Sogefi

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- 13:36 CET

Sogefi: results higher in 2022 than 2021

Revenues: +17.5% at € 1,552.1 million

Revenue growth in all geographical areas and product lines

EBIT: +17% at € 68.3 million

Net income higher at € 29.6 million (€ 2.0 million in 2021)

Free Cash Flow positive for € 29.3 million (€ 32.4 million in 2021)

Debt before IFRS 16 reduced to € 224.3 million (€ 258.2 million at end of 2021)

Milan, 24 February 2023 -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 the year 2022 , 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 three sectors: Air and Cooling, Filtration and Suspensions.

PERFORMANCE OF THE MARKET

In 2022 global vehicle production reported growth of 6.2% compared to the previous year with progress recorded in all geographical areas: +5.7% in Europe, +9.7% in NAFTA, +8.3% in Mercosur, +6.1% in China and +22.7% in India. The good performance reflects the strong rise in production in the third quarter of 2022 (+29.5%) and the more limited rise in the last quarter (+1.7%). 

However, despite the recovery in 2022, world car production was still lower than it was in 2019 (-7.8%), with Europe posting -23.2%. For 2023, S&P Global (IHS), a source commonly used in the sector, is predicting a rise in world production of 3.6% compared to 2022, with growth in all the main geographical areas.

SUMMARY OF SOGEFI’S PERFORMANCE IN 2022

The results for 2022 were positive and showed a significant improvement:

  • Revenues posted growth of 17.5% compared to 2021, +12.5% at constant exchange rates, due to the higher production volumes and selling prices;
  • EBITDA was higher at € 194.7 million versus € 192.5 million in 2021;
  • EBIT totalled € 68.3 million (4.4% of revenues) and was up by 17% from € 58.4 million in 2021;
  • Net income came in at € 29.6 million (€ 2.0 million in 2021);
  • Free cash flow was a positive € 29.3 million (€ 32.4 million in 2021);
  • Net debt (before IFRS 16) contracted to € 224.3 million at 31 December 2022, from € 258.2 million at 31 December 2021.

Product innovation was significant during 2022:

  • SOGEFI’s CabinHepa+ cabin filter, which uses HEPA (High Efficiency Particulate Air) media and filters the air mechanically, capturing particles 50 times smaller than a conventional cabin filter, was nominated product of the year 2022 in France;
  • In the month of September the innovative cooling plates for Electric Vehicle platforms were presented at the Novi Michigan Battery Show and were very well received by the market;
  • In the month of October new aftermarket products and the latest product innovations were presented at the Paris Equip Auto Show, where they received great interest from operators in the sector.  

Commercial activity was positive and 52% of the total value of new contracts was for E-mobility platforms:

  • The Filtration division was awarded contracts for the supply of air purification filters, oil filters and fuel modules in Europe and India; 
  • The Suspensions division signed contracts in Europe for the supply of stabilizer bars for electric or plug-in hybrid vehicles and was awarded a contract for the supply of stabilizer bars for the electric version of one of the most popular pick-up trucks;
  • The Air and Cooling division signed important contracts in NAFTA, Europe and China for the supply of thermal management products and cooling plates for electric mobility. 54% of the value of the division’s new contracts has to do with E-mobility platforms.

Sustainability performance improves: reduction of the energy intensity index, improvement to the procurement mix in favour of renewable sources, an increase in the amount of waste products reused.

CONSOLIDATED RESULTS FOR 2022

Revenues for 2022 came in at € 1,552.1 million and were up by 17.5% compared to the same period of 2021.

At constant exchange rates the rise was 12.6%: sales volumes were 3.9% higher than in 2021 while the remaining part of the increase reflects the higher selling prices over the various product lines as a result of the evolution of the cost of raw materials and the components used.

Revenues were higher in all geographical areas: +9.5% in Europe, +29.7% in North America (+17.2% at constant exchange rates), +38.7% in South America (+15.8% at constant exchange rates, net of inflation in Argentina), +15% in China (+6.7% at constant exchange rates) and +36.8% in India (+29.4% at constant exchange rates).

Suspensions reported a rise in revenues of 21.5% (+16.6% at constant exchange rates), with significant growth rates particularly in India, North America, South America and Europe.

Filtration reported a rise in revenues of 15.6% higher (+12.1% at constant exchange rates), thanks to the good performance of the Aftermarket channel in Europe and of business in North America and India.

Air and Cooling reported revenues that were up by 15.4% (+8.9% at constant exchange rates), with particularly significant increases in China and Nafta.

EBITDA, totalling € 194.7 million, rose by 1.1% from € 192.5 million in 2021; excluding other non-operating income/expense, EBITDA increased by 7%.  

EBIT came to € 68.3 million, posting growth of 17% compared to € 58.4 million in 2021. The ratio to sales in 2022 was in line with 2021 (4.4%).

Financial expense, totalling € 18.8 million, was slightly higher than in 2021 (€ 17.8 million), which included an item of non-recurring financial income of € 1.2 million.

Tax expense was higher at € 18.3 million (€ 13.5 million in 2021).

Net income came in at € 29.6 million, up from € 2.0 million in 2021 (€ 26.4 million, not considering the accounting loss generated by the sale of the Argentinian Filtration business).

Free Cash Flow was positive for € 29.3 million and was substantially in line with the figure of € 32.4 million for 2021.

At 31 December 2022 shareholders’ equity, excluding minority interests, stood at € 230.7 million compared to € 187.7 million at 31 December 2021. The increase reflects the net result for the period together with other positive accounting effects.

Net financial debt before IFRS 16 amounted to € 224.3 million at 31 December 2022 compared to € 258.2 million at year end 2021 and € 219.7 million at 30 September 2022. Including the financial payables for rights of use, in accordance with IFRS 16, net financial debt totalled € 294.9 million at 31 December 2022, down from € 327.6 million at 31 December 2021.

At 31 December 2022 the Group had committed credit lines in excess of its requirements for € 279.0 million.

KEY RESULTS OF FOURTH QUARTER 2022

In the fourth quarter of 2022, Sogefi reported revenues of € 386.5 million, posting growth of 16.9% (+15.4% at constant exchange rates) compared to the same period of 2021, thanks to the increase in production volumes (+5.8%), to the adjustment of selling prices and to the positive effect of exchange rates. Revenue dynamics, even with constant exchange rates and selling prices, were positive and outperformed the market.

EBITDA came in at € 43.3 million, 11.2% of revenues, compared to € 48.3 million (14.6%) in fourth quarter 2021. The performance of EBITDA was affected by non-operating costs of € 4.5 million which compare with non-operating income of € 13.3 million in the fourth quarter of 2021. Excluding the non-operating expense/income, which are of a non-recurring nature, EBITDA rose from € 35.0 million (10.6%) in 2021 to € 47.8 million (12.4%) in 2022.

EBIT was positive for € 6.0 million (versus € 8.9 million in fourth quarter 2021) and was impacted by the non-recurring results mentioned above.

The consolidated net result for the fourth quarter of2022 was a negative € 3.4 million after net income of € 3.9 million in the same period of the previous year, after financial expense of € 5.2 million (€ 4.4 million in 2021) and tax expense of € 3.7 million (€ 0.3 million in 2021). The greater impact of taxes reflects the presence in the result of losses not relevant for tax purposes or for which there was no basis for recognizing deferred tax assets; whereas the fourth quarter of 2021 benefited from the recognition of deferred tax assets of € 4.3 million.

SIGNIFICANT EVENTS OCCURRING AFTER 31 DECEMBER 2022

Since the close of the year, there have been no significant factors or events that could have an impact on the economic, patrimonial and financial information presented in this document.

OUTLOOK FOR THE YEAR

Visibility as to the trend of the automotive market in 2023 remains low due to the uncertainties linked to the Russian-Ukrainian conflict, the macroeconomic evolution and the prices of raw materials, particularly energy. 

For 2023, S&P Global (IHS) is forecasting growth in world car production of 3.6% compared to 2022, with Europe at +7.1%, NAFTA at +5.4%, South America at +4.9% and China at +1.1%.

As far as commodity prices are concerned, during 2022 the rising trend of steel prices came to an end and in the last part of the year the prices of resin and other raw materials, gas and electricity stopped rising although volatility remains high. It should also be noted that there continue to be inflationary pressures on labour costs in certain geographical areas.

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 an operating result, excluding non-recurring expense, that is at least in line with that of 2022.

DIVIDEND PROPOSAL

The Board of Directors will put forward to the Annual General Meeting of the Shareholders the proposal that no dividend be distributed.

VERIFICATION OF THE REQUISITES OF INDEPENDENCE

During today’s meeting the Board of Directors verified the presence of the requisites of independence of the directors who have declared themselves to be independent, Patrizia Arienti, Maha Daoudi, Mauro Melis, Massimiliano Picardi and Christian Georges Streiff. Five directors out of a total of nine are therefore independent. The Board of Statutory Auditors in its turn verified the existence of the requisites of independence of its members. All the independent directors and members of the Board of Statutory Auditors therefore possess the requisites established by the law and by the Corporate Governance Code adopted by the Company.

ANNUAL GENERAL MEETING OF THE SHAREHOLDERS

The Annual General Meeting of the Shareholders of Sogefi will be held at the first call on 21 April 2023 and at the second call on 24 April 2023. 

The Board of Directors has voted to put the following resolution proposals before the Annual General Meeting of the Shareholders:

Authorization to buy back own shares

In the light of the rules stated in Articles 2357 and following articles of the Civil Code, of Art. 132 of D.Lgs. no.  58/98, of Art. 144-bis of Consob Resolution no. 11971/1999, of EU Regulation no. 596/2014, EU Delegated Regulation no. 2016/1052, and of Consob Resolution no. 20876 of April 3 2019 and Consob Guidelines of July 2019, the cancellation and renewal of the authorization of the same Board of Directors, for a period of 18 months to buy back a maximum of 10 million own shares at a unit price that cannot be more than 15% higher or lower than the benchmark price recorded by the Company’s shares on the Stock Exchange trading day preceding each single buyback transaction or preceding the date on which the price is fixed in the event of purchases made according to the procedures stated in points (a), (c) and (d) of the following paragraph, and in any case, when the shares are bought back through orders placed in the regulated market, the price must not be higher than the higher of the price of the last independent transaction and the highest current independent bid price on the same market. As of today the Company owns 1,877,751 of its own shares, equal to 1.56% of the share capital.

The buyback must take place in the market, in compliance with the terms of Art. 132 of D.Lgs no. 58/98 and with the terms of the law or the regulations in force at the moment of the transaction and more precisely (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 said markets, which do not allow bids and offers to be matched directly; (c) through the assignment pro-rata of put options to the shareholders to be assigned within 15 months of the date of the AGM resolution authorizing the same with exercise within 18 months of the same resolution; (d) through the purchase and sale of derivative instruments traded on regulated markets that involve the physical delivery of the underlying shares in compliance with the further provisions contained in Art. 144-bis of the Rules for Issuers issued by Consob, and as per 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 awards of shares of the Company to employees or members of the Board of Directors of Sogefi S.p.A. or its subsidiaries, or to fulfil any obligations resulting from debt instruments that are convertible into or exchangeable with equity instruments; (ii) to have a portfolio of own shares to use as consideration for any extraordinary transactions, even those involving an exchange of shareholdings, with other parties within the scope of transactions of interest to the Company (a so-called “stock of securities”); (iii) to engage in action to support market liquidity, optimize the capital structure and remunerate shareholders in particular market conditions, all within the limits established by current rules and regulations; (iv)  to take advantage of opportunities for creating value, as well as investing liquidity efficiently in relation to the market trend; (v) for any other purpose qualified by the competent Authorities as admitted market practice in accordance with applicable European and domestic rules, and with the procedures established therein.

Stock Grant Plan 2023

The approval of a stock grant plan for 2023, for a maximum of 1,250,000 units, aimed at employees of the Company and its subsidiaries, in terms to be defined by the Board of Directors and communicated to the market in sufficient time for any legal obligations to be complied with. The stock grant plan has the aim of rewarding the loyalty of the beneficiaries to the companies of the Group, giving them a medium-long term incentive to increase their commitment to improving the performance of the Company while at the same time aligning the interests of management, shareholders and all stakeholders.

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- 13:34 CEST

Sogefi: results higher in first nine months of 2022

Revenues: +17.7% to € 1,165.6 million (+29.4% in third quarter)

Sales higher in all geographical areas and business units

EBITDA: +5% to € 151.3 million, equal to 13% of revenues

Net income: € 33.0 million (-€ 2.0 million in first nine months of 2021)

Free Cash Flow positive for € 31.6 million (€ 25.1 million in first nine months of 2021)

Reduction in debt before IFRS 16 to 219.7 million (€ 267.4 million at 30.9.2021)

Milan, 21 October 2022 -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 2022, 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 three sectors: Air and Cooling, Filtration and Suspensions.

PERFORMANCE OF THE MARKET

In the third quarter of 2022 world car production recorded growth of 27.5% compared to the same period of 2021 (+38.4% in Europe), after falling by 1.8% in the first half of 2022 because of difficulties in sourcing parts and raw materials, which had already begun in 2021, and the effects of the conflict between Russia and Ukraine.

Thanks to the recovery in the third quarter, world motor vehicle production was up by 7.5% in the first nine months of 2022 compared to the same period of 2021, with increases in all geographical areas: +2.8% in Europe, +10.6% in NAFTA, +10% in Mercosur, +11.1% in China and +23.7% in India.

Despite the recovery in the first nine months of 2022, world car productions is still lower than it was in 2019, -8.9%, with Europe at -26.3%.

The trend of the market remains uncertain; S&P Global (IHS), a source commonly used in the sector, is forecasting growth in world car production compared to 2021 of 2.2% for fourth quarter 2022 and 6% for the whole year 2022.

SUMMARY OF SOGEFI’S PERFORMANCE IN THE FIRST NINE MONTHS OF 2022

The Group’s consolidated revenues grew by 17.7% compared to the first nine months of 2021: the rise in sales was due to the growth in production volumes (+3.4%), to the adjustment of selling prices to the increases in the cost of raw materials and to the evolution of exchange rates (at constant exchange rates the rise in revenues would be 11.7%).

The performance of the third quarter was particularly positive (+29.4%), even at constant exchange rates (+21%).

The economic results were positive and showed a distinct improvement:

  • EBITDA was higher at € 151.3 million, up from € 144.1 million in the first nine months of 2021;
  • EBIT came in at € 62.3 million (5.3% of revenues), and was up by 26% from € 49.4 million in 2021 (5% of revenues);
  • Net income came to € 33.0 million (in 2021 the net result was € 24.3 million for continuing operations and € 2.0 million including discontinued operations);
  • Business generated a positive free cash flow of € 31.6 million (€ 25.1 million in 2021);
  • Net debt (before IFRS 16) declined to € 219.7 million at 30 September 2022 from € 258.2 million at 31 December 2021.

Significant Investments were made in innovation with progress throughout the period:

  • The SOGEFI cabin filter CabinHepa+, which uses HEPA media (High Efficiency Particulate Air) and filters mechanically capturing particles that are 50 times smaller than a conventional cabin filter, was nominated product of the year in France;
  • At Marckolsheim in France the inauguration took place of the European E-Mobility Tech Center, which is equipped with the largest 3D printer in Europe and is devoted to the research and development of new products for E-mobility;
  • In September the innovative cooling plates for EV platforms were presented at the Novi Michigan Battery Show and received a great deal of customer interest.

In the first nine months of the year commercial activity was buoyant,with important contractsobtained even in the EV sector:

  • The Filtration division obtained contracts for the supply of air purification filters, oil and fuel module filters in Europe and India; 
  • The Suspensions division signed contracts in Europe for the supply of coil springs and stabilizer bars – the majority of which will be produced in Romania – and three new contracts for the supply of stabilizer bars for electric or plug-in hybrid vehicles. 43% of the total estimated value of the new contracts obtained in 2022 is for E-mobility platforms;
  • The Air and Cooling division obtained important contracts in NAFTA, Europe and China for the supply of thermal management products and cooling plates for electric mobility. 54% of the total value of these new contracts is for E-mobility platforms.

Moreover, in line with ESG strategiesfor reducing energy from non-renewable sources, Sogefi has installed photovoltaic panels at its plants in Nules (Spain) and Pune (India) with the aim of mitigating its impact on climate change. These solar panels will make it possible to cover approximately 20% of the energy requirements of the plants involved.

CONSOLIDATED RESULTS FOR THE FIRST NINE MONTHS OF 2022

Revenues for the first nine months of 2022 came in at € 1,165.6 million, posting growth of 17.7% compared to the same period of 2021.

The increase at constant exchange rates was 11.7%: sales volumes were up by 3.4% on those of the first nine months of 2021 and the remaining part of the increase reflects the adjustment of the selling prices of the various product lines to the evolution of the costs of raw materials and of the components used.

All geographical areas reported growth: +7.4% in Europa, +30.6% in North America (+17.4% at constant exchange rates), +57.4% in South America (+19.8% at constant exchange rates, net of inflation in Argentina), +27.9% in Asia (+17.6% at constant exchange rates).

Suspensions reported an increase in revenues of 24.1% (+16.7% at constant exchange rates), with significant growth rates particularly in South America, North America and India.

Filtration reported an increase in revenues of 16.8% (+12.8% at constant exchange rates), thanks to the good performance of the after-market channel in Europe and of business activity in North America and India.  

Air and Cooling reported an increase in revenues of 11.9% (+4.8% at constant exchange rates), negatively affected by a decline in Europe, which in 2021 had realized a non-recurring gain on the sale of a special project.

EBITDA, amounting to € 151.3 million, rose by 5% from € 144.1 million in the first nine months of 2021; the EBITDA/Revenues ratio declined to 13% from 14.6% in the first nine months of 2021.

In order to understand the evolution of profitability, it is necessary to consider that the higher costs for materials and energy have been offset by the rise in selling prices; however, the increase by the same amount in revenues and in the cost of materials used has caused a dilution of the profitability index.

The contribution margin has risen by 3.8% compared to the first nine months of 2021, in line with the increase in volumes sold, and the ratio of the contribution margin/revenues % has declined to 27.7% from 31.4% for the first nine months of 2021 as a result of the dilution effect described above.

The impact of fixed costs on revenues has declined from 16.4% in the same period of 2021 to the current 14.5%.    

EBIT came to € 62.3 million (5.3% of revenues) and was up by 26% from € 49.4 million in 2021 (5% of revenues).

Financial expense, totalling € 13.6 million, was in line with the figure for the first nine months of 2021 (€ 13.4 million).

Tax expense increased to € 14.5 million (€ 13.2 million in 2021).

Income from operating activity came in at € 34.2 million, up from € 24.3 million in the first nine months of 2021.

No results were reported for discontinued operations or operations held for sale, while in the same period of last year the sale of the Filtration branches in Brazil and Argentina gave a negative accounting result of € 24.7 million. The group reported net income of € 33.0 million (€ -2.0 million in the first nine months of 2021).

Free Cash Flow was a positive € 31.6 million, up from € 25.1 million in the first nine months of 2021. The increase reflects the positive evolution of results and the change in working capital in the period, which was less unfavourable than the first nine months of 2021 because there was greater use of factoring.   

At 30 September 2022 shareholders’ equity, excluding minority interests, amounted to € 248.5 million versus € 187.7 million at 31 December 2021. The rise reflects the net result for the period, positive currency translation differences, actuarial gains, the fair value of cash flow hedging instruments, and other changes.

Net financial debt before IFRS 16 stood at € 219.7 million at 30 September 2022, lower than at the close of 2021 (€ 258.2 million) and at 30 September 2021 (€ 267.4 million). Including financial payables for rights of use, as per IFRS 16, net debt at 30 September 2022 totalled € 292.7 million, down from € 327.6 million at 31 December 2021.

At 30 September 2022 the Group had committed credit lines in excess of its requirements for € 294.0 million.

SUMMARY OF THE RESULTS FOR THIRD QUARTER 2022

In the third quarter of 2022, Sogefi reported revenues of € 409.6 million, posting an increase of 29.4% (+21% at constant exchange rates), thanks to the market recovery, the adjustment of selling prices and the positive effect of exchange rates. The dynamics of revenues, even at constant exchange rates, was particularly positive and outperformed the market in Asia and North America.

EBITDA came in at € 51.5 million, 12.6% of revenues, versus € 35.8 million in the third quarter of 2021 (11.3% of revenues).

EBIT was a positive € 21.8 million (€ 2.1 million in third quarter 2021).

Net income from operating activities was € 13.1 million (€ -2.1 million in third quarter 2021).

The consolidated net result was € 12.2 million compared to € -23.4 million in the third quarter of 2021, which suffered a negative accounting charge of € 21.2 million on the sale of the filtration business in Argentina.

SIGNIFICANT EVENTS THAT HAVE TAKEN PLACE SINCE 30 SEPTEMBER 2022

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.

IMPACT OF COVID-19 AND THE RUSSIAN-UKRAINE CONFLICT ON THE BUSINESS

In 2022, despite the continuing pandemic, there has been no suspension of industrial or commercial activity except for the lockdowns in certain areas of China. The Sogefi Group has maintained all the rules for health and safety in the workplace aimed at reducing the risk of contagion: social distancing, the use of individual protection and measures aimed at limiting the presence of personnel in the workplace by having staff work from home. Despite this, staff absences due to contagion or to contact with the virus have continued, causing operating difficulties.  

As for the consequences of the conflict between Russia and Ukraine, it should be noted that in March 2022 the Group ceased its commercial activity in Russia and exports to Ukraine and Belarus; the total revenues of the above activities were not significant (in 2021 they accounted for 0.7% of the Group’s revenues) and thus the loss of revenues has been irrelevant. However, discontinuing business in Russia meant recognizing losses in the value of assets held in that country of € 0.9 million.

In more general terms, the Group, like all of the automotive sector, is feeling the indirect effects of the war particularly the further hikes in the prices of energy and raw materials and the sourcing difficulties.

Lastly, as a combined effect of the pandemic crisis that is still not over and of the Russian-Ukrainian conflict, with a significant impact on important European customers for whom the Russian market was important, demand in Europe has not recovered as expected.  

OUTLOOK FOR THE YEAR

Visibility as to the performance of the automotive market in the fourth quarter of 2022 remains limited because of the uncertainty linked to the conflict between Russia and Ukraine, the macroeconomic scenario, the availability and prices of raw materials and energy, and the logistics of transportation and sourcing from Asian markets.

For 2022, S&P Global (IHS) expects higher volumes to continue in the fourth quarter too and is forecasting growth in world car production of 6% for the whole year compared to 2021 with Europe at +5.4%, NAFTA at +10.9%, South America at +6.7% and China at +6.4%.

As for the prices of raw materials, as from April the rising trend of steel prices came to an end while the prices of other materials such as resin and energy prices continue to rise.  

It should be noted that in the first nine months of 2022 the selling prices of Sogefi’s products were adjusted to factor in the higher costs of raw materials recorded in 2021 and at the beginning of 2022. Given the further rises in the cost of certain raw materials and energy, Sogefi’s management is continuing in its commitment to reaching fair agreements with all its customers with the aim of continuing commercial relationships that are sustainable in the long term.

Assuming that there are no other factors that could seriously worsen the macroeconomic and production scenario (a significant tightening of the sanctions imposed on Russia, a deterioration of the Russian-Ukrainian conflict, further shortages and higher prices of energy and raw materials than current ones, such that could compromise the sustainability of the supply chain, further lockdowns), Sogefi expects to achieve an operating result for the whole year 2022, excluding non-recurring charges, that is at least in line with the result for 2021.

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- 14:45 CEST

Sogefi: results for first half 2022

Revenues at € 760.0 million, up by 12.3% on first half 2021

EBITDA at € 99.8 million, equal to 13.2% of revenues

Net income at € 20.8 million, in line with first half 2021 (€ 21.4 million)

Free Cash Flow positive for € 41.2 million,

higher than in first half 2021 (€ 33.1 million)

Debt lower at € 216.4 million (€ 261.4 million at 30.6.2021)

Raffaella Pallavicini appointed director

Milan, 22 July 2022 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the Semi-Annual Financial Report of the group as of 30 June 2022, as presented by Chief Executive Frédéric Sipahi.

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

PERFORMANCE OF THE MARKET

The first half of 2022 saw the difficulty in sourcing specific components and raw materials continue (even causing the temporary closure of certain of the principal car manufacturers’ production facilities worldwide) while commodity prices continued to rise. As from March 2022 the effects of the conflict between Russia and Ukraine and of the economic and financial sanctions imposed on Russia began to be felt, particularly the decline in world trade and further rises in the prices of energy and raw materials.

Against this backdrop, world car production fell by 1.8% in first half 2022 compared to the first half of 2021.

Europe reported the most critical performance: -7.6% compared to first half 2021; in China and Mercosur production in the first half was broadly in line with that of the first half of 2021 (+0.7% and -0.6% respectively), while NAFTA and India experienced a recovery (+4.7% and +16.4% respectively).

The trend of the market remains uncertain; S&P Global (IHS) expects to see growth in world production of 4.7% for the whole year compared to 2021, with +11.5% in the second half compared to second half 2021, after the -1.8% of the first half.

SUMMARY OF SOGEFI’S PERFORMANCE IN THE FIRST HALF OF 2022

The Group’s consolidated revenues grew by 12.3% compared to the first half of 2021: production volumes were substantially in line with 2021 (a positive performance compared to the market’s -1.8%) and the rise in revenues was due to the evolution of exchange rates and to the adjustment of selling prices to the higher costs of raw materials.

Worthy of note is the positive performance of the After Market segment, which gained market share thanks to its ability to respond adequately to client requirements, despite difficulties in the logistics chain.  

The economic results were positive:

  • Net income came in at € 20.8 million (€ 21.4 million in 2021);
  • Free cash flowwas a positive € 41.2 million (€ 33.1 million in 2021);
  • Net debt (before IFRS 16) declined to € 216.4 million at 30 June 2022, versus € 258.2 million at 31 December 2021.

From the product innovation viewpoint, SOGEFI’S CabinHepa+ cabin filter, which uses HEPA (High Efficiency Particulate Air) media and filters the air mechanically, capturing particles 50 times smaller than a conventional cabin filter, was nominated product of the year 2022 in France. The inauguration took place of the new European E-Mobility Tech Center in Marckolsheim, Eastern France, which is devoted to the research and development of new E-mobility products and is equipped with the largest 3D printer in Europe.

The first half was also positive for commercial activity:

  • The Filtration division was awarded various contracts for the supply of oil filters and air purification filters;
  • The Suspensions division signed contracts in Europe for the supply of coil springs and stabilizer bars and also won a contract for the supply of stabilizer bars to an important Chinese company that is entering the electric vehicle market;
  • The Air and Cooling division signed some important contracts in NAFTA and Europe for the supply of thermal management products and cooling plates for electric mobility and the most important contract ever obtained with a producer of electric commercial vehicles and buses for the production of cooling plates in aluminium soldered using laser technology to regulate the temperature of the battery, integrated cooling modules and regulation and vent valves for the battery.

CONSOLIDATED RESULTS FOR THE FIRST HALF

The revenues of first half 2022 came in at € 756.0 million and were up by 12.3% on those of the same period of 2021.

Production volumes were substantially in line with those of the first half of 2021 and the Group outperformed the market (which declined by 1.8% globally and by 7.6% in Europe).

The trend of exchange rates, particularly the weakness of the euro and the consequent strengthening of the US and Canadian dollars and the Chinese renminbi, led to a rise in consolidated revenues of 2.9 percentage points. The remaining increase in revenues reflects the adjustment of selling prices across the different product lines to factor in the evolution of the cost of raw materials and the components used.   

Performance of revenues by geographical area

The Suspensions business unit reported a rise in revenues of 14.1% (+13.2% at constant exchange rates), with significant growth rates particularly in South America.

The Filtration business unit reported a rise in revenues of 15.3% (+12% at constant exchange rates), thanks to the good performance of the After Market channel in Europe and of business in North America and India.

The Air and Cooling business unit reported a rise in revenues of 6.7% and of 1.1% at constant exchange rates due to the negative performance of the Chinese market and particularly to the lockdowns in some areas in April and May when the pandemic flared up again.

EBITDA came to € 99.8 million, compared to the first half 2021 (€ 108.3 million), recurring EBITDA is stable but some non-recurring factors weighed on the result: particularly higher restructuring costs (€ 4.1 million versus € 1.3 million in first half 2021) and lower non-operating income (€ 3.9 million versus € 9.4 million at 30 June 2021).

EBIT came in at € 40.4 million versus € 47.3 million in 2021.

The Group reported net income of € 20.8 million, in line with that of the first half of 2021, which was € 21.4 million.

Free Cash Flow was a positive € 41.2 million, compared to € 33.1 million in first half 2021, thanks to the positive results and to the management of working capital, the change in which was more favourable in this period compared to that of the first half of 2021, also due to greater use of factoring.

Net debt before IFRS 16 stood at € 216.4 million at 30 June 2022, lower than at the end of 2021 (€ 258.2 million) and at 30 June 2021 (€ 261.4 million). Including the financial payables for rights of use as per IFRS 16, the net financial debt of the Group at 30 June 2022 amounted to € 285.2 million, down from € 327.6 million at 31 December 2021.

At 30 June 2022 the Group had committed credit lines in excess of its requirements for € 302.0 million.

At 30 June 2022 shareholders’ equity, excluding minority interests, stood at € 230.3 million, up from € 187.7 million at 31 December 2021. The increase of € 42.6 million was due mainly to the net income for the period (€ 20.8 million), to currency translation differences and to actuarial gains on the valuation of pension funds.

SIGNIFICANT EVENTS THAT HAVE TAKEN PLACE SINCE 30 JUNE 2022

Since the close of the first half of the year there have been no significant events that could have an impact on the economic, patrimonial and financial information given in this report.

IMPACT OF COVID-19 AND THE RUSSIAN-UKRAINIAN CONFLICT ON THE BUSINESS

In 2022, despite the continuation of the pandemic crisis, the effects on the market in which the Company operates have been less severe than those recorded in previous years, as there has been no suspension of industrial or commercial activity except for the lockdowns in certain areas of China in April and May.

However, operational difficulties linked to personnel absences due to infection or contact have been continuing in spite of the fact that Sogefi has maintained all the rules for health and safety in the workplace aimed at reducing the risk of contagion: social distancing, the use of individual protection and measures aimed at limiting the presence of personnel in the workplace by having staff work from home.  

As for the direct impact on Sogefi of the conflict between Russia and Ukraine, until March 2022 Sogefi had a commercial business in Russia and exported to Ukraine and Belarus; the total revenues from these activities were not signficant as they accounted for 0.7% of the Group’s revenues in 2021. The businesses in Russia, Ukraine and Belarus were discontinued as from March 2022 and the Russian branch is in the process of being wound up. As a result, in the first half of 2022 Sogefi reported losses in value of the assets held in Russia for an amount of € 1.3 million, while the direct impact on revenues and margins was minimal.

Sogefi, like all of the automotive sector, is feeling the indirect effects of the war and particularly the further hike in energy prices and commodities and the sourcing problems.

Lastly, as a combined effect of the pandemic crisis that is still ongoing and of the Russian-Ukrainian conflict , with a significant impact on important European customers for whom the Russian market was important, demand in Europe has been weak.  

OUTLOOK FOR THE YEAR

Visibility as to the performance of the automotive market in the coming months of 2022 is limited because of the uncertainty about the macroeconomic scenario and how the public health situation will evolve, the conflict between Russia and Ukraine, the availability and prices of raw materials, and the logistics of transportation and sourcing from Asian markets.   

However, for 2022 S&P Global (IHS) is continuing to forecast 4.7% growth in world car production compared to 2021, with Europe at +10.7%, Nafta at +12.7%, South America at +6.9% and China remaining substantially stable (+0.4%).

As for commodity prices, the first six months of 2022 saw further price rises and it is difficult to make forecasts for the second half of the year. It should be noted that in the first half of 2022 Sogefi’s selling prices were adjusted to take into account the rise in the cost of raw materials recorded in 2021 and at the beginning of 2022. Given the further commodity and energy price rises since the start of the Russian-Ukrainian conflict, Sogefi’s management is committed to reaching fair agreements with all its customers, as it did in the first half of the year, in order to continue commercial relationships that are sustainable in the long term.

Assuming that there are no factors that could worsen the macroeconomic and production scenario (a significant tightening of the sanctions imposed on Russia, an extension of the conflict outside of Ukraine, shortages and higher prices of energy and raw materials than current ones, such that could compromise the sustainability of the supply chain, further lockdowns), Sogefi hereby confirms its objective of achieving an operating result for the whole year 2022, excluding non-recurring charges, that is substantially in line with the result of 2021.

RAFFAELLA PALLAVICINI NEW DIRECTOR OF SOGEFI

The General Meeting of the shareholders of Sogefi S.p.A., held today in Milan in an ordinary session, approved an increase in the number of directors of Sogefi from eight to nine and appointed Ms Raffaella Pallavicini as director until the mandate of the current Board of Directors comes to an end, i.e. until the date on which the financial statements for the year 2024 are approved by the Annual General Meeting of the Shareholders. Ms Raffaella Pallavicini’s candidature was put forward by the majority shareholder CIR S.p.A. – Compagnie Industriali Riunite, holder of 55.64% of the voting rights. Her curriculum vitae is available on the website www.sogefigroup.com.

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- 19:00 CEST

Sogefi: AGM approves financial statements for 2021

SOGEFI: AGM APPROVES FINANCIAL STATEMENTS FOR 2021
BOARD OF DIRECTORS APPOINTED FOR THREE YEARS 2022-2024
MONDARDINI CONFIRMED AS CHAIRMAN AND SIPAHI AS CHIEF EXECUTIVE OFFICER

Independent directors Patrizia Arienti, Maha Daoudi and Massimiliano Picardi join the Board

Milan, 22 April 2022 – The ordinary Annual General Meeting of the Shareholders of Sogefi S.p.A. was held today under the chairmanship of Monica Mondardini.

Pursuant to Article 106, paragraph 4, of Italian Decree-Law no. 18 of March 17, 2020, shareholders exclusively participated in the Annual General Meeting of the Shareholders through the designated representative appointed pursuant to Article 135-undecies of Italian Legislative Decree no. 58 of February 24, 1998 (TUF) and identified in Studio Segre S.r.l., to which proxies/subproxies pursuant to art. 135-novies of the TUF have also been granted, as an exception to art. 135-undecies, paragraph 4, of the TUF.

Approval of the Financial Statements for 2021

The Shareholders approved the Financial Statements for the year 2021. Sogefi closed the year with consolidated revenues of € 1,320.6 million (€ 1,190.2 million in 2020), EBITDA of € 192.5 million (€ 137.0 million in 2020) and a positive net result of € 2.0 million (loss of € 35.1 million in 2020). The parent company of the group Sogefi S.p.A. reported a profit of € 69.9 million (loss of € 6.2 million in 2020).

The Shareholders approved the proposal put forward by the Board of Directors that no dividends be distributed.

Compensation Policy and Stock Grant Plan

The AGM approved the first section of the Report on Compensation and remuneration paid and expressed a majority vote in favour of the second section of the same Report.

The Shareholders also approved the stock grant plan for 2022 aimed at employees of the Group holding strategically important roles for a maximum of 1,000,000 conditional rights, each of which will give the beneficiaries the right to be assigned free of charge 1 Sogefi share. The shares thus assigned will be made available from the own shares held by the Company. The plan aims to align the interests of management with the objective of creating value for the Group and its Shareholders over a medium-long term time horizon, stimulating the commitment to achieving common objectives at Group level and encouraging those who hold key positions to remain with the Group.

Authorization to buy back own shares

The Annual General Meeting of the Shareholders renewed the proxy to the Board of Directors for a period of 18 months, with power to buy back a maximum of 10 million own shares at a unit price that cannot be more than 15% higher or lower than the benchmark price recorded by the Company’s shares on the trading day preceding each single buyback transaction or preceding the date on which the price is fixed in the event of purchases made in accordance with the procedures stated in points (a), (c) and (d) of the following paragraph, and in any case, when the shares are bought back through orders placed in the regulated market, the price must not be higher than the highest price of the last independent transaction and the highest current independent bid price on the same market.

The buyback must take place in the market, in compliance with the terms of Art. 132 of Italian Leg. Decree no. 58/98 and with the terms of the law and the rules in force at the moment of the transaction and more precisely (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 said markets, which do not allow bids and offers to be matched directly; (c) through the assignment pro-rata of put options to the shareholders to be assigned within 15 months of the date of the AGM resolution authorizing the same with exercise within 18 months of the same resolution; (d) through the purchase and sale of derivative instruments traded on regulated markets that involve physical delivery of the underlying shares in compliance with the further provisions contained in Art. 144-bis of the Rules for Issuers issued by Consob, and as per the terms of Articles 5 and 13 of EU Regulation no. 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 awards of shares of the Company to employees or members of the Board of Directors of Sogefi S.p.A. or its subsidiaries, or to fulfil any obligations resulting from debt instruments that are convertible into or exchangeable with equity instruments; (ii) to have a portfolio of own shares that can be used as consideration for any extraordinary transactions, even those involving an exchange of shareholdings, with other parties within the sphere of transactions of interest to the Company (a so-called “stock of shares”); (iii) to engage in action to support market liquidity, optimize capital structure, and remunerate shareholders in particular market situations, all within the limits established by current rules and regulations; (iv) to take advantage of opportunities for creating value, as well as investing liquidity efficiently in relation to the market trend; (v) for any other purpose qualified by the competent Authorities as admitted market practice in accordance with applicable European or domestic rules, and with the procedures established therein.

As of today’s date, the Company is the owner of 1,993,372 own shares, equal to 1.66% of the share capital.

Appointment of the Board of Directors

The Annual General Meeting of the Shareholders appointed Patrizia Arienti, Maha Daoudi, Rodolfo De Benedetti, Mauro Melis, Monica Mondardini, Massimiliano Picardi, Frédéric Sipahi, Christian Georges Streiff as directors for the three-year period 2022-2024.

Seven directors were drawn from the list submitted by the majority shareholder CIR S.p.A. – Compagnie Industriali Riunite, holder of 55.637% of the voting rights, and one director, Massimiliano Picardi, was taken from the list submitted by minority shareholder Navig S.a.s. of Giorgio Zaffaroni, holder of 3.33% of voting rights. The curricula vitae of the directors are available on the website www.sogefigroup.com.

During the Annual General Meeting, Chairman Monica Mondardini and CEO Frédéric Sipahi thanked outgoing board members Patrizia Canziani, Roberta Di Vieto and Ervino Riccobon for their service at the Company.

Board of Directors Meeting

Following the Annual General Meeting of the Shareholders, the Board of Directors confirmed Monica Mondardini as Chairman and Frédéric Sipahi as CEO of the Company.

The Board verified that five directors out of a total of eight were independent. They are Patrizia Arienti, Maha Daoudi, Mauro Melis, Massimiliano Picardi and Christian Georges Streiff.

The Board of Statutory Auditors in its turn verified the presence of the requisites for the independence of its members.

The Board of Directors also defined the composition of the committees: the Appointment and Remuneration Committee is composed of the directors Mauro Melis, Massimiliano Picardi and Christian Georges Streiff, the Control, Risk and Sustainability Committee is composed of Patrizia Arienti, Maha Daoudi and Mauro Melis and the Committee for Related Party Transactions is composed of Patrizia Arienti, Mauro Melis and Massimiliano Picardi. Mauro Melis was appointed lead independent director.

Lastly, the Board, in accordance with the AGM resolution, implemented the 2022 stock grant plan for the first time, granting 995,000 rights.

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- 16:11 CEST

Sogefi: results for first quarter 2022

RESULTS FOR FIRST QUARTER 2022

Revenues at € 381.1 million, up 8% on the first quarter of 2021
Better than market performance

EBITDA margin at 13.1% of turnover, lower than in the first quarter of 2021
(15.4%) due to higher raw material and energy costs

Net income of € 10.7 million
(€ 11.8 million in the first quarter of 2021)

Free Cash Flow positive for € 43.7 million and higher
than the first quarter of 2021 (€ 32.4 million)

Milan, 22 April 2022 – The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the Interim Financial Report of the Group as of March 31, 2022, presented by Chief Executive Officer Frédéric Sipahi.

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

PERFORMANCE OF THE MARKET

In the first few months of the year the difficulties in sourcing specific components continued (which also led to the temporary closure of some factories of the main world manufacturers), as did the shortages of raw materials and the increase in raw material and energy prices. Starting at the end of February, this problematic situation was compounded by the difficulties linked to the conflict between Russia and Ukraine and the economic and financial sanctions imposed on Russia by Europe, the United States and other countries around the world, which led to a reduction in world trade and a further rise in raw material and energy prices.

Against this backdrop, in the first quarter of 2022, global automobile production was down 4.5% compared to 2021; in March, the decline became more pronounced at -11.4%. Europe performed the worst, with car production at -17% compared to the first quarter of 2021 (-24.3% in March); production also fell in NAFTA and Mercosur (-1.8% and -13.3% respectively), while China showed a positive trend (+6.1%).

Despite the above, IHS maintains a forecast for global manufacturing growth of 4.4% in 2022.

SOGEFI’S KEY RESULTS IN THE FIRST QUARTER OF 2022

The Group revenues grew by 8% compared to 2021: production volumes remained substantially stable (compared to a market at -4.5%) and sales prices were adjusted to take into account the increases in raw material costs (particularly steels) recorded over the last 12 months.

The economic results were positive:
– net income was € 10.7 million (€ 11.8 million in 2021);
– positive free cash flow was € 43.7 million (€ 32.4 million in 2021);
– net debt before IFRS 16 at March 31, 2022 was € 213.4 million, down from € 258.2 million at December 31, 2021 and € 261.1 million at the end of March 2021.

The first quarter of 2022 was also positive for business activity.

During the quarter, the SOGEFI CabinHepa+ cabin filter, which uses HEPA (High Efficiency Particulate Air) media and filters mechanically, capturing particles 50 times smaller than a conventional cabin filter, won the 2022 Product of the Year award in France. The new European E-Mobility Tech Center, based in eastern France, was also inaugurated. It is dedicated to research and development of new E-mobility products and equipped with Europe’s largest 3D printer.

The Air and Cooling division entered into major contracts in NAFTA to supply thermal management products and cooling plates for electric mobility. In particular, a new contract was signed, the largest electric mobility contract ever entered into by Sogefi, with a manufacturer of electric commercial vehicles, for the production of aluminum cooling plates welded with laser technology to control the temperature of the battery. Filtration obtained a significant number of contracts for the supply of oil filters and air purification filters. Suspensions obtained contracts in Europe for coil springs and stabilizer bars, most of which will be manufactured in Romania.

REVENUES

In the first quarter of 2022, Sogefi’s revenues amounted to € 381.1 million, up 8% on the corresponding period of 2021 (€ 352.8 million).

Turnover grew in all geographies: +4.1% in Europe, +13.5% in North America, +31.9% in South America and +7.6% in Asia. Sogefi outperformed the market in all areas except China, where in the same period of the previous year Sogefi had already reported strong growth in revenues thanks to the launch of new programs.

By Business Unit, Suspensions reported revenues up 9.5%, with a particularly significant rate of increase in South America. Filtration reported revenues up 11.6%, with strong performance from the Aftermarket in Europe and the North American operations. The Air and Cooling division grew by 2.7% due to exchange rates, while at constant exchange rates it contracted slightly (-1.7%).

OPERATING RESULT AND NET RESULT

EBITDA amounted to € 50.0 million compared with € 54.2 million in the first quarter of 2021; gross profitability (EBITDA / Revenue %) fell to 13.1%, from 15.4% in the first quarter of 2021. This reflects a decline in contribution margin to 28%, compared to 30.7% in the first quarter of 2021, due to higher material and energy costs. In contrast, fixed costs as a percentage of revenue are down from 16.2% (in the same period of 2021) to 14.6%.

EBIT amounted to € 21.2 million, compared with € 25.4 million in 2021.

Financial expenses, at € 4.5 million, were down on those in the first quarter of 2021 (€ 5.8 million) thanks to the reduction in debt and the cost of debt; tax expenses were essentially stable at € 5.9 million (€ 6.0 million in 2021).

The net result was a positive € 10.7 million (€ 11.8 million in the first quarter of 2021).

DEBT AND EQUITY

The Free Cash Flow was positive for € 43.7 million versus € 32.4 million in Q1 2021. The Free Cash Flow reflects the positive results and specific actions on working capital implemented by the Group.

Net debt before IFRS16 stood at € 213.4 million at March 31, 2022, down from the end of 2021 (€ 258.2 million) and from March 31, 2021 (€ 261.1 million).
Including financial payables for rights of use as per IFRS 16, net debt at March 31, 2022 stood at € 281.8 million, down from € 327.6 at December 31, 2021.

As of March 31, 2022, the Group has committed credit lines in excess of requirements of € 321 million.

At March 31, 2022, Shareholders’ equity, excluding minority interests, amounted to € 205.8 million versus € 187.7 million at December 31, 2021.

IMPACTS OF COVID-19 AND RUSSIAN-UKRAINIAN CONFLICT ON THE BUSINESS

In 2022, despite the continuing pandemic crisis, the effects on the market in which the Company operates were less severe than those suffered in the previous two years. However, demand remains weak, particularly in Europe and NAFTA, and operational challenges related to uneven production levels and staff absences caused by the pandemic continue. The current lockdown in some areas of China could have negative impacts both directly, on manufacturing activities in China, and indirectly, on raw materials imported from the country.

In 2022, the Sogefi Group continued to apply all the rules for health and safety in the workplace aimed at reducing the risk of contagion, namely social distancing, the use of individual protective equipment and measures to limit the presence of personnel in the workplace, i.e. working from home.

Regarding the impact of the Russian-Ukrainian conflict, it should be pointed out that Sogefi has a very limited direct presence in the countries involved: in 2021 revenues earned in these countries accounted for 0.7% of Sogefi’s total revenues. Sales to Russia, Ukraine and Belarus have been discontinued since March. As a result, in the first quarter of 2022, Sogefi recorded impairment losses of € 1.1 million on assets held in Russia. With the exception of these losses, the impact on revenues and margins was not significant.

Regarding the indirect impact of the conflict, Sogefi, like the whole automotive sector, could suffer consequences on production volumes linked to the closure of the factories of the main world manufacturers present in Russia (such as, for example, Renault) and in general the repercussions of a further rise in the prices of raw materials and of increased supply difficulties.

OUTLOOK FOR THE YEAR

Visibility as to the market trend in the next few months of 2022 remains low. The uncertainties related to the evolution of the pandemic, availability and prices of raw materials, transportation and supply logistics from Asian markets, and thus the recovery of the automotive sector have been amplified by the Russian-Ukrainian conflict.

For 2022, however, IHS maintains a forecast of global manufacturing volumes recovering 4.4% from 2021, with Europe at +11.3%, NAFTA at +13%, South America at +9.6% and China essentially breaking even (-0.9%).

With regard to commodity prices, the early months of 2022 have seen a further rise and it is difficult to make forecasts for 2022. It should be noted that in the first quarter of 2022, sales prices were adjusted to reflect the increase in raw material costs recorded in 2021. Faced with a further rise in the cost of raw materials and energy following the outbreak of the Russian-Ukrainian conflict, Sogefi’s management is committed to seeking fair agreements with all its customers, as it did in the first quarter, in order to continue to have sustainable long-term business relationships.

Assuming that there are no further factors causing a serious deterioration in the macro-economic and production scenario (significant tightening of sanctions against Russia, extension of the conflict outside Ukraine, shortages and price rises in energy and raw materials compared to the current ones that would compromise the sustainability of the supply chain), Sogefi confirms its target of achieving operating results for the whole of 2022, excluding non-recurring costs, substantially in line with the result recorded in 2021.

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