2015 Results and 2016 perspectives Laurent Hebenstreit, CEO Yann - - PowerPoint PPT Presentation

2015 Results and 2016 perspectives

Laurent Hebenstreit, CEO Yann Albrand, CFO

Milano, March 1st 2016

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SOGEFI GROUP

ENVIRONMENT TRENDS & SOGEFI PRODUCTS

END USERS

USAGE COSTS / BENEFITS

• Vehicle total cost
• Fuel economy
• Less pollutants
• Less green house gases
• Car sharing
• Autonomous car
• Infotainment

MEGAPOLES

ELECTION & COMMUNICATION

• Clean engines
• Promote electric vehicles

STATES

HEALTH & SUSTAINABILITY

• Pollutant Emissions Regulations
• Green House Gas Emissions

Regulations

• Test methods standards

SOGEFI - 3 Business Units

SUSPENSIONS FILTRATION SPRINGS CABIN AIR FILTERS STABILIZER BARS AIR & COOLING INTAKE MANIFOLD AIR BOX and TUBES WATER PUMPS WATER OUTLETS WATER PIPES FILTRATION OIL FILTERS FUEL FILTERS ENGINE AIR FILTERS CANISTERS OIL SEPARATORS CAM COVERS FILTRATION TRANSMISSION OIL SUMP

VEHICLES MANUFACTURERS

ENGINE TRANSMISSION

VEHICLE

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SOGEFI GROUP

FILTRATION PRODUCT PORTFOLIO

METALIC DIESEL FUEL FILTERS PLASTIC GAZOLINE FILTERS PLASTIC DIESEL FUEL MODULES

CRANKCASE VENTILATION

BLOW BY SEPARATORS CAM-COVER

EVAP

CANISTER AIR FILTER ECO ENGINE LUBRICATION MODULES SPIN ON LUBRICATION SYSTEMS DUAL CLUTCH TRANSMISSION FILTER

L U B R I F I C A T I O N F U E L AIR

ENGINE AIR BOX

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SOGEFI GROUP

A&C PRODUCT PORTFOLIO

ENGINE COOLING

WATER PUMPS WATER OUTLETS WATER PIPES

MANIFOLD

TOP COVER ENGINE AIR INTAKE SYSTEMS TUBES

A I R

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SOGEFI GROUP

SUSPENSIONS PRODUCT PORTFOLIO - PASSENGER CARS

STABILIZER BARS TORSION, STRAIGHT BARS COIL SPRINGS

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SOGEFI GROUP

SUSPENSIONS PRODUCT PORTFOLIO – HEAVY DUTY

Leaf Springs Stabilizer Bars Antiroll, Straight Bars Stabilinkers Track adjusters, Coil Springs

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SOGEFI GROUP

2015 HIGHLIGHTS AND 2016 PERSPECTIVES

• Revenues up by 11.1% in 2015 at €1,5bn (+9.1% like-for-like)
• Solid organic growth in Europe and North America
• Outperforming market production in all geographical areas
• EBITDA up by €6m despite an €8.3m reduction of capitalized expenses
• Net debt reduced by €17.4m in Q4
• New lean organization to strengthen Sogefi’s competitiveness, leveraging
• n quality, cost and innovation
• Planned a € 17m investment for a new plant in Mexico

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SOGEFI GROUP

SOLID GROWTH IN EUROPE AND NORTH AMERICA

€m Q4 2015 Q4 2014 2015 2014 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

weight based on 2015 reported change like for like change* reported change like for like change* reference market

Sales by Region

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SOGEFI GROUP

WELL BALANCED CLIENT MIX Sogefi top 10 clients - in % of total sales In 2015 Sogefi started Suspensions production for Hyundai and Kia

Autodistribution Toyota BMW Volkswagen/Audi GM Daimler PSA Renault/Nissan FCA Ford 2015 2014 10% 15%

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SOGEFI GROUP

POSITIVE CONTRIBUTION FROM ALL BUSINESS UNITS

In € million

Revenue breakdown by Business Unit

Suspensions 37.1% Filtration 35.7% Air&Cooling 27.2%

Business Unit sales

reported change like for like change* Suspensions 10.1% 9.2% Filtration 13.2% 10.0% Air&Cooling 9.3% 7.5%

507 474 374 558 536 409 Suspensions Filtration Air&Cooling 2014 2015

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SOGEFI GROUP

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

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SOGEFI GROUP

CAPITALIZATION / AMORTIZATION OF INTANGIBLES

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

Lowest capitalization since Air & Cooling acquisition in July 2011

12,5 18,4 34,1 39,2 38,8 30,5 10,3 13,4 18,6 21,2 22,7 27,3 5 10 15 20 25 30 35 40 45 2010 2011 2012 2013 2014 2015 capitalization amortization

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SOGEFI GROUP

2015 RESULTS – FCF HIGHLIGHTS

€m 2014 2015 NET DEBT 304.3 322.3

Net financial debt was reduced by € 17,4m in Q4 2015 to € 322.3m versus € 339.7m at end September 2015 2015 FCF includes € 18m advanced payment to the 2 car manufacturers on warranty claims. Without this negative impact, the net debt would have remained unchanged over the year (€ 304.3m as of end 2014).

€m 2014 2015 Ebitda w/o non recurring 134,6 136,9 Changes in net working capital 8,0 (2,7) Capital expenditures (84,4) (81,6) Other operating asset (liabilities) (2,6) 1,4 OPERATING CASH FLOW 55,6 54,0 Warranty claims (2,9) (20,3) Restructuring (17,7) (20,0) Disposal of assets 3,9 4,2 Non recurring items (16,8) (36,1) Taxes (12,7) (14,3) Interests (22,3) (28,4) FREE CASH FLOW 3,8 (24,8)

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SOGEFI GROUP

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

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SOGEFI GROUP

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

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SOGEFI GROUP

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

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SOGEFI GROUP

NEW LEAN ORGANIZATION

CEO

• L. HEBENSTREIT

Human Resources Finance,

• I. S. and

Administration Innovation & Product Marketing Finance Information Systems Purchasing Legal Engine Systems Projects Asia Mergers & Acquisitions

BEFORE OCTOBER 1st 2015

Operational Efficiency CEO

• L. HEBENSTREIT

Central functions are reduced from 7 to 3:

 Finance, Information Systems and Administration  Innovation et Product Marketing  Human Resources

“Lean”, therefore lighter, simpler and less expensive

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SOGEFI GROUP

NEW PRODUCT ORIENTED ORGANIZATION

Air & Cooling Business Unit Suspensions Business Unit Filtration Business Unit North America Region CEO

• L. HEBENSTREIT

OCTOBER 1st 2015

North America Region to support all three business units

 Enhance synergies and best practices sharing  Develop new business opportunities

Three product Business units

 Direct purchasing within business units

CEO

• L. HEBENSTREIT

BEFORE

Engine Systems Business Unit Aftermarket Business Unit Suspensions Business Unit

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SOGEFI GROUP

FOCUS ON INDIRECT COSTS

 Structure costs reduction  Cost rationalization  New, lean, product-oriented

• rganization

 New plants designed more efficiently  Capacity expansion in low cost countries

Gross indirect costs on sales In 2015 gross indirect costs were 19.6% of total sales, the lowest ratio for Sogefi Action plan for savings on indirect costs

21,8% 20,1% 20,9% 20,7% 20,8% 19,6% 2010 2011 2012 2013 2014 2015

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SOGEFI GROUP

INVESTING FOR PROFITABLE GROWTH

0,0% 0,5% 1,0% 1,5% 2,0% 2,5% 3,0% 3,5% 4,0% 10 20 30 40 50 60 2010 2011 2012 2013 2014 2015 Tangibles % on sales

 increase production capacity  industrialize new products

Tangible investments

 improve processes  increase productivity

2015 Sogefi investments priorities:

In € million

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SOGEFI GROUP

INVESTMENTS FOR PROFITABLE GROWTH NEW PLANT IN MEXICO

€ 17m investment at Monterrey in a new plant serving all three Business units

Suspensions building Filtration and A&C building

3D Rendering Building completion as of mid February 16,000 m2 of total covered surface € 60m of additional sales after start up phase

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SOGEFI GROUP

SOGEFI’S PRODUCTION IN NORTH AMERICA

Sogefi footprint

Target sales in Mexico and United States

Chrysler Ford (Hermosillo) Ford Daimler

80% 20%

BMW VW

 Co-localization of facilities maximizes synergies in management, back office and taxes  Possibility to expand the building from 16,000 m2 to 25,000 m2  Total surface of 45,600 m2

 Location is about 10 km driving distance

from international airport

 Plant is about 20 km from Monterrey center

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SOGEFI GROUP

2016 OUTLOOK In 2016 the global car market is expected to increase by 2.5%. Sogefi expects to continue the positive trends in North America, China and India. In Europe after the important business expansion seen in 2015, the company expects a more modest growth, while in South America market conditions remain difficult.

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SOGEFI GROUP

CONTACTS

Yann Albrand, Group CFO Laura Pennino, Investor Relations SOGEFI Via Flavio Gioia, 8 20149 Milano – Italia Tel: 39 02 4675 0214 Fax: +39 02 43511348 Mail: ir@sogefigroup.com

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SOGEFI GROUP

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-Annual and Quarterly Reports.

• 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.

• 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.