Sogefi: in first nine months revenues up by 20% and margins double. Net income 13.5 million euro compared to loss in 2009.

Board of Directors approves results as of September 30 2010


Significant growth in revenues and profitability reported by the group in the first six months of the year continues in the third quarter too thanks to the recovery in world production levels and the cost-cutting actions which began at  the end of 2008     The company confirms its earnings in the first nine months compared to a negative result of 8.6 million euro in 2009.

Business grows in all markets, especially emerging markets,
and in all business sectors

Consolidated results of the first nine months of 2010

Revenues: € 687 million (+19.7% from € 573.8 million in 9M 2009)
Operating income: € 50.5 million (from € 22.4 million in 9M 2009
EBITDA: € 64.5 million (from € 32.2 million in 9M 2009)
Net result: € 13.5 million (negative for € 8.6 million in 9M 2009)
Net debt: € 182.6 million (€ 182.5 million at June 30 2010)

Milan, October 19 2010 – 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 2010.

Sogefi, the automotive components company of the CIR group, is one of the main world operators in engine filter systems and suspension components.

Performance of operations

The first nine months of 2010 saw a gradual recovery in world vehicle production levels compared to 2009 thanks to the continuing growth in the emerging markets (especially China, India and South America) and to the recovery of demand in the mature markets (Europe, North America and Japan). In Europe in particular new vehicle production levels were good in the third quarter too as destocking phenomena came to an end, offsetting the decline in sales caused by the end of incentives. Even in the industrial vehicle sector there were objective signs of a recovery in production.

The upturn in the market and the cost-cutting actions taken from the end of 2008 enabled the Sogefi group to obtain a significant rise in revenues and profitability in the first nine months of 2010 compared to the same period of 2009, as well as a return to profit.

In the third quarter in particular, the group confirmed the rising trend in revenues seen in the first half of the year thanks mainly to its growing presence in emerging markets, and it consolidated the levels of operating profitability reported in the previous quarter, benefiting also from further organizational action undertaken in the period.

Moreover, during the third quarter the group further strengthened its presence in markets with the greatest growth potential, finalizing in the suspension components sector too a joint-venture in India after the one signed at the end of 2008 in the filter sector.

Consolidated results

The consolidated revenues of the first nine months of 2010 came to 687 million euro and were up by 19.7% on the same period of 2009. The greatest rise was seen in the Suspension Components Division (+26.2%), while the Filter Division grew by 14%. In the third quarter revenues rose by 15.1%. This favourable trend was seen in the revenues of all segments of the market in which the group operates: the original equipment market (OEM), with a rise of 28.1%, the independent aftermarket (IAM) and the original equipment spares market (OES), both of which rose by 6.5%. The rise in sales affected all the geographical areas in which Sogefi is present: Europe (+11.3%), North America (+12.6%), South America (+48.1%), China (+106%) and India (+62.8%).

The positive performance of revenues, in the presence of overall stability in selling prices and the costs of the main commodities (the ratio of material costs to revenues declined from 45.7% in the first nine months of 2009 to 45.5% in 2010), associated with further organizational action taken by Sogefi in the third quarter (the restructuring of the Dutch company that markets filters and the start of the procedure for closing the French filter plant at Louvigné), enabled the group to achieve a strong increase in its profitability levels. The overall cost of reorganization came to 10.5 million euro compared to 12.6 million in the same period of 2009,  which led to a reduction in the ratio of labour costs to revenues to 24.9% from the previous figure of 26.3%.

The operating result for the period  came in at 50.5 million euro and more than doubled compared to the figure for the first nine months of 2009 (22.4 million euro). The ratio to sales rose to 7.4% from 3.9% reported in the same period of 2009. Particularly significant was the ratio to sales in the third quarter (8.1%), which confirmed the levels reached in the second quarter despite the rising trend of the prices of raw materials which became evident between July and September.

, totalling 64.5 million euro (9.4% of revenues), doubled from the figure for the same period of 2009 (32.2 million euro, equal to 5.6% of revenues). EBIT came in at 31.3 million euro (4.6% of revenues), up from 0.7 million euro (0.1% of revenues). In the third quarter restructuring costs impacted EBITDA and EBIT for 6.2 million euro.

The result before taxes and minority interests, which at the end of September 2009 had been a negative 7.3 million euro, turned positive again with net income of 23.8 million euro, partly thanks also to a reduction in financial expense, which declined to 7.6 million euro from the previous figure of 8.1 million.

The net result turned positive with 13.5 million euro compared to a negative figure of  8.6 million euro in the first nine months of 2009.

Net financial debt
came to 182.6 million euro at September 30 2010 and was substantially unchanged from the figure at June 30 2010 (182.5 million euro) but was significantly lower than the figure at September 30 2009  (202.7 million euro). At December 31 2009 the net debt of the group stood at 170.2 million euro.

At September 30 2010 total equity, including minority interests, amounted to 202.6 million euro, which was higher than at September 30 2009 (176.8 million euro) and at December 31 2009 (182.2 million euro).

Outlook for the whole year

In the later part of the year the levels of business volumes recorded in the third quarter should be confirmed while no significant restructuring charges are expected.

Therefore, although there is some tension in certain commodities, the company should see a further improvement in its net result compared to the first nine months, unless there are any exceptional events not foreseeable at present.

Amendment of the Company Bylaws

With a deed drawn up by a Notary Public, the Board of Directors voted to amend Articles  9, 10, 12, 13, 17, 26 and 27 of the Company Bylaws in order to bring them into line with the mandatory new regulations contained in D.Lgs. 27/2010. The most significant changes made concerned the following: filing the lists of candidates for the position of Director and Statutory Auditor; calling shareholders’ meetings; speaking and voting rights at shareholders’ meetings.

Approval of the procedure for related party transactions

In compliance with the rules contained in Consob Resolution no. 17221, the Board of Directors adopted the  “Procedure for related party transactions” and set up the “Committee for related party transactions” (the members of which are the same as the members of the Internal Control Committee).

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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