CARRARO GROUP: Draft financial statements for the year 2009 approved.

Transcription

1 CARRARO GROUP: Draft financial statements for the year 2009 approved. A year strongly influenced by the heavy contraction of all main reference markets closes, with evident impacts in terms of both sales and profitability. Sales at million euro, in contraction compared with million euro as at 31 December EBITDA negative by 17.6 million euro, it was a positive 69.7 million euro at 31 December 2008; net of non-recurring extraordinary costs, this value would have been negative 1 million euro. EBIT negative by 49.5 million euro, it was a positive 36.9 million euro at 31 December 2008; net of non-recurring extraordinary costs, this value would have been negative 32.9 million euro. Net income negative by 45.9 million euro, it was a positive 11.3 million euro at 31 December 2008; net of non-recurring extraordinary costs this value would have been negative 33.8 million euro. Net financial position at came to a debt of million euro, in line respect to the value also in debt, of million euro at 30 June 2009, but better than that of 30 September 2009 of million euro due to a reduction in working capital. The first 2010 projections confirm the budget estimate in terms of growth of sales and EBITDA, while as of today, the portfolio s performance indicates further room for improvement The restructuring plan has been completed and the Group's reorganisation has begun: Carraro 2.0 is born, an evolved business model to confront the new competitive scenarios. Milan, 22 March The Board of Directors of Carraro SpA, the world leader in drive systems, held a meeting today chaired by Mario Carraro to examine the draft Financial Statements for the financial year 2009, which will be submitted to the Annual General Meeting, set for the coming 30 April, in first call. Analysis of the consolidated economic and financial data for the year 2009 The 2009 year end close confirmed a strong contraction starting from the end of 2008 and then growing during the course of the year in every segment and geographic area, showing a drop in volumes of more than 50%, with peaks of 80% in the construction equipment sector. This drop was also influenced by the destocking effect, which led numerous clients to produce by utilising components already present in their inventory. In light of a scenario that is new as much as it is complex, a series of actions was undertaken in a timely manner with the aim of making the company secure and making the business continuous. This has been implemented with short-term interventions aimed at lowering the break-even point on the EBITDA, reduced by about 140 million euro in 2009 and a further 120 million euro in 2010, to maintain a more stringent operating cash management and to guarantee the command of the market and continuity in developing new products. 1

2 These actions were implemented alongside a series of initiatives which will bring benefits during the next three years ( ), supporting the turnaround phase. The Group has articulated interventions through an initial organisational phase of "reaction to the crisis" and a second constructive phase of "growth". 1. Reaction to the crisis: interventions begun and completed during 2009 Other than carrying out a staff reduction in some foreign Group facilities, at the end of 2009 important agreements were sealed with corporate parties in Italy and Germany to use social security cushions - such as the Cassa Integrazione Straordinaria [Extraordinary Layoff Benefits Fund] and Kurzarbeit. In 2011, the combined effect of the two actions will bring about a staff reduction of 1,375 compared with 31 December 2008, of which 788 are in Italy. The staff, which had reached 4,500 in July 2008, will be 2,800 at the end of this process. Furthermore, activities were implemented for the optimisation of direct and indirect purchases, with a reduction of incidence of direct materials on sales in 2009 compared with 2008 of about 1.5 percentage points, and a saving on indirect purchases of about 7 million euro compared with In a parallel manner, a reduction of working capital has been reached (-29 million euro in 2009 compared with 2008) thanks to opportune payment policy renegotiations with suppliers, inventory resizing, and the optimisation of client receivables. At the same time, investment policies were re-examined, with a reduction of 35 million euro compared with 2008, focusing attention on interventions aimed at redesigning the industrial footprint and keeping facilities and machines efficient. This confirms a strong focus on quality and innovation, therefore maintaining R&D costs constant at 2.5% of sales. During the course of 2009, finally, the company s top management was strongly renewed, starting from the Managing Director and some Business Unit Directors, with a contextual revision of governance mechanisms and an important strengthening of the role of the Holding direction and control. 2. The path of growth: interventions begun in 2009 but with implementation and results in the next three years Because of the necessity of establishing renewed balance at the industrial level, in order to confront the new sizes of the main reference markets, a process of optimisation for the Group s global productive platform has been started up, with the transfer of some manufacturing of Carraro DriveTech and GearWorld to India and China (to be executed within 2011) which will reflect in a decrease in the incidence of manufacturing in Europe (from 80% in 2009 to 69% in 2012). At the same time, assessments are underway regarding keeping some less important manufacturing sites. Internally, the Group redefined its own organisational model with the objective of rendering its structure even more efficient in its processes and effective in its responses. Consistent with this, commercial presence has been reinforced in the main geographic areas of interest, protecting the market share and which has furthermore led to the development of commercial activity in high-potential countries such as India, China, and South America. In parallel, with the support of a primary consulting study, a strategic development journey, named "Carraro 2.0", has been started up for the three years from This project focuses on the revision of the 2

3 Group s business model (for the productive structure, the local for local market coverage, and the organisational structure), the assessment of assets (saturation of facilities and protection of intangible assets), development of technical and technological competencies (excellence in products and processes, mechatronics, renewable energy), and the leverage of an already-stabilised global presence (India, China, and South America). 3. Renegotiation of debt terms and expiries Due to negative financial results such as those indicated, based on the results of the financial statements as at 31 December 2009, the Company and some of its subsidiaries did not respect some financial covenants, set to protect the positions of the financing banks in some of the numerous medium- and long-term loan agreements that the Company itself and its subsidiaries are part of. At the end of the 2009 financial year, taking into account the possible violation of the aforesaid covenants and the relative consequences in terms of loan accelerations, the Company undertook a contractual process with almost all of the credit institutions that finance it (and therefore not only with those institutions whose financing indicate the aforesaid covenants) to redefine, in the context of a framework agreement, its own commitments regarding these institutions reformulating the expiries of the loans and the covenants themselves. As of today's date, reaching a definitive agreement with the banks seems to be imminent. Revenues As a consequence of the marked contraction of the main reference market volumes indicated above, the Group's sales as at 31 December 2009 reached million euro, a decrease of 49.9% compared with 2008's sales which were attested at million euro. This drop involved all of the Group s Business Units during the entire financial year, with the single exception in the second half of the year of Elettronica Santerno, a company which specialises in power electronics for industrial applications and renewable energy. The gradual overcoming of the credit crunch in fact opened up the implementation of new facilities and installations, both photovoltaic and wind, in various geographical areas. In terms of geographic areas, we note on one hand the heavy decrease of matured markets, such as North America (-61.9%) and Great Britain (-80.2%), and on the other hand the substantial holding of the emerging China (-3.2%). EBITDA and EBIT Based on the above indicated premises, as a consequence of non-recurring events, 2009 s profitability underwent strong repercussions from sudden and unexpected reduction in volumes. Despite the important actions of containing the principle cost items - decreasing consistent with the sales reduction - personnel costs and depreciation and amortisation expenses, unreduced in proportional terms, conditioned the financial period s profitability. Therefore, EBITDA was recorded at the negative value of 17.6 million euro from the 69.7 million euro of 2008, passing from 7.2% of sales to negative 3.6% of sales. EBIT is on the decrease passing from 36.9 million euro in 2008 (3.8% of sales), to negative 49.5 million euro (-10.2% of sales). Net of these non-recurring events, the values would have been: EBITDA negative 1 million euro (-0.2% of sales), EBIT negative 32.9 million euro (-6.8% of sales). 3

4 Net income The Group closed 2009 with a loss of 45.9 million euro (-9.4% of sales), against a profit of 11.3 million euro (1.2% of sales) during the last financial year. Net of non-recurring effects, the net income would have been a loss of 32.7 million euro (-6.9% of sales). Investments During 2009, investments were made for 24.3 million euro compared with the 58.4 million euro of 2008, and they include the carry-over of investments launched in the last fiscal year for about 11 million euro. As a consequence of beginning restructuring, the same were allocated for supporting productive reorganisational programmes. The remaining portion of about 16.3 million euro was allocated to the development of new projects as well as to maintenance. Research and innovation Despite the drastic resizing of operations, expenses for Research and Development amount to 13.9 million euro for the 2009 financial year, 2.8% of sales compared with 14.8 million euro in 2008, equal to 1.5% of sales. Net financial position and gearing Following the decline of the net financial standing as at 30 September 2009 to million euro - as shown in the quarterly report thanks to actions undertaken for implementing financial safety measures, in the last quarter generation was resumed of a positive free cash-flow (working capital reduction from 2008 to 2009 of 28.7 million euro) allowing to reach, as at 31 December 2009, million euro of debt in line compared with the debt value of million euro as at 30 June 2009, a worsening compared with the information as at 31 December 2008, which was million euro. Gearing (defined as the ratio of net financial position to equity) came to 2.49 at 31 December 2009, compared with 1.89 at 30 June 2009 and 1.45 at 31 December Performance of the reference segments and markets As previously anticipated, the important volume contractions posted in the 2009 financial year determined foreseeable drops in terms of performance for all of the Group s BUs. In detail: - Carraro Drive Tech (BU Drivelines - transmission systems) posted in 2009 a reduction of 52.4% of sales compared with the previous year. This variation, which is absolutely extraordinary and which had never occurred in the past, was particularly concentrated in the sector of construction machines, mining machines, and material movement. However, this extraordinary sales contraction is also due to the fact that the movement from record sales peaks in 2008 to negative peaks in 2009 caught all OEM clients by surprise, who found themselves having to manage inventories, both at their own establishments and at dealers, which were completely oversized compared to real sales on the final market. - for Gear World (BU Gear and Components), the first signs of giving in of some strategic outlet markets, in particular Construction Equipment, had already appeared toward the end of 2008 as an immediate consequence of the global financial crisis, stabilising in a decidedly heavy manner starting from the beginning of All of the various application markets - all 10, from powertools to wind power in which 4

5 Gear World operates contextually indicated strong signs of giving way which were gradually confirmed and intensified until they reached a generalised decrease in demand of around 50%. - Carraro Agritalia Division (BU Vehicles - tractors) closed 2009 in heavy contraction with a drop in sales of over 45% compared with the previous year. The important decrease in volume was determined by the crash of 50%, on a European level, of the special and light (between 50 and 100 horses) tractors market. Furthermore, the phase-out of Tier 2 John Deere and Claas models, with the launch of new ranges planned only toward the end of the year, further reduced demand, shifting the focus toward the beginning of Elettronica Santerno (BU Power Controls) went through a significant drop during the first half of the financial year compared with the previous year, because of the credit crunch and the generalised crisis situation on a global level which impacted the main reference markets. The negative trend in the industrial drives sector continued for the whole year, while in the renewable energy market the initial impasse was brilliantly overcome in the second semester, with important increases both in the photovoltaic sector and in the wind energy management sector, with the introduction of products aimed at micro- and mini-eolic. Development of operations The results of the first few months and the first projections confirm the budget estimate in terms of growth of sales and EBITDA, while as of today, the portfolio s performance indicates further room for improvement. Net financial situation and working capital shall be kept under strict control. Annual general meeting and dividends The Financial Statements will be submitted for approval to the Annual General Meeting to be held in first call on 30 April With the aim of ensuring an adequate level of capitalization to face up to the current period, the Board of Directors of Carraro SpA has resolved to propose to the General Meeting not to distribute dividends. Renewal of the treasury shares acquisition plan The Board of Carraro S.p.A. also resolved to submit for the approval of the General Meeting the renewal of the scheme for the purchase and allocation of a maximum number of ordinary shares of no more than 5% of the share capital, taking into account the Carraro shares already held by the company. The buyback is not for the purpose of reduction of the share capital of the company. Authorisation for the purchase will be asked of the Shareholders for a period of 18 months starting from the date of the authorisation itself. The ordinary shares will be bought back for a price per ordinary share which, at the minimum, may not be more than 30% lower, and at the maximum more than 20% higher than the reference price that the stock has recorded in the stock exchange session on the day prior to each individual transaction. These transactions will be performed in accordance with the operational methods laid down in the rules of organisation and operation of the markets so as to ensure parity of treatment among shareholders. At xx.xx.xx the company holds xxx.xxx treasury shares equivalent to xxx% of the share capital. The manager responsible for corporate financial reporting Enrico Gomiero states pursuant to paragraph 2 Article 154 bis of the Consolidated Act on Finance that the accounting information contained in the present press release corresponds to the accounting figures, books, and documents. In this communication we have used a number of "alternative performance indicators" not envisaged by the IFRS accounting standards: EBITDA (understood as the sum of the operating profit, and amortisation and depreciation of fixed assets); EBIT (understood as the operating profit); the NET FINANCIAL POSITION (understood as the sum of 5

6 bank debts, bonds and short/medium term loans, net of cash and cash equivalents, negotiable securities and financial credits); GEARING (understood as the ratio between the net financial position and shareholders equity). Appendices: summary Balance Sheet and Income Statement, Statutory and Consolidated Financial Statements at Carraro is a multinational group leader in power transmission systems, with a consolidated 2009 turnover of 487 million Euro. Organized into four different business units (Drivelines, Vehicles and Complete Traction Systems, Power Controls, Gears and Components) the Group designs, manufactures and markets drive systems destined for construction equipment, agricultural tractors, machines for the transport of materials, light commercial vehicles, automobiles and stationary applications (such as escalators). The Carraro Group is a supplier of advanced technological solutions and integrated systems, in an actual strategic partnership relationship with its clients, supported by its constant efforts to keep its performance levels, product and service quality as high as possible throughout the world. The Group, whose parent company Carraro S.p.A. has been listed on the Italian Stock Exchange since 1995, has its main offices in Campodarsego (Padua); it employs 3,612 people, of which 2,024 in Italy, and has manufacturing plants in Italy, Germany, Poland, Argentina, the United States, and China. For more information carraro.com 6

7 Carraro S.p.A. Dec 31, 2009 (Figures not audited by independent auditors) Balance Sheet (values in thousands Euro) IAS/IFRS Dec 31, 2009 Dec 31, 2008 Fixed assets Tangible Intangible Capital assets Investments Financial assets Deferred taxes assets Trade and other current receivables Current assets Inventory Trade and other current receivables Financial assets Liquid assets Total assets Total group shareholders' equity Non current liabilities Financial liabilities Trade and other non current payables - - Deferred taxes liabilities 69 - Provision for indemnity, pension and similar Provision for risks and contingencies Current liabilities Financial liabilities Trade and other current payables Current taxes Provision for contingencies and obligations Total liabilities & shareholders' equity Net financial position Cash flow Income statement (values in thousands Euro) Dec 31, 2009 Dec 31, 2008 Revenues Cost of material Services Leases Cost of personnel Depreciations and writedown of Assets Writedown Of Receivables - - Changes in inventories stock Provison for risks and contingencies Other incomes / expenses EBIT EBITDA Incomes from investments Financial incomes / expenses Incomes / losses in exchange rates Adjustments of the value of financial essets - - Net result before taxes Income and deferred taxes Net result divestment of the activities - - Minority interest - - Net consolidated result

8 Carraro Group Dec 31, 2009 (Figures not audited by independent auditors) Balance Sheet (Euro thousands) IAS/IFRS Dec 30, 2009 Dec 31, 2008 Fixed assets Tangible Intangible Capital assets Investments Financial assets Deferred taxes assets Trade and other current receivables Current assets Inventory Trade and other current receivables Financial assets Liquid assets Total assets Total group shareholders' equity Non current liabilities Financial liabilities Trade and other non current payables Deferred taxes liabilities Provision for indemnity, pension and similar Provision for risks and contingencies Current liabilities Financial liabilities Trade and other current payables Current taxes Provision for contingencies and obligations Total liabilities & shareholders' equity Net financial position Cash flow Income Statement (Euro thousands) Dec 30, 2009 Dec 31, 2008 Revenues Cost of material Services Leases Cost of personnel Depreciations and writedown of Assets Writedown Of Receivables Changes in inventories stock Provison for risks and contingencies Other incomes / expenses EBIT EBITDA Incomes from investments - - Financial incomes / expenses Incomes / losses in exchange rates Adjustments of the value of financial essets Net result before taxes Income and deferred taxes Minority interest Net consolidated result