STAR CONFERENCE 2018 Milan March 27-28th, 2018 Laurent HEBENSTREIT - Chief Executive Officer Yann ALBRAND - Chief Financial Officer Stefan Canu - Investr Relatins
Agenda 1 2 3 Full Year 2017 Results Technlgy Prfitable and Sustainable Grwth Strategy 2 I
2017 Highlights Revenues up by 6.2% at 1.672m (+7.3% at cnstant exchange rates), utperfrming the market EBITDA at 165.8m up 8.6%, i.e. 9.9% n sales EBIT at 85.4m up 14.6%, i.e. 5.1% n sales. Net result at 26.6m (vs 9.3m in 2016) Free cash flw at + 34.4m (vs 31.2m in 2016) Cash generatin (FCF + Capex) fr the first time abve 100m 3 I
3 Business Units Suspensins Filtratin Air & Cling MAIN PRODUCTS Stabilizer Bars Cil Springs Oil Filters Engine Air Filters Fuel Filters Cabin Air Filters Maniflds Clant Pumps Clant Outlet Husings 1.672M 607M 566M 504M 2017 Sales 36% 34% 30% 4 I
Well balanced clients mix 2016 2017 5% 10% Grwth with FCA is mainly driven fr Sgefi Suspensins by Jeep Cmpass in Eurpe, in China and in the new plant in Mexic 5 I
Revenues by Business Unit Psitive perfrmance fr all three business units Q4 2017 Q4 2016 reprted change cnstant exchange rates FY 2017 FY 2016 reprted change cnstant exchange rates m Air&Cling 124.9 120.3 3.8% 6.8% 504.0 480.2 5.0% 5.6% Filtratin 135.1 132.1 2.3% 6.3% 565.7 535.1 5.7% 7.1% Suspensins 156.9 141.0 11.2% 14.5% 606.8 562.8 7.8% 8.9% Intercmpany eliminatins -0.9-0.9-4.1-4.0 Ttal 415.9 392.5 6.0% 9.4% 1672.4 1574.1 6.2% 7.3% 6 I
Revenues by Gegraphical Area Surce: Sgefi and IHS data All gegraphical areas cntributed t sales grwth (+6.2%, +7.3% at cnstant exchange rates) utperfrming the market in mst areas Q4 2017 Q4 2016 reprted change reference market prductin m Q1 2017 Q2 2017 Q3 2017 Q4 2017 Eurpe 8.2% -2.7% 3.3% 9.1% Nrth America 15.4% 7.9% -12.2% -1.4% Suth America 30.6% 22.0% 9.0% -4.1% Asia 26.4% 38.2% 13.1% 10.3% Ttal reprted 12.6% 4.5% 2.0% 6.0% Ttal at cnstant exchange 11.0% 4.6% 4.2% 9.4% cnstant exchange rates FY 2017 FY 2016 reprted change reference market prductin cnstant exchange rates weight based n FY 2017 m Eurpe 258.2 236.7 9.1% 6.0% 9.3% 1031.7 988.9 4.3% 1.1% 5.0% 61.7% Nrth America 71.8 72.8-1.4% -4.2% 5.2% 296.7 290.6 2.1% -4.0% 3.3% 17.7% Suth America 45.5 47.5-4.1% 15.4% 8.9% 195.0 172.2 13.2% 20.9% 15.1% 11.7% Asia 43.0 39.0 10.3% 0.1% 15.9% 163.2 135.0 20.9% 2.7% 23.3% 9.8% Intercmpany eliminatins -2.6-3.5-14.2-12.6 Ttal 415.9 392.5 6.0% 0.4% 9.4% 1672.4 1574.1 6.2% 2.1% 7.3% 100.0% 7 I
Strng Prfitability Increase m / % sales Cntributin margin 28.8% 453.9 +5.4% 28.6% 250,5 478.4 2017 Ebitda imprvement mstly driven by: Cntributin margin impacted by 13m linked t the higher cst f steel 2016 2017 Better fixed csts absrptin (frm 18.9% t 18.5%) 9.7% +8.6% 9.9% Reductin f ttal labur csts % t sales frm 21.4% t 20.8% EBITDA 152.7 165.8 2016 2017 Ebitda includes: Higher restructuring csts ( 11.2 millin vs 5.3 millin in 2016) 3 millin f nn-rdinary accrual (administrative litigatin n past activities in Filtratin) 8 I
Strng Prfitability Increase m / % sales EBIT 4.7% 74.5 +14.6% 5.1% 85.4 EBIT after write-dwns f Brazilian peratins fixed assets ( 6.2m in 2017 vs 4.8m in 2016) FINANCIAL RESULT NET INCOME 2016 2017 2.0% 1.9% 31.5 31.7 2016 2017 +185% 0.6% 1.6% 26.6 9.3 2016 2017 2017 financial result includes 6.0m charge due t the fair value f India put ptin. Cash interests are dwn 5.3m Net incme after 22.9m f tax expense in 2017 vs 32.6m in 2016 (including 6.7m f tax charge fr claims in 2016) 9 I
FCF Highlights - Strng Free Cash Flw generatin m 2016 2017 OPERATING CASH FLOW 56.0 69.7 Warranty claims 9.6 0.4 Tax disputes 5.7 0.0 Other 0.7 0.0 Nn rdinary items 16.0 0.4 Taxes (13.6) (13.6) Interests (27.2) (22.1) FREE CASH FLOW 31.2 34.4 After 68.1m f tangible CAPEX vs 58.8m in 2016 (+16%) FY16 including 15.3m f psitive neffs frm warranty claims and tax disputes Thanks t lwer interest rates FCF represents 2.1% f sales FREE CASH FLOW w/ nn rdinary items 15.2 34.0 NET DEBT 299.0 264.0 Dwn 35m vs FY 2016 Factring at 94.9m end 2017 vs 98.9m end 2016 and 89.0m end 2015 10 I
Tangible Investments 2013-2017 m 68 36 42 51 59 2013 2014 2015 2016 2017 Health & Safety, Quality, Capacity increase, Efficiency, New prducts, New plants 11 I
Value Creatin Thrugh ROCE Increase in % 17.8% 14.9% 10.1% Q4 2015 Q4 2016 Q4 2017 12 I
Operatinal Imprvement - Cash Generatin m & % f revenues Free Cash Flw + Tangible Investments 2017 was a recrd cash generatin year bth in term f Ttal amunt fr the first time abve 100m In % f revenues higher than 6% 13 I
DEBT/EBITDA Rati Imprved 2.79 Leverage nw supprts Prfitable Grwth Strategy 1.96 1.59 Q4 2015 Q4 2016 Q4 2017 DEBT: Net debt (end f perid) EBITDA: 12 mnths rlling 14 I
2. Technlgy
Current Trends Air Quality Fine Particles Reductin CO 2 Emissins Reductin Fuel Cnsumptin Reductin Higher technlgy requirements Weight Reductin Filtratin Filtratin Air & Cling Filtratin Air & Cling Suspensins 16 I
4 Disruptive Future Trends 1 CONNECTIVITY 2 AUTONOMOUS DRIVING Cnnected, Autnmus and Shared trends have limited direct impact fr Sgefi 3 SHARED MOBILITY ELECTRIFICATION Pwertrain electrificatin is a key trend fr Filtratin and Air & Cling Sgefi develped with Mc Kinsey supprt a detailed wrld data base and mdel t create alternative pwertrain scenaris Higher technlgy requirements 17 I
2027 Sgefi Frecast All scenaris predict a reductin f ICE t reach 86% in Base Case and 81% in Strng Case in 2027 EV High Share f 2027 sales per type f engine, LV1 glbal 59% 56% 19% 15% 7% 18% 15% 11% 18% 15% 14% 53% Scenari Base case Strng case EV scenaris 14% 16% 8% 63% 14% 16% 11% 60% 14% 16% 15% 56% Type f engine EV Lw 10% 16% 8% 66% 10% 16% 12% 62% 10% 16% 15% 59% EV Hybrid Diesel Gaslin e Diesel Lw Diesel scenaris Diesel High Surce: Sgefi Technlgy presentatin and Mc Kinsey 1 including PC and LCV (<3.5 tns) 18 I
Light Vehicles Sales Frecast (Sgefi Base Case) Strng grwth f Hybrid pwertrains and Electric Vehicles (EV) But ttal Internal Cmbustin Engine (ICE) remains flat Ttal Vehicles (M units) 2017 2022 2027 CAGR 17/22 CAGR 22/27 92 99 110 1.4% 2.1% EV 1 6 15 35% 19% Hybrid 4 9 17 19% 14% ICE Diesel 15 14 12-2% -2% ICE Gasline 72 70 66 0% -1% Ttal ICE 91 93 95 0.4% 0.5% Surce: Sgefi Technlgy presentatin and Mc Kinsey Vlume including Passenger Car (PC) and Light Cmmercial Vehicle (LCV) < 3.5T 19 I
Sgefi Filtratin / Air&Cling Main Prducts Filtratin Air & Cling OEM AFTERMARKET Oil Filter Manifld Engine Air Clant Pump Fuel Filter Cabin Air Filter Eurpean Car Park 10 years average age Clant Outlet Husing 20 I
Hybrid Pwertrain Vlume Effect New Prduct Air & Cling VOLUME X2 Manifld Clant Pump Clant Outlet Husing Battery Pack Battery Pack clant Manifld Filtratin Thermal Pack Clant Valve Oil Filter Engine Air Fuel Filter High perfrmance Cabin Air Filter 21 I
BEV Pwertrain Vlume Effect New Prduct Air & Cling Battery Pack Battery Pack Clant Manifld Mdule Battery Thermal Pack Electric Cling Mdule VOLUME X2 Filtratin Electric Clant Pump Clant Outlet Husing Clant Valve High perfrmance Cabin Air Filter 22 I
FCEV Pwertrain New Prduct Air & Cling Electric Clant Pump Clant Outlet Husing Clant Valve Filtratin Fuel Cell Air Filter Fuel Cell Filters Water Separatr High perfrmance Cabin Air Filter 23 I
SOGEFI n Hybrid and Electric Pwertrain 3-serie A8 MALIBU TX5 S-CLASS PANAMERA PACIFIC A ZOE FORTWO B-CLASS 500 24 I
Sgefi Filtratin / Air&Cling prducts ffer pprtunities Even if all scenaris predict an increase f EV, the ttal ICE pwertrains culd remain flat r a substantial part f the market until 2027. Hybrid pwertrain is a first step twards a wrld f multiple pwertrains. The rise f EV is depending n key evlving factrs (vehicle range, battery csts, infrastructures develpment, ) The rise f Hybrid, BEV and FCEV ffers pprtunities fr SOGEFI. Mre vlume f Cling prducts New Sgefi prducts Higher cntent fr existing Sgefi prducts 25 I
At Tp Level in term f R&D Investments Ttal R&D Investment Italy Eurpe N 14 N 292 Wrld N 1407 Surce: Il Sle 24 re, "The 2017 Eu Industrial R&D Investment Screbard" 26 I
3. Prfitable and Sustainable Grwth Strategy
Grwth Strategies : Harvest, Challenger, Leader Filtratin Air & Cling Harvest Challenger Leader OEM Oil Filter Engine Air Fuel Filter Cabin Air Filter N 4 Wrldwide AFTERMARKET N 1 France Eurpean Car Park 10 years average age Manifld Clant Pump Clant Outlet Husing N 2 Wrldwide 28 I
Prfitability imprvement plan 5 perfrmance drivers t increase peratinal efficiency 1 PURCHASING PROGRAM 2 SHOPFLOOR 3 MANAGEMENT 4 REDUCTION Plyvalence and Cst reductin thrugh technical mdificatins Pluriannual price and prductivity negtiatins Lw Cst Cuntry surcing Inventry and Scrap reductin Direct labr prductivity Higher autmatizatin Shrter reactin times t deviatins Indirect labr prductivity increase Lean rganizatins Price increases fr technical mdificatins Systematic price increases fr vlume fluctuatins Develpment and tling cash payment 5 INDIRECT COSTS Plycmpetence Prcess redesign COMPETITIVE FOOTPRINT Industrial excellence Plant cmpetitivity plan 29 I
Sgefi Excellence System Strategic cst reductin initiative 1245 945 TOTAL Material fr final prduct 380 Transfrmatin csts 290 Csts analized 100 Adressable csts 100% 64% 36% 23% 8% A deep analysis f the cst base has been dne On 100m addressable csts sme prductivity ptential have been identified with expected saving in the next 3 years TOTAL COSTS VALUATION OF POTENTIALS Data: 2016 cst base 30 I
Prfitability Levers Update n Shpflr 2. Shpflr 11 Grup Industrial KPIs identified t drive perfrmance level Already achieved material imprvement in 2017 KPI 2017 Safety Accident Frequency Rate -33% Custmer Claim Rate -22% Quality Custmer Line Return -63% Supplier Return = Scrap f Ttal Prduct Sales -3% Delivery Custmer Miss Deliveries -35% Supplier Miss Deliveries -24% Peple Direct Absenteeism Rate -5% Prductivity Direct Wrker Efficiency +2,2% Yield Rate f Equipment +9% Inventry Days f Prductin Inventry -11% 31 I
Mexic and Mrcc prjects are cntributing t the grwth 5. Cmpetitive Ftprint Mexic Mrcc Filtratin Suspensins Air & Cling Building ready in Q1 2016 Start f prductin in 2016 mainly in Filtratin and Air & Cling 2018 grwth mainly related t Suspensins 60m f additinal sales after start up phase ( 17m investments) Filtratin Prject start in March 2017 Building cnstructin start July 2017 Building ready (fr line installatin) January 2018 Filter prductin line installed and injectin presses installatin in prgress Start f prductin Q3 2018 Additinal annual sales f 30 millin frm 2020 ( 10m investments in a full-scale scenari) 32 I
Gegraphical Expansin and cst cmpetitive ftprint 5. Cmpetitive Ftprint NAFTA Mexic EMEA Suspensins Mrcc Rmania EMEA prject India China ASIA Filtratin Air & Cling 33 I
Sustainability is part f Sgefy strategy Energy intensity GHG emissins intensity Strng cmmitment t substantiality Reductin in Energy intensity = Sgefi energy cnsumptin t sales rati) Greenhuse Gas (GHG) emissin reductin = ttal Sgefi gas emissins expressed as carbn dixide equivalent (CO2e) Index Number 34 I
2018 OUTLOOK In 2018 the glbal autmtive market is expected t grw by arund 1.5% In this scenari Sgefi is expecting t mderately utperfrm the market at cnstant exchange rates, thanks particularly t the grwth initiatives in Mexic and Mrcc and a higher result, despite the further increase in steel csts 35 I
CONTACTS Yann Albrand, Grup CFO Stefan Canu, Investr Relatins SOGEFI Via Civassin, 1/a 20121 Milan Italia Tel: 39 02 46750214 Fax: +39 02 43511348 Mail: ir@sgefigrup.cm 36 I
DISCLAIMER This dcument has been prepared by SOGEFI S.p.A. fr infrmatin purpses nly and fr use in presentatins f the Grup s results and strategies. Fr further details n the SOGEFI Grup. reference shuld be made t publicly available infrmatin. including the Annual Reprt. the Semi-Annual and Quarterly Reprts. Statements cntained in this dcument. particularly the nes regarding any SOGEFI Grup pssible r assumed future perfrmance are r may be frward lking statements and in this respect they invlve sme risks and uncertainties. Any reference t past perfrmance f the SOGEFI Grup shall nt be taken as an indicatin f future perfrmance. This dcument des nt cnstitute an ffer r invitatin t purchase r subscribe fr any shares and n part f it shall frm the basis f r be relied upn in cnnectin with any cntract r cmmitment whatsever. 37 I