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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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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Sogefi: results higher in 2021

Revenues at € 1,320.6 million: up by 11% on 2020
Outperforming the market in all geographical areas

EBITDA margin at 14.6% of revenues higher than the EBITDA margin of 2020 (11.5%) and 2019 (12.1%)

Net income from continuing operations at € 28.6 million (loss of € 18.4 million in 2020 and earnings of € 13.8 million in 2019)

Free Cash Flow positive for € 32.4 million (negative for € 38.2 million in 2020 and for € 8.4 million in 2019)

Milan, February 25 2022 – 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 2021 presented by Chief Executive Frédéric Sipahi.

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

PERFORMANCE OF THE MARKET

In 2021 world car production rose by 2.5% compared to 2020. After the rise of 29.2% in the first half of 2021 compared to the first half of 2020 (impacted by the spread of the Covid-19 pandemic and the resulting lockdown), in the second half global production was significantly lower than that of the same period of 2020 (-16%). It was particularly affected by the difficulties experienced in the sourcing of specific parts (which also involved the temporary closure of certain production sites of some of the top global producers), shortages of raw materials and the sharp rise in the prices of the same.

In 2021 Europe reported the worst performance, with car production at -6.2% compared to 2020; production remained substantially stable in NAFTA (+0.1%) and reported a recovery in China (+4%) and Mercosur (+16.2%).

Global production in 2021 did not see a return to the volumes of the pre-pandemic period, and reported -14.1% on 2019 (Europe -27.9%, NAFTA -20.1% and Mercosur -19.4%); the only exception was China, which did substantially return to the levels of 2019 (-0.6%).

After the fall reported in 2020 and the extremely weak recovery in 2021, IHS is forecasting 8.5% growth in production for 2022.

SOGEFI’S KEY RESULTS FOR 2021

The Group’s revenues recorded growth of 11% compared to 2020, clearly outperforming the market (+2.5%); compared to 2019 revenues were -8.3%, versus -14.1% for car production worldwide.

The recovery of revenues and the action taken to counter the economic impact of the crisis made it possible to close the year with:

  • “Net income from continuing operations” of € 28.6 million, versus a loss of € 18.4 million in 2020,
  • Positive free cash flow of € 32.4 million (a negative € 38.2 million in 2020),
  • Net debt before IFRS16 lower at € 258.2 million (€ 291.3 million at December 31 2020).

The year 2021 was also a positive year for commercial activity.

The Air and Cooling Division obtained important contracts in Europe, NAFTA and China for the supply of thermal management products for electric mobility, which contain greater added value than the average standard value of traditional products for internal combustion engines. More specifically, these new contracts were with a prime German car manufacturer for a new-generation electric platform, with two producers of electric commercial vehicles, one pure electric and the other using fuel cell technology, and with various Chinese car manufacturers of full electric vehicles.

Filtration obtained a significant number of contracts for the supply of air purification Filters and two important contracts in the NAFTA zone for transmission filters.

Suspensions extended its customer portfolio, obtaining contracts with new customers focusing exclusively on electric products. The division also obtained contracts from historical customers for orders that will be produced in the new production plant at Oradea in Romania. Of these it is worth mentioning the first contract signed with one of the principal customers for the production of coil springs in Eastern Europe.

In the current context of generalized increases in the cost of raw materials, transportation and energy, which led to a deterioration in margins in the second half of 2021, Sogefi has started negotiations with all customers aimed at adjusting its sales prices to the situation to a more complete extent than that envisaged by the indexation mechanisms contained in the contracts. Sogefi’s management is determined and confident that it will be able to reach fair agreements with all of its customers in order to continue its commercial relationships in a way that is sustainable in the long term. With some of them this objective has already been reached.

REVENUES

In 2021 Sogefi’s revenues came in at € 1,320.6 million and were up by 11% on 2020.

After growth of 34.7% in the first half, the second half closed with a decline of 6.2% on the same period of 2020, although this was still significantly better than the market’s -16%.

Performance of revenues by geographical area

Revenues rose in all geographical areas: +7.8% in Europe, +4.6% in North America, +22.0% in Asia, +67.9% in South America.

Performance of revenues by Business Unit

The Air and Cooling and Filtration sectors reported revenues close to those reported in 2019. The growth of Air and Cooling compared to 2020 (+8.1%) was due partly to the recovery of the market but partly also to the expansion of the contract portfolio particularly in China, where revenues were up by 18.4% compared to the previous year.

The increase in the revenues of Filtration (+10%) reflects the strong recovery in India as well as the evolution of the market.

Lastly, Suspensions posted revenue growth of 14.7%, but business remains significantly below the levels of the corresponding period of 2019 (-16.6%).

The rise in revenues mainly reflects the good performance in South America and China.

OPERATING RESULT AND NET RESULT

EBITDA came to € 192.5 million, up from € 137.0 million in 2020 and € 174.6 million in 2019; gross profitability (EBITDA / Revenues %) rose to 14.6% from 11.5% in 2020 (13.1% excluding non-recurring restructuring charges) and 12.1% in 2019.

The contribution margin remained stable (30.6% versus 30.8% in 2020 and 30.1% in 2019) and the increase in profitability was due to the decline in the impact of fixed costs on revenues to 16.3% (16.9% in 2020 and 17.2% in 2019) and of restructuring costs. It should be noted that compared to 2019 fixed costs were down by 12.8%, thanks to the action plans put in place. Lastly, the higher EBITDA was partly due to the positive effect of exchange rates (€ +2.5 million in 2021 versus € -4.7 million in 2020).

In conclusion, it should be pointed out that, as was the case in the third quarter, the fourth quarter was negatively affected by the weakness in volumes and the generalized rise in the cost of raw materials, especially steel prices for the production of suspensions, which caused a reduction in the contribution margin for the quarter from 31.5% in 2020 to 28.1% in 2021.

EBIT came to € 58.4 million, up from € 7.1 million in 2020 and € 46.4 million in 2019.

Financial expense, totalling € 17.8 million, was lower than in 2020 (€ 22.1 million) thanks to the reduction in debt and to the recognition of an item of non-recurring financial income (of € 1.2 million); tax expense came to € 13.5 million versus € 3.4 million in 2020.

Net income from operating activity came in at € 28.6 million and compares with a loss of € 18.4 million in 2020 and earnings of € 13.8 million in 2019.

The net result of discontinued operations was a loss of € 24.5 million (a loss of € 16.2 million at December 31 2020) and related to the filtration business in Argentina, which was sold in 2021 and which generated an accounting loss in the income statement of € 24.1 million, of which € 20.8 million due to the restatement of accrued exchange rate differences from shareholders’ equity to the result for the period. This had no impact either on the cash or the equity position.

The net result was a positive € 2.0 million compared to a loss of € 35.1 million in 2020 and net income of € 3.2 million in 2019.

DEBT AND EQUITY

Free Cash Flow was positive for € 32.4 million, versus cash absorption of € 38.2 million in 2020, due to the particular circumstances that occurred in 2020 and more especially to the fall in revenues, which also had an impact on working capital. In 2021 the strong recovery of Free Cash Flow reflected the positive evolution of results and the specific action taken by the Group on working capital.

Net financial debt before IFRS 16 stood at € 258.2 million at December 31 2021, lower than at the end of 2020 (€ 291.3 million) and substantially in line with December 31 2019 (€ 256.2 million).

Including financial payables for rights of use, as per IFRS 16, net debt stood at € 327.6 million at December 31 2021, down from € 358.1 million at December 31 2020 (€ 318.9 million at December 31 2019).

At December 31 2021 the Group had committed credit lines of € 280 million in excess of its requirements (after repaying its convertible bond loan of € 100 million in May).

At December 31 2021 shareholders’ equity, excluding minority interests, stood at € 187.7 million compared to € 133.8 million at December 31 2020 (€ 188.7 million at December 31 2019).

KEY RESULTS OF FOURTH QUARTER 2021

In the fourth quarter of 2021, Sogefi reported revenues of € 330.6 million, with a decline of 8.4% compared to the fourth quarter of 2020, in a market in which production was -13.2%. The fourth quarter, like the third quarter, was affected by the temporary closure of certain production facilities of top global producers; the business unit most affected by the performance of the market was Air and Cooling partly because of its greater exposure to the two markets that suffered the most (Europe and NAFTA).

EBITDA came to € 48.3 million, up from € 38.8 million in the fourth quarter of 2020 and € 43.1 million in 2019. The EBITDA margin was 14.6%, higher than in 2020, but in line excluding the non-recurring expenses of the previous year. The contraction of the contribution margin (from 31.5% in fourth quarter 2020 to 28.1% in fourth quarter 2021) reflects the increase in the cost of raw materials, which had a particular impact on the results of the suspensions business unit; negotiations are in progress with customers to adjust sales prices to the current conditions of the commodity markets.

EBIT was a positive € 8.9 million (€ 3.8 million in fourth quarter 2020).

The net result of operating activity was a positive € 4.3 million, versus a loss of € 2.9 million in the fourth quarter of 2020.

The net result of discontinued operations was a positive € 0.2 million compared to a negative result of € 8 million in the fourth quarter of 2020 (due particularly to the Brazilian Filtration business, which was sold at the end of 2020).

The consolidated net result for the fourth quarter of 2021 was € 3.9 million, compared to a loss of € 12.0 million in the previous year.

IMPACT OF COVID-19 ON THE BUSINESS

In 2021, despite the continuing pandemic crisis, the effects on the market in which the Company operates were less severe than those suffered in 2020. There was, however, a general weakness in demand, which is still lower than in the same period of 2019, particularly in Europe (-27.9%) and NAFTA (-20.1%), and operating difficulties linked to fluctuating production levels and personnel absences caused by contagion and, most of all, by contact with infected people.

During the year 2021, 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.

RESULTS OF THE PARENT COMPANY SOGEFI S.P.A.

In financial year 2021 the Company recognized a reversal of an impairment loss on equity investments after conducting an impairment test at December 31 2021. The reversal was for € 68.1 million (recognized to the item “Adjustments to the value of financial assets”), relating to the French subsidiary Sogefi Filtration S.A.. Thanks to this reversal Sogefi S.p.A. realized net income of € 69.9 million in financial year 2021 after reporting a net loss of € 6.2 million in 2020.

SIGNIFICANT EVENTS OCCURRING AFTER DECEMBER 31 2021

No significant events have occurred since the close of the year.

OUTLOOK FOR THE YEAR

Visibility as to the market trend in the next few months remains low, mainly due to the uncertainty, still existing, as to the evolution of the pandemic and the macroeconomic situation.

There are also specific areas of uncertainty regarding the trend of demand, the generalized increase in commodity prices and their availability, as well as logistic difficulties involving transportation and sourcing from Asian markets.

For 2022, after the decline in 2020 and performance in 2021 that was lower than expected at the start of the year, IHS is estimating a recovery in world car production volumes of 8.5% compared to 2021, with Europe +20.8%, Nafta +16.6%, South America +12.5% and China substantially breaking even (+0.9%); despite the expected positive trend, 2022 production would still be lower than that of 2019 (-6.8%), especially in Europe (-12.9%), Nafta (-6.9%) and South America (-9.4%), with only the Asian market at pre-Covid levels (+0.7%).

With regard to commodity prices, given the unprecedented price boom in 2021, it is difficult to make any forecasts for 2022 and the current situation seems to be continuing in the first part of this year. To mitigate the effects of this, the Group has already started resourcing activities, putting in place measures to contain costs and taking commercial action.

In this scenario and in the absence of any currently unforeseeable extraordinary events, Sogefi expects to achieve operating profitability for full year 2022, excluding non-recurring charges, substantially in line with that of 2021, thanks to the effects of the incisive action already implemented to reduce the impact of fixed costs and structurally improve profitability and, with regard to Suspensions in particular, the gradual entry into operation of the new plant in Romania.

DIVIDEND PROPOSAL

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

ANNUAL GENERAL MEETING OF THE SHAREHOLDERS

The Annual General Meeting of the Shareholders of Sogefi will be held at the first call on April 22 2022 and at the second call on April 26 2022.

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

a) The cancellation and renewal of the authorization of the same Board of Directors, 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, of Consob Resolution no. 20876 of April 3 2019 and Consob Guidelines of July 2019, 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 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 higher of the price of the last independent transaction and the highest current independent bid price on the same market. As of today’s date the Company is the owner of 1,993,372 own shares, equal to 1.65% 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 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.

b) The approval of a stock grant plan for 2022 aimed at employees of the Company and its subsidiaries, in the terms to be defined by the Board of Directors and notified to the market in sufficient time for any legal obligations to be carried out. The Stock Grant Plan has the aim of rewarding the loyalty of the beneficiaries to the companies of the Group, giving them an incentive to increase their commitment to improving the performance of the Company.

APPOINTMENT OF THE NEW CHIEF FINANCIAL OFFICER AND THE EXECUTIVE RESPONSIBLE FOR THE PREPARATION OF THE COMPANY’S FINANCIAL STATEMENTS

The Board of Directors has approved the appointment, as from May 1 2022, of Olivier Proust as the new Chief Financial Officer and Investor Relator in replacement of Yann Albrand who should be leaving the Company on April 30 2022. Mr Proust has been working for Sogefi since 2008 and is currently in charge of the group’s treasury. Mr Proust owns 8,394 shares in the Company.

It should be noted that Mr Albrand has terminated his relationship with the Company by mutual consent; in connection with the termination of the employment there will be payment of an all-inclusive sum as a negotiated settlement (including the notice period) of euro 307,000 and he will keep the benefits that he was assigned that have not yet vested under the stock grant plans approved by the Company for the years 2018 and 2019.

According to the information available to the Company, Mr Albrand owns 74,517 shares in the Company.

In addition to the position of Chief Financial Officer, Mr Albrand was also the Executive Responsible for the preparation of the Company’s Financial Statements. After obtaining the favourable opinion of the Board of Statutory Auditors, the Board of Directors has resolved to assign the title of Executive Responsible for the preparation of the Company’s Financial Statements to Ms Maria Beatrice De Minicis, who has been in Sogefi since 2004 and is currently in charge of the Company’s consolidated accounts and reporting. Ms De Minicis is the owner of 20,570 shares in the Company.

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Sogefi: results higher in first nine months of 2021

Revenues at € 990.0 million: up by 20.9% at constant exchange rates on 9M 2020
Better performance than the market in all geographical areas 

EBITDA margin at 14.6% of revenues higher than in first 9M of 2020 (11.8%) and 2019 (12.1%)

Net income from continuing operations € 24.3 million (loss of € 15.6 million in 9M 2020 and earnings of € 14.9 million in 9M 2019)

Positive Free Cash Flow of € 25.1 million (negative for € 55.6 million in 9M 2020 and for € 4.2 million in 9M 2019)

Milan, October 22 2021 – 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 September 30 2021, as 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 three sectors: Air and Cooling, Filtration and Suspensions.

PERFORMANCE OF THE MARKET

After the rises reported in the first and in the second quarter (+15.7%, +48.3%), in the third quarter of 2021 global car production was weak and significantly lower than that of the same period of 2020 (-19.7%) in which there had been a strong recovery. This was due to the difficulties experienced in the sourcing of particular components, which slowed production and even led to the temporary shutdown of certain production facilities of the main producers worldwide.

In the first nine months of 2021 world car production did in any case report growth of 9.5% compared to the same period of 2020: +4.4% in Europe, +6.8% in NAFTA, +7.7% in China, +28.7% in Mercosur and +48.4% in India.

Lastly, despite the recovery, production volumes were still significantly lower than those before the spread of the pandemic in all geographical areas, with the sole exception of China. In fact world production in the first nine months of 2021 was 15.5% lower than that of the same period of 2019, with Europe reporting -27.6%, NAFTA -21.5%, Mercosur -23.3% and China substantially in line with 2019 (-1.8%).

SUMMARY OF SOGEFI’S RESULTS FOR 9M 2021

The Group reported a significant recovery in revenues, which rose by 19.4% compared to the first nine months of 2020, clearly outperforming the market. Compared to the same period of 2019, revenues posted -9.1%, versus a -15.5% fall in car production worldwide.

The recovery in revenues and the action taken to counter the impact of the crisis made it possible to close the first nine months of the year with:

  • EBITDA higher at 14.6% of revenues (11.8% in 9M 2020 and 12.1% in 9M 2019);
  • Net income from “continuing operations” of € 24.3 millionversus a loss of € 15.6 million in the same period of 2020;
  • Positive free cash flow of € 25.1 million (a negative € 55.6 million in the first nine months of 2020);
  • Net debt before IFRS 16 of € 267.4 million, lower than the figure at December 2020 (€ 291.3 million).

During the first nine months of the year commercial activity posted a positive performance.

The Air and Cooling division obtained important contracts in Europe, NAFTA and China for the supply of thermal management products for electric mobility, which incorporate a higher added value than the standard average value for traditional plastic products. More specifically, these were new contracts entered into with a premium German car maker for a new-generation electric platform and with two producers of electric commercial vehicles, one of which is pure electric while the other uses fuel cell technology.

The Filtration division obtained a significant number of contracts for the supply of air purification filters and two important contracts in NAFTA for transmission filters.

The Suspensions division obtained various contracts with new customers focusing exclusively on electric platforms.

REVENUES

In the first nine months of 2021 Sogefi’s revenues totalled € 990.0 million and were up by 19.4% at historical exchange rates and by 20.9% at constant exchange rates compared to the same period of 2020. After the increases of 5.2% in the first quarter and 94.5% in the second quarter, the third quarter closed with a decline in revenues of 3.8% at current exchange rates, compared to the market’s -19.7%. Revenues for the first nine months of 2021 were down by 9.1% compared to those of the first nine months of 2019.

Performance of revenues by geographical area

Revenues at constant exchange rates rose by 17.6% in Europe, by 13.6% in North America, by 19.4% in China and by 104.6% (72.3% at current exchange rates) in South America. Thus in all geographical areas Sogefi outperformed the market.

Performance of revenues by Business Unit

In the first nine months of 2021 the Air and Cooling and the Filtration Business Units reported a greater recovery in business activity compared to 2020 than that of the market, with revenues more or less in line with those of the corresponding period of 2019.

The growth in revenues of the Air and Cooling division (+20.5% at constant exchange rates and +19.8% at current exchange rates compared to the same period of 2020) was due not only to the market recovery by also to the development of its contract portfolio especially in China, where revenues at constant exchange rates have risen by 24.3% on the previous year.

The higher revenues of the Filtration division (+18.8% at constant exchange rates and +17% at current rates compared to the same period of 2020) reflect not only the trend of the market but also the strong recovery in India.

Lastly, the Suspensions Business Unit reported a 23.8% rise in revenues at constant exchange rates (+21.7% at current rates) compared to the first nine months of 2020, although business activity remains significantly lower than in the same period of 2019 (-20% at current exchange rates).

OPERATING RESULT AND NET RESULT

EBITDA came in at € 144.1 million, up from € 98.1 million in the first nine months of 2020 and € 131.5 million in the first nine months of 2019; gross profitability (EBITDA / Revenues %) rose to 14.6%, versus 11.8% in the first nine months of 2020 and 12.1% in the same period of 2019.

The higher profitability is the result of the rise in the contribution margin to 31.4% (29.8% in the first nine months of 2019 and 30.4% in the same period of 2020) and of the reduction of the impact of fixed costs on revenues to 16.4% (17.2% and 17.3% in the first nine months of 2019 and 2020 respectively). Fixed costs declined by 13.3%, compared to the first nine months of 2019, thanks to the action plans put in place.

Lower restructuring costs also contributed to the increase in EBITDA (€ 2.3 million versus € 12.2 million in the first nine months of 2020 and € 4.8 million in the same period of 2019).

The third quarter was affected by the weakness of volumes and the generalized increase in the cost of raw materials, particularly steel prices for the production of suspensions, which caused a reduction in the contribution margin that is destined to continue in the fourth quarter of the year.

EBIT came to € 49.4 million, compared to € 3.3 million in the same period of 2020 and € 41.9 million in the first nine months of 2019.

Financial expense, which totalled € 13.4 million, was lower than that of the same period of 2020 (€ 16.0 million), thanks to the reduction of the debt and to an item of non-recurring financial income of € 1.2 million; tax expense amounted to € 13.2 million, up from € 2.9 million in the previous year.

Net income from continuing operations came to € 24.3 million, versus a loss of € 15.6 million in the first nine months of 2020.

The net result of “discontinued operations and operations held for sale” was a loss of € 24.7 million (€ 8.2 million in the first nine months of 2020) and came from the sale of the filtration business in Argentina, which had a negative impact on the income statement of € 23.3 million, of which € 20.6 million from the reclassification of the exchange rate differences accrued by the subsidiary from equity to result for the year, which had no impact on liquidity or on equity.

The net result for the period was a loss of € 2.0 million, compared to a loss of € 23.2 million in the first nine months of 2020 and net income of € 8.3 million in the first nine months of 2019.

DEBT AND EQUITY

Free Cash Flow was a positive € 25.1 million, which compares with a cash absorption of  € 55.6 million in the first nine months of 2020, the performance of which was of course anomalous because of the sharp contraction of business activity due to the Covid-19 pandemic.

Net financial debt before IFRS 16 amounted to € 267.4 million at September 30 2021, down from December 31 2020 (€ 291.3 million) and September 30 2020 (€ 299.0 million) and was close to being in line with September 30 2019 (€ 264.6 million).

Including the financial payables for rights of use, as per IFRS 16, the net debt figure at September 30 2021 stood at € 335.5 million, down from € 358.1 million at December 31 2020 and € 374.5 million at September 30 2020.

At September 30 2021 the Group had committed credit facilities in excess of its requirements for € 265.0 million (after repaying its convertible bond of € 100.0 million in May 2021).

At September 30 2021 shareholders’ equity, excluding minority interests, came to a total of € 168.3 million (€ 133.0 million at December 31 2020).

SUMMARY OF 2021 THIRD QUARTER RESULTS

In the third quarter of 2021 Sogefi reported a decline in revenues of 3.8% (-4% at constant exchange rates) compared to the third quarter of 2020, to € 316.6 million, after seeing growth of 5.2% in the first quarter and of 94.5% in the second quarter. The group’s revenues were affected by the market trend which involved a 19.7% fall in production in the third quarter. The group’s performance, however, was considerably better than that of the market.

EBITDA came to € 35.8 million, down from € 45.9 million in the third quarter of 2020 and € 44.7 million in the same period of 2019. The reduction in EBITDA reflects the weakness of revenues due to the market scenario and to the reduction in the contribution margin (from 30.8% in third quarter 2020 to 28.4% in third quarter 2021) because of the higher cost of raw materials, which particularly affected the results of the Suspensions Business Unit. Negotiations are in progress with customers to adjust selling prices to the current cost of raw materials.

EBIT was positive for € 2.1 million versus € 14.8 million in the third quarter of 2020.

The net result of continuing operations was a loss of € 2.1 million, which compares with net income of € 5.2 million in the third quarter of 2020.

The net result of “discontinued operations and operations held for sale” was a loss of € 21.2 million (net income of € 0.3 million in third quarter 2020), of which € 20.6 million came from the reclassification of the exchange rate differences accrued by the Argentinian subsidiary from shareholders’ equity to result for the year, which had no impact on liquidity or equity.

The consolidated net result for the third quarter of 2021 was a loss of € 23.4 million, versus net income of € 5.6 million in the previous year.

IMPACT OF COVID-19 ON THE BUSINESS

In the first nine months of 2021, despite the continuing pandemic crisis, the effects on the market in which the Company operates were less severe than those recorded for the first nine months of 2020 and consisted of a general weakness in demand, which was still lower than in the same period of 2019, especially in Europe (-27.6%) and NAFTA (-21.5%).

During the first nine months of 2021, the Sogefi Group continued to apply all the rules for health and safety in the workplace with the aim of reducing the risk of contagion. These include social distancing, the use of individual protection systems and measures to limit the presence of personnel in the workplace, with staff working from home.

SIGNIFICANT EVENTS THAT HAVE OCCURRED SINCE SEPTEMBER 30 2021

No significant events have taken place since the close of the period.

OUTLOOK FOR THE YEAR

Visibility as to the market trend in the next few months remains low mainly due to the continuing uncertainty about the evolution of the pandemic and the macroeconomic situation.

There are also specific critical issues relating to the generalized increase in the prices of the main raw materials and their availability, as well as logistic difficulties involving transportation and sourcing from Asian markets.

Given this scenario, IHS has revised its estimates for world production down, forecasting that fourth quarter 2021 will be down by approximately 20% on the same period of 2020, with Europe at -24.9%, NAFTA at -16.8% and China at -19.6%.  Therefore, for the whole year 2021 production should be in line with that of 2020 (+0.3%) but still around 16% lower than that of 2019. The expected recovery of volumes after the fall reported in 2020 is therefore forecast by IHS to take place in 2022, the year in which IHS is projecting growth of 10.6%.

For the fourth quarter of 2021, Sogefi expects the market to remain weak, in line with IHS projections, and pressure on commodity prices (steel, plastic and paper) to continue with possible negative effects on the contribution margin. To mitigate these effects the Group has already launched resourcing initiatives, has taken commercial action and adopted measures to reduce labour costs.

Provided there are no extraordinary circumstances or events that are not at present foreseeable, Sogefi confirms the view it expressed in the publication of its results for first half 2021, i.e. for the full year it expects to achieve an operating result at least equal to that reported for 2019.

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Sogefi: results for first half 2021

RESULTS SHOW STRONG GROWTH IN FIRST HALF OF 2021

Revenues rise significantly to € 682.5 million (+38.5% at constant exchange rates) outperforming the market in all geographical areas

EBITDA at 16.1% of revenues, up from H1 2020 (10.3%) and H1 2019 (11.7%)

Net income at € 21.4 million after a loss in H1 2020 (€ -28.8 million) and higher than in H1 2019 (€ 6.9 million)

Free Cash Flow positive for € 33.1 million compared to absorption of € 64.0 million in H1 2020 and € 8.8 million in H1 2019

Milan, July 23 2021 – 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 June 30 2021 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 three sectors: Air and Cooling, Filtration and Suspensions.

In the first half of 2021 world car production grew by 29.2% compared to the first half of 2020, +15.5% in the first quarter and +48.6% in the second quarter. In 2020 there had been an unprecedented fall in production as an effect of the Covid-19 pandemic.

The recovery was seen in all of the main geographical areas. In Europe, NAFTA and Asia production rose by around 30% (28%, 32% and 31.6% respectively) and in Mercosur it was up by 63.3%.

In all geographical areas production volumes are still significantly lower than those prior to the spread of the pandemic with the exception of China. Indeed, compared to the first half of 2019, world production stood at -12.6% in the first half of 2021 with Europe posting -23.5%, NAFTA -19.7%, Mercosur -19.5% and China +1.6%.

During the first half of 2021, the Group kept in place all the health and safety rules for the workplace with the aim of reducing the risk of contagion. These rules involve social distancing, the use of personal protective equipment, and measures to limit the presence of personnel in the workplace by resorting to working from home.

The Group reported a significant recovery of revenues, which were up by +34.9% on the first half of 2020; compared to the first half of 2019, revenues posted -9%, compared to -12.6% for car production worldwide.

The recovery of revenues and the action taken to counter the impact of the crisis made it possible to close the first half with net income of € 21.4 million (versus a loss of € 28.8 million in the first half of 2020), positive free cash flow of € 33.1 million (a negative € 64.0 million in first half 2020) and net debt before IFRS 16 of € 261.4 million, lower than the figure at December 31 2020 (€ 291.3 million).

Commercial activity was positive during the first six months.

The Air and Cooling division has concluded important contracts in Europe, NAFTA and China for the supply of Thermal Management products for electric mobility (products for E-Thermal Management today represent approximately 50% of the ongoing requests for quotations).

Filtration has been awarded a significant number of contracts for the supply of Air Purification Filters and two important contracts in NAFTA for Transmission Filters. For the two product categories in question, numerous requests for quotations are in progress, confirming the validity of the strategy pursued by the Group, of developing new applications, to face the decline of diesel engines.

The company has continued to focus on the development of products for electric mobility and air purification and today it has in its portfolio a wide variety of Thermal Management products for electric mobility, which enable it to be ready to meet the new market demands potential applications.

REVENUES

In the first half of 2021 Sogefi’s revenues came in at € 682.5 million, posting growth compared to the same period of 2020 of 34.9% at historical and 38.5% at constant exchange rates (+ 9.3% in the first quarter and + 96% in the second quarter); revenues were, however, still 9% lower than in the first half of 2019.

Performance of revenues by geographical area

Revenues at constant exchange rates rose by 30.4% in Europe, by 40.3% in North America (+32.7% at current exchange rates) and by 36.3% in China, outperforming the market both in North America and in China.

Performance of revenues by Business Unit

The Air and Cooling and Filtration sectors reported a stronger recovery from 2020 than that of the market with revenues almost in line with those of the same period of 2019.

The growth of Air and Cooling compared to first half 2020 (+39.9% at constant exchange rates, +37.4% at current exchange rates) was due not only to the market recovery but also to the development of its contract portfolio particularly in China, where revenues at constant exchange rates rose by 43.6% compared to the previous year.

The increase in Filtration revenues compared to first half 2020 (+36.2% at constant exchange rates, +31.6% at current exchange rates) reflects the strong recovery in India as well as the trend of the market.

Lastly, Suspensions reported 39.8% growth in revenues at constant exchange rates (+36.3% at current rates), but business has remained significantly lower than the level seen in the same period of 2019 (-19.4% at current exchange rates).

OPERATING RESULT AND NET RESULT

EBITDA came in at € 110.0 million, up from € 52.1 million in the first half of 2020 and € 87.9 million in the first half of 2019; gross profitability (EBITDA / Revenues %) went up to 16.1% (versus 11.7% in first half 2019 and 10.3% in the same period of 2020).

The increase in profitability was due to the higher contribution margin of 31.3% (29.6% in the first half of 2019 and 30.2% in the same period of 2020), despite the tension in the market over the availability and the prices of raw materials, and to the ratio of fixed costs to revenues which declined to 16.4% (17.4% and 19.2% in first half 2019 and first half 2020). It should be noted that compared to the first half of 2019 fixed costs fell by 14.2%.

The positive effect of exchange rates also contributed to the increase in EBITDA (€1.3 million in 2021 versus € -1.4 million in the first half of 2020) as did the recognition of € 5.3 million of non-operating income.

EBIT came to € 48.9 million, compared to € -12.0 million in the same period of 2020 and € 27.9 million in the first half of 2019.

Financial expense, which totalled € 10.6 million, was in line with that of the same period of 2020 (€ 10.4 million), tax expense came to € 13.5 million, compared to tax income of € 1.0 million in the previous year, and the net result of discontinued operations and those held for sale was a negative € 3.3 million (€ -8.0 million in the first half of 2020). This last result includes the best estimate of the capital loss on the sale of the Argentinian subsidiary in the filtration division which at June 30 2021 was classified in “Assets held for sale” since, in the light of the negotiations in progress, a sale is highly probable to be completed within a year.

The Group reported net income of € 21.4 million versus a loss of € 28.8 million in the first half of 2020 and earnings of € 6.9 million in the first half of 2019.

DEBT AND EQUITY

Free Cash Flow was a positive € 33.1 million, which compares with an absorption of € 64.0 million in the first half of 2020, the performance of which was of course anomalous because of the sharp contraction of business activity due to the Covid-19 pandemic.

Net financial debt before IFRS 16 amounted to € 261.4 million at June 30 2021, which was lower than the figure at the close of 2020 (€ 291.3 million), at June 30 2020 (€ 327 million) and at June 30 2019 (€ 267.3 million).

Including the financial payables for rights of use, as per IFRS 16, the net debt figure at June 30 2021 totalled € 327.5 million, down from € 358.1 million at December 31 2020 and € 382.9 million at June 30 2020.

At June 30 2021 the Group had committed credit facilities in excess of its requirements of € 276.0 million (after repaying its convertible bond of € 100.0 million in May of this year).

At June 30 2021 shareholders’ equity, excluding minority interests, stood at € 168.9 million (€ 133.0 million at December 31 2020). The increase in equity of € 35.9 million, was higher than the net income for the period (€ 21.4 million) mainly because of the recognition of actuarial gains on the valuation of pension funds.

IMPACT OF COVID-19 ON THE BUSINESS

In the first six months of 2021, despite the continuing pandemic crisis, the effects on the market in which the Company operates were less severe than those recorded for the first half of 2020 and consisted of a general weakness in demand, which was still lower than in the same period of 2019 especially in Europe and NAFTA (-20% approximately), and the need to continue to apply measures giving a high level of protection.

SIGNIFICANT EVENTS THAT HAVE TAKEN PLACE SINCE JUNE 30 2021

Since the beginning of July negotiations have been underway for the sale of the Argentinian branch of Filtration. This sale is part of the strategy of refocusing the group’s Filtration business, which aims, on the one hand, to consolidate its position in Europe while at the same time pursuing growth in NAFTA, China and India.

The sale would generate a capital loss, estimated today at € 2.8 million, which is already included in the results at June 30 2021 in accordance with IFRS 5.

If the sale is completed it will have a negative impact of approximately € 21.0 million on the income statement for purely accounting reasons (with no cash impact), resulting from the reclassification from shareholders’ equity to the result for the period of the exchange rate differences of the subsidiary.

OUTLOOK FOR THE YEAR

Visibility as to the market trend in the next few months remains low, due to uncertainty about the evolution of the pandemic and macroeconomic and sectorial developments. There are also specific critical issues relating to the generalized increase in the main prices of raw materials and the availability of the latter, as well as logistic difficulties involving transport and sourcing from Asian markets.

For the second half of 2021, IHS expects world production to show a limited overall decline (-3.4%) compared to the second half of 2020: Europe -5.3%, NAFTA -0.5%, China -7% (an area that in the second half of 2020 had recorded an earlier and higher recovery than the other geographical areas). Therefore, for the full year 2021, IHS is forecasting growth of 10%, with a partial recovery of the fall seen in 2020, thus coming in at -7.8% on 2019. 

For the second half of 2021, pressure on commodity prices (steel, plastic and paper) is expected to continue. 

The group has launched resourcing activities and commercial actions to mitigate the negative effect that the evolution of raw material prices could have on the group’s contribution margin. 

Provided there are no extraordinary circumstances or events that are not at present foreseeable, Sogefi confirms the view it expressed in the publication of its results for first quarter 2021, i.e. for the full year it expects to achieve an operating result at least equal to that reported for 2019.

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