Sogefi: net profit at € 9.3 m (€ 1.1 m in 2015), revenues at € 1.6 bn (+5%)

Revenues up by 5% to € 1.6bn (+9.8% at constant exchange rates)
EBITDA up by 32.2% to € 152.7m
Net result at € 9.3m (€ 1.1m in 2015)
Free Cash Flow positive at € 31.2 m (negative € 24.8m in 2015)

Milan, February 27 2016 - The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the proposed statutory financial statements and the consolidated financial statements of the company for financial year 2016.

Laurent Hebenstreit, Sogefi's Chief Executive Officer, made the following statement: 'In 2016, Sogefi made progress in quality and productivity. The results show the impact of the turnaround actions undertaken by Sogefi in the past 18 months to improve profitability and cash generation.'

Revenues up by 5% and by 9.8% at constant exchange rates In 2016 the global automotive market reported an increase in production of 4.8%, with growth of 13.3% in Asia and a positive evolution in Europe (+3.5%) and North America (+2%). In South America the market remained in recession (-8.7%), although the fourth quarter, with a 7% growth of the production, seems to show an inversion of the trend. In this environment, in 2016, Sogefi reported revenues of € 1,574.1 million, up 5% compared to € 1,499.1 million in 2015 and up 9.8% at constant exchange rates. The revenue growth was driven by significant development in North America (+16.9%) and in Asia (+25.6%) while Europe reported an increase of 1.4%. Revenues in South America, however, declined by 7.1% (+15.8% at constant exchange rates), but grew by 13.9% in the fourth quarter thanks to the first signs of market recovery. The Air & Cooling sector, which reported a 15.6% sales increase (+18.4% at constant exchange rates) contributed largely to the progress of the group. The revenues of the other two business units were affected by the evolution of exchange rates: the Suspensions sector reported revenue growth of 0.9% (+6.2% at constant exchange rates) and Filtration reported a 1% increase (+6.7% at constant exchange rates). Operating results and net income EBITDA in 2016 grew by € 37.2 million to € 152.7 million, representing a +32.2% increase compared to €115.5 million in 2015. The increase benefited from revenue growth and from the improvement in profitability which increased to 9.7% from 7.7% in 2015. The increase in profitability was due to a slight improvement in the gross margin and to the reduced impact of indirect costs. In particular, the ratio of total labour costs to revenues declined from 22.1% in 2015 to 21.4% in 2016. Regarding the risks resulting from the claims made against the company Sogefi Air & Refroidissement France S.A.S. (formerly Systèmes Moteurs S.A.S.), in 2016 there were no developments in the 'product guarantee' issue that warranted a change in the provision made at December 31 2015. As for the recovery of damages from Dayco, the vendor of Systèmes Moteurs S.A.S. to Sogefi in 2011, in May the arbitration process ended with Dayco being sentenced to pay Sogefi € 9.4 million for the claims already settled. The whole amount was received during the second half of 2016. The arbitration decision, however, reduced the amount expected to be recovered by Sogefi by € 4 million, with a negative impact of the same amount on the accounts booked in June 2016. Sogefi appealed against the decision which stipulated that any payments for claims relating to production that took place after the acquisition will be borne by Sogefi; Dayco appealed against the award for the part which confirmed the validity of the compensation to Sogefi included in the acquisition contract. In this regard, the validity of the compensation has been confirmed both by the arbitration award, and, preliminarily, in a decision by the Milan Court of Appeal which rejected a Dayco request to suspend the enforceability of the award. EBIT increased by 46.8% to € 74.5 million compared to € 50.7 million in 2015. The result before taxes and minority interests was a positive € 46.6 million (€ 17.9 million in 2015), benefiting also from non-recurring financial income of € 6 million. The net result was a positive € 9.3 million (€ 1.1 million in 2015) after tax expense of € 32.6 million in 2016 (versus € 12.9 million in 2015), as an effect of the higher pre-tax result and non-recurring taxes of € 10.2 million. Net debt Free Cash Flow in 2016 amounted to a positive € 31.2 million, compared to € 24.8 million of cash absorption in 2015 which included € 20.3 of quality costs (out of which € 18.0 million of payment related to Systèmes Moteurs warranty claims). The improvement came with an increase in tangible asset expenditure to € 58.8 million (€ 51.3 million in 2015). Without items of non-ordinary nature, Free Cash Flow amounted to € 21.9 million in 2016. Net financial debt stood at € 299 million at December 31 2016 showing a € 23.3 million improvement on December 31 2015 (€ 322.3 million) and a € 15.1 million improvement on September 30 2016 (€ 314.1 million). Shareholders' equity At December 31 2016 shareholders' equity excluding minority interests amounted to € 172.9 million (€ 170.8 million at December 31 2015). Employees The Sogefi group had 6,801 employees at December 31 2016 compared to 6,702 at December 31 2015. Results of the parent company Sogefi S.p.A. In 2016, the parent company Sogefi S.p.A. reported net income of € 27.7 million (a net loss of € 6.8 million in the previous year). The difference was mainly due to higher dividends from subsidiaries for € 22.8 million, non-recurring financial income of € 6 million and revenues of a non-ordinary nature from subsidiaries for € 2.3 million. Net debt stood at € 280.1 million at December 31 2016, posting a reduction of € 25.7 million compared to December 31 2015 (€ 305.8 million). Shareholders' equity at December 31 2016 amounted to € 197.9 million (€ 167.5 million at December 31 2015). Outlook for the year In 2017 the global car market is expected to experience a modest increase with limited growth in Europe, a contraction in North America and a slight recovery in South America. The company is targeting a mid-single digit revenue growth in percentage terms driven by a good performance in China and India and to a lower extent by growth in North and South America. In this environment, Sogefi expects to continue to improve its profitability. Proposed dividend The Board of Directors will propose that no dividend distribution be approved by the Annual General Meeting of the Shareholders. Shareholders' Meeting The Annual General Meeting of the Shareholders of Sogefi has been convened at the first call for April 26 2017 and at the second call for April 27 2017. The Board of Directors has specifically resolved: • To submit for approval by the Shareholders' Meeting the early termination by mutual consent of the mandate to the current firm of auditors Deloitte & Touche S.p.A. and to assign the new legal audit mandate for the period 2017-2025. • To propose that the Shareholders' Meeting cancel and renew its authorization of the Board of Directors, for a period of 18 months, to buy back a maximum of 10 million of the company's own shares (including the 2,868,933 shares already held as of today, corresponding to 2.40% of the share capital), at a unit price that cannot be more than 10% higher or lower than the official price of the shares recorded at the trading session on the regulated market prior to that of each individual transaction or the date on which the price is fixed, and in any case when the buybacks are effected on the regulated market, at a price no higher than the higher of the price of the last independent transaction and the highest current independent bid price on the same market, in accordance with what is laid down by EU Delegated Regulation no.2016/1052. The main reasons why this authorization is being renewed are the following: to fulfill obligations from possible stock option plans or other awards of the Company's shares to employees or members of the board of directors or the board of statutory auditors of Sogefi or any of its subsidiary companies; to fulfill any obligations resulting from debt instruments that are convertible into or exchangeable with equity instruments; to have a portfolio of shares to use as consideration in extraordinary transactions, even those involving share exchanges, with other entities in deals of interest to the Company (as treasury stock); to engage in activities supporting the liquidity of the market; to take advantage of any opportunities to create value, and to invest liquidity efficiently in relation to the market trend; for any other purposes that the competent authorities should qualify as market practices permitted as per the terms of applicable European and domestic regulations, and following procedures established therein. • To submit to the approval of the Shareholders' Meeting a stock grant plan for 2017 for the employees of the company and its subsidiaries for a maximum of 750,000 conditional rights, each of which will give the beneficiaries the right to be assigned 1 Sogefi share free of charge. The shares assigned will be taken from the own shares held by the Company as treasury shares. SOGEFI (CIR GROUP):