Board of Directors approves results as of June 30
2012
CIR GROUP: REVENUES AT 2.4 BLN (+9.1%), EBITDA LOWER
AT 175.8 MLN
The group closes the first half in profit (0.7 million
euro) despite the repercussions of the deep recession
in Italy on the domestic businesses, especially energy
(Sorgenia) and the media (Espresso).
Higher earnings for the parent company CIR SpA
(19.8 million euro versus 14.2 million in 2011)
Global growth continues in the automotive
components sector (Sogefi). Positive in the first
half the contribution of the financial investments of the
group.
Financial surplus at holding level of 25.6
million euro
Consolidated results of first half 2012
Revenues: € 2,406.9 million (+9.1% from € 2,205.6
million in H1 2011)
-
EBITDA: € 175.8 million (-22.3% from € 226.3 million
in H1 2011)
-
Net income: € 0.7 million (from € 19.4 million in H1
2011)
-
Aggregate net financial surplus: € 25.6 million (€
24.6 million at 31/3/2012)
Consolidated net debt: € 2,551.5 million (€
2,437.9 million at 31/3/2012
-
Milan, July 30 2012 - The Board of Directors of
CIR-Compagnie Industriali Riunite SpA met today under the
chairmanship of Stefano Micossi and approved the
Semi-Annual Financial Report of the group as of June 30
2012.
-
The CIR group operates in five business sectors: energy
(Sorgenia), media (Espresso), automotive components
(Sogefi), healthcare (KOS) and non-core investments
(private equity and minority interests, venture capital
and other investments).
Performance of operations
Despite the repercussions of the deep recession in Italy on
its businesses most exposed to the domestic market
(especially Sorgenia in energy and Espresso in the media),
the CIR group closed the first half with a positive net
result of almost 1 million euro, although it was down on the
result for 2011. Consolidated revenues rose by 9.1% to over
2.4 billion while EBITDA fell by 22.3% to 175.8 million euro.
Espresso and especially Sorgenia reported a considerable
reduction in their profitability compared to last year while
in the automotive parts sector Sogefi's global growth is
continuing. In healthcare the business of KOS remains stable.
All the main operating subsidiaries of the group, apart from
Sorgenia, closed the first half with a profit. The
contribution of financial investments in the first half was a
positive one.
-
Consolidated results
The revenues of the CIR group in the first half of 2012
totalled 2,406.9 million euro, and were up by 9.1% from
2,205.6 million euro in the same period of 2011 thanks
mainly to the higher sales reported by Sorgenia, Sogefi
and KOS.
EBITDA came in at 175.8 million euro (7.3% of revenues), down
by 22.3% compared to the figure of 226.3 million euro (10.3%
of revenues) in the first half of 2011. The operating margin
(EBIT) was 55.6 million euro versus 128.6 million euro in
2011. The contraction in margins, despite the significant
increase reported by Sogefi, was due especially to the lower
profitability of Sorgenia and Espresso as a result of the
negative economic situation in Italy.
The net result of financial management was a negative figure
of 45.3 million euro (a negative 52.3 million euro in the
first half of 2011) and came from net financial expense of
60.8 million euro partly offset by dividends and net gains
from trading and valuing securities of 15.5 million euro.
The net result of the CIR group in the first half of
the year was a positive 0.7 million euro, although it was
down on the figure of 19.4 million euro for the same period
of 2011. The change from last year, despite the higher net
income of Sogefi, was due mainly to the lower contribution of
the other operating subsidiaries particularly Sorgenia, which
closed the first half of the year with a net loss of
approximately 54 million euro. The result for the first half
benefited from a positive adjustment of the fair value of the
securities portfolio (8 million euro) and from income on
private equity investments (4.2 million euro).
The net debt of the CIR group stood at 2,551.5 million euro
at June 30 2012, up from 2,437.9 million euro at March 31
2012 (2,335.1 million euro at December 31 2011). The
consolidated net debt figure is the result of the following
factors:
- An
aggregate net financial surplus at holding level of 25.6
million euro (24.6 million euro at March 31 2012). The rise
from 10.8 million euro at December 31 2011 was due
essentially to the positive fair value adjustment of the
securities portfolio;
- Total
net debt in the operating companies of 2,577.1 million euro
(2,462.5 million euro at March 31 2012). The increase from
2,345.9 million euro at December 31 2011 was due mainly to
the investments made in production capacity and to the rise
in the working capital of Sorgenia.
Total consolidated equity came to 2,427 million euro at June
30 2012 versus 2,479 million euro at December 31 2011. The
group's equity amounted to 1,417.6 million euro compared to
1,437.7 million euro at December 31 2011. The change was due
mainly to the payment of dividends.
At June 30 2012 the CIR group had 14,271 employees (14,072 at
December 31 2011).
Results of the parent company CIR SpA
The parent company of the group CIR SpA closed the first half
of 2012 with net income of 19.8 million euro, up from 14.2
million euro in the same period of 2011 thanks to lower
operating costs. Shareholders' equity stood at 948.6 million
euro at June 30 2012 (946 million euro at December 31
2011).
Industrial businesses
Energy: Sorgenia
The revenues of the Sorgenia group came in at 1,119.3 million
euro in the first half of 2012 and were up by 7.3% on the
figure for the same period of 2011 (1,043.1 million euro).
Adjusted EBITDA was 33.6 million euro, down by 56.8% on the
figure for the first half of 2011 (77.7 million euro). EBITDA
came to 32.2 million euro versus 76.3 million euro in
2011.
The considerable decline in operating results compared to
last year was due mainly to the following factors: the
contraction in thermoelectric generating margins mainly
because of the high price of gas for the power plants; the
lower contribution of the investee Tirreno Power;
higher congestion charges on the electricity grid in
the Southern region; a reduction in the contribution of the
renewable source businesses due to the changes in the
consolidation; a decline in natural gas sales volumes and the
margins thereon.
The net result of the group was a loss of 54.1 million euro
which compares with a substantial breakeven in the
first half of 2011 (0.3 million euro). Apart from the lower
EBITDA, the result for the first half was also affected by
the higher financial expense and by the writedown of assets
for 13 million euro mainly in hydrocarbon exploration and
production.
To counter the deep recession in Italy and the difficulties
in the national energy market, Sorgenia has launched a series
of actions (renegotiating its gas sourcing contract, cutting
operating costs and the possible sale of non-strategic
businesses) which should generate the first benefits in
economic and financial terms in the second part of this year
and in 2013.
Media: Espresso
The revenues of the Espresso group in the first half of 2012
came in at 419.8 million euro, down by 8.2% on the figure for
the same period of 2011 (457.4 million euro) given the
performance of add-on products, which had been extraordinary
favourable last year, and the contraction of advertising
revenues due to the trend of the market. Circulation
revenues, excluding add-ons, came to 127.1 million euro,
substantially unchanged on the figure of the previous year
(129.2 million euro), thanks partly to the gradual adjustment
of the cover prices of the daily newspapers. Advertising
revenues, totalling 251.1 million euro, declined by 8.5%
compared to 2011 while the whole market, in the first five
months of the year, went down by 9.5% (
Nielsen Media
Research figures). Performance was very positive for
internet advertising (+13.2%) which confirmed the brilliant
dynamics of the last few years, despite the particularly
unfavourable climate. Revenues from add-ons, which came in at
25.6 million euro, posted a significant fall (-37.3%)
compared to the first half of 2011, while sundry revenues,
which came to 16 million euro, rose by over 20% thanks to the
growth of the business of renting out digital terrestrial TV
bandwidth to third parties and to the positive performance of
subscriptions to digital products.
EBITDA came to 60.8 million euro, and was down by 25.4% from
81.5 million euro in the first half of 2011. About half of
this decline was due to the reduced margin on add-on products
while the remaining part came from the press and radio
businesses, which were hit by the contraction in advertising
revenues, while internet and television results showed an
improvement. Net income was 21.2 million euro versus 31.5
million euro in 2011.
Automotive components: Sogefi
The revenues of Sogefi in the first half of 2012 came in at
686.8 million euro and were up by 30.4% from the figure of
526.6 million euro reported in the same period of 2011 thanks
to the consolidation of the businesses of Systèmes Moteurs as
from August 1 of last year. The highest rise was in the
original equipment segment (+44.5%). The original spares
aftermarket rose by 4.3% while the independent market
declined by 5.8%. In geographical terms, the highest growth
in revenues in the first half was in the United States
(+277.9% to approximately 52 million euro), India (+69.9%)
and China (+12.9%). By contrast, sales in Mercosur fell by
7.9% in the first half while Europe's percentage of the
group's total revenues further declined to 69%. With the same
consolidation as last year revenues would have been 504.9
million euro, down slightly (-4.1%) from the same period of
2011 because of the decline in the European market (new
registrations -6.8%) and the slowdown in Brazil.
First half EBITDA came in at 68.1 million euro (9.9% of
revenues) and was up by 28.9% on the figure of 52.8 million
euro in 2011 (10% of revenues). With the same consolidation
EBITDA would have been 47.7 million euro (9.5% of revenues).
Net income came to 16.1 million euro, posting a rise of 4.8%
on the figure for the previous year (15.3 million euro). The
lower growth in net earnings compared to operating results
was due to the rise in financial expense (totalling 8.4
million euro versus 4.7 million euro in the same period of
2011) as a result of the higher average level of debt in the
period following the acquisition of Systèmes Moteurs.
Healthcare: KOS
The revenues of KOS in the first half of 2012 came to 178.7
million euro and were up by 1% on the figure for the same
period of 2011 (176.9 million euro), thanks to the
development of the three business sectors (Nursing homes,
rehabilitation units and hospital management). EBITDA was 25
million euro, down from the figure for first half 2011 (27.5
million euro) partly because of the higher leasing costs
resulting from the sale of three instrumental properties in
the third quarter of last year.
Net income came in at 4.6 million euro versus 6.2 million
euro in the previous year. Net debt stood at 151.7 million
euro at June 30 2012, down from 171.5 million euro at March
31 2012 (165.1 million euro at December 31 2011).
During the second quarter the shareholder AXA Private Equity
subscribed a capital increase of 17.5 million euro. This deal
which was needed for the development of the business was part
of the agreement signed by the shareholders of the KOS group
at the end of 2010. Following this capital increase CIR
remains the majority shareholder of KOS with 51.26% of its
capital, AXA Private Equity has risen to 46.70% while 2.04%
is in the hands of management and other shareholders.
The KOS group today manages some 60 facilities, mainly in the
centre and north of Italy with a total of over 5,700 beds
plus more than 900 under construction. The activities in the
start-up stage are continuing in India, where in the second
half of 2011 the KOS group set up the joint venture ClearMedi
Healthcare LTD, 51% controlled by the KOS group and 49% by a
local operator. The company is active in the sector supplying
diagnostic and therapeutic technologies in outsourcing to
Indian hospitals.
Non-core investments
The non-core investments of the group consist of private
equity initiatives and minority shareholdings, venture
capital and other investments. More specifically, CIR has a
diversified portfolio of funds and direct minority
shareholdings in the private equity sector (with a fair value
at June 30 2012 of 105.6 million euro) and the venture
capital fund CIR Ventures (with a fair value at June 30 of 14
million dollars). Among the other investments, it should be
noted that there is a 20% interest in the company Swiss
Education Group, a world leader in managerial training in the
hospitality sector. Lastly, the CIR group has a portfolio of
non-performing loans. The net value of the investment in this
business at June 30 2012 was 63.4 million euro.
Outlook for the year 2012
The performance of the CIR group in 2012 will be affected by
the evolution of the macroeconomic environment, which is
currently characterized by a recessionary scenario the
intensity of which cannot at the moment be predicted, and by
the performance of the financial markets. In this scenario
the main operating subsidiaries of the group will continue
the strategy of taking action to improve their operating
efficiency while at the same time engaging in business
development initiatives.
Securities maturing in the 24 months following June 30
2012
The company, which has a BB rating with a stable outlook
issued by Standard&Poor's and confirmed on July 20 2012, has
no bonds maturing in the 24 months following June 30
2012.
Significant events which have occurred since June 30 2012
On July 19 2012 the Rome Regional Tax Commission
("Commissione Tributaria Regionale - CTR") suspended the
enforceability of ruling no. 64/9/2012, filed on May 18 2012,
which had ruled partly against the Espresso group regarding
the tax assessments issued by the Inland Revenue ("Agenzia
delle Entrate") for events going back to financial year 1991.
More specifically, the Regional Tax Commission had pronounced
as legitimate the application of ITL 440,824,125,000 tax on
capital gains which, according to the Commission, had been
made but not declared and ITL 13,972,000,000 for costs
indicated as non-deductible for dividends and tax credits,
with the application of penalties set at the legal minimum
and payment of court costs. The Espresso group considers the
ruling to be patently unfounded as well as clearly unlawful
for various aspects of form and merit and therefore filed a
petition to the Court of Cassation on June 27 2012 and
requested suspension from the Regional Tax Commission on June
28 2012.
Conference call
The results of the first half of 2012 will be illustrated
today at 14.00 hours CEST by the Chief Executive Officer of
CIR, Rodolfo De Benedetti, in a conference call. Journalists
can follow the presentation on the phone, in listen-only mode
by dialling +39 02 805 88 27, or in a webcast on the website
www.cirgroup.com.
Recommend:
