Board of Directors approves results of year ended December 31 2010
SOGEFI: REVENUES OF 925 MILLION (+18.4%), HIGHER MARGINS,
NET INCOME RISES TO 18.8 MILLION FROM A LOSS OF 7.6 MILLION IN 2009
After a difficult year in 2009 due to the crisis in the car sector, the company has reported growth in all its markets and business segments.
Significant rise in earnings in emerging countries: the Mercosur area becomes the top market in terms of sales
Operating result doubles, debt continues to be reduced
Considering the result for the period and the financial solidity of the company, the Board of Directors will propose that the Shareholders Meeting distribute a dividend of 0.13 euro per share
Consolidated results for financial year 2010
Revenues: € 924.7 million (+18.4% from € 781 million in 2009)
Operating income: € 67.5 million (+100.5% from € 33.7 million in 2009)
EBITDA: € 86.7 million (+83.6% from € 47.2 million in 2009)
Net income: € 18.8 million (net loss of € 7.6 million in 2009)
Net debt: € 164.9 million (€ 170.2 million at 31/12/2009)
Milan, February 24 2011 – The Board of Directors of Sogefi SpA, which met today under the chairmanship of Rodolfo De Benedetti, has approved the proposed statutory financial statements and the consolidated financial statements for financial year 2010.
Sogefi, the automotive components company of the CIR group, is one of the main world producers in the field of filters and flexible suspension components.
Performance of operations
In 2010, its thirtieth year of business, the Sogefi group reported a significant rise in all its main performance indicators and a return to profit after the losses of 2009. These results were achieved thanks to the cost-cutting action taken by the company in the last two years together with the recovery in the production of motor vehicles in the main world markets after the sharp contraction in 2009.
In Europe, the significant reduction in vehicle registrations in the period April-December due to the end of Government incentives caused the annual figure to decline (-5.5% on 2009). However new vehicle production rose compared to the previous year, both because destocking had come to an end and because of the rise in demand from markets outside Europe recorded by German manufacturers. After the deepest crisis in its history, the North American market showed signs of recovery while growth continued in South America (+15%). In 2010 China became the top world market for the production and sale of cars with over 17 million vehicles sold (+33% on 2009). India continues to show strong growth (+19% on average over the last five years). As far as the industrial vehicle sector is concerned, the second half of the year saw a rise in production levels but was still nowhere near the record volumes of 2007.
Consolidated results
The performance of Sogefi’s business reflected the trends of the various markets in which the group is present. Revenues, totalling 924.7 million euro, rose by 18.4% compared to 2009 (781 million euro). The recovery was particularly significant in the original equipment sector, which accounted for 66% of total revenues.
Just under 30% of the group’s consolidated revenues came from non-European markets. In 2010 revenues recorded in Mercosur (219.4 million euro) for the first time overtook those of France (207.4 million euro), which had for years been Sogefi’s number one market. Revenues generated in China and India almost doubled compared to 2009, while sales in the United States rose by approximately 25%.
The operating result, which came in at 67.5 million euro (7.3% of sales revenues) doubled from the figure of 33.7 million euro (4.3% of sales) posted for 2009. This result benefited from the rise in the contribution margin (+0.4 as a % of sales), in spite of the higher impact of the cost of materials (from 45.5% to 46% of sales), and from the cutting of structure costs, which went down from 27.8% to 25.3% of revenues.
The gross operating margin (EBITDA) for the year came in at 86.7 million euro (9.4% of sales revenues), and was up by 83.6% compared to the figure of 47.2 million euro in the previous year (6% of sales). EBIT was also sharply higher, rising to 41.8 million euro (4.5% of sales) from 5.1 million euro (0.6% of sales) in 2009.
The significant rise in all of these results enabled the company to return to profit, with earnings of 18.8 million euro compared to a loss of 7.6 million in 2009.
Despite the group’s higher volumes of business, the net debt figure at December 31 2010 stood at 164.9 million euro, which was lower than it was both at December 31 2009 (170.2 million euro) and at September 30 2010 (182.6 million euro).
Consolidated equity stood at 197.2 million euro at December 31 2010, up from 166.8 million euro at the end of 2009.
The group had 5,574 employees on its books at December 31 2010 compared to 5,770 at the end of 2009.
Filter Division
The Filter Division reported sales revenues of 465.1 million euro, with a rise of 12.1% on 2009 (414.8 million euro). The rise affected both the original equipment market (+28.6%) and the aftermarket (+6.2% for the independent market, +3.5% for the original equipment spares market). As far as countries are concerned, the main growth was seen in South America (+28.8%), the United States (+245.9%) and India (+48.7%).
The EBITDA for the division rose by 44.9%, coming in at 39.2 million euro (8.4% of sales), up from 27.1 million euro in 2009. EBIT, totalling 19.4 million euro (4.2% of sales), doubled from the figure of 9.7 million euro (2.3% of sales) in 2009. During the year the French factory at Louvigné was closed. The Dutch aftermarket spares distribution business was restructured as part of the logistical reorganization in Europe.
Suspension Components Division
The revenues of the Suspension Components Division came to 461.6 million, showing an improvement of 25.4% on the figure for 2009 (368 million euro), thanks to the rise in volumes in Europe (+18%) and to the rise in market share in South America (+64.8%) and in demand in China (+58.9%).
EBITDA came in at 52.1 million euro (11.3% of sales), showing strong growth compared to the figure for 2009 (24 million euro, equal to 6.5% of sales).
EBIT, amounting to 27.5 million euro (6% of sales), compares with a loss of 0.1 million euro in 2009. During the year the French factory at Mussey was closed and precision spring production was transferred to other facilities.
Results of the parent company of the group Sogefi SpA
In 2010 the parent company Sogefi SpA reported net income of 12.4 million euro. The change from the figure for 2009 (33.4 million euro) was mainly due to the reduced flow of dividends from subsidiaries resulting from the decline in results in 2009.
Net debt stood at 119.5 million euro at December 31 2010, with a reduction of 16.6 million euro from the figure at December 31 2009.
Outlook for the year 2011
In 2011 there is expected to be a rise in the world production of motor vehicles thanks to further growth in North and South America and the Chinese and Indian markets maintaining current levels of development. In Western Europe, on the other hand, the situation is expected to remain stable overall compared to 2010. In line with the market trend, the group will continue in its strategy of downsizing its production capacity in Europe and expanding its presence in countries with higher growth levels.
Therefore, although there is likely to be a rise in the cost of the main commodities, the group believes that it can achieve growth in revenues and earnings in 2011 too unless there are any events of an exceptional nature that cannot be envisaged at present.
Proposed dividend
In view of the result for the period and of the financial solidity of the group, the Board of Directors will propose that the Shareholders Meeting approve the distribution of a dividend of 0.13 euro per share, which will be paid out as from April 29 2011 against presentation of coupon no. 29 on April 26 2011. In the last two years the company did not pay any dividend.
Shareholders Meeting
The Meeting of the Shareholders of Sogefi has been convened at the first call for April 19 2011 and at the second call for April 20 2011.
The Board resolved:
· To propose to an extraordinary session of the Shareholders Meeting that certain amendments be made to the Company Bylaws in order to bring them into line with Legislative Decree no. 27 of January 27 2010;
· To propose that the Shareholders Meeting cancel and renew its authorization of the Board of Directors for a period of 18 months to buy back a maximum of 6 million of the company’s own shares (including 1,956,000 shares already held as of today, corresponding to 1.68% of the ordinary share capital) at a unit price that cannot be more than 10% higher or lower than the official price of the shares recorded at the trading session on the regulated market prior to that of each individual transaction. The main reasons why this authorization is being renewed are the possibility of investing in shares of the company at prices below their actual value, based on the real economic value of its equity and its income generating prospects and also of being able to use the shares bought back for the Company’s share-based compensation plans.
· To put forward for approval by the Shareholders Meeting a stock grant plan for 2011 for employees of the company and its subsidiaries and the Chief Executive Officer of the company for a maximum of 1,250,000 conditional rights, each of which will give the beneficiaries the right to be assigned 1 Sogefi share free of charge. The shares assigned will be the own shares held by the Company as treasury stock.
· To propose that the Shareholders Meeting amend the Rules for Shareholders Meetings to bring them into line with the new requirements of the Company Bylaws approved by the Board of Directors on October 19 2010 and also with those submitted to the approval of the Shareholders Meeting at its extraordinary session.
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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