February 26, 2018 / 6:37 PM / 24 days ago

Sogefi targets new investment, acquisitions after profit rise

MILAN (Reuters) - Italian automotive parts maker Sogefi (SGFI.MI) plans to grow organically and through acquisitions in all three of its business segments, its Chief Executive Laurent Hebenstreit said.

Sogefi, which develops and produces filtration systems, suspension components as well as air management and engine cooling systems, hopes to strengthen its position in Europe but also grow further in North America, India and China.

“I’m looking at different opportunities as we speak,” Hebenstreit told Reuters in an interview on Monday.

“With a debt to EBITDA ratio at 1.6, if we find any good opportunities, we have ways to fund them.”

Recent organic expansion included a Mexico suspension plant, which opened last year, and a filtration facility in Morocco that will be launched by July.

Sogefi chose Morocco because of its competitiveness and because of future car manufacturing that might be based in the North African country given the government’s plans to raise vehicle production to a million per year from 370,000 in 2017.

Sogefi plans to make a decision on another suspension plant investment in the Europe, Middle East and Africa region later this year, the CEO said, adding the new investment would be greater than the 10 million euros spent in Morocco.

Already present in 21 countries with 42 production sites, Sogefi is looking at partnerships with hardware startups and would take stakes of at least 5-10 percent to “help them grow”.

Sogefi’s main clients include mass market player such as U.S. carmaker Ford (F.N), France’s Renault (RENA.PA) and PSA Group (PEUP.PA) and Italian-American Fiat Chrysler (FCHA.MI).

But it also hopes to increase the share of sales to German premium carmakers such as Daimler (DAIGn.DE) and BMW (BMWG.DE), to invest in higher-end technology and give it a boost over German rivals Mubea, Mann+Hummel and Mahle, Hebenstreit said.

The shift away from diesel engines does not worry Sogefi, which expects the technology to support sales for years to come.

But the real growth will come from the higher technology requirement in hybrid vehicles and completely new products that a shift to electrification will require, he said.

    He dismissed the idea Sogefi, with a market capitalisation of 440 million euros, could be a takeover target, adding it was on a growth path and did not need a “white knight”.

    Sogefi reported a 8.6 percent increase in full-year earnings before interest, tax, depreciation and amortisation (EBITDA) to 165.8 million euros ($204 million) on Monday, while sales were up 7.3 percent at constant exchange rates to 1.67 billion euros.

    For 2018, Hebenstreit expects sales to outperform a projected 1.5 percent growth in the market by 1-2 percent at constant exchange rates, helped by the Mexico and Morocco investments. He also expects Sogefi’s profit to increase, but did not say by how much.

    Sogefi has not paid a dividend in five years.

    “Given the investments that we have ahead of us, it’s too early,” Hebenstreit said, adding he did not rule out this changing in the future.

    ($1 = 0.8130 euros)

    Reporting by Agnieszka Flak; editing by Alexander Smith

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