Sogefi (SGF) Status Update summary

Business unit performance and market dynamics

• Suspension business derives about 70% of turnover from stabilizer bars, with major new projects tied to German OEM platform changes expected to impact volumes from late 2027 to early 2028.

• High cost pressure is present due to European OEMs' concerns over Chinese competition, leading to aggressive cost reduction efforts and pricing pressure.

• Exposure to Chinese customers is split 54% air and cooling, 44% suspension, with strategic focus on emerging OEMs like Xiaomi and XPeng rather than established players such as BYD and Geely.

• Stellantis exposure is roughly 50/50 between suspension and air and cooling, with compensation for project cancellations managed through new project awards or cash settlements.

• Air and cooling business is ramping up new battery vehicle programs, with low historical exposure to battery electric vehicles but expected growth in coming years.

Operational efficiency and capacity utilization

• Suspension plant saturation is around 60-63%, prompting footprint optimization, including production shifts from France to Romania, Italy, Spain, and other French plants.

• Romanian suspension plant turnaround is complete, with capacity for an additional 30% volume, and ongoing review of footprint and automation to improve efficiency.

• Air and cooling plants are at or near full capacity in China, North America, and Romania, with expansion planned in China and India; only the French plant operates at 60-65% capacity.

Financial management and cost control

• Suspension division has contractual compensation mechanisms for raw material and energy cost fluctuations, with most costs passed through to customers based on indexed pricing.

• Air and cooling division uses indexed contracts for plastics, minimizing raw material exposure, especially in North America and Europe.

• CapEx allocation is about 60% to air and cooling, driven by capacity expansion in North America and investments in battery vehicle cooling plates.

• Working capital requirements are higher in suspension due to raw material needs.