Sogefi S p A : Results for the year 2020 and appointed the new CEO

PRESS RELEASE

FOURTH QUARTER 2020 Revenues and results higher than in Q4 2019

RESULTS FOR THE YEAR 2020

The group showed resilience in a totally exceptional year

Revenues: € 1,203.2 million, -14.2% at constant exchange rates (car market -16.2%)

Outperformed market in all geographical areas

In Q4, revenues higher (+8.9% at constant exchange rates)

EBITDA margin, excluding non-recurring charges, was higher reaching 13% of revenues (12.1% in 2019)

Net result before non-recurring charges and result of operations for disposal close to break-even (€ -3.4 million)

Net non-recurring charges for rationalization actions came to € 16.2 million (€ 4.3

million in 2019)

THE BOARD APPOINTED AS NEW GROUP CEO FREDERIC SIPAHI, LEADER OF THE AIR & COOLING BUSINESS UNIT TURNAROUND AND SINCE

2019 ALSO MANAGER OF THE FILTRATION BU

Highlights from results for 2020*

(in €m)

2019

2020

Δ%

Revenues 1,463.8 1,203.2

-17.8

Δ% at constant exch. rates -14.2

EBITDA** 177.4 137.6

Net result of operations destined to continue 11.1 -19.6

Net result

3.2 -35.1

Net debt (end of period) before IFRS16 256.2 291.3

* The figures for the year 2019 were restated to apply IFRS 5 ("Non-current assets held for sale and discontinued operations") to the

Brazilian subsidiary, sold in December 2020, and to the Spanish subsidiary sold in January 2021, both of which belonged to the Filtration business unit.

** EBITDA is calculated by adding to the "Ebit" figure the item "Amortization and depreciation" and the amount for the write-down of tangible and intangible assets included in the item "Other non-operating costs (revenues)", which totalled € 13.6 million at December 31 2020 (€ 9.2 million in the same period of the previous year).

Milan, February 26 2021 - The Board of Directors of Sogefi S.p.A., which met today under the chairmanship of Monica Mondardini, has approved the proposed financial statements for the year 2020, presented by Mr Mauro Fenzi.

The Board of Directors appointed the current General Manager of the Air & Cooling and Filtration Business Units, Mr. Frederic Sipahi, as new group CEO, in substitution of Mr. Mauro Fenzi.

Frederic Sipahi, aged 40, has a business education and has spent his entire career in the automotive sector, initially in PSA, then in Faurecia and since 2012 in Sogefi.

Since 2015 he has led the Air & Cooling division, achieving a significant improvement in performance, both in terms of increased profitability and cash generation; he also achieved positive results in 2020, despite the extraordinary context. He also reoriented the division's product strategy, by effectively positioning it towards new technologies.

Since 2019 he has also led the Filtration division, where he launched major rationalisation and efficiency enhancement programs.

Mr. Fenzi said: "After a year of intense work, my managerial role at Sogefi comes to an end for personal reasons. Sogefi has an extremely motivated and competent management team, that is well equipped to face with the right determination the challenges of the next few years. I take this opportunity to thank my collaborators for their professional and decisive contribution and the members of the Board of Directors for their continuous support". The Board of Directors thanked him for the work done.

SUMMARY OF RESULTS FOR 2020

After the first half of 2020 in which world car production suffered a dramatic and unprecedented fall (-33.2%) due to the effects of the spread of the Covid-19 pandemic, in the second half of the year the market reported a definite recovery compared to the previous half (+44%), with volumes substantially unchanged compared to the same period of 2019 thanks to the growth reported in the last quarter of 2020 (+2.5%). The recovery in the fourth quarter was seen in all markets: China, where production was up by 5.9% on the fourth quarter of the previous year, NAFTA, the EU and South America, with volumes substantially equivalent to those of the fourth quarter of 2019 (+0.5%, +1.4% and +1.3% respectively).

Despite the recovery in the second half, the results for the whole year reported an extraordinarily significant downturn compared to 2019: -16.2% for world car production, -23.3% in the EU, -20.1% in North America, -4.2 % in China and -30.7% in South America.

In 2020 the Group's priority was the safety of its employees; from the moment when news came of the Covid-19 phenomenon in China, action was immediately taken to reduce the risk of contagion and then all the measures recommended for health and safety in the workplace were adopted, reviewing the production processes and implementing new safety protocols, which involve physical distancing and the use of individual protection systems. Currently it has been decided to maintain the measures to limit the presence of personnel in the workplace, with staff working from home.

At the same time radical action was taken to mitigate the impact of the crisis, and of the consequent contraction in sales, on results and on the capital solidity of the Group. The measures put in place made it possible to obtain the following:

• • An increase in the contribution margin to 30.8% from 30.2% in 2019;

• • A 19.1% reduction in fixed costs with an unchanged ratio to sales of 17%, which was down in 4Q 2020 (15.8% versus 17.1% in 4Q 2019).

Moreover, in 2020 Sogefi obtained new contracts for a value in line with previous years and consistent with the objectives of maintaining/increasing its market share, with a significant portion of the new orders being for hybrid or full electric vehicles, positioning itself in the markets of the future.

More specifically, 25% of the value of the orders acquired in 2020 by the Air and Cooling division is destined for cooling hybrid or full electric vehicles; the division also obtained an important contract (Life Time Value: € 100 million) to supply air-intake manifolds in aluminium to a prime German OEM, launching a new product line in a sector in which the division is already market leader.

Similarly, 35% of the value of the orders received by the Suspensions division is for hybrid or full electric vehicles, thanks to the new product developed to meet the light-weight and time-to-market requirements of electric vehicles and to the receipt of an order from a prime North American producer of full electric vehicles.

REVENUES

In 2020, Sogefi's revenues totalled € 1,203.2 million and were down by 17.8% on 2019 at historical exchange rates and by 14.2% at constant exchange rates.

An examination of the performance of revenues throughout the year shows that in the first quarter revenues fell by 9.6%, because of the spread worldwide of the pandemic as from March; in the second quarter they fell by 55.6%, in a phase of substantial lockdown in the main markets; during the third quarter there was a gradual recovery (-6.6% on 2019), which led to growth of 2% in the fourth quarter (+8.9% at constant exchange rates) compared to the same period of 2019.

Performance of revenues by geographical area

The performance of revenues at constant exchange rates was better than the market in all the main geographical areas; the decline in Europe was 18.1% versus the market's -23.3%, and in North America it was 9.8% versus -20.1%; in Asia revenues rose, while the market reported -7%, thanks particularly to the good performance of China (+15.8% versus the market's -4.2%).

(in millions of Euro)	FY 2020	FY 2019	reported change	constant exchange rates	reference market production	weight based on FY 2020
Europe	754.9	923.5	-18.3%	-18.1%	-23.3%	62.7%
North America	250.8	288.7	-13.1%	-9.8%	-20.1%	20.8%
South America	59.5	110.2	-46.0%	-12.1%	-30.7%	4.9%
Asia	145.0	149.9	-3.3%	0.9%	-7.0%	12.1%
- of which China	86.0	75.5	13.8%	15.8%	-4.2%	7.1%
Intercompany	(7.0)	(8.5)
Total	1,203.2	1,463.8	-17.8%	-14.2%	-16.2%	100.0%

Performance of revenues by Business Unit

Filtration (with an 8.1% decline in revenues at constant exchange rates) and Air and Cooling (-10.7% at constant exchange rates) reported a much less negative result than the market thanks, for Filtration, to the fact that the OES and Aftermarket channels held up better and for Air and Cooling to the development of the portfolio of contracts particularly in China and North America. The impact of the crisis was greater for Suspensions, which suffered a fall in revenues of 22.7% at constant exchange rates, reflecting the greater concentration of the business in Europe and South America and the particularly bad performance of the sector in these areas.

(in millions of Euro)	2020	2019	var. '20 vs '19	var. '20 vs '19 constant exchange rate
Amount	%	Amount	%
Suspensions	399.6	33.2	549.7	37.6	-27.3%	-22.7%
Filtration	434.2	36.1	491.5	33.6	-11.7%	-8.1%
Air&Cooling	371.8	30.9	425.9	29.1	-12.7%	-10.7%
Intercompany eliminations	(2.4)	(0.2)	(3.3)	(0.3)
TOTAL	1,203.2	100.0	1,463.8	100.0	-17.8%	-14.2%

OPERATING RESULT AND NET RESULT

The results of the group were affected by the fall in revenues and the non-recurring charges linked to the launch of plans for reducing fixed costs, particularly in Europe, and for rationalizing the Group's footprint (sale and closure of two production sites in Europe) as well as its geographical presence (sale of the filtration business in Brazil).

EBITDA came in at € 137.6 million compared to € 177.4 million in 2019. Excluding the rationalization charges as above, EBITDA declined from € 177.4 million to € 156.9 million with profitability (EBITDA / Revenues %) of 13%, which was higher than the figure for 2019 (12.1%).

The contribution margin for 2020 was slightly better than that of 2019, rising from 30.2% to 30.8% and the ratio of fixed costs to sales remained unchanged, despite the lower revenues, thanks to the cost-cutting measures taken, which were partly temporary and partly destined to become structural.

EBIT came to € 7.2 million, versus € 48.4 million in 2019. The lower EBIT reflects the fall in revenues, the gross non-recurring charges of € 20 million (€ 4.3 million in 2019) and further write-downs of fixed assets for € 12.9 million (€ 4.9 million in 2019), resulting from the action taken by the company to counter the crisis.

The Group reported a net loss from businesses destined to continue of € 19.6 million, mainly because of € 16.2 million of non-recurring rationalization charge (versus earnings of € 11.1 million in 2019). The operations sold between the end of 2020 and the beginning of this year (the Brazilian subsidiary and the Spanish subsidiary of the Filtration business unit) gave rise to a loss of € 15.5 million, which compares with a loss of € 7.9 million in 2019.

DEBT AND EQUITY

Regarding Free Cash Flow, in 2020 an amount of € 38.2 million was absorbed (versus cash generation of € 8.4 million in 2019), mainly as a result of the evolution of working capital due to the particular circumstances that arose during the year.