H1 2020 RESULTS
Milano - July 27th, 2020
Mauro FENZI - Chief Executive Officer
Yann ALBRAND - Chief Financial Officer
Stefano CANU - Investor Relations
Agenda
1
2
3
H1 2020 Results
Covid update
Perspectives
2 I
H1 2020 Highlights
Revenues at €519.5m
vs €777.8m in H1 2019
EBITDA at € 47.0m
vs €86.4m in H1 2019
EBIT at € -18.8m
vs €24.4m in H1 2019
Net Income at € -28.8
vs € 6.9m end H1 2019
FCF1 at -€70.8m
vs €-3.3m in H1 2019
Net debt1 at € 256.7
vs € 256.2m end of 2019
1. FCF and Net debt excluding IFRS 16
- Down 33.2% on a reported basis (-31.2% at constant exchange rate) strongly outperforming in most regions
- In Q2 in Europe Sogefi was 55.7% down vs 65.5% for the market
- 9.1% on sales vs 11.1% in PY, mainly volume impact mitigated by reduction of gross fixed costs of € 38.8 million vs H1 2019
- In Q2 cost actions implemented are becoming effective (€ -32.0 million in Q2 vs € 6.8 million in Q1)
- € 7.3 million in restructuring costs vs € 4.4 million in H1 2019
- Including € 4 million of adverse exchange impacts in North & South America
- In 1H 2020 assets write-down was €6.4 million vs €1.9 million in the previous year
- After positive tax impact for € +1.0 million vs €-8.2 million in H1 2019
- Free Cash Flow - € 70.8 million vs €-3.3 million in H1 2019
- Net debt to € 327.0 vs € 256.2 million end of 2019 and € 267.3 million end
June 2019
3
H1 2020 Highlights
Starting from March an emergency plan has been launched to
reduce costs and minimize cash out:
- Variable costs reduction in line with new volumes, minimizing impact of manufacturing inefficiencies in an unstable context
- Gross fixed costs reduced by 27% vs 2019
- Investments reduced by 24% vs 2019 whilst protecting development of new products and the ramp-up of the new plant in Romania
4
Revenues by Geographical Area
STRONG OUTPERFORMANCE IN MOST REGIONS
reported | constant | reference | performance | reported | constant | reference | performance | weight | ||||||
Q2 2019 | Q2 2020 | exchange | market | vs market | H1 2019 | H1 2020 | exchange | market | vs market | based on | ||||
change | change | |||||||||||||
€m | rates | production | (bps) | rates | production | (bps) | H1 2020 | |||||||
Europe | 242.4 | 107.2 | -55.8% | -55.7% | -65.5% | 979 | 486.8 | 329.6 | -32.3% | -32.2% | -41.7% | 951 | 63.5% | |
North America | 72.7 | 29.8 | -59.0% | -58.5% | -69.1% | 1057 | 146.8 | 102.5 | -30.2% | -30.5% | -39.9% | 940 | 19.7% | |
South America | 40.1 | 6.6 | -83.6% | -74.9% | -81.6% | 667 | 77.6 | 35.6 | -54.2% | -36.7% | -50.6% | 1391 | 6.9% | |
Asia | 34.9 | 26.9 | -23.0% | -20.1% | -5.9% | -1419 | 71.0 | 54.7 | -22.9% | -21.5% | -24.9% | 339 | 10.5% | |
- of which China | 16.1 | 22.5 | 39.8% | 41.8% | 9.4% | 3241 | 33.2 | 34.3 | 3.1% | 4.0% | -19.7% | 2373 | 6.6% | |
Intercompany | (2.1) | (1.2) | (4.4) | (2.9) | ||||||||||
Total | 388.0 | 169.3 | -56.4% | -54.5% | -44.5% | 777.8 | 519.5 | -33.2% | -31.2% | -33.2% | 100.0% | |||
Source: Sogefi and IHS data. Passenger cars and Light commercial vehicles only. Europe is Europe 28 and Asia is China + India
5
Revenues by Business Unit
reported | constant | reported | constant | ||||||
Q2 2019 | Q2 2020 | exchange | H1 2019 | H1 2020 | exchange | ||||
change | change | ||||||||
rates change | rates change | ||||||||
€m | |||||||||
Air&Cooling | 104.6 | 50.8 | -51.4% | -50.7% | 213.4 | 150.8 | -29.3% | -29.1% | |
Filtration | 139.2 | 62.3 | -55.3% | -53.1% | 274.0 | 197.0 | -28.1% | -25.7% | |
Suspensions | 145.3 | 56.4 | -61.2% | -58.8% | 292.3 | 172.7 | -40.9% | -38.2% | |
Intercompany | (1.1) | 0.2 | (1.9) | (1.0) | |||||
Total | 388.0 | 169.3 | -56.4% | -54.5% | 777.8 | 519.5 | -33.2% | -31.2% | |
6
Sales by client
H1 2019
H1 2020
5%10%
7
H1 2020 EBIT performance breakdown €m / % sales
3.5% | 2.9% |
8
Suspensions
Sales (€m) | EBITDA (%) | |
- Down 40.9% (-38.2% at constant exchange)
- Affected by higher presence in Europe and in the most difficult markets (South America and India)
- China + 22.6% in Q2
- EBITDA benefiting lower material costs in % of revenues
- Including costs of new Romania plant
- € 15.6m of fixed cost reduction
- EBIT margin (-4.7%) reflecting higher incidence of depreciation
Suspensions9
Filtration
Sales (€m)
- Revenues down 28.1% at current exchange rates (-25.7% at constant exchange rates)
- After a Q1 growth, Europe performed better than the market in Q2 thanks to Morocco and to Aftermarket
- Major decline registered in South America and India.
Filtration
EBITDA (%)
- Decline mainly related to volume decline in Europe and worsening of the situation in South America and India
- € 13.2m of fixed cost reduction
- Including € 2.6 million negative effect of exchange rate in Brazil
10
Air & Cooling
Sales (€m)
- Down 29.3% (-29.1% at constant exchange)
- Major decline in Europe and North America
- China after a negative Q1 grew 54% in Q2 overperforming the market thanks to new SOPs
Air & Cooling
EBITDA (%)
- Higher EBITDA in Europe and China
- € 7.1m of fixed cost reduction
- EBIT at breakeven despite the volumes gap
11
H1 2020/ Quarterly P&L - Sogefi Group - €m / % sales
€m | Q1 2020 | % | Q2 2020 | % | H1 2019 | % | H1 2020 | % | ||||
REVENUES | 350.2 | 100.0% | 169.3 | 100.0% | 777.8 | 100.0% | 519.5 | 100.0% | ||||
Variable costs | ||||||||||||
reduction | ||||||||||||
Costs of sales / Variable costs | 245.1 | 70.0% | 119.4 | 70.5% | 549.2 | 70.6% | 364.5 | 70.2% | ||||
Gross Fixed Costs | 67.5 | 19.3% | 39.0 | 23.0% | 145.3 | 18.7% | 106.5 | 20.5% | In Q2 € 32.0 | |||
million of gross | ||||||||||||
EBITDA | 34.9 | 10.0% | 12.1 | 7.1% | 86.4 | 11.1% | 47.0 | 9.1% | fixed cost | |||
reduction | ||||||||||||
D&A | 30.3 | 8.7% | 29.2 | 17.2% | 60.1 | 7.7% | 59.5 | 11.4% | 1.8m€ linked | |||
Write downs | 0.9 | 0.3% | 5.5 | 3.2% | 1.9 | 0.2% | 6.4 | 1.2% | ||||
to Covid-19 | ||||||||||||
EBIT | 3.7 | 1.1% | (22.5) -13.3% | 24.4 | 3.1% | (18.8) | -3.6% | |||||
Financial results | 6.8 | 1.9% | 4.8 | 2.8% | 11.0 | 1.4% | 11.6 | 2.2% | ||||
Income Tax | 2.5 | 0.7% | -3.5 | -2.1% | 8.2 | 1.1% | -1.0 | -0.2% | ||||
Minority Interest | 0.0 | 0.0% | -0.6 | -0.4% | 2.3 | 0.3% | -0.6 | -0.1% | ||||
NET INCOME OF | (5.6) | -1.6% | (23.2) | -13.7% | 2.9 | 0.4% | (28.8) | -5.5% | ||||
OPERATING ACTIVITIES | ||||||||||||
Net income from discontinued | 0.0 | 0.0% | 0.0 | 0.0% | 4.0 | 0.5% | 0.0 | 0.0% | ||||
operations | ||||||||||||
NET INCOME | (5.6) | -1.6% | (23.2) -13.7% | 6.9 | 0.9% | (28.8) | -5.5% | |||||
12
H1 2020 FCF Highlights - Cash Flow generation
- Figures excluding IFRS16
€m | Q1 2020 | Q2 2020 | H1 2019 | H1 2020 | ||||
FUNDS PROVIDED BY OPERATIONS | 23.2 | 6.1 | 71.0 | 29.4 | ||||
Working Capital | (2.0) | (52.2) | (23.0) | (54.2) | of which € 7.5m | |||
Capex (Tangible, Intangibles & IFRS15) | (25.4) | (21.5) | (54.0) | (46.8) | for new | |||
Romanian plant | ||||||||
Others | 3.7 | (2.8) | 2.7 | 0.8 | ||||
FREE CASH FLOW (NET) | (0.4) | (70.3) | (3.3) | (70.8) | ||||
NET DEBT | 256.7 | 327.0 | 267.3 | 327.0 | ||||
FACTORING | 96.3 | 57.6 | 103.2 | 57.6 | ||||
13
Financial Position
- At June 30, 2020, the Group has financing in excess for € 194.2 million
- Sogefi anticipates a similar excess end 2020
- In H2 2020 no debt repayments are scheduled
- As of June 20 all covenants were met
- Currently discussion on-going with banks for new state-backed financing in France and Italy: the group expects to thereby secure medium-term financing for around € 100 million
14
Covid update
15 I
Covid update - Status
Safety:
Actions taken to protect
workforce
Plants:
All plants now open
Main actions:
Using all government
incentives + cost
efficiency
Expectation:
Customers plants are now
reopened
- Travel limitations, "quarantine" for employees coming back from zones at risk
- Massive use of smart working in all regions
- Implemented all health safety means defined by local authorities
- Production processes revised to implement safety rules
- Internal production of safety masks for the workforce
- As of today Sogefi has reopened all plants working with reduced volume (with the exception of China now running at speed)
- Local government support is high in western Europe and not-existing in other regions (i.e. South America or India) where the situation was managed trough local union agreements
- In addition taking all necessary steps to manage the crisis by assessing liquidity, containing cash-out by reducing costs and investments that are not strictly necessary
- China, strong recovery since March
- North America, strong recovery since mid-May
- EMEA, gradual recovery since mid-May
- Brazil and India, very slow recovery
16
Covid update - Plants situation & incentives/agreements
Plants | Open | |||||||||||||
Europe | North America | |||||||||||||
Status | ||||||||||||||
(61% of sales) | (19% of sales) | |||||||||||||
France | USA | ↑↑ | ||||||||||||
Italy | Canada | ↑↑ | ||||||||||||
↑↑↑ | Asia | |||||||||||||
Slovenia | ↑ | |||||||||||||
(10% of sales) | Mexico | |||||||||||||
Others | China | •Closing March 23 / 26 | ||||||||||||
•Currently all open | ||||||||||||||
•Closing March 8 / 27 | ||||||||||||||
India | ↑ |
•Currently all open | •India closed March 23 |
•Currently all open |
Production | Governments' | Union | |||
South America | |||||
Recovery | Incentives | Agreements | (11% of sales) | ||
High | ↑↑↑ | ↑↑↑ | Brazil | ↑ | |
Middle | ↑↑ | ↑↑ | Argentina | ↑ | |
Low | ↑ | ↑ | •Closing March 19 / 30 | ||
•Currently all open | |||||
17
Perspectives
18 I
Market production evolution
€m
Europe
North America
South America
Asia
- of which China Total
IHS Forecast (July 2020)
1Q 2020E | 2Q 2020E | 3Q 2020E | 4Q 2020E | FY 2020E | ||
-18.9% | -65.5% | -8.5% | -3.4% | -25.0% | ||
-10.7% | -69.1% | -2.4% | -5.5% | -22.6% | ||
-16.3% | -81.6% | -23.4% | -3.0% | -32.3% | ||
-42.0% | -5.9% | -6.8% | -9.3% | -16.1% | ||
-46.2% | 9.4% | -3.3% | -9.5% | -12.8% | ||
-22.2% | -44.5% | -11.0% | -9.5% | -21.9% |
Primary brokers, institutes,
consulting firms estimating within a range -15/30% depending on different scenarios
Source: Sogefi and IHS data. Passenger cars and Light commercial vehicles only. Europe is Europe 28 and Asia is China + India
19
2020 OUTLOOK
- For H2 2020, IHS expects that, without a second outbreak of Covid-19, world production could be at -10% vs H2 2019. Market analysts forecasts, more cautiously, expect a world market reduction in a range between -15% and -30%
- In this uncertain scenario, Sogefi has incorporated into its expectations for H2 2020 a world market scenario of around -20%, in which it expects to achieve a slightly positive EBIT, excluding restructuring costs, a significant reduction in the net loss vs H1 2020 and a slightly positive free cash flow
- In light of the uncertain market outlook for the next few years, Sogefi has launched a plan for a significant reduction of fixed costs, which will be completed by the end of H1 2021, as well as actions to rationalize footprint and manage suppliers
- At the end of June the 2020 the Company has financial resources in excess of its current needs and it does not foresee an increase in its debt by year end
- In view of market uncertainties and anticipating the natural expiry of existing loans, Sogefi has started negotiations with its current financial partners to renew loans and enter into new medium-term loans for a total value of around € 100 million
20
CONTACTS
Yann Albrand, Group CFO
Stefano Canu, Investor Relations
SOGEFI
Via Ciovassino, 1/a
20121 Milano - Italia
Tel: +39 02 46750214
Fax: +39 02 43511348
Mail: ir@sogefigroup.com
21
DISCLAIMER
o
o
This document has been prepared by SOGEFI S.p.A. for information purposes only and for use in presentations of the Group's results and strategies.
For further details on the SOGEFI Group. reference should be made to publicly available information. including the Annual Report. the Semi-Annual and Quarterly Reports.
o Statements contained in this document. particularly the ones regarding any SOGEFI Group possible or assumed future performance are or may be forward looking statements and in this respect they involve some risks and uncertainties.
o
o
Any reference to past performance of the SOGEFI Group shall not be taken as an indication of future performance.
This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it
shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.
22
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Sogefi S.p.A. published this content on 27 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2020 13:35:09 UTC