Sogefi (CIR group): revenues up by 4.6% in H1 2016, net profit € 8.3 m

Board of Directors approves results as of June 30 2016
Revenues up by 4.6% in H1 2016 at € 798.6m
EBITDA up by 19.6% at € 74.7m
Net result at € 8.3m (€ 9.7m in H1 2015)
Net debt at € 326.2m (€ 348.0m at 30/6/2015)

Milan, July 25 2016 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the Interim Financial Report of the group for the first half of the year 2016.

Laurent Hebenstreit, Chief Executive Officer of Sogefi, made the following statement:
“The EBITDA improvement reported in the first half of 2016, thanks to higher revenues, to a slight improvement in gross margin and to a slight reduction of indirect expense, confirms our commitment to improving the company’s profitability and cash flow”.

Revenues up by 4.6% in H1 2016

In the first half of 2016, Sogefi reported revenues of € 798.6 million, up 4.6% compared to € 763.7 million in H1 2015 (+10.3% at the same exchange rates).

Revenues by geographical area: strong growth in North America and Asia

In Europe revenues grew by 1.8% compared to H1 2015 and business continued to develop vigorously in North America (+24.6%) and in Asia (+25.4%). In South America, sales in euro declined by 18.3% because of the depreciation of the local currencies and the persisting market crisis. Excluding South America, growth was 7.6%. The contribution of non-European countries to total revenues increased to 36.5% from 34.7% in the first half of 2015 thanks to the positive performance of North America and Asia. In particular, the contribution of the North American and Asian areas rose to 26.9% from 22.4% in H1 2015, while the percentage of the South American region declined from 11.8% to 9.2%.

Revenues by Business Unit: significant increase in the Air & Cooling segment

Revenue growth in the first six months of 2016 came largely from the Air & Cooling segment, which reported a 17.4% increase. Revenues of the Suspensions segment grew by 0.8%, with a 4.7% increase excluding South America. Revenues of the Filtration Business Unit were down by 1.2%, but experienced a 3.2% rise excluding South America.

Operating results and net income

was € 74.7 million, up by 19.6% compared to the figure reported in the same period of 2015 (€ 62.4 million). The increase was due to revenue growth and to the improvement in profitability which rose to 9.3% from 8.2% in H1 2015, thanks to a slight improvement in the contribution margin and a slight reduction of indirect costs. In particular, the ratio of total labour costs to Group revenues declined to 21.7% from the previous 22.6%. EBITDA increased in all regions with the exception of South America. Regarding the risks resulting from the claims made against the company Systèmes Moteurs Sas, in the first half of 2016, there were no developments in the “product guarantee” issue that warrented a change in the provision made at December 31 2015. As for recovery from the company Dayco, vendor of Systèmes Moteurs Sas, in May the arbitration process ended with Dayco being sentenced to pay Sogefi € 9.4 million for the claims already settled. However, this decision reduced the amount expected to be recovered by Sogefi by € 4 million, with a negative impact of the same amount on the accounts of the first half of 2016.

EBIT increased by 20.1% to € 36.6 million compared to the first six months of 2015, after higher amortization and write-downs of fixed assets. Financial expense increase to € 16.8 million, versus € 14.7 million in the corresponding period of 2015; this increase is mainly due to the proceeds posted in H1 2015 for the fair value measurement of the derivative embedded in the convertible bond.

The net result was a positive € 8.3 million, versus € 9.7 million in the first half of 2015 as an effect of higher income taxes.

Net debt Net financial debt stood at € 326.2 million at June 30 2016, broadly in line with December 31 2015 (€ 322.3 million) and showing an improvement of € 21.8 million on the figure at June 30 2015 (€ 348 million).

Free Cash Flow in first half 2016 amounted to € -0.2 million, compared to € -51.9 million in H1 2015. The improvement is attributable for approximately € 19 million to lower disbursements of a non-ordinary nature for product guarantees and restructuring and, for the remaining part, to a better performance in operating cash flow and to more factoring.

Shareholders’ equity

At June 30 2016 shareholders’ equity excluding minority interests amounted to € 168.2 million (€ 170.8 million at December 31 2015).

Employees The Sogefi group had 6,795 employees at June 30 2016 compared to 6,702 at December 31 2015.

Results of the parent company Sogefi S.p.A.

In the first half of the year the parent company Sogefi S.p.A. reported net income of € 13.8 million, up from € 9.1 million in the same period of 2015. The increase came mainly from higher dividend flows from the subsidiaries (€ 6.7 million) partially offset by higher net financial expense (€ 2.5 million).

Net debt stood at € 307.6 million at June 30 2016 (€ 305.8 million at December 31 2015).

The shareholders’ equity of the company amounted to € 183.6 million at June 30 2016 (€ 167.5 million at December 31 2015).

Outlook for the year

For the whole of 2016 Sogefi expects a positive contribution from North America, China and India. In Europe, in line with what was observed in the first half, growth could be more limited than in 2015, while in the South American market conditions remain difficult.

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