Sogefi (CIR Group): revenues at € 1,25 bn (+6.3%) in 9M 2017

Board of Directors approves results as of September 30 2017

SOGEFI (CIR GROUP): RESULTS HIGHER IN FIRST NINE MONTHS OF 2017

Revenues up by 6.3% at € 1,256.5m
EBITDA at € 131m (+ 14.4%)
Net income at € 28m (€ 15.8m in 9M 2016)
Net debt reduced to € 266.7m (€ 314.1m at 9/30/2016)

Milan, October 24 2017 - The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, approved the Interim Financial Report of the group as of September 30 2017.

Sogefi, a company of the CIR Group, is a leading global manufacturer of automotive components in three business segments: Air&Cooling, Filtration and Suspensions.

Laurent Hebenstreit, Chief Executive of Sogefi, made the following statement:
'Sogefi obtained an improvement in its results for the first nine months despite the car market slowdown in some key countries, which confirms that the turnaround actions aimed at increasing profitability and cash generation have been effective'.

Revenues up by 6.3%

In the first nine months of 2017, the global automotive market reported an increase in production of 2.6% thanks to growth in Asia (+3.2%) and South America (+22.2%) while production was substantially stable (-0.1%) in Europe and the market slowed considerably in North America (-3.7%).

In this environment, in the first nine months Sogefi reported revenues of € 1,256.5 million, up 6.3% compared to € 1,181.5 million in the same period of 2016 (+6.6% at constant exchange rates). After the high growth recorded in the first quarter (+12.6%) and the still significant growth in the second quarter (+4.5%), in the third quarter the company posted lower growth (+2.0%) mainly because of unfavourable exchange rates. At constant exchange rates, the growth per quarter is more balanced throughout the year, with +11% and +4.6% in the first and second quarter respectively and +4.2% in the third quarter.

Revenues grow in all geographical areas

All geographical areas contributed to the increase in sales in the first nine months. In Europe revenues increased 2.8%, outperforming the market, which was down in the first nine months of 2017 (-0.1%). Business continued to develop in North America (+3.3%) despite the expected market slowdown in the third quarter (-9.7%), and in Asia (+25.2%): the two regions now account for 27.5% of the group's sales. In South America revenues increased by 19.8%, reflecting the recovery of the market and a favourable exchange rate trend (+17.1% at constant exchange rates).

Positive performance for the three Business Units

In the nine months, all three business units reported growth: +6.7% Suspensions (+7.1% at constant exchange rates, and 7.9% growth in the third quarter of 2017), +6.9% Filtration (+7.3% at constant exchange rates) and lastly Air & Cooling, +5.3%. The Air & Cooling business unit posted a 3.1% decline at constant exchange rates in the third quarter, due mainly to the slowdown in the United States and Canada.

Operating results and net income

EBITDA, at € 131.0 million, increased by 14.4% compared to € 114.5 million for the same period of 2016. The increase was due to the revenue growth and the improvement in profitability (EBITDA/revenue %), which rose from 9.7% to 10.4%.

The increase in profitability is the result of a stable contribution margin despite higher material costs and a better absorption of fixed costs. The ratio of total labour costs to revenues declined from 21.5% in the first nine months of 2016 to 20.8% in the same period of 2017.

EBIT, at € 70.2 million, increased by 19.6% compared to the same period of 2016 (€ 58.7 million) and represents 5.6% of total sales. The result includes € 6 million of write-downs of the fixed assets of the Brazilian operations.

Net income before taxes and non-controlling interests was € 51.0 million (€ 39.8 million in the first nine months of 2016), after financial expenses of € 19.2 million, down from € 22.5 million in the same period of 2016 thanks to lower interest expense and fair value gains of € 1.6 million.

Net income was € 28.0 million (€ 15.8 million in the first nine months 2016).

Regarding the risks resulting from the claims made against Sogefi Air & Cooling S.A.S. (formerly Systèmes Moteurs S.A.S.), in the first nine months of 2017 there were no significant developments.

Net debt

Free Cash Flow in the first nine months of 2017 amounted to a positive€ 32.5 million compared to a cash flow of € 12.3 million in the same period of 2016, which included €11.2 million of positive one-offs from the warranty claims and fiscal disputes. The improvement is attributable to the better operating performance of the group.

Net financial debt at September 30 2017 stood at € 266.7 million, showing an improvement of € 32.3 million compared to December 31 2016 (€ 299 million) and of € 47.4 million compared to September 30 2016 (€ 314.1 million).

Shareholders' equity

At September 30 2017 shareholders' equity excluding minority interests amounted to € 192.4 million (€ 172.9 million at December 31 2016).

Employees

The Sogefi group had 6,900 employees at September 30 2017 compared to 6,801 at December 31 2016.

Outlook for the year

For the global automotive market, the outlook for the last quarter of 2017 shows a slightly positive trend, albeit at a slower pace than in the first nine months of the year. Europe is expected to grow while North America is expected to show a further decline. Despite this, Sogefi expects revenue growth for the whole of 2017 in line with the first nine months. Profitability should confirm the improvement versus 2016 registered until now despite an increase in the cost of raw materials.

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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.

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