Sogefi: results for first half 2010 published

Board of Directors approves interim report as of June 30 2010


The market rally and the cost containment actions taken in the past 18 months have allowed a significant recovery in profitability: operating result quadruples and EBITDA trebles from the difficult first half of 2009  

The company returns to profit in the first half from a loss of over 10 million in 2009
Business is growing in all markets, especially South America, China and India

Consolidated results of the first half of 2010

Revenues: € 457.6 million (+22.2% from € 374.5 million in H1 2009)
Operating income: € 32 million (€ 8 million in H1 2009)
EBITDA: € 45.3 million (€ 14.2 million in H1 2009)
Net result: a positive € 9.9 million (a negative € 10.6 million in H1 2009)
Net debt: € 182.5 million (€ 188.4 million at March 31 2010)

Milan, July 22 2010 – The Board of Directors of Sogefi SpA, which met today under the chairmanship of Rodolfo De Benedetti, has examined and approved the semi-annual financial report as of June 30 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 half of 2010 was characterized by a positive evolution in world vehicle production, thanks to the recovery of the business in the mature markets, which in 2009 had suffered sharp downturns (Europe, Nafta and Japan), and to the further growth of volumes in areas with developing economies such as China, India and Brazil. The improvement in the market was due essentially to two factors: the state incentives adopted by many countries but which are gradually being phased out, and the end of destocking of unsold vehicles which had begun in the last part of 2008. However, in the absence of any incentives, difficulties remain in the industrial vehicle and earth moving sectors, which are nonetheless starting to show the first signs of recovery.

Thanks to the recovery of the market and the cost containment actions taken in the past 18 months, the Sogefi group closed the first half with a strong rise in all its economic indicators compared to the same period of last year and with a return to net profit. In terms of margin in particular, in the first half Sogefi succeeded in quadrupling its operating income and more than trebling its EBITDA compared to the first half of 2009, which was the worst moment of the recent crisis in the sector.

Consolidated results

The consolidated revenues of the first half came in at 457.6 million euro, up by 22.2% from 374.5 million in the same period of 2009. As well as to the growth of the business, this result was also due to the favourable performance of exchange rates following the rise of the main non-European currencies and of the pound against the euro. At the same exchange rates as those of the previous year, revenues would have been 444.4 million euro, up by 18.7%.  

Sales grew by 13.9% in Europe (+8.8% in filters, +19.3% in suspension components) and by 51.1% in the South American market, which also benefited from the rise in value of the Brazilian real and which in the first half of 2010 represented 22.3% of the total revenues of the Sogefi group. Strong revenue growth was also reported in China (+173%) and in India (+64.3%), where the joint venture set up at the end of 2008 is operating successfully in the filter sector. In the United States, after suspension component production ceased in July 2009, the rapid conversion of the local company to the production of filter systems enabled the company to achieve a 10.7% growth in sales.

The Filter Division increased its revenues to 231.5 million euro (+17.2%), while the Suspension Components Division grew by 27.9% compared to the first half of 2009 with sales revenues of 227.3 million euro.

The positive performance of revenues together with management taking care to contain all cost factors, made it possible for the group to obtain significant growth in its margins compared to the first half of 2009.

The consolidated operating result came in at 32 million euro (7% of revenues), showing strong growth from 8 million euro (2.1% of revenues) in 2009. Non-recurring costs for reorganization amounted to 4.3 million euro, down from 9.9 million euro in 2009. EBITDA was 45.3 million euro (9.9% of revenues), versus 14.2 million euro in the first half of last year (3.8% of revenues). EBIT came to 22.8 million euro (5% of revenues) compared to a negative figure of 7.1 million euro in 2009.

As a result of the reduction of the average net debt in the period, financial expense declined to 5.1 million euro (5.7 million euro in the first half of 2009).

The significant recovery of profitability reported by Sogefi in the first half of the year enabled the group to return to profit, posting net income of 9.9 million euro, compared to the loss of 10.6 million euro in the first half of 2009.

Consolidated shareholders’ equity
including minority interests amounted to 206.8 million euro at June 30 2010 and was up substantially compared to the figure at June 30 2009 (174.8 million euro) and at December 31 2009 (182.2 million euro).

Consolidated net debt stood at 182.5 million euro at June 30 2010, lower than the figure at June 30 2009 (212.6 million euro) and that at March 31 2010 (188.4 million euro). The debt figure was, however, up slightly compared to the figure at December 31 2009 (170.2 million euro) on account of the rise in working capital due to greater business activity.

Result of the parent company of the group

In the first half of the year the parent company Sogefi SpA reported net income of 8.4 million euro. The change compared to the figure for the first half of 2009 (32.8 million euro) was due mainly to the lower flow of dividends from the subsidiaries.

Outlook for the whole year

In the second half of the year Sogefi should achieve good levels of operating profitability and confirm for the whole year the significant improvement of all its economic indicators compared to 2009. The extent of the improvement will also depend on the performance of the European original equipment market, which is likely to show a contraction in demand when the incentive packages have expired in all the main countries except France, and on the prices of certain commodities, which may rise in the later part of the year.

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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