ITALMOBILIARE GROUP
- REVENUES: 6,157 MILLION EURO (6,397 MILLION EURO IN 2007)
- TOTAL NET PROFIT: 111.8 MILLION EURO (660.9 MILLION EURO)
- NET PROFIT ATTRIBUTABLE TO GROUP: -106.1 MILLION EURO (217.2 MILLION EURO)
- NET DEBT: 2,571.9 MILLION EURO (2,149.6 MILLION EURO)
- SHAREHOLDERS' EQUITY: 5,481.6 MILLION EURO (6,300.2 MILLION EURO)
ITALMOBILIARE S.p.A.
- NET PROFIT: -23.4 MILLION EURO (73.6 MILLION EURO)
- DIVIDEND: GIVEN THE CONTINUING FINANCIAL MARKET CRISIS AND THE NET RESULT, AT THE SHAREHOLDERS’ MEETING THE BOARD WILL PROPOSE NON-DISTRIBUTION FOR FY 2008
- NET ASSET VALUE: 1,911.0 MILLION EURO (3,324.3 MILLION EURO AT DECEMBER 31, 2007) IN COMPARISON WITH A MARKET CAPITALIZATION OF 959.5 MILLION EURO
Milan, March 25, 2009 – At a meeting today the Board of Directors of Italmobiliare S.p.A. examined and approved the consolidated financial statements and the parent company financial statements for financial year 2008.
The exceptionally severe crisis, whose effects deepened and spread wider toward the end of last year, caused a significant decline in Italmobiliare Group margins during 2008, in both the industrial and the financial sectors. Earnings in the construction materials sector and the banking sector were positive, even if lower than in 2007, while the packaging and insulation sector achieved a turnaround with a return to net profit. The financial sector, adversely affected by the fall in share and debenture prices, the crisis of a number of financial players and the rise in credit spreads, reported large losses. The Group maintained its prudent approach of recognizing investments in debentures at fair value, that is, at the 2008 year-end market prices adversely affected by the crisis on world markets.
On 2008 revenues of 6,157.0 million euro (6,397 million euro in 2007), the Italmobiliare Group reported total net profit of 111.8 million euro and, largely due to the unfavorable result in the wholly owned financial sector, a net loss attributable to the Group of 106.1 million euro. This compared with total net profit of 660.9 million euro and Group net profit of 217.2 million euro in 2007.
In the fourth quarter alone, the Group had a total net loss of 181.0 million euro (150.6 million euro attributable to the Group), chiefly due to the decline on the financial markets and the outcome of impairment testing conducted at the end of the year, as previously reported on February 11.
For the full year, the financial sector reported expense from write-downs and losses on trading equities and debentures of approximately 145.5 million euro (-26.7 million euro in 2007), while impairment losses totaled 45.2 million euro (6.1 million euro in 2007), arising largely on assets in the construction materials sector. The market downturn generated adjustments to financial asset values of 182.7 million euro (absent in 2007), of which approximately one third related directly to the financial companies and the rest to the construction materials sector.
At December 31, 2008, total shareholders' equity was 5,481.6 million euro, compared with 6,300.2 million euro at December 31, 2007. At the same date net debt was 2,571.9 million euro (2,149.6 million euro at the end of 2007).
After the changes in shareholders' equity and net debt, the gearing ratio passed from 34.12% at the end of December 2007 to 46.92% at December 31, 2008.
At the end of 2008, the net financial position of Italmobiliare and the wholly owned financial companies was positive at 160.6 million euro (299.4 million euro at the end of 2007).
During 2008, Italmobiliare Group revenues held well in the construction materials sector (where Italcementi operates; Italcementi announced its 2008 results on March 6), to total 5,775.6 million euro (-3.8%), despite negative effects relating to the scope of consolidation, volumes and exchange rates. Operating results decreased as a result of increases in cost factors that were not offset by sales prices: recurring EBITDA was 1,113.1 million euro and EBIT was 607.3 million euro. Net profit for the year was 272.2 million euro, while group net profit was 138.8 million euro.
The food packaging and thermal insulation sector, consisting of the Sirap Gema group, boosted revenues to 264.3 million euro (+6.5%), largely as a result of the growth of the food packaging business in Eastern Europe and sales of rigid containers. EBIT was 13.0 million euro, an improvement on 2007, which reflected the effects of the deconsolidation of Inline Ucraine L.C.F.I. and an impairment loss on the French subsidiary Sirap France S.A.. After a sharp rise in net finance costs (caused in part by translation losses), the sector reported a net profit of 2.2 million euro compared with a net loss in 2007 (1.2 million euro).
The financial sector, which comprises the parent company Italmobiliare and the wholly owned financial subsidiaries, was badly affected by the highly unfavorable conditions on the financial markets, posting a net loss of 124.0 million euro, a heavy decline with respect to the 2007 net profit of 85.3 million euro. The significant fall in earnings reflected the above-mentioned write-downs on trading equities and the debenture portfolio, losses on alternative investments and adjustments to financial asset values for 57.8 million euro (relating to the equity investments in RCS MediaGroup and Intek), compared with zero adjustments in 2007. The rise in debt charges was a far less significant factor in the downturn, given that the increase in spreads was absorbed in part by the reduction in interest rates at the end of the year.
In the banking sector (Finter Bank Zürich and Crédit Mobilier de Monaco) 2008 net profit was 4.1 million euro, down by 58.0% from 9.7 million euro in 2007. This result, essentially due to Finter Bank Zürich, was influenced by a decrease in net commission income, writedowns on the asset portfolio.
For the year to December 31, 2008, the parent company Italmobiliare S.p.A. reported a net loss of 23.4 million euro compared to net profit of 73.6 million euro in 2007. The loss for the year arose entirely from adjustments to financial asset values totaling 84.6 million euro in the fourth quarter, largely in respect of the subsidiary Franco Tosi (83.8 million euro on impairment test basis). In June 2006 Italmobiliare sold a number of equity investments (all tied at the time to voting trusts) to Franco Tosi at market prices. The sale generated significant net capital gains for Italmobiliare (99.0 million euro), which, as intercompany transactions, were taken in full to an extraordinary reserve at the time of allocation of 2006 net profit. This prudential provision is today superior to the adjustments applied in 2008.
In view of the severe overall impact of the economic and financial crisis on results for 2008, and in light of the continuing uncertainty on the financial markets, the Italmobiliare Board of Directors will propose at the Shareholders' Meeting called for April 28 and 29 (first and second call respectively) that no dividend be distributed for financial year 2008.
Italmobiliare Net Asset Value (NAV) at December 31, 2008, was 1,911.0 million euro (3,324.3 million euro at December 31, 2007) in comparison with a market capitalization of 959.5 million euro.
The severe financial crisis, which has now also spread into the real economy, at varying intensities in the sectors in which the Group operates, has triggered a deep global recession, whose gravity and duration cannot be reliably assessed today. In this context, the Group’s industrial operations are taking action to improve their cost structures, raise efficiency, in part through production re-organizations, and monitor cash flows closely.
The uncertainty on the equities and debentures markets makes it difficult to provide reliable guidance on results in the financial sector.
The above considerations also apply to the parent company Italmobiliare, whose earnings will depend on trends on the financial markets, on movements in interest rates and on the prospects of the individual subsidiaries.
The Board of Directors also decided to ask the Shareholders' Meeting to renew the authorization for the purchase and disposal of treasury shares for a period of 18 months as from the resolution date, for a maximum amount of 150 million euro.
Attached the full press release