Sogefi (SGF) Q2 2024 earnings summary

Executive summary

• H1 2024 revenues were €524.1 million, down 2.7% year-over-year, mainly due to a downturn in the European automotive market, while EBITDA rose to €67 million and EBIT more than doubled to €27.8 million.

• Net profit reached €145.8 million, driven by a €136.4 million gain from the sale of the Filtration division, and free cash flow surged to €342.5 million, with net financial position swinging to a positive €48.8 million from significant net debt.

• Extraordinary dividend of €110 million was approved for July 2024, following a €23.7 million ordinary dividend paid earlier in the year.

• CEO and General Manager Frédéric Sipahi resigned after June 30, 2024.

• Mickaël Sebag introduced as CEO of the Air and Cooling business unit, with a track record of significant growth in North America.

Financial highlights

• Contribution margin improved to 29% of sales (up from 26.2%), mainly due to lower raw material and energy costs.

• EBITDA (excluding non-recurring) rose to €68 million (vs. €57 million), with margin up to 12.8% from 9.7% in H1 2023.

• EBIT reached €28 million (vs. €14 million last year); adjusted EBIT was €29 million (vs. €18 million); EBIT margin rose to 5.3% from 2.6%.

• Net income from operating activities was €11 million, up from €4 million; total net income including Filtration disposal was €145.8 million.

• Free cash flow was €342.5 million, including €321.8 million from discontinued Filtration operations; free cash flow from continuing operations was €20.7 million.

Outlook and guidance

• Sogefi expects a low single-digit revenue decline for 2024, with operating profitability (excluding non-recurring items) higher than 2023.

• Market visibility remains low due to macroeconomic and geopolitical uncertainties; global car production is forecast to drop 2% in 2024, with Europe down 5.3%.

• Cost rationalization and footprint optimization actions to continue delivering positive effects.

• 5% return on sales margin targeted for the second half, barring major volume drops.

• No significant raw material price changes expected in H2; guidance does not include major customer compensation.