Good afternoon. This is the conference operator. Welcome, and thank you for joining the Sogefi full year 2021 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, please signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Frédéric Sipahi, CEO of Sogefi. Please go ahead, sir.
Thank you very much. Good afternoon, ladies and gentlemen, and thank you for joining this call. Well, I have to admit that 2021, for my first year as CEO, has been full of challenges, but you will see in the presentation also full of transformation for Sogefi group. With my team, we have done a deep transformation of the group in order to follow and even anticipate the strong evolution of the automotive industry. You will see that during this year we have continued to implement strong cost-control. We have improved our business model, making it more agile, flexible and efficient in order to generate sustainable cash flows. We have defined and implemented a strong culture for sustainability and social responsibility.
Last but not least, you will see that we have continued to push the evolution of our product portfolio to propose to our customers more and more products for E-mobility all around the world. I propose now we go together to page four of the presentation, with the highlights of this incredible year. As you can see on page four, our revenues are increasing by 11% on a reported basis, versus 2020. Still lower than 2019 by 8%. We are beating the market in all geographical areas. You will see that in the next slide. Our EBITDA, excluding the non-recurring, is at 13.7%, so very close to 14%. The EBITDA with the non-recurring is close to 15%, with 14.6% compared to 11.5% in 2020.
Our EBIT excluding the non-recurring impact is close to 4% at [EUR 51 million]. The net income is at +EUR 2 million versus -EUR 35 million last year. Nevertheless, please keep in mind that in 2021 we have a negative one-off impact by EUR 21 million for the disposal of Filtration Argentina in the beginning of the year with of course no cash impact. Our free cash flow for the year is at EUR 35 million compared to -EUR 34 million last year, thanks to the EBITDA and the strong working capital control. De facto, our debt is decreasing. It's going to EUR 260 million versus EUR 290 million last year and EUR 256 million in 2019. I now propose we go to page five, where we have the details of the sales by geographical area.
As I was saying before, we are beating the markets everywhere at 2021 versus 2020. For example, in Europe, at constant exchange rate, we are growing by 7.5% in a market going down by 6%. North America, we are growing by 5% in a stable market. South America, strong growth compared to a market growing by 16%. In Asia, India, and China for Sogefi, we are growing by 21% in a market growing by 6%. Overall, our sales are up by 11% in a market up by 2.5%.
If we go to page six, the sales by business units, you can see that Air and Cooling versus 2019 at constant exchange rate is increasing by 7% versus 2020 and going down only by 3.4% versus 2019. It's mainly thanks to the good performance in China and North America. Filtration is increasing versus 2020 by almost 11% at constant exchange rates and is stable versus 2019. It's mainly thanks to the very good performance in aftermarket and OES. Suspension business unit is growing by 15% versus 2020, but is still below 2019 by 11%. Overall, as you can see, we are beating the market in almost all our business units. If we go to page seven, the sales by customers.
Stellantis is still our biggest customer, with more than 20% of our sales, and followed by Ford, where we are very big in North America. Then the others are very close to each other and quite balanced with Nissan, Daimler, GM, BMW. There is no big change in the hierarchy of our customers. Page eight. We have included here slides about the increase on material prices. I think you all know the crisis we had in 2021, and it's still continuing in 2022.
From the second part of the year, there has been a big increase on almost all commodities, including the plastics that we are using, PA6 and PA66, and also steel with the indicator of scrap and wire. Basically, as you can see on our financials, we have been able to mitigate big part of this increase thanks to strong negotiation with the customers. Basically in 2021, we have been able to cover 80% of the material increases, and we are continuing these negotiations in 2022. If we go to page nine, the breakdown of the EBIT versus 2019. Unfortunately, as you can see, we have a big sales volume unfavorable impact by EUR 44 million, but very well compensated by the cost control we have implemented very early, especially on fixed cost.
During 2020, we have been able to launch very quickly strong action of reduction on our fixed cost, and we have continued in 2021, which help us to compensate the strong decrease of volumes of 2021 versus 2019. In the negative side, we have Romania, as anticipated in the first quarter. We have lost EUR 10 million in Romania due to the launch of a new facility in very difficult conditions with the COVID situation. Of course, it was a double challenge, and it's clearly one of the area where we will have a strong improvement in the next months. Then we have a big part for non-recurring, for positive non-recurring by EUR 7 million. I will detail later this + EUR 7 million. If we go to page 10, our P&L.
As you can see, our contribution margin is closing at 30.6%, slightly below 2020, which was at 30.8% and higher than 2019. Overall, during the year, it has been under control, even if there has been a first part of the year, which has been very positive, and then a second part, which has been a bit more difficult with the material increases. As I said, thanks to the great job done on fixed costs, we have been able to offset the volume effect. Our fixed costs for 2021 are at EUR 226 million, compared to EUR 265 million in 2019. In two years, we have been able to strongly reduce our fixed cost, and in percentage it helped us by 1.4%.
The conversion in EBITDA, as I anticipated before, is at 13.7%, excluding the non-recurring, compared to 13.1% in 2020 and 12.8% in 2019. If we look at the EBIT excluding non-recurring, as I said before, we are 3.9% compared to 2.2% in 2020 and 4.2% in 2019. We have positive non-recurring impacts that helped us this year, which explain the fact that our EBIT is at 4.4% at EUR 58 million, compared to 3.2% in 2019 at EUR 46 million. To understand better the non-recurring impacts I mentioned, I propose you to go to page 11.
For the first three quarters, each time we explained to you, and of course, I will be available to answer to your questions about these items at the end of the call. In Q4, we had also a few non-recurring items, of which one that you can see is close to -EUR 4 million, which is a non-recurring write-down related to the footprint optimization. As I anticipated to you in the last quarters, we are doing our homework in order to turn around Suspension business units. One of the action that we have launched is the closure of a facility in U.K. I propose we go to page 12 with the quarter four.
The quarter four from a turnover point of view is lower than the Q4 2020, as you can see, EUR 13 million sales below. The contribution margin is at 28.1% compared to 31.5% last year. Here we lost almost 3 points. It's mainly due to the lag between the increase of material prices and our ability to immediately pass through to the customers. That's why I said we are continuing the discussion with customers in order to catch up this Q4 impact. The fixed cost impact remain positive. We are at 17% in Q4 2021 versus almost 19% in 2019. The EBITDA excluding non-recurring is at 14.3% this year compared to 13.2% in 2019.
The EBIT, excluding the non-recurring for the Q4, is at 3.4% compared to 3.4% in 2019 and 5.5% in 2020. The last quarter of 2020 was kind of special because very high activity to catch up the first three quarters. I propose now we go to page 13. This year, we really pushed our working capital and all the items of the balance sheet in order to have an acceptable cash generation.
As you can see, we have been able to generate EUR 35 million of positive free cash flow compared to a loss of -EUR 34 million last year. Included in this EUR 35 million of positive cash flow, we have a positive effect for the grants of Romania by EUR 8.5 million, but we have EUR 10 million of CapEx for this time too. It's quite neutral from a cash flow point of view. To do it, we have not pushed more than reasonable the factoring. It's really a cash generation coming mainly from the operations and a working capital under control. If we go to page 14 about our debt profile.
Basically the update compared to what we explained to you in Q3 is that we have been able to secure in Q4 new major term loans about EUR 65 million. Here also, we have done our homework in order to secure the maturity of the debt. I propose now we go to the results by business unit, page 15. I will start by Suspension. Even if there is an improvement on the EBITDA for Suspension compared to 2020, you can see that we are still lower than the two other business unit and the average of the group with an EBITDA at 7% compared to 8.4% in 2019. Here, clearly the challenge of 2022 will be to successfully turn around the business unit Suspension.
If we go to page 16 with Filtration. Here in Filtration, the sales have been quite in line with 2019 and much higher than 2020. It's mainly thanks to the good contribution of aftermarket, where we have been able to gain market shares, and the EBITDA conversion is now becoming acceptable close to 16%, knowing that we started at 11.7% two years ago. Here in Filtration we have also done a strong action of optimization of fixed cost started in 2020. In 2021, we have launched a restructuring plan in France, which with positive impact in 2021 for half of the year and another half full year in 2022. Let's go to page 17, Air and Cooling.
Air and Cooling compared to 2020, the sales have increased by EUR 30 million, but still below 2019 from a turnover point of view. If we look at the contribution in EBITDA, we have been able to reach more than 20% in 2021, with an EBITDA at 20.6%, for 17.2% in 2019. I think it's clearly the evidence that at Sogefi, even during difficult days and difficult times and with lot of challenge, we are able to continue to do our homework and the job in order to secure the sustainability of the company. I think it's a good transition for page 19. I was speaking of the transformation of the group.
We are continuing, and we are even accelerating in these days, our sustainable transformation. As you know, Air and Cooling, we started the transition to E-mobility five years ago, and we are accelerating. You will see that in the figures for the business nomination. Filtration, we are pushing the transition from diesel products to new products for air purification, and Suspension is less impacted than the 2 other business units by the technological revolution. Here it's being able to do more and to improve from an operational point of view, and as I mentioned to you, the footprint optimization. If we go to page 20 about the new business awards. During the year 2021, we have been able really to confirm our position of strong player in the thermal management for E-mobility products with Air and Cooling.
We have been awarded in Europe, NAFTA and China for very important contracts with key customers, and this trend is continuing in 2021. The good thing is that we have now a broad portfolio of products that I will present to you in the next slide. With broad customer also portfolio, we have been awarded this year with a premium German OEM for the next generation of premium electric platform with two LCV makers, one which is pure electric and another based on fuel cell technology. In China also, we are continuing to gain market share in this product. On Filtration, here the transition has been done on air purification, especially with our HEPA filter and also two important contracts in North America for transmission filters.
Suspension, in the last quarters, the very good news is that we have been awarded for our first big contract signed with our new factory with a major customer for a coil spring that will be produced from 2024 in our Romanian plant. If we go to page 21. It's a summary of a few example of the business E-mobility, Air and Cooling on which we have been awarded. I already presented these businesses to you because in last quarter there has not been any new businesses. If we go to page 22, the picture of the E-mobility business quotations currently. This our business not awarded yet, but business on which we are doing the quotations. The very good news is that 63% of our current quotations are currently for E-mobility products.
Hybrid, [full EV], or fuel cell, of which 68% in Air and Cooling, 20, sorry, 68% of our businesses are for Air and Cooling, 12% are for Filtration, and 20% for Suspension. Among the sales, 68% of Air and Cooling are for E-mobility, 30% for Filtration, and 70% for Suspension. You can see that the ratio of Suspension and Air and Cooling is very high. Even in Filtration, we are starting to quote for businesses for E-mobility application. If we go to page 23, this is an updated picture of our product portfolio for E-mobility in Air and Cooling. Five years ago, we started just with one product. Now I'm quite proud of this picture because we have many products on shelf. These pictures are not product of prototypes or whatever.
These are really products that we have on shelf and that we are proposing to our customers, some of them already for the third generation. We have now accumulated a very strong know-how, both from a project and process point of view, and it really give us a high legitimacy with our customers, whether legacy or new customers. If we go more in detail for the page 24, here I have divided in two the product I presented to you in the previous slide, the current product portfolio. We also have innovation, which will start in production from 2022 to 2025. It's starting now, especially a new product line, which is cooling plates, very different from the product we were used to do, mixed between aluminum, plastic, and electronic.
Clearly this product has much more added value than the classical manifolds we were used to do. If we go to page 25, the HEPA filter of Filtration. You already know this product because I presented it to you in the last quarter. The only good update that we had in last quarter, it has been elected Product of the Year in France by a very well-known branding company. The sales have increased a lot in the north of Europe and also in France and in Germany since the last quarter. I propose now we go to page 27 for a market outlook of 2022. We have been again when we built our assumptions for 2022 much more conservative than [IHS].
It's already what we have done 2021, and we have been very accurate when we have done our estimation for 2021. Basically the assumption we took for 2022 is to consider half of [IHS] for 2022. [IHS] estimate a growth at 8.5% for the full year, with a strong growth in the second semester. On our side, we prefer to build our budget, the fixed cost associated with half of this growth, on a full year basis. Page 28, raw material outlook. Well, here it would be quite arrogant to say that we have a clear vision about what's gonna happen with the material prices in 2022. The events of the last days, of course, are creating, again, confusion in the market, which was already unstable.
Our position is always the same. We have started strong actions of resourcing among our suppliers. We have done strong actions to change material in order to consume less material and be able to source material closer to us. We have also started, as I mentioned, strong discussion with the customers in order to be able to pass through the raw material increases that we cannot compensate. Here, we are speaking about raw materials, but of course, this integrates also the transportation costs and energies. Both of these two items have increased a lot in 2021, and there are a lot of tensions right now on transport and energy.
These are global discussions that we are having with the customers, always keeping a door open based on the current situation, in order to be able to pass through as much as we can to our customers. Based on that, if we go to page 29, the financial outlook for the full 2022. Of course, the visibility of the markets is still very low. Nevertheless, as we have done in 2021, we are ready to face this kind of situation. We have shown that we are very agile, both from an operational or commercial point of view. We are preparing ourselves to a very difficult 2020 year from a market condition point of view.
As I said before, there is also uncertainty in raw materials moving already in 2021 and still very stressed due to the Russian situation. In this scenario, based on our current knowledge of the market, we are targeting to have in 2021 an operating profitability excluding the non-recurring charges, of course, close to 2021. Mainly, thanks to the strong actions we already launched and we continue to launch on fixed costs and our profitability with the suppliers and customers. I have finished with the presentation. Now, I am at your disposal for all the questions you would like to ask. Thank you.
Excuse me. This is the conference call operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. The first question is from Martino De Ambroggi with Equita. Please go ahead.
Thank you. Good afternoon, everybody.
Good afternoon.
The first question is on the guidance, just to double check if your indication is in terms of absolute value for the EUR 52 million adjusted EBIT or as a percentage of sales 3.9%. The second is always related to non-recurring items. Thank you for your slide number 11, which is very useful because it's always very difficult to understand exactly what is recurring or not in your quarterly results. Can we have an idea, if any, what could be the restructuring cost line for the current year and maybe any other item that could be taken into account? The third question is on the raw materials because you mentioned to be able to recover 80% last year.
Can we use the same percentage for the current year? Or maybe you are more effective, obviously, without taking any view on where raw mat will go. Always in terms of costs, transportation and energy, if I understand correctly, are still ongoing negotiations, so nobody has already accepted or a certain percentage of clients already accepted automatic adjustments or non-automatic adjustment for these kind of costs. Thank you.
Thank you very much for your questions. They are all very good questions. The first question is very good because from a technical point of view, in fact, as we are integrating repricing with our customers and we use the sales to divide then the EBIT, it's diluting the percentage. Basically the guidance we are giving is in percentage, but retreated from the repricing effect because otherwise it will dilute the percentage of EBIT. It bring us slightly higher than the target in absolute value of 2021. For the second question, non-operating. Yeah. This year we had a lot of non-recurring, and the addition is positive.
In 2022, based on the current knowledge of the market, which again can change a lot with the Russia situation, we don't have any restructuring plan because they are already booked from a P&L point of view in 2021. Nevertheless, what has been booked in 2021, part of it may be cashed out in 2022, but it's not in P&L. It's not in cash. It's not in P&L, it's in cash. We will have some kind of recurring restructuring as we were used to have in the previous years, without closure of facility or big [AG] restructuring. Of course, this excludes the fact that maybe there may be a big impact due to the Russia situation or whatever, and then we will have to adjust strongly.
Right now, we don't expect a big restructuring cost as of now. On the other hand, we don't expect positive non-recurring as we had in 2021, because 2021 has been quite exceptional. We had a positive impact with the U.K. pension. We had a tax recovery of EUR 2 million in Brazil. We had exchanges positive in Q3 also. We had reimbursement of insurance. That's why it's very important in 2021 to take out all these non-recurring items. That's why my target, the guidance I gave for 2022 is without these items too. For number three, raw materials.
Yeah, when I said we have been able to book 80%, it's basically because when we discuss with the customers, they consider that, okay, they would compensate a part of it, and another part has to be compensated with internal actions. The remaining part we are still discussing. There is also a lag of application. That's why at the end it's at 80%. Most likely we will reach a higher percentage when we will close the negotiation for Q1. It supposes of course that the inflation on materials does not continue as strong as it was in 2021. Otherwise, it means that we will have to start new discussions with our customers to catch up the increase of 20% of Q1 that is not integrated in the contract.
I hope the big bubble and the big rise of material increase will stop. If it continues, it means that we have to redo negotiations. Concerning energy and price, this has been one of the most difficult discussion with our customers, because on energy, we have our own cost of energy in some countries where the prices were not blocked, plus our suppliers are requesting increases for their own energy, especially in Suspension. Of course, here to be able to have a strong pass-through with the customers is a bit more difficult. On energy and transportation, the discussion are ongoing with two customers among all our customers. I think we will be able to lock them about the price increases of 2021 and the first month of 2022.
The question will be if in March, April, the prices and energy are booming again, it will mean that we will have to have new discussion with our customers. Part of this now are in the contract. The other half will be based on discussion, especially not knowing where it goes. Basically, the prices of energy these last two, three days have really increased a lot. It's very difficult to know if it's a trend that will last or if it's just a peak that will decrease. We have not yet started the discussion with our customers on the new energy or freight price that we are seeing for the last two weeks and last week.
Okay, thank you. If I may, on the energy and freight costs, what was the weight on sales last year, very roughly?
In fact it's mainly North America. It's mainly North America for freight, basically, because we are purchasing most of our aluminum from China. The price of containers between China and North America has increased a lot. Here for the freight, globally, we are speaking about EUR 14 million, 14 for 2021, due to the increase of the freight between China and North America, mainly. For the energy, it's more in the range of EUR 5 million-EUR 6 million, especially in Suspension plants. It's also thanks to the fact that we locked a lot of energy prices in most of our countries. For example, in France our price are in theory locked.
Of course, I don't know with the current situation if this contract will be respected, but right now we have locked in France, for example, our prices in energy. It means that the impact is not immediate, but will be end of the year after 2022 for these countries. Basically, it's EUR 5 million, the increase of last year.
That's the increase, the total increase?
Yes. Yes.
As a percent, the total cost, what was?
Sorry, what do you mean by total cost?
The total energy cost in 2021 results [audio distortion] not just...
Ah.
Very roughly.
Give me a few seconds.
I think the energy cost was around 2.3%.
20 25. It's EUR 30 million. EUR 30 million.
Okay, so-
Of which, EUR 21 million in Suspension.
Okay. Perfect. Thank you.
You're welcome.
The next question is from Monica Bosio with Intesa Sanpaolo. Please go ahead, madam.
Good afternoon, and thanks for taking my question. First of all, a check on the previous question. As for the freight cost, EUR 14 million, is the total cost or is it the increase? Just to check.
That was the increase.
Also the EUR 14 million?
Yes.
Okay. The second question is on Romania. Can we expect a breakeven for Romania plant in 2022, or should we account some ongoing losses? The second question is on the EV products. Can you give us some flavor on the margins related to these products? And if you expect some pressures going forward, given also the statement of Stellantis that stated during the last conference call that all the supply chain has to share the higher costs of the electrification. Thank you.
Thank you for the questions. To go straight to the point about Romania, it won't be in 2022, the breakeven. The loss will be of course lower than 2021. It will be an improvement in a progressive improvement in three years. It won't be in 2022, but the loss will decrease each year before reaching a breakeven. Concerning EV products, it's honestly very difficult to estimate the future trends because each generation right now is different from the other. The technology is still ongoing. Each time there are new innovations. One customer is not like the other. Of course you are cutting synergies. The profitability on synergies product or EV products are de facto lower than for premium car makers.
That's also why in the beginning we started, and it has always been Air and Cooling strategy with the premium car makers, in order to be able to have a good control of the technology, of the price control and the suppliers, and then go to the generic customers. For sure there will be a pressure on EV products, as it is always in automotive. In automotive there is no niche with EV margin forever. It's the name of the game. The good point is that we are ready because we are working on this product for the last five years. We are also in this phase where we are able now to improve our production costs, in order to be competitive and have margins.
You have seen in Air and Cooling, the strategy has never been to dilute the profitability. I don't know if we can keep 21% of EBITDA, but the strategy is always to be sustainable on the long term from a profitability point of view. To be able to innovate, to invest, and continue to grow in this kind of application.
Okay. Thank you very much. Can I ask a further question? Can you give us a rough indication of the expected investments for 2022, both in intangibles and tangibles?
We are in line with 2021. If we exclude Romania trend of course will be a bit different during the year. We are targeting the same amount of CapEx as 2021.
Thank you very much.
You're welcome.
The next question is from Alexandre Raverdy with Kepler Cheuvreux. Please go ahead.
Yeah, good afternoon. Thank you for taking my question. I have a quick one, please. You mentioned a very cautious market outlook, at least compared to [IHS]. When we listen to other European suppliers, they mention that in Q1, their volumes are so far better than budgeted, so there is upside risk on the first half. Is it something that you share as well?
In fact, we decided to divide by two. When I say that, it doesn't mean that we are not ready to do better. It's kind of cautiousness when we built our budget for the next year, for the fixed cost, for the CapEx amount. We have already done that in 2021. [IHS] was very optimistic and at the end, and it has not happened. 2022, you see there are a lot of risk on the market. That's why I think our assumption is quite realistic. My feeling, it's realistic. Nevertheless, I have performed some stress tests in each of our countries, especially North America, where everything can grow very quickly. If the market is growing higher, we will be ready to produce. This is a challenge.
Nevertheless, if the market is going down, I'm also very I would be very quick to react on the other hand. Right now it's very difficult to predict the market due to the shortage of material. Still some advantage in the customers, for the customers due to the COVID. Plus this new situation in Russia where I don't know how it will impact the customers or the global consumption of the world. So honestly, to divide by two [IHS], I think looks reasonable to me now.
All right.
We'll be hoping that it will be more, then we will leverage on volumes, keeping our costs under control.
Sure. Thank you very much.
You're welcome.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Gabriele Gambarova with Banca Akros. Please go ahead, sir.
Yes. Thank you for taking my questions, a couple. The first one is on diesel. We saw that in very recent months, someone is speaking about diesel and its future. Any comment on this would be interesting. The second one is on the attitude of OEMs. We saw incredible increases in average selling prices. I was wondering if, in your perception, the negotiation with your clients is somehow less tough than it usually is, basically.
Thank you. The diesel, to be honest with you, I always had an approach, and up to this it has only ever to be, I would say technology neutral. Means I don't beat the trend about diesel or not diesel. Nevertheless we have 40 customers all around the world with good customer intimacy. It's very strange. Two years ago everybody was saying it's dead. Now, some are starting to say maybe not. As always, I prefer to be very prudent and consider that there is a potential risk of decrease of diesel and be ready and innovate to have alternative if the diesel is decreasing, especially in Filtration. Because the business unit the most exposed today is Filtration.
Thanks to aftermarket and OES, in fact, the exposure is in a very long range, and it's not one year, two year, three year. I prefer to be ready, and if the diesel really decreases as it is forecasted by the analysts with other products, then I don't know. Honestly, with the E-mobility, the technology is moving so quickly, maybe we will have some issues to find the raw materials for the batteries and so on, and then diesel can come back, or maybe a clean diesel is also possible. Nevertheless, to be very honest with you, when I do a quotation for a diesel business, I'm very prudent. I ask for upfront payment of R&D, and I don't invest new line. For the tooling, we ask an upfront payment, because it may be risky.
From a risk management point of view, we are cautious on diesel. If it remains, it would be a very good news for Sogefi, because with the rise of the E-mobility, Air and Cooling will have a strong growth and Filtration business then will be very much protected, and we will add our new product range on that. Concerning the discussion with our customers, yeah, it's of course very difficult because they are Stellantis, we are Sogefi. Of course their defense is very well organized. They are defending very well, and I'm sure that there are very big consultancy companies that are advising them because they basically have all the same strategy.
Nevertheless, I would say that of course being tough and protecting their company, more and more we are able to have fair agreements, because it's in interest of our global business. Even Stellantis will need a suspension filter manifold. It's a global trend, and I would say that our customers are aware of that. Even if the discussions are tough, they are fair, and at the end we are able to find agreements and deals, even if sometimes there is a lag between the increase of material prices for Sogefi and the day we have a compensation from our customers. The last three months has been strong discussion, but at the end with, I would say, most of our customers, we have been able to find deals.
Of course, they don't compensate 100% always. They expect us to compensate part of it. I have to admit that it's going in the right direction, and maybe also at Sogefi now, we know to do it. We are maybe more used to do it than before. Of course, when I see the financial results of our customers, you can imagine that the first thing I do, I send them an email to congratulate. Then I ask them for a meeting to reprice immediately, especially when they publish their results saying that it's thanks to price increase with their customers and strong control of suppliers. I would lie if sometimes I'm not shouting when I see that. I'm very pragmatic. It's better to have rich customers than poor customers.
My job is to go and have a fair part of that with us. It's going on the right direction, but it's difficult.
Yeah. I understand. Thanks.
You're welcome.
Just one follow-up. How long does it take you to see your prices increase then from the start?
It depends. In fact, the first thing that happens is the contractual part arrives, I would say, almost immediately. There is just some administrative time, the time to have a PO and so on. It takes eight weeks for the part which is contractual. Here, the big issue is that the contracts are based on the index. Here, the big issue that we had the last six months of 2021 is that the material prices, especially in steel, and now we can see that pressure on plastic, are increasing more than the index. For example, for plastic, if the index is increasing by 10%, the ISF is asking you 25%.
It's on this remaining part that I am obliged to open discussion with the customers, saying the contract was on index, but the increase with our suppliers is much more than the index. Here we need to discuss, and here usually, it depends on the customer, but it's three months. Basically, it's three months, but from the beginning, usually, we try to deal that it will be retroactive, in order to have quick agreement. It's on average three months for everything that is above the contract.
Okay. Thank you very much. Last question regards the tax rate. I think it was around 32% in 2021, so pretty low. I was wondering it was much better than expected. If I remember well, it was around 40%. What should we expect and assume for 2022?
I think in 2021 there has been also some non-recurring items with no tax impact. For the tax then, I think that there will be a kind of normalization on the tax rate if we exclude the non-recurring items. In 2021, as I said, there have been many positive impacts that do not have a tax impact. And everything will be also much linked to Romania because Romania had a big loss this year. It may impact the tax rate in 2022 and 2023, but I think we will have an accurate answer, if you agree, on Q1, maybe Q1 2022.
Okay. Thank you very much.
You're welcome.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star followed by one. The next question is a follow-up from Martino De Ambroggi with Equita. Please go ahead.
Inevitable questions. You have a limited exposure to Russia, direct exposure. Some of your clients, thinking about Renault, has a quite important presence over there. Have you any idea on what could be a potential impact or what are the potential implications for your business? Obviously, we know it's totally unpredictable evolution, but just to have an idea, what is your exposure? The second question is on the free cash flow. Based on the line assumptions that you mentioned, what could be the free cash flow very roughly for the current year? Because last year was very strong. You were able to achieve it despite reducing the amount of factoring.
Just to have an idea, what could be the magnitude for the current year? Also connected to this question, the working capital evolution, if it's possible to have an even better number of days for payables, receivables and so on in inventory.
Thank you. Yeah, our exposure or direct exposure to Russia is very low. In fact, our main exposure is with aftermarket for Filtration, where we have roughly EUR 5 million of direct sales to Russia. Then in Suspension, we are selling to Renault mainly, with CKD. We are doing CKD to Russia. Our direct sales exposure is very low, basically EUR 5 million in aftermarket, and our sales to Renault. From the sales point of view, we are very low exposed very in a low amount. For purchasing too, we don't have direct purchasing from Russia. Some of our suppliers of steel are purchasing from Russia, but we checked with them, they would be able to switch from Russia if needed.
Here again, I think our exposure is very, very low. There is one thing, but we are not here yet, and I hope we will not arrive at this stage, is that most of the goods purchased from China, but it's not only for Sogefi, it's for everybody, are coming by train through Russia. On that, I'm not able to predict what's gonna happen. We are not exposed in Russia because it's very difficult to do business there forever. We have always been very conservative, not growing too much in Russia. The free cash flow for 2022, yeah, you said it, 2021 was a very good year. Sorry. We had very, we have done actions on the working capital to improve it.
Even in difficult situation and difficult year like 2021, we have been able to push the inventories and the payment terms. It will be difficult to push more on in 2022 these items of working capital, so it will be more on the funds provided by operations that we will have to do the job. So it's a bit early to give you an indication of the free cash flow that we may generate in 2022. As you said, we have not pushed the factoring too much in 2021. We have been able to generate it in normalized way. EUR 35 million is a good year in 2021 with a lot of one-off impacts. As I said, in 2022 we will have to pay some accruals that we booked in the P&L of 2021.
I think we'll be a bit lower than 2021, the free cash flow. Not much, but a bit lower.
Another strong year.
Yeah. We will never go back, I hope, to the level we had in... I don't know if it's strong year. I will say it's normal for Sogefi. I think six, seven years ago, the cash generation was very strong. 2019 was okay, was not so high. 2020 is a bit exceptional. But I think we will be above EUR 20 million, yeah, in 2022. We have to. Basically, we have each year to generate cash in order to be able to continue the innovation and the investment.
Very last, we already touched this issue, but is it possible to think about any additional divestiture or rightsizing around the globe?
You mean to sell something or to close something?
Well, both because you made a lot of things in the past 18 months.
Thank you. Yes. In the last 18 months, we have a lot of things and it is paying off. You see, in Filtration, we have been able to sell Brazil and Argentina with good conditions. And now Filtration is very strong. I would say that the most urgent things have already been done, and that's right. No, we don't have anything urgent to do. We don't have a cash-bleeding situation like we had in Brazil and Argentina. This year we have to focus to be able to have a strong supply chain, negotiation with our suppliers, customers, and improvement of Romania. Right now my priorities are this one. There is no more an urgent situation to solve as it was the case before.
Thank you.
You're welcome.
For any further questions, please press star and one on your telephone. Mr. Sipahi, gentlemen, there are no more questions registered at this time.
It means I was clear. Thank you very much. I thank you all for your attendance and your questions. It was a pleasure for me this year, so I hope we will continue in 2021. 2022, sorry. Thank you a lot. Have a nice weekend, everybody.
Thank you. Bye-bye.
Thank you. Bye-bye.
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