SOGEFI (CIR GROUP):
2018 Revenues at € 1,623.8m, +3.2% at constant exchange rates (€ 1,647.8m in 2017)
EBITDA at € 190.0m (€ 206.9m in 2017)
Net income at € 14.0m (€ 26.6m in 2017)
Net debt slightly lower at € 260.5m (€ 264.0m at 31/12/2017)
Milan, February 25 2019
– The Board of Directors of Sogefi S.p.A.
, which met today under the chairmanship of Monica Mondardini
, approved the proposed statutory financial statements for financial year 2018
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
Laurent Hebenstreit, Chief Executive of Sogefi, said:“In a difficult year for the car markets in Europe and China, Sogefi is reporting growth of 3% at constant exchange rates; profitability, however, suffered the negative impact of exchange rates and the rise in the cost of steel, which was significant for Suspensions. Even Filtration reported a slight decline in the profitability of the OEM, while the After Market business and Air and Cooling held up well. Cash flow reflects the investments made for the purchase of the minority interest in India, and for the development in Morocco, with the opening of a new production site”.
Revenues up by 3.2% at the same exchange rates
In 2018 the world car market reported a contraction in production of 1%, with a decline of 2% in Europe, of 0.6% in North America and of 2.3% in Asia, while South America reported growth of 3.2%.
Performance was particularly critical in the fourth quarter, with a decline of 5.4% in volumes compared to the same period of 2017, due to the decline in Europe, South America and Asia, because of the inversion of the trend in the Chinese market.
In this context, in 2018 Sogefi reported revenues
of € 1,623.8 million
, down by 1.5% at current exchange rates but up by 3.2% at constant exchange rates. In the fourth quarter revenues declined by 0.4%, but rose by 3.1% at constant exchange rates, thus outperforming the market.
Performance of revenues by geographical area
At constant exchange rates, revenues were down in Europe (-1.4%) but higher in North America (+5.7%), Asia (+4.8%) and South America (+28% and +18.5% on a like-for-like basis, i.e. without including the impact of the application of IAS 29 for hyperinflation, to the Argentinian business).
Performance of revenues by Business Unit
The three divisions reported declines in revenues of around 1/2 %; at constant exchange rates, however, the revenues of Suspensions and Filtration increased (+4.5% and +4.1% respectively) while those of the Air and Cooling business unit remained substantially stable.
Operating results and net income
came in at € 190.0 million
, in contraction compared to financial year 2017 (€ 206.9 million), with profitability (EBITDA/Revenues %) down by 12.6% at 11.7%. The lower EBITDA mainly reflects the performance of the Suspensions business unit, which was significantly penalized by steel prices, as well the negative effect of exchange rates on the whole Group (€ 6.2 million).
, which came to € 61.9 million
and posted a decline on 2017 (€ 85.8 million), substantially reflected the lower EBITDA.
The EBIT included a positive effect from the non-operating gain generated by the claims agreement (€ 6.6 million) but also the negative impact of the write-down of the asset relating to the Fraize site in view of its sale (-€ 5.2 million) and of the application of IAS 29 to the Argentina businesses (-€ 2.6 million).
amounted to € 23.9 million
in 2018, down from € 31.7 million in 2017, due to the reduction of interest expense (from € 22.0 million in 2017 to € 21.4 million in 2018), to the lower impact of the fair value adjustment made to the put option of the minority shareholder of the Indian subsidiary (for € 4.2 million) and to the lower costs for hedging interest rate risk (for € 3.0 million).
came to € 20.7 million
, down from € 23.4 million in the previous year; the modest decline in relation to the reduction in the pre-tax result reflects the composition of the result, with some areas showing significant earnings while for other areas with losses linked to the start-up of businesses or to ongoing problems, it was decided not to set aside any deferred tax assets.
came in at € 14.0 million
, compared to € 26.6 million for the year 2017.
Free Cash Flow
for the year 2018 was a positive figure of € 2.9 million
, down from € 34.4 million in 2017. It should be noted that in 2018 the minority interest in the Indian branch Sogefi M.N.R. Engine Systems India Pvt Ltd was acquired (€ 16.7 million). In the fourth quarter, free cash flow was positive for approximately € 25.7 million (compared to € 1.9 million in the fourth quarter of 2017), thus recovering from the temporary unfavourable trend of working capital experienced in the third quarter.
amounted to € 260.5 million
at December 31 2018 (€ 286.2 million at September 30 2018 and € 264 million at December 31 2017).
At December 31 2018 shareholders’ equity
, excluding minority interests, stood at € 192.9 million
(€ 177.4 million at December 31 2017).
The Sogefi Group had 6,973 employees
at December 31 2018, in line with the number at December 31 2017.
Results of the parent company Sogefi S.p.A.
In financial year 2018, the Company reported a write-down, recognized on the basis of the impairment test carried out at December 31 2018, of € 36 million (accounted for in the item “Adjustments to the value of financial assets”) on the value of the French subsidiary Sogefi Filtration S.A.. Because of this write-down, Sogefi S.p.A. reported a loss of € 13.7 million, compared to net income of € 11.7 million in 2017. The dividend flow from the subsidiaries was higher than that of the previous year (+€ 6.6 million) and net financial expense was lower than in 2017 (-€ 3.8 million).
Significant events that have occurred since December 31 2018
There have been no significant events since the close of the year at December 31 2018.
Outlook for the year
According to the sources generally used at sector level, it is expected that car production in 2019 will be in line with that of 2018, with a decline in the first half due mainly to China, and a recovery in the second half of the year. It should however be stressed that there is a lack of visibility at present as to how the year will evolve, and there is also a very high level of volatility in the markets. Uncertainty also remains as to how the prices of raw materials will evolve.
In such a climate, Sogefi expects revenues to evolve in line with the market, and is committed to recovering profitability particularly in the Suspensions sector.
The Board of Directors will propose to the Annual General Meeting of the Shareholders that no dividend be distributed.
Annual General Meeting of the Shareholders
The first call of the Annual General Meeting of the Shareholders of Sogefi has been called for April 26 2019 and the second call for April 27 2019.
The Board of Directors has voted to put the following proposals before the ordinary session of the AGM:
· The cancellation and renewal of the power assigned to the Board of Directors for a period of 18 months to buy back a maximum of 10 million own shares (including 2,429,080 own shares held today, corresponding to 2.02% of the share capital) at a unit price that must not be more than 10% higher or lower than the benchmark price recorded by the shares in the stock exchange trading session preceding each single buyback transaction or the date on which the price is fixed and in any case, when the purchases are made on a regulated market, at a price that is no higher than the higher of the price of the last independent transaction and the current independent bid price in the same market, in accordance with what is stipulated in EU Delegated Regulation no. 2016/1052.
The main reasons for renewing this authorization are the following: to fulfil obligations resulting from any stock option plans or other forms of assignation of the Company’s shares to employees or members of the Board of Directors of Sogefi or its affiliated companies; to fulfil obligations that may derive from debt instruments that can be converted into or exchanged for shares; to have a portfolio of own shares to use as consideration in any extraordinary transactions, possibly involving an exchange of shareholding interests, with other parties within the scope of transactions of interest to the Company (a so-called “stock of shares”); to be able to increase the liquidity of the shares in the market; to be able to take any opportunities for creating value as well as investing liquidity efficiently in relation to the trend of the market; for any other purpose that the competent Authorities should qualify as permitted market practice as per the terms of the European and domestic rules applicable, and following the procedures established therein;
· The approval of a stock grant plan for 2019 aimed at employees of the Company and its subsidiaries for a maximum of 500,000 conditional rights, each of which will give the beneficiaries the right to be assigned 1 Sogefi share free of charge.
The shares thus assigned will be made available from the stock of own shares held by the company.
The Plan aims to reward the loyalty of the beneficiaries to the companies of the Group by giving them an incentive to increase their commitment to improving performance;
· An update of the fee of the legal audit firm KPMG S.p.A..
The ordinary session of the Annual General Meeting will also be called upon to pass resolution on the renewal of the Board of Directors.
The Board of Directors also passed a resolution to propose that the AGM, in an extraordinary session, cancel the previous delegation of powers and give new powers to the same Board for share capital increases, even with the exclusion or limitation of the option right as per the terms of Art. 2441, paragraphs IV and V of the Civil Code, up to a maximum amount of € 100 million, for capital increases in favour of directors and employees of the Company and its subsidiaries for a maximum amount of € 5.2 million, and for issuing, even with the exclusion of the option right and in this case in favour of institutional investors, convertible bonds or bonds with ancillary rights for the assignation of shares, even in foreign currency, with the related share capital increase, up to a maximum amount of € 100 million.
***The executive responsible for the preparation of the Company’s financial statements, Yann Albrand, hereby declares, in compliance with the terms of paragraph 2 Article 154-bis of the Finance Consolidation Act (TUF), that the accounting figures contained in this press release correspond to the results documented in the Company’s accounts and general ledger.