SOGEFI GROUP: RECORD SALES AND PROFITS IN A DIFFICULT YEAR FOR THE STEEL PRICE INCREASE

Consolidated results for fiscal year 2004

Turnover € 966,1 million (+ 7%)
EBITDA € 138 million (+ 6%)
EBIT € 85,7 million (+ 9%)
Net Profit € 37,9 million (+ 33,1%)
Net Borrowing € 190,5 million (- 11%)

The Board of Directors will submit to the approval of the Shareholders’ Meeting, scheduled for 19 April 2005, the distribution of a dividend per share of € 0,16 (+ 10%)

The Board of Directors of SOGEFI S.p.A. met today in Milan under the Chairmanship of Mr. Carlo De Benedetti and examined the proposed Statutory Financial Statements and the consolidated accounts of the Group for fiscal year 2004.

THE GROUP

In 2004 the SOGEFI Group achieved the best results in its 25 years of activity, in spite of strong tensions in raw material prices. Such negative impact was successfully offset through an increase in sales volumes for the main product lines, a partial charge of higher costs on prices and a further reduction in structure costs after the industrial and corporate reorganization already carried out.

In an international vehicle market on the road to recovery, the SOGEFI Group confirmed its ability to grow – in particular in the original equipment sector – achieving consolidated sales of € 966.1 million, 7.1% up on the € 902,4 million of 2003. Particularly positive profits were attained in the South American area, with an improvement in sales of 34%.

Consolidated gross operating margin (EBITDA) was of € 138 million (14.3% on sales), growing by 6.1% from € 130.1 million (14.4% on sales) in the previous fiscal year. This result is the more noticeable because it was achieved in a period with increases in steel prices exceeding 30% on a yearly basis.

Consolidated net operating income (EBIT) progressed by 9%, arriving at € 85.7 million (8.9% on sales) compared with € 78.6 (8.7% on sales) in 2003.

Consolidated income before taxes in 2004 was of € 70.3 million, with a significant increase (+29.1%) on € 54.4 million in the previous period. This result includes a capital gain worth € 7.6 million due to the disposal of industrial buildings, of a capital gain of € 1.4 million for the selling of the investment in the property company Immobiliare REGIS S.r.l., as well as charges and provisions totalling € 12.9 million for industrial reorganization costs to bear in 2005-2006.

Consolidated net income in 2004 was of € 37.9 million compared with € 28.5 million in 2003, posting a rise of 33.1% (percentage on sales grew from 3.2% to 3.9%). This figure benefited from a lower proportion of tax charges following corporate reorganization processes and the inclusion of the Italian companies of the SOGEFI Group in the CIR Group’s consolidated tax return.

Group’s net financial indebtedness decreased to € 190.5 million compared with € 213.4 million at the end of the period 2003 (-10.8%).

The bond of € 80 million issued by the Parent Company in December 2000 will expire in December 2005.

In 2004 consolidated net equity improved compared with 2003, reaching at the end of the period € 222.1 million (after dividend distribution for € 15.8 million) versus € 198.2 at 31 December 2003.

Return On Investment (ROI) grew to 20.2% (in 2003 it was 18.3%). Also Return On Equity (ROE) progressed from 15.1% in 2003 to 18.4% in 2004.

Filtration Division

Thanks to a good growth in the original equipment sales, in 2004 the filtration division achieved sales for € 514.6 million, rising by 3.8% compared with € 496 million in 2003.

Consolidated gross operating margin (EBITDA) stood at € 77.4 million (15% on sales), while consolidated net operating income (EBIT) was of € 56 million (10.9% on sales). In 2003 figures were respectively € 71.6 million (14.4% on sales) and € 49.4 million (10% on sales). The noteworthy improvement in profitability was determined by a limited influence of hot and cold rolled steel prices on the total cost of product and by an outstanding performance of South American companies.

Suspension Components Division

In 2004 the Division reported a large rise in sales (+11.6%), yet only partly improved economic results due to the negative impact of steel prices increase.

Sales amounted to € 451.5 million, compared with € 404.8 in 2003, following an improvement of market shares for both cars and industrial vehicles on all the markets except for the Chinese one, that slowed down a lot in the second part of the period.

The partial adjustment of selling prices to the evolving costs allowed a slight increase of operating results.

Consolidated gross operating margin (EBITDA) was of € 63.7 million (14.1% of sales) versus € 61.5 million (15.2% on sales) in 2003. Consolidated net operating income (EBIT) amounted to € 37.6 million (8.3% on sales) compared with € 37.2 million (9.2% on sales) in the previous period.

THE PARENT COMPANY

Also the Parent Company SOGEFI S.p.A. posted a significant rise in its net income, up from € 17.1 million in 2003 to € 22.1 million (+29.4%) in 2004. Consequently, shareholders’ equity rose from € 161.3 million at 31 December 2003 to € 170.2 million at the end of 2004, after a dividend distribution of € 15.8 million. The improved result was determined by a higher dividend collection from subsidiaries.

The Board of Directors of SOGEFI S.p.A. will submit to the approval of the Shareholders’ Meeting, scheduled for 19 April 2005, first call, and for the following day, second call, the proposal of a dividend per share of € 0.160 (€ 0.145 in 2004). Payment will be available from 28 April 2005 against coupon n° 25 that can be detached on 25 April 2005.

The Board of Directors will also submit for the approval of next Shareholders’ Meeting:

in ordinary session

the proposal of withdrawal and renewal of the proxy in favour of the Board, for a period of 18 months, for the purchase of a maximum of n°10 million own shares, at a minimum price per share of € 0.52 and maximum price per share of € 5.5, with a possible maximum expense of € 55 million.
The main reasons for the renewal of the authorization are, on the one hand, the possibility to invest in company’s shares at prices lower than their actual “value”, based on the real economic consistency of net equity and company’s income perspectives, and on the other hand the opportunity to reduce the average cost of company’s capital.

in extraordinary session

a proposal of renewal of the proxy in favour of the Board to carry out capital share increases up to an amount of € 250 million, to augment capital share in favour of employees up to € 6.2 million and issue convertible bonds in compliance with legal limits.

Milan, 28 February 2005

CONTACTS

PRESS OFFICE
Beppe Pescetto
Francesca Sagramoso
Tel.:+39 02 722701

INVESTOR RELATIONS
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www.sogefi.it