Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the CIR first half 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Rodolfo De Benedetti, Chairman, and Michele Cavigioli, CFO of CIR. Please go ahead, sir.
Thank you. Good afternoon, everybody, and sorry for the delay. We will go over the presentation that is on the website. I start on page 4. Our board of directors just approved the semiannual report, and we have listed the main highlights of this first half of the year. Starting with the completion of the announced divestiture of the Filtration Division of Sogefi for EUR 331 million. This transaction closed on May 31st. In June, CIR sold its remaining 5% stake in GEDI to Exor. Always in June, we closed a transaction that was announced last year, that is the sale of real estate assets for an amount of EUR 38 million.
As expected, of those EUR 38.7 million had been cashed in as a deposit last year. In the first half of the year, CIR continued to execute on its buyback. We bought 23.4 million shares for a total amount of EUR 12.4 million, and this is equivalent to 2.2% of the share capital. We also proceeded with the cancellation of 60 million shares, equivalent to 5.7% of the share capital. In terms of the operating results, sales were up 2% in the first half. The main contributor was KOS, up 9% on last year.
A slight decrease in Sogefi, -2.7%, mainly due to, you know, the weak market in the last few months. Net result was a profit of EUR 114 million. This includes the extraordinary gain that was realized with the divestiture of the filtration operation. KOS turned in a positive performance, thanks to its ongoing recovery. EUR 3 million contribution to CIR P&L, so a EUR 5 million profit for KOS in the first half. And the holding company has contributed positively with EUR 11.5 million, plus the EUR 17.7 million of capital gain on the real estate transaction. The financial assets of the company performed well in the first half of the year with healthy returns.
The Net Financial Position at the end of June, on a consolidated basis, is a positive EUR 316 million, and this is the big change related to the filtration divestiture, but also to good cash flows and other divestitures. In terms of the outlook, we, as we said in the past calls, continue to see a normalization of the cost results. The return of full activity to Italy, you know, happened in the first half of the year. Occupancy, both in Italy and in Germany, is very close to pre-COVID levels. And this has had a strong impact on PNL, particularly in Italy, which had a good first half.
Germany is still lagging, but still, significantly better than the same period a year ago. We continue to see an alignment of tariff. So, you know, the better results are due both to the increase in occupancy, but also to lower costs and to an increasing tariffs, both in Italy and in Germany. So we, we expect, you know, to continue on this trend for costs for the second half of the year. Sogefi operates in a pretty unstable and low visibility market. Car production has been relatively weak in the first half of the year. Despite that, as you will see, both operating results and net results are higher than last year due to lower costs, better margins.
But, you know, at this stage, we have low visibility on second half volumes, and, you know, volumes in this business are important. But, that said, we are, you know, cautiously optimistic about the second half for Sogefi. I will not spend much time on the Filtration divestiture. Just to recall that the EV was EUR 374 million, which translates into an equity of EUR 331 million at closing. This is very close to what we expected when we announced the transaction. There has been customary adjustments on working capital and Net Financial Position.
I think we already talked about the rationale of this transaction, which is really to capitalize on the very positive performance in terms of profitability of this business in the last couple of years. And in, you know, deciding to focus on the two other divisions, where we see less risk from an EV transition than what we saw in the Filtration business, which by its nature, you know, is more exposed to this transition, which is happening over time. On July eighteenth, so after the end of the period, the shareholders' meeting of Sogefi approved the distribution of an extraordinary dividend of EUR 110 million.
That dividend was paid on July 24, and CIR received almost EUR 62 million, which is pro rata share of that dividend. Going to page 7, you have the full P&L, where, as you can see, as I mentioned earlier, revenues increased, slight increase in Sogefi, good increase, about 9% in KOS. EBITDA significantly higher than last year, EUR 134 million. By the way, those numbers, they don't take into account the Filtration Division, which was accounted for as a for-sale asset. So this is the continuing operations of Sogefi consolidated into CIR for the first half. EBIT was EUR 49.5 million, so a significant increase, 5.3% of revenues compared to 3.1% a year ago.
The financial results was significantly better, EUR -8.9 million. Here you have both the cost of debt that we have in the operating companies, as well as the return on the financial assets in CIR. This was a positive EUR 17 million in the first half of the year. Then you have taxes, you have third party, so those are the minority interest, and the net result from continuing operation is close to EUR 20 million, compared to a EUR 3 million loss in the same period last year. And then just before the end, you have the asset held for sale. This is the capital gain on the sale of the Filtration Division, as well as on the sale of the real estate assets in CIR.
On page 8, you have a breakdown of our net financial position, which had a big swing because of the divestitures that I mentioned. At the operating levels, net debt of KOS increased by EUR 17 million. This is due to payment of dividends that happened in the first half of the year, and negative working capital seasonality for KOS. In the case of Sogefi, you had a massive reduction of net debt. Net debt is about EUR 296 million, compared to the same period last year, and the bulk of this for EUR 300 million in the sale of the Filtration Division.
On the right-hand side of this page, you have a bridge of the consolidated net financial position, where you see the contribution of the operating cash flow. This is recurring. Then you have the EUR 300+ million of the Sogefi Filtration, the sale of the real estate, and what was paid to third-party shareholders in KOS and Sogefi as dividends, because this exits our consolidated balance sheet, and what was invested in buybacks, which is EUR 12 million for the first half of the year. Page 9, you have a simplified balance sheet, where you have the pro rata share of net assets of both KOS and Sogefi.
It goes up in the case of Sogefi because of the gain due to the divestiture of the Filtration Division. The private equity line increases mainly because of fair value adjustments and we also had some cash ins in the first half of the year. Other investments, this is where the minority investments sit, and this is the main change here is the, as I mentioned earlier, the sale of the remaining 5% stake in JD. So net cash for the holding company system is EUR 369.8. I recall this is before the suggested dividend that was paid in July, so this is end of June.
And you have a bridge on the right-hand side of the page, where you have the main elements that contributed to this change in the financial position. I'll go now to page 11 to talk about costs. We continue to grow our infrastructure in terms of nursing homes, both in Germany as well as in Italy. As you know, we have a number of greenfield developments that we pursue in a continuous way, and so some of those were completed during the period. I'll go to page 12 to comment the PNL of the six months. Revenues were up to EUR 404 million.
EBITDA, um, this is, um, EBITDA including IFRS 16, EUR 76 million, compared to EUR 65 million last year. And as you can see, we are above the 2019 numbers, even though next line, pre-IFRS 16, we're still a bit below, but higher than the same period last year. And we are about in line at the EBIT level with a substantial increase on last year result. I remind you here that last year still had some public grants or subsidies, both in Germany and in Italy, that were related to previous years, while this year we have zero contribution from those. So in a way, the quality of the result in 2024 is significantly better than the quality for 2023.
Financial result was, so those are interest charges were pretty much in line with last year, and this brings a group net profit of EUR 5 million, which is still, you know, low in both absolute and relative terms. But, you know, the trajectory is, it goes in the right direction, and we are a bit ahead of what we had budgeted and expected for this year. On the lower end of the page, you have the net book value of our real estate assets that we own, as well as their fair value and the real estate debt, which is secured by mortgages on the real estate portfolio.
On page 13, you have a breakdown in terms of number of beds and occupancy, which is split between Italy, where you have nursing home, rehab, and acute care, and Germany. I think this occupancy is particularly meaningful for the nursing home business. And as you can see, you know, we went up from 85.5% in the first half of last year to close to 91% on average in the first half of this year in Italy, and from 85 to 90 in Germany. So the numbers are pretty much in line. Italy is probably, you know, a bit higher. Here you have also the effect of the greenfield.
So the more greenfield you have, the more, you know, way you dilute the occupancy rate. And so, you know, if you do this on a like-for-like basis, there's been a higher than 5 percentage point increase on a like-for-like basis in the occupancy rate. As you can see also from the revenue line, there's been a substantial increase, which was driven both by occupancy, but also by higher tariffs both in Italy and in Germany. On page 14, you have a PNL which details the numbers for both Italy and Germany.
This year, this year, first half compared to last year and compared to the first half of 2019, which was the pre-COVID period, and which was the, you know, the best ever period in the history of the company in terms of profitability. As you can see, you know, we are not there yet, but there is a constant increase in profitability, and as I said, we are ahead of plan in the first half of the year. I will skip to page 15, which is Sogefi, where as you can see, there is a slight decrease in revenues, mainly due to the weakness of the market in Europe and particularly with some of our European clients.
Despite that, because of lower costs, and because of, you know, lower cost of material, our EBITDA was good, up to EUR 67 million, almost 13% of sales. EBIT almost double compared to a year ago, and so the results from continuing operation increases from EUR 2 million last year to EUR 9.4 million this year. And then you have the line discontinued operation, which is related to the gain on the sale of the filtration division. Good cash flow generation. You know, lower raw material prices, and I think I made the other comments earlier. On page 16, you have a breakdown of the performance by division.
So you have the two divisions that are part of our footprint today. As you can see, Suspension Division has increased starting from very low level. This is a division which still has significantly lower profitability than what it should have and we expect. So we need to focus on consolidating the turnaround of this division. I think a number of things we're achieving. The first half, and as you can see there, you start to see some signs, but we're not there yet. While the Air and Cooling Division has continued to perform well both in terms of volumes, but more importantly, in terms of profitability with a EUR 44 million EBITDA for the period.
I will stop here and pause for a second, just to conclude. The board that took place this morning has also resolved to convene an extraordinary shareholders meeting, which will be held on September the sixth, to resolve on the proposal for certain amendments to the company bylaws. And those are strengthening of the increased voting rights currently envisaged to a maximum of 10 votes. As you know, the so-called Decreto Capitali has introduced in Italy these options for a company that had to be introduced in the bylaws. So this is what we are proposing to the shareholders. We are also making changes to the introduction of the possibility of holding meetings through exclusive participation of a designated representative.
This is the modality with which companies in Italy and elsewhere have held shareholders meetings in the last few years since COVID. We've experienced that this you know is a saving in terms of time and cost, and functions well also for shareholders. So we will amend our bylaws to make this possible. And finally, the introduction of the possibility of holding shareholders meetings exclusively by means of telecommunication. This is obviously in the case that the company decides to have a presence of shareholders and not that of the designated representative. And there are some minor other changes to the bylaws.
The details regarding the proposals will be disclosed upon publication of the notice of the call in the next few days, in accordance with the applicable regulation. I'll pause here and pass it on to you for questions.
This is the Chorus Call Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their touchtone telephone. To remove yourself from the question queue, please press Star and Two. Please pick up the receiver when asking questions. Anyone who has a question may press Star and One at this time. That's Star and One. The first question is from Martino De Ambrogi of Equita. Please go ahead.
Thank you. Good afternoon, everybody. Three questions on costs. The first one is, when do you feel to achieve the full occupancy? It seems to be the case by year-end, but maybe it is postponed to first half next year. The second one, you commented 3% and 6% price increases in Italy and Germany, but what is your expectation of tariff going ahead? The last one on costs. Now we are back to full occupancy. Presumably some additional tariff increase will come. Just to have an idea, what is the achievable margin in a full occupancy mode?
Okay. Full occupancy is already reached in most situations. In Italy, we only have one region where we still are below that, and that is Piedmont. This is, this has always been an underperforming region for KOS, both in terms of occupancy levels and for level of tariffs. So we know that it will, it will take some, some more time before we get to full occupancy there. But, for the rest of the geographies, we are already there or almost there. In Germany, there are a few regions where we are at regime, 95% or more. Even there, we have one region where the occupancy is very weak, in the north of Germany, and another one where is also not at regime.
The occupancy levels in Germany also depend on the availability of staff. In those regions, there are some more challenges to get the full staffing and to reach full occupancy. We think that by year-end, we'll be very close to having a 99.5% or slightly below occupancy in most of the structures. And then it will just boil down to the greenfields ramping up and a few underperforming structures with specific issues. Tariff increase in Italy, we have had finally, after many years, some increases in the public tariffs, but in some selected regions only. And fortunately, the most important regions for us did it, like Lombardy.
And we are still expecting a couple of other regions that are relevant for us to follow, to follow that decision. As you know, there is no guarantee that, that happens in Italy, so hard to make forecast, but maybe another couple percentage points could come second half or next year. In Germany, the process is structured. We have had price renegotiation in the last couple of years that have contributed to closing the gap with the high cost inflation. I say contributed because that has not closed the gap yet. So in some regions, in some specific structures, actually, because it happens structure by structure, we have had increases up to 7%, and we're still having good results recently.
So we hope to continue on this trend and maybe next year as well, so that we can close the gap with the cost inflation that was particularly severe in Germany, especially on the cost of the professional staff. So in Italy, we're still a couple of percentage points below the southern 19 margins, as you can see on the numbers. We can probably catch up maybe one more point. We cannot commit on when, because of what I said before, the process of adjusting tariffs. So we can only work on the cost side with certainty.
As for the EBITDA after IFRS 16, we will not get to the same level of 19, simply because we sold a few structures, as you can remember, in the last few years, so we have more rents today. So the catch-up has to be seen at the EBITDA with IFRS 16 level. As the cost overall level, then, of course, the weight of Germany is very important in terms of rents, because there we are renting 100% of the property. So I hope this answer your questions.
Yeah. Thank you. If I may, on the subsidies or grants, if I remember correctly, last year in the first half, there were only EUR 1 million in Germany, just to compare apple with apples.
Last year, we had overall, yes, approximately EUR 1 million in Germany, but overall, including Italy, it was EUR 6 million subsidies. And then you have different types of subsidies. Some are related to lost revenue, some are related to increased cost related to COVID, and they were, of course, related to previous years. So we had 6 last years, and we have almost nothing this year. So that's why Mr. Vailati said that the numbers this year are higher quality compared to last year.
Okay. If I may, the last one on costs, if I look at EBITDA before IFRS 16 in Germany, was still negative, despite 90%+ of occupancy. What are the prospects for Germany?
So in Germany, we have slightly negative EBIT and slightly negative EBITDA after IFRS 16, which means that net profit is still negative. Despite a considerable improvement versus last year, we still have some work to do. That's mainly related to completing the renegotiation of tariffs, as I said before. Then working on some specific structures that are underperforming. We have a handful of them that make up for most of the negative net result in the network. These are the two challenges, of course, apart from working on efficiency, as we always do, and trying to get to full occupancy.
So that means that the price increase didn't have an important effect in the first half, and will be more evident in the second half in Germany?
No, no. I mean, the tariff negotiation is ongoing, and it did have an effect this year. As you can see, EBITDA margin increased five points compared to last year, from 11.3%-16%. So it did have an impact, but not to the extent that it makes up all the cost inflation yet.
Okay, and two questions on Sogefi, because I was wondering, what are your priorities right now after selling the filters division, after paying the jumbo dividend, and after CEO departure? So what are your priorities on Sogefi today? And I saw you bought some shares last week. I was wondering if it's just a one-off because of the weakness of the stock in those days, or there is something else. Thank you.
I think that the priorities are the ones that we indicated when we announced the divestiture of the Filtration Division, which is really to focus our capital and our management attentions on the two divisions that are part of the group today. That are in very different situations. The Suspension Division is going through a turnaround. This is a company that has lost money for the last few years due to a series of factors, and we've done a lot of work to you know, streamline that operation, to get rid of contracts that were not sufficiently profitable for the company, to close plants, and we will continue to do that.
You have seen some results of that turnaround in the first half of the year, but we definitely are not done, and so there is more to do. But that is, I would say, operationally, one of the two big areas of focus for us, and will be for the next few years. The other is to continue the good growth trajectory of the Air and Cooling Division, which is the division which has a good profitability, which has always had it for many years. Where we see a very significant opportunity in the energy transition, and you know, we would like to capitalize on that.
And so, you know, our focus and our effort will really be to stay on top of those two divisions, to strengthen the management team. We believe that, you know, the team that manages today those two divisions is of high quality. We will reinforce the team in the near future, you know, to be consistent with that goal of focusing on making those operations more efficient. We have a company that will have almost no debt after the divestiture. So we think we have, you know, ample financial flexibility to invest in the business and to develop those two sectors.
The next question is from Gianmarco Ghedini of Banca Akros. Please go ahead.
Hi, everyone. I was wondering whether you have any update on negotiations with F2i, if any, about the buyout of the minority in KOS. Many thanks.
No. I mean, we've read, as everybody, some press reports a few weeks ago talking about this. This was totally made up. There is no conversation ongoing. There hasn't been in the past. You know, we know that F2i, as every private equity fund, has the objective of sooner or later exiting their investment. I think, even though they might have preferred to exit earlier, but I think they recognize the fact that the negative performance of the company following COVID didn't provide them you know, an attractive exit opportunity. And so they decided to take more time. And it's really up to them and, you know, we are pretty passive in that process. We obviously are in close contact with them.
They're very supportive in what we do in the company, but there is no conversation ongoing. There is no, you know, there is no. There's nothing at this stage. I think there will be in the future, but frankly, it's. You should ask them.
All right, thanks.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is a follow-up from Martino De Ambrogi of Equita. Please go ahead.
Yeah, sorry. Just, the follow-up is exactly what I asked before on the purchases you made last week on Sogefi. Should I take it as a one-off, just, to offset the weakness following downward revision in guidance, and the CEO departure?
Sorry, it was not on purpose that I didn't answer. I forgot. You know, we don't have a policy. When, you know, when we see a drawdown, an important drawdown, like we saw, you know, following the results announcement, we took the opportunity to buy shares in a company that we believe in and, where, you know, we think that there is potentially more value than what the market expresses. I think the reaction, you know, to us was a bit overdone, and so we thought that that was a buying opportunity. But, you know, we don't have a policy, we don't have, you know, a...
We haven't made a strategic decision to increase our stakes, so I think we will continue to be, you know, fairly opportunistic in, in what we do there.
Okay, thank you.
Gentlemen, there are no more questions registered at this time.
I would like to thank all of you for participating to this call, and have a great day.