Milan, 23 April 2009 – The Board of Directors of Sogefi SpA, chaired by Mr. Rodolfo De Benedetti, met today in Milan to examine the consolidated group results for the first quarter of 2009.
Business trends
Following an already critical situation in the last quarter of 2008, Q1 2009 saw a further contraction in world vehicle production due to a slump in consumer demand and the attempts by car makers to reduce the backlog of unsold vehicles at dealerships.
The incentives to buy new and cleaner vehicles announced by many governments focused mainly on the auto segment, and took effect only from the second half of February. Without similar support sales and output of industrial vehicles collapsed.
This situation hit Sogefi group revenues and margins with a sharp contraction in sales of original equipment, but also in the smaller spare parts business in Europe where dealers are having difficulty obtaining finance.
In this extraordinarily difficult climate, the company has taken further steps to combat the effects of the crisis throughout the sector. In particular:
Structural reduction of all major costs, variable and fixed, assisted by the drop in commodity prices. Compared with Q1 2008, structural costs have been cut by 17.1% and the headcount by14.2%.
Acceleration of existing plans to rationalise the manufacturing structure in view of the dramatic scenario. We therefore plan to close one plant in France and cease production of suspension components in the United States by the end of 2009.
Intensified research and innovation efforts, particularly in suspensions in composite materials, and business development in Asia, especially India, in the filtration segment.
Consolidated results
In the period under examination Sogefi group’s consolidated revenues came to Euro 174.9 million, down 35.6% from 271.7 million in the first quarter of 2008. Revenues for the Filtration Division amounted to Euro 90.2 million (32.2%), while those of the Suspension Components Division came to 84.9 million (-39%).
Sales fell 37.5% in Europe (Euro 138.2 million against the previous 221.2 million) and by 27.8% in LatinAmerica (Euro 29.7 million compared with 41.1 million in Q1 2008). The worst performance was seen in Europe in suspension components for industrial vehicles (-44.4%) and precision springs (-45.6%).
Beginning in the final months of 2008 the group has taken extraordinary steps to reduce all the main cost factors, variable and fixed, and contain the impact of the rapid fall in revenues on earnings. Comparison between the first quarters of 2009 and 2008 reveals a reduction in the workforce (including part-time workers but excluding those covered by flexible employment schemes, such as ordinary and extraordinary “cassa integrazione” in Italy or similar arrangements in other countries) by 977 units (-14.2%) and a cut in structural costs of Euro 11.5 million (-17.1%), besides the favourable trend in the cost of raw materials.
Profits for the period nevertheless fell sharply due to lower sales volumes:
Consolidated EBITDA amounted to Euro 2.2 million (29.1 million in Q1 2008). Euro 2.3 million were generated by the Filtration Division and Euro 0.5 million by the Suspension Components Division.
Consolidated EBIT was a negative Euro 8.4 million, against a positive result of 17.9 million.
Result before taxes and minority interests came to a negative Euro 11.6 million, compared with a profit of 15.7 million in 2008.
The consolidated net result was also negative by Euro 8.8 million against a profit of 9 million in first three months of last year.
Despite the difficult economic climate, we were able to avoid a worsening of the net financial position, so that net indebtedness at 31 March 2009 remained substantially in line with the figure for year-end 2008 (Euro 260.9 million compared with 257.2 million at 31 December 2008).
Total consolidated shareholders’ equity including minority interests amounted to Euro 173 million at the end of the quarter (178.3 million at the end of 2008), while consolidated net equity for the group was Euro 155.5 million (160.9 million at 31 December 2008).
Outlook for the whole of FY 2009
While we can expect some pickup in demand over the coming months as the new vehicle purchase incentives take effect, it is clear that sales for the whole year will be significantly lower than those of 2008.
As mentioned above, the group has taken further steps to contain costs as far as possible, bringing them into line with the new revenue levels, and to speed up planned rationalisation measures at its production plants. However, lower revenues and the extraordinary reorganisation costs make the forecast of a net loss for the financial year unavoidable.
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.
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