Sogefi

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- 19:07 CET

Sogefi: put option agreement for the sale of the Filtration BU

Milan, 23 February 2024 – Sogefi, in the context of a process aimed at the valorization of its Filtration Business Unit, entered into a put option agreement with the US private equity fund Pacific Avenue Capital Partners, pursuant to which Carta Acquisition France S.A.S. (“Carta France”) and Carta Acquisition U.S., Inc. (“Carta US”), the latter corporate vehicles incorporated by the fund, have unilaterally, unconditionally and irrevocably committed to acquire – upon the exercise of the put option by Sogefi – the entire share capital of, respectively, Sogefi Filtration S.A. and Sogefi USA Inc. The Filtration Business Unit will operate under the name Purflux Group in case of closing of the transaction.

Under the terms of the put option agreement, Sogefi has granted the acquiring entities, Carta US and Carta France a 6-month exclusivity period to complete the transaction.

The exercise of the put option by Sogefi and the signing of the sale and purchase agreement relating to the potential sale of the Filtration Business Unit (“Transaction”) can only take place once the works council consultation process, required by French law, has been completed.

The Transaction is in any case subject to the obtainment of the clearance from the Slovenian FDI (Foreign Direct Investment) authority and the clearance from the Moroccan antitrust authority.

Subject to the exercise of the put option by Sogefi, the closing of the Transaction is expected to occur within six months from today’s date.

The exercise of the put option by Sogefi will be communicated in accordance with applicable law.

The consideration for the Transaction is based on an enterprise value of Euro 374 million, corresponding to an Equity Value, to be settled entirely in cash, currently estimated at approximately Euro 330 million, which would be determined at closing on the basis of a bridge to equity, which takes into account adjustments based on the Working Capital and the Net Financial Position, as customary for this type of transactions.

The enterprise value implies a multiple of 0.65 times 2023 revenues (compared to 0.41 for the average of mid cap peers and 0.31 for Sogefi) and 3.6 times 2023 EBITDA (in line with the average multiples of mid cap peers and significantly higher than Sogefi’s spot multiple estimated at 2.3 EBITDA), year in which the Filtration Business Unit achieved a record EBITDA result, +24% compared to 2022.

Therefore, the consideration envisaged for the Transaction implies a substantial generation of value compared to the current stock market value.

Based on the estimated Equity Value, the Transaction would result in a capital gain of approximately Euro 130 million vs. the balance sheet value in the financial statements as of December 31, 2023.

For Sogefi, the strategic rationale for the Transaction is clear and articulated.

First of all, the Transaction allows to realize the value of Filtration in a phase when the unithas achieved unprecedented results, following a program that has involved the disposal of unprofitable activities, commercial development and an increase in profitability, in a favorable market context for the Aftermarket division.

The Transaction entails the reduction of the powertrain component in the group’s business portfolio, making Sogefi less exposed to the risks associated with the transition to E-mobility.

The Transaction also allows the reduction of the complexity and diversification of the group and to focus on two high-potential sectors, namely Suspension, which is undergoing a turnaround, and Air&Cooling, an activity that has been recording positive and ever-increasing results and an ambitious growth path.

Finally, the group will have a very solid financial position, which will allow greater investments for development,already identified and in progress, in the EV market, by leveraging on at least part of the financial resources deriving from the potential sale.

Subject to the exercise of the put option by Sogefi and completion of the Transaction, at least 50% of the proceeds from the sale, estimated in approximately Euro 330 million, will be allocated to the reduction of the group’s indebtedness (Euro 266.1 million as of December 31, 2023, Euro 200.7 million without considering IFRS 16 liabilities) and, for the remaining portion, the Board of Directors will evaluate to propose its distribution.

Sogefi’s Filtration Business Unit produces a full range of filters for the Original Equipment (OE), Original Equipment Spares (OES) markets, and the Independent Aftermarket (IAM). Specifically, the Aftermarket division serves all channels of the independent automotive replacement markets, also through the sale of products branded by the Group: CoopersFiaam, Tecnocar, FRAM® and Purflux for light vehicles, SogefiPro dedicated to commercial vehicle applications.

The Business Unit, headquartered in Paris, is a major player in the sector, with operations in Europe, the United States and India, has 11 production sites, and in 2023 recorded revenues of Euro 573.6 million (35% of the Sogefi group’s turnover).

Pacific Avenue Capital Partners is a Los Angeles, CA-based private equity firm focused on corporate divestitures, carve-outs and other complex situations in the middle market.

In relation to the Transaction, the Company’s was advised by Houlihan Lockey and Clifford Chance, BNP Paribas provided the fairness opinion.

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- 19:05 CET

Sogefi: results higher in 2023

RESULTS HIGHER IN 2023

Revenues: +5.5% to € 1,627.9 million, (+9.1% at constant exchange rates)

EBIT: +49.2% to € 105.2 million

Net income: +95.4% to € 57.8 million (€ 29.6 million in 2022)

Free Cash Flow positive for € 37.9 million (€ 29.3 million in 2022)

Debt before IFRS 16 reduced to € 200.7 million (€ 224.7 million at end of December 2022)

Milan, 23 February 2024 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the proposed financial statements for 2023 presented by Chief Executive Officer Frédéric Sipahi.

Sogefi, a company of the CIR Group, is one of the main global producers of automotive components in the sectors of Air and Cooling, Suspensions and Filtration.

PERFORMANCE OF THE MARKET

In the fourth quarter of 2023 world car production rose by 9.1% compared to the fourth quarter of 2022, confirming the positive trend recorded in the first nine months of the year, with growth in all geographical areas except for Mercosur (-3%).

For the whole of 2023 world vehicle production thus reported growth of 9.4% compared to 2022, with a return to the volumes of 2019 before the pandemic crisis (+1.2%).

Performance in 2023 was positive in all geographical areas: +12.5% in Europe, +9.5% in NAFTA, +9.4% in China, +6.3% in India and +3.5% in Mercosur.

However, compared to 2019, while China and India experienced strong growth (+17.2% and +29.5% respectively), production volumes still remained lower in Europe (-13%), in Mercosur (-9.6%) and in NAFTA (-4.1%).

For the year 2024, S&P Global (IHS) forecasts that world production should remain substantially unchanged (-0.5%) from 2023.

KEY FIGURES OF SOGEFI’S PERFORMANCE IN 2023

The consolidated revenues of the Group were up by 5.5% on 2022 and by 9.1% at constant exchange rates, in line with the increased production volumes (+6.1%) and selling prices (+2.8%).

Results were significantly better than those of 2022:

  • EBITDA, totalling € 221.4 million, rose by +13.5%, with an EBITDA margin of 16.6% thanks to the increase in volumes and the greater contribution margin;
  • EBIT, which came in at € 105.2 million, was up by +49.2%, with an EBIT margin of 6.5% of sales, versus 4.6% in 2022;
  • Net income was € 57.8 million (+95.4% versus € 29.6 million in 2022);
  • Free cash flow was positive for € 37.9 million (€ 29.3 million in 2022);
  • Net debt (before IFRS16) declined to € 200.7 million at 31 December 2023 from € 224.3 million at 31 December 2022.

Commercial activity was positive too, both in terms of the total value of contracts acquired and in terms of mix, with 31% of the value of the new contracts being for E-mobility. Significant new contracts were awarded inNorth America, Europe and China.

The Suspensions division acquired new business in the Chinese market with local operators, in particular signing a contract for the supply of stabilizer bars to an innovative player aspiring to become one of the main producers in the electric car market in China. The division also obtained various contracts in Europe, particularly for the supply of stabilizer bars for top-of-the-range electric SUVs and for the supply of coil springs for E-mobility platforms. The contracts for E-mobility account for 45% of the value of the new contracts obtained during the year.

The Air and Cooling division has been continuing to develop in China, with the acquisition of various orders from BYD including one for the supply of air manifolds for a Plug-in-Hybrid platform and a contract for the supply of oil manifolds used in electric cars to lubricate the inside of the gearbox. These parts, which were traditionally made of metal, are offered by Sogefi in plastic which makes it possible to reduce weight and optimize design and cost. Important contracts were also signed in North America and these will enable the Group to increase its market share in this area, especially for the supply of thermal management and cooling products for E-mobility platforms.In Europe the main orders were for thermostat units for E-mobility and intake manifolds for thermal management. 27% of the value of the new contracts obtained by the Air and Cooling division in 2023 was for components for E-mobility platforms.

The Filtration division reached important agreements in Europe for both the OEM (Original Equipment Manufacturer) and the IAM (Independent After Market) channels: it obtained new contracts for the supply of filters for truck brake circuits and signed a three-year exclusivity agreement with one of the principal market leaders in the distribution of automotive components through the Aftermarket channel. Development has also been continuing in India with a gradual increase in market share. Lastly, the company obtained new contracts for the supply of air-purification filters representing around 15% of the total value.

RESULTS FOR 2023

Revenues for 2023 came in at € 1,627.9 million, posting a rise of 5.5% at current exchange rates and of 9.1% at constant exchange rates compared to 2022.

The growth in revenues reflects the very positive performance reported in Europe (+10%), in North America (+ 6.0% and +10.5% at constant exchange rates) and in India (+7.1% and +15.6% at constant exchange rates); in the remaining areas volumes were substantially stable but revenues were negatively affected by exchange rate movements (- 7.1% in China, +0.5% at constant exchange rates, and -21.7% in South America, -2.2% at constant exchange rates net of inflation in Argentina).

Suspensions reported a 4.8% increase in revenues (+9.5% at constant exchange rates) with significant growth particularly in India and Europe.

Air and Cooling recorded a rise of 5.0% (+8.9% at constant exchange rates), with particularly significant growth in NAFTA (+12.4% at constant exchange rates).

Filtration reported a rise in revenues of 7.1% (+9.3% at constant exchange rates), with strong growth in the Aftermarket channel (+10.5%) and in India.

EBITDA came in at € 221.4 million, posting growth of 13.5% on 2022 (€ 195.1 million). The EBITDA marginrose from 12.6% in 2022 to 13.6% in 2023.

The contribution margin was 12.8% greater than in 2022, thanks to the higher volumes and to the profit margin (ratio in percentage terms of contribution margin to revenues) which rose from 27.4% in 2022 to 29.3% in 2023.

The impact of fixed costs on revenues was 14.6%, substantially unchanged from 2022 (14.3%).

Other charges, which mainly include exchange rate differences, made a negative contribution to EBITDA of € 10.4 million versus a positive contribution of € 0.8 million in 2022.   

EBIT came to € 105.2 million and was up by 49.2% from € 70.5 million in 2022. The ratio to revenues rose from 4.6% in 2022 to 6.5% in 2023. 

The Group reported consolidated net income from operating activities of € 67.7 million, versus € 32.6 million in the previous year.

In October 2023 the Suspensions business in Mexico was sold, giving rise to a net loss for “discontinued operations and operations held for sale” of € 6.7 million (€ -1.4 million in 2022) which includes the net result of operations for the period until October and the capital loss posted.

The group reported net income of € 57.8 million, up from € 29.6 million in the previous year.

Free Cash Flow was a positive € 37.9 million, higher than in 2022 (€ 29.3 million).

At 31 December 2023 shareholders’ equity, excluding minority interests, stood at € 272.9 million, compared to € 230.7 million at 31 December 2022. The increase reflects the net result for the year, the exchange rate differences (negative) from currency conversion, the fair value of the instruments hedging cash flows as well as other changes.

Net financial debt before IFRS16 totalled € 200.7 million at 31 December 2023, down from € 224.3 million at 31 December 2022. Including financial payables for rights of use, in accordance with IFRS 16, the net financial debt at 31 December 2023 amounted to € 266.1 million, versus € 294.9 million at 31 December 2022.

At 31 December 2023 the Group had committed credit lines in excess of its requirements of € 242 million.

KEY RESULTS OF FOURTH QUARTER 2023

In the fourth quarter of 2023, Sogefi reported revenues of € 375.3 million, down by 2.4% on the same period of 2022; at constant exchange rates the group reported growth of 4.1% thanks to the higher production volumes (+2.9%) and to the adjustment of selling prices.

EBITDA came to € 47.5 million, 12.7% of revenues, compared to € 43.5 million (11.3%) in the fourth quarter of 2022, thanks to the higher contribution margin which rose from 26.5% to 31.1%.

EBIT was a positive € 16.0 million versus € 6.6 million in fourth quarter 2022.

The consolidated net result for the fourth quarter of 2023 was a positive € 12 million after a negative result of € 3.4 million in the same period of the previous year.

SIGNIFICANT EVENTS HAVE TAKEN PLACE SINCE YEAR END

A put option agreement in Sogefi’s favour has been signed for the sale of the Filtration division to the US investment fund Pacific Avenue

Today the company has signed a put option agreement with the US investment fund Pacific Avenue, pursuant to which Carta Acquisition France S.A.S. (“Carta France”) and Carta Acquisition U.S., Inc. (“Carta US”), acquisition vehicles that refer to the fund, have unilaterally, unconditionally and irrevocably undertaken to buy – in the event that Sogefi should exercise the put option – the entire share capital of Sogefi Filtration S.A. and Sogefi USA Inc, respectively. The filtration division will operate under the name of Purflux Group in the event of the transaction being completed.

As per the terms of the put option agreement, Sogefi has granted Carta US and Carta France a six-month period of exclusivity to complete the transaction.

Exercise of the put option by Sogefi and the signing of the purchase and sale agreement relating to the described sale of the Filtration division (the “Transaction”) may take place only once the consultation procedure with the trade union representatives, required by French law, has taken place.

The deal is in any case subject to obtaining FDI (Foreign Direct Investment) authorization in Slovenia and antitrust authorization in Morocco.

Subject to exercise of the put option by Sogefi, the Transaction should be finalized within six months of today’s date.

Exercise of the put option by Sogefi will be disclosed in compliance with applicable laws and regulations.

For the conditions of the Transaction see the press release issued at the same time as this one.   

OUTLOOK FOR THE YEAR

Visibility as to the trend of the automotive market in 2024 remains low due to uncertainty as to the evolution of the macroeconomic and geopolitical scenarios. S&P Global (IHS) expects that, after the growth reported in 2023, world car production will remain substantially stable (-0.5%), with Europe declining by 1.9%, China in line with 2023 and higher margins in the other geographical areas.

As far as commodity and energy prices are concerned, the early months of 2024 have confirmed a certain stability, already seen in the second half of 2023, but prices remain exposed to the risk of volatility caused by geopolitical tensions. The pressure of inflation on labour costs also remains a source of tension in certain geographical areas.  

In this scenario the Group is constantly monitoring performance in the various geographical areas and seeking fair agreements with all of its customers with regard to selling prices.

In the absence of any factors causing the deterioration of the macroeconomic scenario compared to today, for 2024 it is expected – for all of the three divisions currently comprising the group – that there will be single-digit revenue growth, higher than that forecast for the automotive market, and operating profitability, excluding non-recurring charges, at least in line with that reported for the year 2023.

In the event of deconsolidation of the Filtration division from the perimeter of the consolidated businesses (Suspensions and Air & Cooling), the same evolution of revenues as that described above is to be expected, with an increase in operating profitability and a positive net result.

DIVIDEND PROPOSAL

In view of the result for the year and the financial solidity of the Group, the Board of Directors will propose that the Ordinary General Meeting of the Shareholders, convened at the first call for 22 April 2024, allocate the net result resulting from the Financial Statements for the year ended 31 December 2023, totalling Euro 6,735,288.96, to a dividend distribution of Euro 0.20 for each of the shares in circulation, giving a total amount of Euro 23,730,484, of which Euro 16,995,195.04 will be withdrawn from the “Retained Earnings Reserve” while the amount of Euro 6,735,288.96 will be the net income for the year 2023.

The dividend will be paid out as from 8 May 2024 after coupon detachment on 6 May 2024 and record date on 7 May 2024.

ANNUAL GENERAL MEETING OF THE SHAREHOLDERS

The Annual General Meeting of the Shareholders of Sogefi has been called for 22 April 2024 at the first call and for 23 April 2024 at the second call.

The full text of the proposed resolutions and the reports of the Board of Directors on the items on the Agenda, together with all the relevant documentation, will be available, within the time frames required by law, at the registered office, on the authorized storage mechanism eMarket Storage (www.emarketstorage.com) and on the Company’s website  www.sogefigroup.com (section Shareholders/Shareholder Meetings).

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- 13:03 CEST

Sogefi: results for first nine months of 2023

RESULTS HIGHER IN FIRST NINE MONTHS OF 2023

Revenues: +8.1% to € 1,252.5 million

EBIT: +39.5% to € 89.1 million

Net income € 45.8 million (€ 33.0 million in first nine months of 2022)

Free Cash Flow positive for € 38.4 million (€ 31.6 million in first nine months of 2022)

Debt before IFRS 16 lower at € 192.7 million (€ 219.7 million at 30 September 2022)

Orbey, 23 October 2023 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the Interim Report on Operations of the Group as of 30 September 2023, presented by Chief Executive Officer Frédéric Sipahi.

Sogefi, a company of the CIR Group, is one of the main producers worldwide of automotive components in the sectors Air and Cooling, Filtration and Suspensions.

PERFORMANCE OF THE MARKET

In the third quarter of 2023 world car production increased by 3.8% compared to the third quarter of 2022, which had in its turn reported growth of 29.5% on the previous year.

In the first nine months of 2023, world production of motor vehicles rose by 9% compared to the corresponding period of 2022. Growth was particularly strong in Europe (+15.3%) and NAFTA (+11.3%) and significant also in Mercosur (+6%) and India (+6.7%). As for China, the performance of the quarter had its ups and downs with production in the first nine months posting an overall increase (of +4.8%).

S&P Global (IHS) expects that the fourth quarter will see growth in world car production of 3.5% compared to fourth quarter 2022, forecasting for the whole year 2023 a rise of 7.5% on 2022, with growth in all the main geographical areas.

SUMMARY OF SOGEFI’S PERFORMANCE IN THE FIRST NINE MONTHS OF 2023

In the first nine months of 2023, the consolidated revenues of the Group recorded growth of 8.1% on the first nine months of 2022; at constant exchange rates the increase would have been 10.7%, thanks to the 7.1% rise in production volumes and the 3.4% rise in selling prices.

The results were positive and showed a significant improvement on those of the first nine months of 2022:

  • EBITDA, totalling € 173.9 million, was up by 14.7% thanks to the growth in revenues and the greater contribution margin;
  • EBIT, which came to € 89.1 million, was up by 39.5%, with an EBIT margin of 7.1% of revenues, up from 5.5% in the first nine months of 2022;
  • Net income came in at € 45.8 million (+39% compared to € 33.0 million in the first nine months of 2022);
  • Free Cash Flow was positive for € 38.4 million (€ 31.6 million in the first nine months of 2022);
  • Net debt (before IFRS 16) stood at € 192.7 million at 30 September 2022, down from € 224.3 million at 31 December 2022.

Business activity performed positively, with a good percentage of contracts for E-mobility (28% of the value of the new contracts acquired in the first nine months of 2023); the acquisition of new businesses was particularly dynamic in North America, China and India.

In particular, Air and Cooling obtained important contracts in North America, which will make it possible to increase market share in that area, and in China, including various orders from the car manufacturer BYD. 32% of the value of the new contracts obtained in 2023 by the business unit were for parts for E-mobility platforms.

Suspensions, in addition to having obtained new orders in Europe mainly for the supply of stabilizer bars, also signed a contract in China with an innovative local player who aspires to becoming one of the main producers in the electric car market.

CONSOLIDATED RESULTS FOR THE FIRST NINE MONTHS OF 2023

Revenues for the first nine months of 2023 came in at € 1,252.5 million, posting a rise of 8.1% at current exchange rates and of 10.7% at constant exchange rates compared to the same period of 2022.

Growth was very significant in Europe (+11.1%), North America (+9.2% and +13.3% at constant exchange rates) and India (+7.8% and +16.8% at constant exchange rates). However, in South America and in China revenues were down slightly because of the changes in exchange rates; at constant exchange rates, revenues were equivalent to or slightly higher than those of the previous year.  

Sogefi’s overall performance was substantially in line with that of the market; by geographical areas, its performance was better in NAFTA and India.  

All of the business units reported substantial revenue growth.

Revenues of Suspensions were up by 9.8% (+11.7% at constant exchange rates), with particularly positive performance in Europe (+14.4% at constant exchange rates) and India (+25.7% at constant exchange rates).

Filtration reported revenue growth of 7.9% (+10.1% at constant exchange rates), with the Aftermarket channel in Europe reporting +10.7% and India reporting +15.3% at constant exchange rates.

Air and Cooling reported a 6.9% rise in revenues (+10.7% at constant exchange rates), with growth of 14.5% at constant exchange rates in NAFTA.

EBITDA, totalling € 173.9 million, was up by 14.7% compared to the first nine months of 2022 (€ 151.7 million). 

The contribution margin increased by 12.3% compared to the first nine months of 2022, thanks to the higher revenues and greater margins (% of ratio of contribution margin to revenues), rising from 27.7% in 2022 to 28.8%. 

The impact of fixed costs on revenues (14.3%) was unchanged from the first nine months of 2022.  

Other income/charges made a negative contribution to EBITDA of € 4.2 million, versus a positive contribution of € 5.5 million in the first nine months of 2022 and consist mainly of exchange rate differences.  

EBIT came in at € 89.1 million, +39.5% from € 63.9 million in the first nine months of 2022. Its ratio to revenues increased from 5.5% in the first nine months of 2022 to 7.1% in the first nine months of 2023. 

Financial expense, totalling € 16.4 million, was higher than in the first nine months of 2022 (€ 13.6 million) because the rise in interest rates affected the loans at variable interest rates.  

Tax expense came to € 18.2 million (€ 15.0 million in the same period of 2022).

Net income from continuing operations was € 54.5 million, up from € 35.3 million in the same period of last year.

The net result of “discontinued operations and assets held for sale” refers to the sale, currently under negotiation, of the Suspensions business in Mexico; the result was a negative € 6.4 million (€ -1.1 million in the same period of 2022) and includes the net result of the business in the first nine months of 2023 and the best estimate of the income from the envisaged sale.

The group reported net income of € 45.8 million (€ 33.0 million in the first nine months of 2022).

Free Cash Flow was positive for € 38.4 million (€ 31.6 million in the first nine months of 2022).

At 30 September 2023 shareholders’ equity, excluding minority interests, stood at € 273.5 million, versus € 230.7 million at 31 December 2022. The increase mainly reflects the net result for the period.

Net financial debt before IFRS 16 totalled € 192.7 million at 30 September 2023, down from € 224.3 million at 31 December 2022 and € 219.7 million at 30 September 2022. Including the financial payables for rights of use, in accordance with IFRS 16, the net financial debt stood at € 257.9 million at 30 September 2023, down from € 294.9 million at 31 December 2022 and € 292.7 million at 30 September 2022. 

At 30 September 2023 the Group had committed credit lines in excess of its requirements for € 270.0 million.

SUMMARY OF THE RESULTS FOR THIRD QUARTER 2023

In the third quarter of 2023, the Sogefi Group reported revenues of € 404.9 million, -0.5% compared to the same period of 2022 and +4.6% at constant exchange rates.

EBITDA came in at € 61.7 million, up from € 51.6 million in the third quarter of 2022, thanks to the contribution margin increasing from 27% to 30%.

EBIT was a positive € 32.3 million (versus € 22.3 million in the third quarter of 2022).

The net income from continuing operations in the quarter was € 20.2 million, up from € 13.4 million in the same period of the previous year.

In the third quarter a negative net result of € 5.0 million was recorded for “discontinued operations and assets held for sale” (€ -0.3 million in the same period of 2022), which refers to the Suspensions business in Mexico and includes, as well as the net result of the business in the third quarter, the best estimate of the income from the disposal.

The consolidated net result for the third quarter of 2023 was € 14.4 million compared to € 12.2 million in the same period of the previous year.  

SIGNIFICANT EVENTS THAT HAVE TAKEN PLACE SINCE 30 SEPTEMBER 2023

Since the close of the period, there have been no significant events that could have an impact on the economic, patrimonial or financial information contained in this press release.

OUTLOOK FOR THE YEAR

Visibility as to the automotive market trend in 2023 remains limited due to the uncertainties regarding the macroeconomic evolution in a context of high inflation and still rising interest rates.

For the fourth quarter of 2023, S&P Global (IHS) expects world car production to grow by 3.5% compared to the same period of 2022.

As far as raw materials are concerned, in the first nine months of 2023 prices trended downwards and as yet there have been no signs of any inversion of the trend. As for energy costs, after a phase of containment, volatility remains high and could potentially intensify due to the new geo-political tensions.

Assuming there are no factors that could cause a deterioration of the macroeconomic scenario from today’s levels, for 2023 the Sogefi Group expects to see revenue growth of over 5% and an increase in profitability, excluding non-recurring charges, in line with the results reported for the first nine months of the year.

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- 13:16 CEST

Sogefi: results for first quarter 2023

Revenues up by 12.8% to € 852.4 million

EBIT: € 54.8 million, +35.6%

Net income € 31.4 million (€ 20.8 million in first half 2022)

Free Cash Flow positive for € 45.0 million (€ 41.2 million in first half 2022)

Debt before IFRS 16 reduced to € 185.3 million (€ 216.4 million at end of June 2022)

Milan, 24 July 2023 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the group’s Semi-Annual Financial Report as of 30 June 2023, presented by Chief Executive Frédéric Sipahi.

Sogefi, a company of the CIR Group, is one of the main producers worldwide of automotive components in the sectors of Air and Cooling, Filtration and Suspensions.

PERFORMANCE OF THE MARKET

In the first half of 2023 world vehicle production reported growth of 11.2% compared to the same period of 2022, with progress made in all geographical areas.

Growth was particularly strong in Europe (+20.2%) and NAFTA (+12.2%) and significant in Mercosur (+9.7%), India (+6.5%) and China (+7%), where, after a negative first quarter of 2023 (-4.7%), there was a distinct recovery in the second quarter (+20.3%). 

For 2023, S&P Global (IHS), a source widely used in the sector, expects that world production will grow by 5.3% compared to 2022, with an increase in all the main geographical areas. The reduction in the growth index forecast for the full year compared with that reported in the first half of the year is due to the strong recovery of production seen in the second half of 2022.

KEY FIGURES OF SOGEFI’S PERFORMANCE IN THE FIRST HALF OF 2023

The consolidated revenues of the Group recorded double-digit growth compared to the first half of 2022 (+12.8% and +14% at constant exchange rates), which reflects the increase in production volumes (+9.4%) and in selling prices (+4.2%).

The results were positive and significantly better than those of first half 2022:

  • EBITDA came in at € 111.1 million and was up by 11.3% on first half 2022, thanks to the growth in volumes and the contribution margin holding up well;
  • EBIT, totalling € 54.8 million, rose by 35.6%, with the EBIT margin at 6.4% of sales, up from 5.3% in first half 2022;
  • Net income was € 31.4 million (+ 51% from € 20.8 million in first half 2022);
  • Free cash flow was positive for € 45.0 million (€ 41.2 million in first half 2022);
  • Net debt (before IFRS 16) stood at € 185.3 million at 30 June 2023, down from € 216.4 million at the end of June 2022.

Commercial activity was positive with an important part of contracts being for E-mobility (32% of the value of new contracts acquired in the first half) with significant new contracts awarded in China, India and the United States too.  

Filtration signed important agreements in Europe both for the OEM (Original Equipment Manufacturers) and the IAM (Independent Automotive Aftermarket) channels: it gained contracts for the supply of filters for truck brake circuits and signed an exclusivity agreement for three years with one of the principal leaders in the distribution of automotive parts in the Aftermarket channel. Development has been continuing in India too, where the business unit is gradually gaining market share.

Suspensions obtained new business in the Indian market with local operators, signing a contract in particular for the supply of stabilizer bars for light commercial vehicles with an innovative player aspiring to becoming one of the principal E-mobility producers in the Indian market. The division also obtained various contracts in Europe, particularly for the supply of stabilizer bars for top-of-the-range electric SUVs and for coil springs for E-mobility platforms.

Air and Cooling is continuing to develop in China, with the receipt of an important order from BYD for the supply of air manifolds for a Plug-in-Hybrid platform and a contract for the supply of oil manifolds used in electric cars to lubricate the inside of the gearbox. Sogefi can offer these components, which are traditionally made of metal, in plastic which gives a weight reduction and optimizes design and cost. Contracts have also been signed in North America for the supply of thermal management products and in Europe for thermostat groups for E-mobility and intake manifolds. 47% of the value of the new contracts signed in 2023 by the Air and Cooling division were for parts destined for E-mobility platforms.

CONSOLIDATED RESULTS FOR FIRST HALF 2023

The revenues for the first half of 2023 totalled € 852.4 million, posting growth of 12.8% at current exchange rates and 14% at constant exchange rates on the corresponding period of 2022.   

Revenues recorded growth in all geographical areas: +14% in Europe, +15.8% in North America (+17.2% at constant exchange rates), +5.6% in South America (+3.9% at constant exchange rates net of inflation in Argentina), +10.3% in India (+17.7% at constant exchange rates), +2.3% in China (+8.2% at constant exchange rates).

Sogefi outperformed the market in North America, India and China.

Suspensions reported growth in revenues of 15.4% (+15.7% at constant exchange rates).

Filtration reported an 11% rise in revenues (+12.4% at constant exchange rates), with particularly significant growth in the Aftermarket channel in Europe (+13.6%), North America and India.

Air and Cooling revenues were up by 12.2% (+14.4% at constant exchange rates), with a particularly significant increase in NAFTA (+18.5% at constant exchange rates).

EBITDA came in at € 111.1 million and was up by 11.3% compared to first half 2022 (€ 99.8 million). 

The contribution margin increased by 12.9% compared to the first half of 2022, thanks to the higher volumes and to profitability (ratio of contribution margin/revenues %) which was unchanged at 28.1% compared to 2022, despite the extra costs linked to energy prices and in general to inflation.

The ratio of fixed costs to revenues declined to 14.3% from 14.9% in the first half of 2022.

Other expense, which mainly includes exchange rate differences, made a negative contribution to EBITDA of € 3.8 million versus a positive contribution of € 3.9 million in the first half of 2022.   

EBIT came to € 54.8 million, posting growth of 35.6% compared to € 40.4 million in first half 2022. The ratio to revenues increased from 5.3% in first half 2022 to 6.4% in first half 2023. 

Financial expense totalled € 11.0 million and was higher than in the first half of 2022 (€ 9.1 million) because the rise in interest rates affected the variable-rate part of the loan portfolio.

Tax expense was substantially unchanged at € 10.8 million (€ 10.3 million in the same period of 2022).

The group reported net income of € 31.4 million (€ 20.8 million in the first half of 2022).

Free Cash Flow was positive for € 45.0 million (€ 41.2 million in first half 2022), including the effect of the greater recourse to factoring on account of the increase in revenues.

At 30 June 2023 shareholders’ equity, excluding minority interests, stood at € 258 million, up from € 230.7 million at 31 December 2022.

Net financial debt before IFRS 16 totalled € 185.3 million at 30 June 2023, down from € 224.3 million at 31 December 2022 and € 216.4 million at 30 June 2022. Including the financial payables for rights of use, in accordance with IFRS 16, the net financial debt at 30 June 2023 amounted to € 250.6 million, versus € 294.9 million at 31 December 2022 and € 285.2 million at 30 June 2022. 

At 30 June 2023 the Group had committed credit lines in excess of its requirements for € 284.0 million.

SIGNIFICANT EVENTS THAT HAVE OCCURRED SINCE 30 GIUGNO 2023

Since the close of the period there have been no significant events that could have an impact on the economic, patrimonial and financial information presented herein.

OUTLOOK FOR THE YEAR

Visibility as to the automotive market trend in 2023 remains limited due to the uncertainties relating to the macroeconomic evolution in a context of high inflation and still rising interest rates.

For 2023, S&P Global (IHS) expects global car production to grow by 5.3% on 2022, with Europe up 11.8%, NAFTA up 8.2%, India up 7.2% and South America and China substantially unchanged.

As far as raw materials and energy are concerned, since the beginning of the year prices have been trending downwards, but they remain high and very volatile.

Assuming there are no further factors that could cause a deterioration of the macroeconomic scenario from today’s levels, for 2023 the Sogefi Group expects to see mid-single-digit revenue growth, in line with forecasts for the automotive market, and higher profitability, excluding non-recurring charges, than that of 2022.

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- 17:09 CEST

Sogefi: AGM approves financial statements for 2022

Milan, 21 April 2023 – The Annual General Meeting of the Shareholders of Sogefi S.p.A. was held today in Milan under the chairmanship of Monica Mondardini, in an ordinary session.

As per the terms of Art. 106, paragraph 4, of the “Cura Italia” Decree, transposed with amendments into Law no. 27 of 24 April 2020, and recently extended as an effect of Law no. 14 of 24 February 2023, the shareholder attendance at the meeting was exclusively through the designated representative, appointed pursuant to the terms of Art. 135-undecies of D.Lgs. no. 58 of 24 February 1998 (TUF) and was identified as Studio Segre S.r.l., to whom proxies/sub-proxies have been assigned as per the terms of Art. 135-novies of the TUF, in waiver of Art. 135-undecies, paragraph 4, of the TUF. 

APPROVAL OF THE FINANCIAL STATEMENTS FOR 2022

The Shareholders Meeting approved the Financial Statements for the year 2022.

The Sogefi Group closed the year with consolidated revenues of € 1,552.1 million (€ 1,320.6 million in 2021), EBITDA of € 194.7 million (€ 192.5 million in 2021) and a positive net result of € 29.6 million (€ 2.0 million in 2021).

The parent company Sogefi S.p.A. reported a loss of € 58.7 million (net earnings of € 69.9 million in 2021), the consequence of the write-down of the investment in the Suspensions business unit due to the unfavourable performance of the sector. The Shareholders Meeting approved the Board of Directors’ proposal not to distribute any dividends and to cover the whole of the loss with the existing available balance of the “Retained earnings” reserve.

REMUNERATION POLICY AND STOCK GRANT PLAN

The AGM approved the first section of the “Report on remuneration policy and on compensation paid” and gave a majority vote in favour of the second section of the same report.  

The Shareholders also approved the stock grant plan for 2023, aimed at employees of the Group, for a maximum number of 1,250,000 conditional rights, each of which gives the beneficiaries the right to receive one ordinary Sogefi share free of charge at set maturity dates and provided the conditions stated in the plan are met with. The shares will be made available by drawing on the treasury shares held by the Company. The plan has the aim of aligning the interests of management with the objectives of creating value for the Group and its Shareholders in a medium-long term time horizon, stimulating commitment to common objectives at Group level and fostering the retention of those who hold key positions.  

AUTHORIZATION TO BUY BACK OWN SHARES

The AGM renewed for a period of 18 months the authorization of the Board of Directors to buy back a maximum of 10 million ordinary shares, each with a nominal value € 0.52, without prejudice to the fact that, including in the calculation the treasury shares already held even through subsidiaries, the nominal value of the shares may not in any way exceed one fifth of the Company’s share capital. The price paid per share cannot be more than 15% higher or lower than the benchmark price recorded by the Company’s shares in the Stock Exchange trading session preceding each single buyback transaction or the date on which the price is fixed. In the event of purchases made following the procedures stated in points (a), (c) and (d) of the following paragraph, and in any case where the shares are bought back with orders placed in the regulated market, the price must not be higher than the higher of the price of the last independent deal and the highest current independent bid price in the same market, in compliance with what is prescribed by Art. 3 of EU Delegated Regulation no. 2016/1052. 

The purchases must be made in the market, in compliance with the terms of Art. 132 of D.Lgs. no. 58/98 and with the rules of law or regulations in force at the moment of the transaction, and more specifically: (a) through a public tender offer to buy or exchange shares; (b) on regulated markets following operating procedures established in the rules for organizing and managing the same markets, which do not allow bids to be matched directly with pre-determined offers; (c) through the pro-rata assignment to the shareholders of put options to be assigned within 15 months of the date of the AGM resolution authorizing the same and exercisable within 18 months of the same date; (d) through the purchase and sale of derivative instruments traded in regulated markets that involve the physical delivery of the underlying shares in compliance with the provisions of Art. 144-bis of Consob’s Rules for Issuers and with the terms of Articles 5 and 13 of EU Regulation 596/2014.

The main reasons why this authorization is being renewed are the following: (i) to fulfil obligations resulting from possible stock option plans or other assignations of shares of the Company to employees or members of the administrative bodies of Sogefi S.p.A. or its subsidiaries, and to fulfil any obligations resulting from debt instruments convertible into or exchangeable with equity instruments;  (ii) to have a portfolio of treasury shares to use as consideration in any extraordinary transaction, including an exchange of shareholding interests, with other entities within the scope of transactions in the interest of the  Company (“a stock of securities”); (iii) to support liquidity in the market, optimize the capital structure, remunerate the shareholders in particular market situations, all within the limits established by current rules and regulations; (iv) to seize opportunities for creating value and investing liquidity efficiently in relation to the market trends; (v) for any other purpose that the competent Authorities should qualify as admitted market practice as per the terms of European and domestic rules applicable and following the procedures established therein.

As of today’s date, the Company is holding 1,877,751 treasury shares, equal to 1.56% of the share capital.

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- 16:18 CEST

Sogefi: results for first quarter 2023

Revenues up by 13.2% to € 431.6 million

EBIT: +21.4% to € 25.7 million

Net income higher at € 13.2 million  (€ 10.7 million in first quarter 2022)

Free Cash Flow positive for € 39.6 million (€ 43.7 million in first quarter 2022)

Debt before IFRS 16 lower at € 186.9 million (€ 213.4 million at end of March 2022)

Milan, 21 April 2023 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the interim report on operations of the group as of 31 March 2023, presented by Chief Executive Officer Frédéric Sipahi.

Sogefi, a company of the CIR Group, is one of the main producers at global level of automotive components in the Air and Cooling, Filtration and Suspensions sectors.

PERFORMANCE OF THE MARKET

In the first quarter of 2023 world vehicle production reported growth of 5.7% compared to the equivalent period of 2022, with progress made in all geographical areas except China, which reported a decline of 7.9%. Growth was particularly buoyant in Europe, +25.6%, and was also significant in NAFTA (+9.8%), Mercosur (+14.2%) and India (+9.4%). 

In 2023, S&P Global (IHS), a source commonly used in the sector, forecasts that world production could rise by 3.8% compared to 2022, with growth in all the main geographical areas.

SUMMARY OF SOGEFI’S PERFORMANCE IN FIRST QUARTER 2023

The Group’s consolidated revenues posted double-digit growth on the first quarter of 2022, +13.2%, underpinned by the increase in production volumes (+7.3%) and by the higher selling prices (+5.4%).

Results were positive and showed an improvement:

  • EBITDA rose by 7.4% compared to first quarter 2022, to € 53.7 million, thanks to the growth in volumes and the contribution margin holding up well despite the higher energy costs;
  • EBIT was up by 21.4% at € 25.7 million and the EBIT margin rose to 6% of revenues versus 5.6% in first quarter 2022;
  • The business generated free cash flow of € 39.6 million (€ 43.7 million in first quarter 2022);
  • Net debt (before IFRS 16) decreased to € 186.9 million at 31 March 2023, versus € 224.3 million at 31 December 2022.

Commercial activity was positive, with new contracts concluded even for E-mobility platforms (31% of the value of new contracts in first quarter 2023);

  • The Filtration division obtained contracts in Europe for the supply of brake circuit filters for trucks and in India for the supply of air filters;
  • The Suspensions division signed a contract in India for stabilizer bars with an innovative player who is aspiring to become one of the main producers in the market for electric cars in India, and various contracts in Europe and South America for stabilizer bars and leaf springs;
  • The Air and Cooling division signed contracts, in China with customers in the E-mobilitysector, in North America for the supply of thermal management and air ducts, and in Europe for inlet manifolds. 66% of the value of the new contracts obtained in 2023 by the Air and Cooling division are for E-mobility platforms.

Investments in innovations were significant:

  • The use of HoloLens Metaverse viewers for augmented reality, which make it possible to visit production sites virtually, supporting workplace safety remotely and giving instructions in real time: the aim is to equip all the group’s production sites with this innovative technology by the end of 2023;
  • The ACMA, the association representing Indian car component producers, has given the Suspensions division three awards for its excellence in digitization, designing and developing new products and localization, and has certified it as a sustainable business.

CONSOLIDATED RESULTS IN FIRST QUARTER 2023

The revenues for first quarter 2023 came in at € 431.6 million, up by 13.2% compared to the same period of 2022 (+13.1% at constant exchange rates).

Volumes sold rose by 7.3% compared to those of the same period of 2022 and selling prices increased on average by 5.4%, the increase being distributed between the different product lines partly as a function of the evolution of the costs of raw materials and the parts used.

Revenues posted double-digit growth in all geographical areas, with the sole exception of China: +11.9% in Europa, +21.5% in North America (+19.2% at constant exchange rates), +17.6% in South America (+8.8% at constant exchange rates net of inflation in Argentina) and +15.9% in India (+21.3% at constant exchange rates); in China revenues declined by 3% but were stable at constant exchange rates.

Sogefi’s revenue performance was significantly better than that of the market in NAFTA, India and China.

Suspensions reported a rise in revenues of 18.4% (+17.4% at constant exchange rate), with significant growth rates in all the geographical areas in which it operates, with the exception of China on account of the performance of the local market.

Filtration revenues were up by 10.6% (+11.1% at constant exchange rates), thanks to the good performance of business activity in North America and India and of the Aftermarket channel in Europe. 

Air and Cooling reported a 10.7% rise in revenues (both at current and constant exchange rates), with particularly significant increases in NAFTA.

EBITDA, totalling € 53.7 million, was up by 7.4% compared to € 50.0 million in first quarter 2022.

The contribution margin increased by 11.3% compared to first quarter 2022, thanks to the higher sales volumes, and the ratio of contribution margin to revenues remained substantially stable at 27.5% (28% in the same period of 2022), absorbing the extra costs generated by energy prices and inflation in general.  

The impact of fixed costs on revenues edged down to 14.3%, from 14.6% in first quarter 2022.

Other charges, which refer mainly to exchange rate differences, made a negative contribution to EBITDA of € 2.7 million versus a positive contribution of € 0.9 million in first quarter 2022.   

EBIT came in at € 25.7 million, up by 21.4% from € 21.2 million in first quarter 2022. The impact on revenues rose from 5.6% in first quarter 2022 to 6% in first quarter 2023. 

Financial expenses, amounting to € 5.7 million, were higher than those of the first quarter of 2022 (€ 4.5 million) because of the higher interest rates on the variable part of the loans.

Tax expense was substantially unchanged at € 6.0 million (€ 5.9 million in the same period of 2022).

The group reported net income of € 13.2 million (€ 10.7 million in the first quarter of 2022).

Free Cash Flow was a positive € 39.6 million (€ 43.7 million in first quarter 2022), also taking into account recourse to factoring.

At 31 March 2023 shareholders’ equity, excluding minority interests, stood at € 240.5 million, up from € 230.7 million at 31 December 2022.

Net financial debt before IFRS 16 totalled € 186.9 million at 31 March 2023, down from € 224.3 million at 31 December 2022 and € 213.4 million at 31 March 2022. Including financial payables for rights of use, in accordance with IFRS 16, net debt at 31 March 2023 stood at € 255.9 million, down from € 294.9 million at 31 December 2022 and € 281.8 million at 31 March 2022. 

At 31 March 2023 the Group had committed credit lines in excess of its needs for € 313.0 million.

SIGNIFICANT EVENTS THAT HAVE TAKEN PLACE SINCE 31 MARCH 2023

Since the close of the period, there have been no significant events that could have an impact on the economic, patrimonial or financial information contained in this press release.

OUTLOOK FOR THE YEAR

Visibility as to the performance of the automotive market in 2023 is still limited because of the uncertainties linked to the macroeconomic evolution, the volatility of commodity prices (although less pronounced than in 2022), particularly energy, and to the trend of inflation and interest rates.  

For 2023, S&P Global (IHS) is forecasting that world car production will grow by 3.8% on 2022, with Europe posting +8.2%, NAFTA +5.2% and South America +3.6%.

As for raw materials and energy, in the early months of 2023 prices have been trending downwards but they remain very high and very volatile.     

Provided there is no serious deterioration in the geopolitical and macroeconomic scenario from today’s levels, in 2023 the Sogefi Group expects to see mid single-digit revenue growth and profitability, excluding non-recurring expense, at least in line with that of 2022.

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