following: to fulfil obligations resulting from stock option plans or other forms of assignation of the company’s shares to employees or members of the board of directors of Sogefi or companies controlled by the latter; to fulfil obligations that may derive from debt instruments that can be converted into or exchanged for shares; to have a portfolio of own shares to use as consideration in any extraordinary transactions, possibly involving an exchange of shareholding interests, with other parties within the scope of transactions of interest to the company (a so-called “stock of shares”); to be able to take action to support the liquidity of the shares in the market; to be able to take any opportunities for creating value as well as investing liquidity efficiently in relation to the trend of the market; for any other purpose that the competent Authorities should qualify as permitted market practice as per the terms of the European and domestic rules applicable, and following the procedures established therein;
– The approval of a stock grant plan for 2018 aimed at employees of the Company and its subsidiaries for a maximum of 500,000 conditional rights, each of which will give the beneficiaries the right to be assigned 1 Sogefi share free of charge.
The shares thus assigned will be made available from the stock of own shares held by the company.
The Plan aims to reward the loyalty of the beneficiaries to the companies of the Group by providing an incentive for them to increase their commitment to improving the Company’s performance.
The Annual General Meeting will also be called upon to adopt a resolution for the renewal of the Board of Statutory Auditors.
The Board of Directors also voted to put before the extraordinary session of the Annual General Meeting of the Shareholders a proposal to amend Article 17 of the Company Bylaws in order to eliminate the clause stipulating that the list filed for the election of the members of the Board of Directors by Shareholders representing less than 20% of the share capital may not contain more than three candidates.
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The executive responsible for the preparation of the Company’s financial statements, Yann Albrand, 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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