2015 Results and 2016 perspectives Laurent Hebenstreit, CEO Yann Albrand, CFO Milano, March 1 st 2016
ENVIRONMENT TRENDS & SOGEFI PRODUCTS VEHICLES MANUFACTURERS SOGEFI - 3 Business Units END USERS USAGE COSTS / BENEFITS SUSPENSIONS FILTRATION • Vehicle total cost VEHICLE SPRINGS CABIN AIR • Fuel economy FILTERS • Less pollutants STABILIZER BARS • Less green house gases • Car sharing • Autonomous car AIR & COOLING • Infotainment INTAKE MANIFOLD AIR BOX and TUBES WATER PUMPS MEGAPOLES WATER OUTLETS ELECTION & COMMUNICATION WATER PIPES ENGINE • Clean engines • Promote electric vehicles FILTRATION OIL FILTERS FUEL FILTERS STATES ENGINE AIR FILTERS HEALTH & SUSTAINABILITY CANISTERS • Pollutant Emissions Regulations OIL SEPARATORS • Green House Gas Emissions CAM COVERS Regulations FILTRATION • TRANSMISSION Test methods standards TRANSMISSION OIL SUMP SOGEFI GROUP 1
FILTRATION PRODUCT PORTFOLIO EVAP AIR L AIR ENGINE AIR SPIN ON PLASTIC U FILTER BOX LUBRICATION GAZOLINE CANISTER B SYSTEMS FILTERS R I F F U I E C L ECO ENGINE PLASTIC A LUBRICATION DIESEL FUEL MODULES T MODULES I O N DUAL CLUTCH TRANSMISSION METALIC FILTER CRANKCASE VENTILATION DIESEL FUEL FILTERS CAM-COVER BLOW BY SEPARATORS SOGEFI GROUP 2
A&C PRODUCT PORTFOLIO MANIFOLD TUBES A I R TOP COVER ENGINE AIR INTAKE SYSTEMS WATER WATER WATER OUTLETS PIPES PUMPS ENGINE COOLING SOGEFI GROUP 3
SUSPENSIONS PRODUCT PORTFOLIO - PASSENGER CARS TORSION, STRAIGHT BARS STABILIZER BARS COIL SPRINGS SOGEFI GROUP 4
SUSPENSIONS PRODUCT PORTFOLIO – HEAVY DUTY Leaf Springs Stabilinkers Stabilizer Bars Track adjusters, Coil Springs Antiroll, Straight Bars SOGEFI GROUP 5
2015 HIGHLIGHTS AND 2016 PERSPECTIVES Revenues up by 11.1% in 2015 at €1,5bn (+9.1% like -for-like) o o Solid organic growth in Europe and North America o Outperforming market production in all geographical areas EBITDA up by €6m despite an €8.3m reduction of capitalized expenses o Net debt reduced by €17.4m in Q4 o New lean organization to strengthen Sogefi’s competitiveness, leveraging o on quality, cost and innovation Planned a € 17m investment for a new plant in Mexico o SOGEFI GROUP 6
SOLID GROWTH IN EUROPE AND NORTH AMERICA Sales by Region like for like for weight reported reported reference Q4 2015 Q4 2014 like 2015 2014 like based on €m change change market change* change* 2015 Europe 226.2 215.4 5.0% 4.1% 943.8 872.1 8.2% 7.1% 7.0% 63.0% North America 72.6 51.9 39.8% 37.6% 264.1 207.3 27.4% 2.7% 18.8% 17.6% South America 39.6 45.6 -13.1% 2.0% 174.5 181.4 -3.8% -20.5% 2.8% 11.6% Asia 32.8 22.9 43.2% 32.7% 111.1 82.7 34.4% 4.5% 18.7% 7.4% Other 1.2 3.4 -64.9% -65.6% 5.5 5.9 -7.1% -8.9% 0.4% Total 372.4 339.2 9.8% 10.5% 1,499.1 1,349.4 11.1% 9.1% 100.0% * Constant exchange rate Source: Sogefi and IHS data SOGEFI GROUP 7
WELL BALANCED CLIENT MIX Sogefi top 10 clients - in % of total sales Ford FCA Renault/Nissan PSA Daimler GM Volkswagen/Audi BMW Toyota Autodistribution 10% 15% 2015 2014 In 2015 Sogefi started Suspensions production for Hyundai and Kia SOGEFI GROUP 8
POSITIVE CONTRIBUTION FROM ALL BUSINESS UNITS In € million Revenue breakdown Business Unit sales by Business Unit Air&Cooling Suspensions 558 536 27.2% 507 37.1% 474 409 374 Suspensions Filtration Air&Cooling 2014 2015 Filtration 35.7% reported like for like change change* Suspensions 10.1% 9.2% Filtration 13.2% 10.0% Air&Cooling 9.3% 7.5% SOGEFI GROUP 9
2015 RESULTS – P&L HIGHLIGHTS 2014 % 2015 % vs PY (in €m) TOTAL NET SALES 1,349.4 1,499.1 11.1% GROSS MARGIN 455.5 33.8% 496.1 33.1% 8.9% PROFIT BEFORE INDIRECT EXPENSES 389.4 28.9% 419.9 28.0% 7.8% Gross indirect operating expenses (280.3) (294.0) 4.9% Internally made equipment 38.8 30.5 -8.3 Other Non Operating Costs (13.2) (19.5) -6.3 EBITDA PRE- NON RECURRING ITEMS 134.6 10.0% 136.9 9.1% +2.3 D&A (59.9) (64.7) EBIT PRE-NON RECURRING ITEMS 74.7 5.5% 72.2 4.8% -2.5 Non recurring items (26.5) (21.5) +5.0 EBIT 48.3 3.6% 50.7 3.4% +2.5 Interest (Income) Expenses (26.8) (32.8) -6.0 PRE-TAX INCOME (LOSS) 21.5 1.6% 18.0 1.2% -3.5 Income Tax (13.1) (12.9) +0.2 Minority Interest (4.8) (3.9) +0.9 NET INCOME (LOSS) 3.6 0.3% 1.1 0.1% -2.5 EBITDA 109.5 8.1% 115.5 7.7% +6.0 CAPITALIZATION - AMORTIZATION INTANGIBLE 16.1 3.2 -12.9 SOGEFI GROUP 10
CAPITALIZATION / AMORTIZATION OF INTANGIBLES Lowest capitalization since Air & Cooling acquisition in July 2011 45 40 35 30 25 20 39,2 38,8 34,1 15 30,5 27,3 22,7 21,2 10 18,6 18,4 13,4 12,5 5 10,3 0 2010 2011 2012 2013 2014 2015 capitalization amortization At constant capitalization in 2015: • Q4 2015 EBITDA would have been € 32.4m or 8.7% of sales, slightly above the 8.5% in Q4 2014 • EBITDA for the year 2015 would have been € 123.8m +13.1% versus 2014 SOGEFI GROUP 11
2015 RESULTS – FCF HIGHLIGHTS €m 2014 2015 Ebitda w/o non recurring 134,6 136,9 Net financial debt was reduced by Changes in net working capital 8,0 (2,7) € 17,4m in Q4 2015 to € 322.3m Capital expenditures (84,4) (81,6) versus € 339.7m at end September Other operating asset (liabilities) (2,6) 1,4 2015 OPERATING CASH FLOW 55,6 54,0 2015 FCF includes € 18m advanced payment to the 2 car Warranty claims (2,9) (20,3) manufacturers on warranty claims. Restructuring (17,7) (20,0) Disposal of assets 3,9 4,2 Without this negative impact, the Non recurring items (16,8) (36,1) net debt would have remained unchanged over the year ( € 304.3m as of end 2014). Taxes (12,7) (14,3) Interests (22,3) (28,4) FREE CASH FLOW 3,8 (24,8) €m 2014 2015 NET DEBT 304.3 322.3 SOGEFI GROUP 12
UPDATE ON THE QUALITY CLAIMS Claims by 2 car manufacturers related to Cooling products developed by Systèmes Moteurs (SM) before its sale to Sogefi (July 2011) Legal procedure against the supplier of the defective sub-part initiated by SM in 2012 at the Chateauroux Court in France In June 2012, the Court has appointed an expert to investigate the technical and financial issues : • root cause • technical responsibilities • assessment of damages In 2015, the 2 car manufacturers have joined the expertise Current claims (yet to be assessed) : • € 122.8m, out of which € 60.4m before the closing € 26.6m in the 7 months after (according to Sogefi’s estimates) • € 65.9m for brand damage/ loss on future sales, deemed remote by our lawyer. The company already has paid € 3.0m via debit notes + € 18.0m of advance payments in H1 2015. As of June 2015, Sogefi prudently has booked an accrual of € 11.8m Sogefi has started an arbitration procedure against the seller of SM. A decision is expected in 2016 SOGEFI GROUP 13
FOCUS ON QUALITY: BACK TO BASICS Action plan for an increased focus on quality Introduction of a new mindset at all company levels All managers MBO to include Quality KPIs All people to get at least one Quality objective at their own level Increase detection and reactivity for customer claims management. Better tracking of the problem solving process Reinforcement of technical expertise of the Group Simplified process flow Collection of best practices/lesson learned Increased involvement of top management and BU general managers Quick Response Quality Control SOGEFI GROUP 14
FOCUS ON RAW MATERIALS 1) Action plan for savings on Raw Materials Use of alternative raw materials Improve pricing through negotiations Develop supplier network Partner with a limited number of suppliers Low cost / Best cost sourcing 2) Limit and mitigate negative impact of raw materials prices increases in Brazil and Argentina 3) Capture additional savings opportunities from raw materials prices decreases SOGEFI GROUP 15
NEW LEAN ORGANIZATION Central functions are reduced from 7 to 3: “Lean”, therefore lighter, simpler Finance, Information Systems and Administration and less expensive Innovation et Product Marketing Human Resources OCTOBER 1 st 2015 BEFORE CEO CEO L. HEBENSTREIT L. HEBENSTREIT Finance Legal Finance, Innovation & Human I. S. and Product Resources Administration Marketing Information Engine Systems Systems Projects Asia Mergers & Purchasing Acquisitions Operational Efficiency SOGEFI GROUP 16
NEW PRODUCT ORIENTED ORGANIZATION Three product Business units Direct purchasing within business units North America Region to support all three business units Enhance synergies and best practices sharing Develop new business opportunities OCTOBER 1 st 2015 BEFORE CEO CEO L. HEBENSTREIT L. HEBENSTREIT Engine Systems Suspensions Aftermarket Air & Cooling Filtration Suspensions Business Unit Business Unit Business Unit Business Unit Business Unit Business Unit North America Region SOGEFI GROUP 17
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