Revenues: -2.7% at € 524.1 million
EBIT: increased to € 27.8 million (€ 13.8 million in first half 2023)
Net income at € 145.8 million, including the effects of the sale of Filtration
Free Cash Flow from continuing operations € 20.7 million (€ 3.1 million in first half 2023)
Free Cash Flow from Filtration € 321,8 million
NFP before IFRS 16 at 30 June positive at € 95.3 million, before the extraordinary dividend to be paid as of 24 July
Milan, 23 July 2024 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, approved the Group’s half-yearly financial report at 30 June 2024, presented by the Chief Executive Officer Frédéric Sipahi.
Sogefi, a company of the CIR Group, is one of the leading global manufacturers of automotive components in the Air and Cooling, Filtration and Suspensions sectors.
MARKET PERFORMANCE
In the first half of 2024, global car production decreased by 0.2% compared to the first half of 2023. Production increased in China (+5.2%), India (+6.8%) and NAFTA (+1.8%), while it recorded a downturn in Mercosur (-7.1%) and Europe (-5.2%), a geographical area that had shown strong recovery in 2023.
For the full year 2024, S&P Global (IHS), a source commonly used in the industry, predicts that world production may drop by 2% compared to 2023, with a much more modest increase in China than in the first half of the year, substantial stability in NAFTA, a 5.3% drop, in line with the first half, in Europe, and a 2.1% drop in Mercosur.
SUMMARY OF SOGEFI’S PERFORMANCE IN FIRST QUARTER 2024
In view of the agreement signed on 23 February 2024 for the sale of the Filtration Business Unit, the figures for this business are reported in accordance with IFRS 5, i.e., by recording only the net result of the business under the item ‘income from assets held for sale and discontinued operations’. The operating data commented on below refer only to the perimeter of continuing operations excluding Filtration; the net result and the free cash flow will be shown for continuing operations, discontinued operations and total operations.
With regard to continuing operations, the results showed a significant improvement compared to first half 2023:
- revenues decreased by 2.7% compared to first half 2023 due to the performance of the European market;
- EBITDA, equal to € 67 million, increased by 27.8% compared to the same period of 2023, with an EBITDA margin of 12.8%;
- EBIT, equal to € 27.8 million, recorded an increase on first half 2023 (€ 13.8 million), with an EBIT margin of 5.3% of revenues, compared to 2.6% in first half 2023;
- net income from continuing operations totalled € 10.8 million, compared to € 3.7 million in first half 2023;
- free cash flow from operating activities was positive by € 20.7 million, compared to € 3.1 million in first half 2023.
With regard to discontinued operations:
- the net result was equal to € 136.4 million, including the capital gain, tax charges and costs arising from the sale transaction;
- the free cash flow amounted to € 321.8 million.
Overall, in first half 2024, the Group recorded:
- net income of € 145.8 million
- free cash flow of € 342.5 million
- with a net financial position at 30 June 2024 equal to € 48.8 million, against a net debt of € 266.1 million at 31 December 2023, after the payment of an ordinary dividend of € 23.7 million to the Parent Company’s shareholders in May 2024.
Following the resolution adopted by the Shareholders’ Meeting held on 17 July 2024, an extraordinary dividend totalling approximately € 110 million will be paid on 24 July 2024, reducing the Group’s net financial position by the same amount.
FIRST HALF RESULTS 2024
In first half 2024 revenues stood at € 524.1 million, down by 2.7% on first half 2023.
The drop in revenues mainly reflected the less than positive performance recorded in Europe (-6.3%), due to the market downturn (-5.2%), and in North America -2.6%, while South America, China and India grew by +2.6%, +16.2% and +10.3% respectively, outperforming the market.
Suspensions recorded a 4.7% drop in revenues, affected by the unfavourable trend in the European market, while significant growth was recorded in China and India, +44.3% and +16.2% respectively.
Air and Cooling reported revenues in line with first half 2023, recording an above-market performance in Europe, +5.9%, and a slight decline in the North American and Chinese markets.
EBITDA stood at € 67 million, up by 27.8% on first half 2023 (€ 52.4 million) despite the slight decline in volumes. The EBITDA margin rose from 9.7% in 2023 to 12.8% in the same period of 2024.
The contribution margin increased by 7.4% compared to first half 2023, representing 29% of revenues compared to 26.2%, due in part to lower raw material and energy costs.
The ratio of fixed costs to revenues stood at 15.7% in first half 2024, essentially stable compared to 2023 (15.5%).
Other charges, which specifically included exchange rate differences, made a negative contribution of € 0.5 million to EBITDA, compared to the negative contribution of € 3.2 million in first half 2023.
EBIT totalled € 27.8 million, compared to € 13.8 million in first half 2023, and the ratio to revenues rose from 2.6% in first half 2023 to 5.3% in the same period of 2024. The increase mainly reflects the improved results recorded by the Suspensions division.
Financial expense, equal to € 9.1 million, was higher than in the same period of 2023 (€ 8.2 million) mainly due to one-off charges related to the early repayment of a number of loans, following the proceeds from the sale of the Filtration division, which enabled the Company to drastically reduce its financing needs.
Tax expense amounted to € 8 million (€ 1.9 million in first half 2023), reflecting the higher pre-tax profit.
The net income from operating activities was positive by € 10.8 million compared to € 3.7 million in the same period of the previous year.
The net result of ‘discontinued operations’ refers to the Filtration division and amounted to € 136.4 million in first half 2024, compared to € 29.3 million in first half 2023. This value incorporates the net income of the business up to the date of sale on 31 May 2024, equal to € 22.2 million, the capital gain realised on the sale of the business, equal to € 124.5 million, the tax charges arising from the transaction and the costs incurred in finalising the transaction.
The Group reported total net income of € 145.8 million, compared to € 31.4 million in first half 2023.
The Free Cash Flow was positive by € 342.5 million and includes a free cash flowof € 321.8 million from Filtration and € 20.7 million generated by continuing operations (€ 3.1 million in first half 2023).
At 30 June 2024, excluding non-controlling interests, equity came to € 407.6 million (€ 272.9 million at 31 December 2023). The increase essentially reflects the net result for the period and the dividends paid to the Parent Company’s shareholders (€ 23.7 million).
The Net Financial Position at end of June 2024, after payment of € 27.1 million in dividends, was positive by € 48.8 million, compared to net debt at the end of 2023 of € 266.1 million. The Net Financial Position excluding payables for rights of use at 30 June 2024 was positive by € 95.3 million, compared to € 200.7 million at 31 December 2023 and € 185.3 million at 30 June 2023.
At 30 June 2024, the Group had committed credit lines in excess of requirements of € 309 million.
SUMMARY OF RESULTS OF SECOND QUARTER 2024
In the second quarter of 2024, the Sogefi Group reported revenues of € 260.9 million, slightly down at both current (-1.5%) and constant (-2%) exchange rates. At constant exchange rates, revenue growth was positive in China (+14.9%) and India (+27.6%), while it was negative in Europe (-3.9%), South America (-3.6%) and North America (-4.6%).
Air and Cooling recorded growth of 1.6% at constant exchange rates, while Suspensions recorded a decrease at constant exchange rates of -4.8%.
EBITDA stood at € 33.3 million compared to € 26.6 million in second quarter 2023, due to the increase in the contribution margin from 26.7% of revenues in second quarter 2023 to 29.5% in second quarter 2024.
EBIT was positive at € 13.2 million (compared to € 7.2 million in second quarter 2023).
Net income from operating activities amounted to € 5.2 million, compared to € 2.8 million in second quarter 2023.
The consolidated net result for second quarter 2024, including discontinued operations, amounted to € 130.8 million (€ 18.2 million in the same period of the previous year), as it incorporates the April-May 2024 results of the Filtration division and the capital gain generated by the sale.
SIGNIFICANT EVENTS AFTER 30 JUNE 2024
No significant events that could affect the economic, equity and financial information reported occurred after 30 June 2024, with the exception of payment of the extraordinary dividend of € 0.923 per share, totalling approximately € 110 million, resolved by the Shareholders’ Meeting on 18 July 2024, with ex-dividend date on 22 July 2024, which was disclosed to the market.
The CEO and General Manager Frédéric Sipahi resigned from his role, as per the press release published today.
OUTLOOK FOR THE YEAR
There is still limited visibility on the automotive market’s performance in 2024 due to the uncertainties linked to macroeconomic and geopolitical developments. S&P Global (IHS) predicts that, after the growth recorded in 2023, global car production may drop by 2%, with Europe down by 5.3% and modest growth in China, NAFTA and India.
As far as commodity and energy prices are concerned, the first half 2024 confirms a certain degree of stability, already seen in the second part of 2023, but they are still exposed to volatility risks exacerbated by geo-political tensions. Inflationary tensions on labour costs also persist in some geographical areas. In this scenario, the Group constantly monitors trends in the various geographic areas, seeking fair agreements with all customers on sales prices.
Based on a more conservative forecast for the automotive market than the S&P Global estimates, with specific regard to Europe, Sogefi in 2024 expects a low single-digit revenue decline, while confirming its expectation that operating profitability, excluding non-recurring charges and extraordinary events that are not yet foreseeable, will be higher than in 2023.
