Thanks to the first signs of recovery in demand and the measures taken by management, the company closed the quarter with net profit of € 2 million
Operating result rises again versus previous quarters (€ 14.5 million in Q3 compared with 11.9 million in Q2 and -3.9 million in Q1), net debt continues to contract
Consolidated results as of 30 September 2009
- Revenues: € 573.8 million (-29.4% from € 813.3 million in 9M 2008)
Operating result: € 22.4 million (€ 79.4 million in 9M 2008)
EBITDA: € 32.2 million (€ 91.2 million in 9M 2008)
Net result: a loss of € 8.6 million (earnings of € 29.6 million in 9M 2008)
Net debt: € 202.7 million (€ 212.6 million at 30 June 2009)
Performance of operations
Over the period July-September 2009 Sogefi Group saw a significant improvement in the main business indicators compared with the previous two quarters, confirming the trend already in evidence on June 30. The first signs of strengthening demand and the positive effects of action taken by company management at the outset of the crisis have enabled Sogefi to close the third quarter with a positive net result of Euro 2 million, compared with losses in the previous two quarters. Outside Europe the quarter saw a healthy recovery of business in Brazil and continued growth in China and India, while the situation remains unfavourable in North America. Over the period, Sogefi maintained its four-pronged attack to combat the crisis in the automobile industry through the reduction of structural costs, further rationalisation of production facilities, improvement in the net financial position and expansion of initiatives in emerging markets (Brazil, China, India).
Business in the first nine months of 2009 was hit hard by the fall in world car production. Government car scrapping schemes in major markets have still not produced a corresponding rise in production in Europe, due to continued efforts by big manufacturers to draw down their inventory backlogs. Furthermore the production mix follows the trend in demand originated by incentives and is largely directed at economy vehicles. The spare parts market has also been affected, though less dramatically, primarily owing to financial tensions in the distribution chain. In Europe demand for industrial vehicles and earth moving machinery remains sluggish, as does the precision springs segment, though aftermarket sales have begun to pick up.
Consolidated results
Consolidated revenues at 30 September 2009 stood at Euro 573.8 million, down 29.4% from the 813.3 million for the same period of 2008 (-27.4% at the same exchange rates). Q3 revenues (Euro 199.3 million) were down 22.5% against the previous-year period, but the slide was much less steep than in the first and second quarters, 35.6% and 29.8% respectively.
Sales for the Suspension Components Division, mainly directed towards original equipment and industrial vehicles, fell by 35.8% on the previous period, recording revenues of Euro 268.7 million (418.4 million in 2008). The Filtration Division, which primarily serves the spare parts market, saw its volumes decline by 22.7% to Euro 306.4 million from 396.5 million in 2008.
In Europe revenues fell by 31.8% (Euro 440.9 million compared with 646.2 million in 2008), while in Latin America the drop was only 21.1% (110.1 million against 139.6 million in 2008).
Group profitability have been affected by the sharp fall-off in revenues. To counter the situation the company has taken drastic measures to contain all cost factors through the following actions:
· cheaper prices paid for key raw materials, while maintaining sales prices substantially unchanged. This has cut the impact of material costs on revenues by 1% compared with the first nine months of 2008;
· overall reduction in labour costs of Euro 39.4 million (-20.7%) on the previous-year period achieved by cutting the workforce (624 fewer employees).
· structural costs cut by 31.8 million (-16.4%), of which 14.2 million for personnel, compared with the first nine months of 2008.
Operating profit for the first nine months of 2009 comes to Euro 22.4 million (3.9% of revenues), of which 14.5 million produced in the third quarter, compared with Euro 79.4 million (9.8%) at 30 September 2008. In particular the steady improvement in the ratio of operating result to sales over the three quarters of 2009 is: -2.2% in Q1, +6% in Q2 and +7.3% in Q3. This recovery in profitability is proof of the effectiveness of the past and ongoing efforts of management.
Gross operating margin (EBITDA) for the period, after non-recurring restructuring charges of Euro 12.6 million (+42.5% from 8.8 million in first nine months of 2008), was a positive 32.2 million (5.6% of revenues), down 91.2 million (11.2%) from 30 September 2008. Once again it is worth highlighting the improvement in results in the third quarter, when EBITDA reached 9% of revenues, close to the 11.8% of the previous-year period. In the first nine months EBIT turned positive at Euro 0.7 million from 58.6 million at 30 September 2008.
Financial expenses stood at Euro 8.1 million compared with 9.5 million in 2008 due to the reduction in net indebtedness. Consolidated net result was negative for Euro 8.6 million over the whole nine months, though the third quarter generated a positive 2 million. Over the first nine months of 2008 net profits came to Euro 29.6 million. Consolidated shareholders’ equity at 30 September 2009, including minority interests, came to Euro 176.8 million (178.3 million at 31 December 2008).
Efforts continue to reduce the debt level. Net indebtedness at 30 September 2009 stood at Euro 202.7 million, down from 212.6 million at 30 June and 257.2 million at 31 December 2008.
Outlook for the whole of 2009
In the last quarter the profitability recovery shown in the second and third quarters is likely to continue, thanks to further strengthening of demand and the effects of management strategy. However, expectations of stronger results in the last quarter are insufficient to alter our forecast of an overall loss for the financial year, bearing in mind the restructuring costs.
The manager responsible for preparing the company’s financial statements, Giancarlo Coppa, declares under comma 2 of Article 154-(ii) of the Consolidated Law on Finance that the information presented in this press release corresponds to the results documented in the company accounts and balance sheets.
