Thanks to the recovery of production levels in the car industry and to cost cutting actions taken in 2009, the company reports a rise in all its economic indicators
Revenues up by 22%, profitability rises significantly with a return to profit compared to the loss of first quarter 2009
Development in emerging markets continues: significant rise in sales in South America, China and India
Consolidated results of Q1 2010
· Revenues: € 214 million (+22.4% from € 174.9 million in Q1 2009
· Operating result: € 12.2 million (loss of € 3.9 million in Q1 2009
· EBITDA: € 20.6 million (€ 2.2 million in Q1 2009)
· Net result: a positive € 3.8 million (a negative € 8.8 million in Q1 2009)
· Net debt: € 188.4 million (€ 170.2 million at 12/31/2009)
Milan, April 20 2010 – The Board of Directors of Sogefi SpA met today in Milan under the chairmanship of Rodolfo De Benedetti, to examine the consolidated results of the group in the first quarter of 2010.
Performance of operations
The first quarter of 2010 confirmed the trend of gradual recovery in the production levels of the car industry in the markets most hit by the crisis that began in the last part of 2008 (Europe, United States and Japan). The recovery in demand for cars, underpinned by the state incentives adopted by many countries, and the end of the drastic stock reducing policy by manufacturers led to a growth in production volumes, with positive repercussions on the supply system. The markets that had reported growth in volumes in 2009 (Brazil, India, China) confirmed this positive trend even in the early part of this year thanks to growing internal demand.
By contrast, the performance of production in the industrial vehicle sector in Europe has remained particularly weak and was thus substantially unchanged from a year ago, while the aftermarket confirmed the levels of the second half of 2009.
Overall growth in production levels in the automotive sector and the drastic cost-cutting actions taken by Sogefi in 2009 enabled the company to achieve a significant rise in all its main economic indicators in the first quarter of 2010 compared to the first three months of 2009 and a return to profit.
Consolidated results
The consolidated revenues of the Sogefi group in the first quarter of 2010 benefited from the evolution of the market, reporting growth of 22.4% (214 million euro up from 174.9 million euro in the first quarter of 2009). The Filter Division reported revenues of 106.6 million euro (+18.2% compared to 90.2 million euro in the first quarter of 2009), while the Suspension Components Division, despite the negative performance of the industrial vehicle and precision spring sectors, closed the first quarter with sales up by 27.1% to 108 million euro (84.9 million euro in 2009). As for the main markets in which the group operates, sales rose by 15.3% in Europe (159.3 million euro up from 138.2 million euro in first quarter 2009), by 53.2% in South America (45.5 million euro up from 29.7 million euro in 2009) thanks partly to the revaluation of the Brazilian real, by 179.9% in China and by 40.1% in India. The only downturn was that recorded in the North American market, which in 2009 had benefited from revenues from the local production of suspension components, which was discontinued in July of last year. After the drastic reduction in structure costs achieved by the company in 2009, the rise in revenues led to a significant recovery of profitability at all levels compared to the first three months of the previous year. With costs for raw materials remaining substantially unchanged since the end of 2009, the consolidated contribution margin came in at 71 million euro (33.2% of sales), up from 51.8 million (29.6% of sales) in the first quarter of 2009. The consolidated operating result was 12.2 million euro (5.7% of sales), versus a negative 3.9 million euro in the same period of last year. The impact of the cost of materials on sales declined from 46.7% to 44.2%, while that of labour costs fell from 29.2% to 26.6%. In the absence of any significant restructuring charges (which totalled 1.3 million euro in the first quarter of 2009), earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings before interest and taxes (EBIT) also improved considerably. Consolidated EBITDA came in at 20.6 million euro (9.6% of sales), while in the same period of 2009 it was 2.2 million (1.3% of sales). EBIT was 9.5 million euro (4.5% of sales), compared to a negative figure of 8.4 million euro in the first quarter of 2009. The significant reduction in the average debt for the period and the decline in market rates compared to the first quarter of 2009 caused financial expense to decrease to 2.5 million euro (3.2 million euro in the previous period), with a positive impact on the result before taxes and minority interests (a positive 7 million euro versus a negative figure of 11.6 million euro in first quarter 2009). The consolidated net result also turned positive, coming in at 3.8 million euro (1.8% of sales), after a loss of 8.8 million euro in the first quarter of 2009. At March 31 2010 net debt stood at 188.4 million euro (170.2 million euro at December 31 2009 and 260.9 million euro at March 31 2009). The policies of selling receivables on a non-recourse basis and lengthening the payment terms of suppliers are continuing but the latter to a lesser extent than in previous quarters. Consolidated equity including minority interests stood at 190.5 million euro at March 31 2010 (182.2 million at December 31 2009). At March 31 2010 the consolidated equity of the group amounted to 174.8 million euro (166.8 million at the end of 2009). Outlook for the whole year For 2010 the company confirms its forecast of higher revenues and earnings compared to the previous year and a return to profit. The results will benefit from a slight increase in car production levels in Europe, where an absence of the inventory reduction that weighed on volumes in 2009 should offset the decline in sales due to the end of incentives in many countries. It is also expected that the good start to the year will be confirmed in the BIC markets (Brazil, India and China) and in the aftermarket. In the next few months the company will also be taking further action to restructure its production facilities, involving significantly lower costs than those of 2009. If the current tensions in commodity prices persist, price rises will have to be passed rapidly on to selling prices. Any impact of this would however only affect the last part of the year.
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