Sogefi S.p.a. · MIL:SGF
Sogefi — FY2016 Earnings Presentation
34 slides from Sogefi's earnings presentation, Feb 28, 2017
Slide 1: Full Year 2016 Results, Milan, February 28th 2017
Laurent HEBENSTREIT Chief Executive Officer Yann ALBRAND Chief Financial Officer Laura PENNINO Investor relations & CSR Milan, February 28th, 2017
Slide 2: Index
INDEX Group presentation page 3 2016 Highlights page 6 Full Year 2016 results page 8 Performance levers page 24 2017 Outlook page 31 February 28, 2017 2
Slide 3: Group presentation
Group presentation soteri
Slide 4: Sogefi Customers
SOGEFI CUSTOMERS CARS TRUCKS 2 WHEELERS 3 WHEELERS PARTS February 28, 2017 4
Slide 5: 3 Business Units
3 BUSINESS UNITS Suspensions Filtration Air & Cooling Stabilizer bars, Oil filters Manifolds heavy stab bars & Diesel filters Airducts stabilinkers Air filters Cooling Coil springs Coil filters (waterpumps, Products Torsion bars transmission water outlet Leaf springs Canister
Slide 6: 2016 Highlights
2016 HIGHLIGHTS soteri
Slide 7: 2016 Highlights
2016 HIGHLIGHTS Revenues up by 5% in 2016 at € 1.6bn (+9.8% at constant exchange rates). Vigorous business growth in Asia and in North America. High growth with GM (+35.6%) which reaches 10% of Sogefi sales. +7.3% R&D spending growth Strong profitability improvement: EBITDA up by 32.2% with 2 points
Slide 8: Full Year 2016 Results
Full Year 2016 RESULTS soteri
Slide 9: 2016 Results – P&L Highlights
2016 RESULTS – P&L HIGHLIGHTS €m 2015 % 2016 % YoY TOTAL NET SALES 1,499.1 1,574.1 5.0% CONTRIBUTION MARGIN 420.0 28.0% 453.9 28.8% 8.1% GROSS INDIRECT COSTS 294.0 19.6% 295.2 18.8% 0.4% EBITDA 115.5 7.7% 152.7 9.7% 32.2% EBIT 50.7 3.4% 74.5 4.7% 46.8% Financial expense (income) (32.8) 2.2% (27.9) 1
Slide 10: Sales by Region
SALES BY REGION Constant weight €m Q4 2016 Q4 2015 reported 2016 2015 reported exchange based on reference change change market* rates 2016 Europe 228.4 226.2 1.0% 957.2 943.8 1.4% 2.2% 60.8% 3.5% North America 77.7 72.6 7.0% 308.7 264.1 16.9% 21.0% 19.6% 2.0% South America 45.1 39.6 13.9% 162.2 174
Slide 11: Sales by Business Units
SALES BY BUSINESS UNITS Constant reported reported €m Q4 2016 Q4 2015 2016 2015 exchange change change rates Suspensions 141.0 137.6 2.5% 562.8 558.0 0.9% 6.2% Filtration 132.1 124.5 6.1% 535.1 529.7 1.0% 6.7% Air & Cooling 119.6 99.4 20.3% 480.2 415.3 15.6% 18.4% intercompany -0.2 10.9 -4.0 -3.9 To
Slide 12: Sogefi Top 10 Clients - in % of Total Sales
SOGEFI TOP 10 CLIENTS - IN % OF TOTAL SALES Ford Renault/Nissan FCA/CNH Industrial PSA GM Daimler Volkswagen/Audi BMW Toyota 5% 10% 15% Volvo 2016 2015 WELL BALANCED CLIENTS MIX WITH GM REACHING 10% OF TOTAL SALES February 28, 2017 12
Slide 13: Intangibles: Reduction of the Gap Between Capitalization and Amortization
INTANGIBLES: REDUCTION OF THE GAP BETWEEN CAPITALIZATION AND AMORTIZATION 45 40 35 30 25 20 39.2 38.8 15 30.5 30.3 29.4 27.3 10 21.2 22.7 5 0 2013 2014 2015 2016 capitalization amortization Capitalization -amortization 18.0 16.1 3.2 0.9 February 28, 2017 13
Slide 14: Strong Profitability Increase
STRONG PROFITABILITY INCREASE €m / % sales 28.8% +8.1% 28.0% Contribution 453.9 margin 420.0 2015 2016 +2 points in EBITDA +32.2% 9.7% mostly driven by: 7.7% EBITDA Contribution margin improvement 152.7 115.5 Control of indirect costs 2015 2016 Reduction of total labour costs % to sales from 22.1% t
Slide 15: Focus on Net Profit
FOCUS ON NET PROFIT EBIT increased by 46.8% to € 74.5m compared to € 50.7m in 2015. Result before taxes and minority interests grew to € 46.6m (€ 17,9m in 2015), including € 6m of recovery of previous years tax withholdings. Net result was a positive € 9.3m (€ 1.1m in 2015) after € 32.6m of income t
Slide 16: Main Significant Non-Ordinary Items
MAIN SIGNIFICANT NON-ORDINARY ITEMS Tax Dayco Deferred tax Total withholdings EBIT -4,0 -0,3 -4,3 Financial result 6,0 6,0 Income tax -6,7 -1,6 -1,9 -10,2 Net income -10,7 4,1 -1,9 -8,5 Without such items adjusted net income is € 17.8m (1.13% of sales) February 28, 2017 16
Slide 17: 2016 Results – FCF Highlights
2016 RESULTS – FCF HIGHLIGHTS €m 2015 2016 OPERATING CASH FLOW 54.2 67.3 Restructuring (20.0) (9.4) SM Warranty Claims (18.0) 9.6 Tax withholdings 0.0 5.7 Other 3.7 3.5 Non recurring items (34.3) 9.4 Taxes (16.1) (18.3) € 31.2m FCF generation Interests (28.6) (27.1) in 2016 vs a cash burn of FREE CA
Slide 18: Investing for Profitable Growth
INVESTING FOR PROFITABLE GROWTH Tangible investments (in € million) 70 4.0% 3.5% 60 58.8 51.3 3.0% 50 2.5% 42.3 40 2.0% 36.0 1.5% 30 1.0% 20 0.5% 10 0.0% 2013 2014 2015 2016 Tangibles % sales February 28, 2017 18
Slide 19: Value Creation Through ROCE Increase and WACC Decrease
VALUE CREATION THROUGH ROCE INCREASE AND WACC DECREASE Difference between ROCE and WACC 6.5% 0.0% 0.6% 2014 2015 2016 14.9% ROCE Wacc 9.9% 9.9% 10.2% 9.6% 8.3% 2014 2015 2016 February 28, 2017 19
Slide 20: NFP/EBITDA Ratio Improving
NFP/EBITDA RATIO IMPROVING Net/gross financial position Debt maturity 33 115 99 53 31 414 49 299 149 Net Fin. Position cash and cash Gross debt <1 year >1<2 >2<3 >3<4 >4<5 >5 equivalents 2.78 2.79 NFP/EBITDA 1.96 2014 2015 2016 February 28, 2017 20
Slide 21: Update on the Warranty Claims
UPDATE ON THE WARRANTY CLAIMS Claims by 2 car makers related to Cooling products developed by Systèmes Moteurs (SM) before its acquisition by Sogefi from Dayco (July 2011). 1. Legal procedure against the supplier of the defective sub-part started by SM in 2012 in France. In June 2012, the Court appo
Slide 22: Update on the Warranty Claims
UPDATE ON THE WARRANTY CLAIMS 3. On the € 122.6m claim, Sogefi estimates that € 60.2m relates to pre-acquisition production and € 62.4m relates to post-acquisition production. In 2016, an Award was rendered in the arbitration procedure launched by Sogefi against Dayco. Dayco was sentenced to pay Sog
Slide 23: Shareholders Return & Communication
SHAREHOLDERS RETURN & COMMUNICATION Sogefi Stock and reference indexes performance in 2016 Sogefi 12.5% Italian Auto&Parts 12.2% FTSE Italia All-Share -9.9% European Auto&Parts -3.9% Planned communication in 2017 Star meeting - Milan – March 2017 ISMO – Paris – May 2017 Roadshows in London and Frank
Slide 24: Performance Levers
PERFORMANCE LEVERS soteri
Slide 25: Performance Levers
PERFORMANCE LEVERS KEY OBJECTIVES KEY LEVERS To join the best-in-class in To increase operational terms of: efficiency, 5 performance levers: Safety Quality Purchasing excellence Sustainability Shopfloor excellence Customers’ satisfaction Program management Profitability excellence Cash flow Indirec
Slide 26: Focus on Quality: Back to Basics
FOCUS ON QUALITY: BACK TO BASICS New mindset at all company levels Increase detection and reactivity for customer claims management Quick Standardize problem solving process Response Quality Best practices/lessons learned sharing Control Increase involvement of top management Single method from shop
Slide 27: Profitability Levers
PROFITABILITY LEVERS 5 performance drivers to increase operational efficiency 1 Purchasing 2 Shopfloor 3 Program Management 4 Indirect costs reduction Cost reduction Scrap reduction Price increases for Polyvalence and through technical Direct labor technical Polycompetence modifications pr
Slide 28: Purchasing Excellence
PURCHASING EXCELLENCE Saving Saving 2016: 2016: € 4m STEEL € 12,2m CHEMICALS TOTAL Market Drivers Switch lower grades Allocation Management Allocation Management SAVINGS: Value Added / Value Engineering Direct Material to suppliers € 23m Use of alternative raw materials Improve pricing t
Slide 29: Program Management Excellence
PROGRAM MANAGEMENT EXCELLENCE Continuous price negotiation from first quotation to end of life to maximize pricing power. Renegotiation of the contract price February 28, 2017 29
Slide 30: Indirect Costs Optimization
INDIRECT COSTS OPTIMIZATION 20.9% 20.8% 20.7% 19.6% 18.8% 2012 2013 2014 2015 2016 Key levers for savings on indirect costs Structure costs reduction Cost rationalization Better sharing/ New plants designed more efficiently allocating functions February 28, 2017 30
Slide 31: 2017 Outlook
2017 OUTLOOK soteri
Slide 32: 2017 Outlook
2017 OUTLOOK 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
Slide 33: Contacts
CONTACTS Yann Albrand, Group CFO Laura Pennino, Investor Relations and CSR SOGEFI Via Ciovassino, 1/a 20121 Milano – Italia Tel: 39 02 46750214 Fax: +39 02 43511348 Mail: ir@sogefigroup.com February 28, 2017 33
Slide 34: Disclaimer
DISCLAIMER 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-Ann