Good morning. This is the Chorus Call conference operator. Welcome, thank you for joining the Sogefi nine-month 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 their 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, madam. Good morning, ladies and gentlemen, welcome to our nine-month 2021 earnings call . I think you all received the presentation, we will go through it with Yann. At the end, of course, as usual, we will answer the questions. Could you please go to page number four, where we have the highlights of the first nine months 2021. Page four, I think we can say that we have good results for the first nine months of 2021 in regards to the current automotive market situation. Clearly solid on the sales side. I can say that in all regions we are beating the market. I will come back in detail on that later. EBITDA and EBIT are much better, of course, than 2020, but also 2019. Most important, a free cash flow positive by EUR 27 million.
We'll come to this later, but I can say that to get this free cash flow, we have to improve the business model of all business units and implemented very strong actions in the working capital and CapEx management. I propose we go to page number five, please. As I was saying before, our sales are much better than the market. Cost of raw material and transportation have increased during this quarter. I will give some more information when we come to Suspension, as steel is one of the commodity which increased a lot during this year. We will explain, of course, in detail the impact in the margin of the quarter three. Page six, please. As you can see, and as I was saying before, our model quite diversified from product and geographical point of view.
It's paying as we are showing -5% of sales versus 2019 at constant exchange rate with a market down by 15%. The detail by customer, page seven. We don't have big change of customer portfolio versus June presentation . You can see nevertheless a big increase in BMW versus 2019, thanks to the start of many new products that we launched in 2020 and 2021. The details, page eight, per business unit. You can see that Air & Cooling and Filtration are showing great resilience thanks to the start of new business and also aftermarket and OEM. Suspensions is basically following the market trend with -14% versus 2019 at constant exchange rates. Page nine, please. I will give more information in a few minutes after the financials about nomination.
As you can see here, we have continued to be very dynamic from a business nomination point of view, and we will continue, of course, in the last quarter and next year. Now I will let Yann comment the financial slides. Yann, please.
Thank you, Fred. We move on to page 10. As usual, we compare our results with 2019 versus the pre-COVID. You can see the first box, no big news, Fred mentioned that already. It's the impact of - 9% of sales versus 2019. The second box is less positive than it was before. We already start seeing the negative impact of increase of raw materials, although is partly hidden, and I'll come back to that. The main takeaway of this slide, it's the following box. It's fixed cost savings, EUR 30 million fixed cost savings versus 2019. You have the start-up cost of Romania. As we mentioned at the end of Q2, strong positive one-offs versus 2019. All in all, as you can see, an EBIT which stands at 5% when it was 3.8% in 2019 before COVID. We move on to slide 11.
The 9% less sales we already commented. Contribution margin appears ahead of 2019, we'll show in the following slides that it's not exactly like this. Restructuring cost below 2019. What is important is, we mentioned this in our previous call, it's the net income from discontinued operations, EUR 24.7 million loss, including a EUR 20.6 million of reversal of the translation reserve linked to the disposal of Filtration Argentina. I insist on it because it's an accounting matter. It's non-cash. It is just reversal of accounting impacts since, I think, 2004. Nothing to do with the operations. As you can see, the net income of operating activities is still far ahead of what it was in 2019, at +EUR 22.7 million versus EUR 12.1 million. If we move to slide 12, it shows Q3.
Q3, as it stands in the current account, as you can see, Q3 contribution margin looks high at 31.7%. What we have done is that we have included in Q3 a special project, which Fred maybe will comment later, which slightly distorts the numbers. When we take it out, which is the column on the right-hand side, you can see that contribution margin is at 28.4% instead of 31.7%. We have really a strong negative impact of the increase of raw materials. Fred mentioned this in our last call. There is a deferred impact. We are fighting to get it back from the car makers, but it really already shows very strongly in Q3. Cost fixed costs, it's still the same. We are still doing our homework, and as you can see, we still have an EUR 8 million saving of fixed costs versus 2019 in Q3.
Write-downs high at EUR 5 million in Q3. All in all, a result of net operating activities, which is a loss of EUR 2.2 million in Q3 2021. It was a profit of EUR 3.6 million in Q3 2019. I shall not comment too much on the following line, which is discontinued operations. It's what I referred to before in the reversal of the translation reserve of Argentina. If we move to slide 13, free cash flow. Funds provided by operations are slightly distorted by the inclusion of the loss of the translation reserve. If it was not included, it would be slightly higher than it was in 2019. As you can see, positive free cash flow on 9 months, positive by EUR 26.5 million. It was negative by EUR 0.5 million in 2019. As you can see, we have done our homework, both on working cap and CapEx.
CapEx, this includes a high investment on Romania. We have focused investments on the necessities of Sogefi. At the end of the day, we end up the quarter with an NFP of EUR 267, which is in line with what it was at the end of 2019. I'd say we have not pushed on factoring because as you can see, factoring stands at EUR 87 million. It was at EUR 103 million two years ago. We have not pushed on this. We probably might have taken more factoring. Page 14, debt profile. I'd say not much changed since our last presentation. We still have EUR 126 million of cash on hand, plus EUR 140 million of undrawn lines. We have started the renegotiation of the lines maturing in 2022 and 2023, and we already are working to renew a first batch of EUR 50 million of lines.
We move to the results by BU, so page 15. Page 15, Suspension, as Fred mentioned, is 20% below 2019 in terms of sales. Although the contribution margin stands roughly in line with what it was two years ago, less sales means that we have less contribution. The contribution margin already is suffering because it's a BU which is most impacted by the raw materials. The increase of iron costs already is hitting the BU, and it will keep on hitting it in Q4. Cost fixed costs, - 16% versus 2019. I insist on it's a EUR 14 million fixed cost savings. It is a big saving, but not enough in view of the reduction of sales. We are going to focus our actions in the coming quarters on improving operational efficiency, which will also imply further reducing fixed costs. Filtration is a different profile.
As Fred mentioned, sales roughly in line with 2019, - 1.2%. This, coupled with a 14.7% reduction of fixed costs, generates a high increase of EBITDA, which also is slightly carried with positive one-offs. Air & Cooling, it's much the same. As you have seen, sales are also in line with 2019, only 3.2% lower than they were in 2019, which is far better than the evolution of the market. Fixed costs, - 11.2% versus 2019. This generates a further improvement of profitability, which already was very high in 2019 at 16.4%, up to 18.5% in 2021. Fred?
Thank you very much, Yann. I propose we move on to slide 19, please. As I already explained before, we started the process of the product portfolio transformation in Air & Cooling and Filtration already a few years ago. You will see next page that it is paying now with new business awards. Let's go to page 20. In page 20, here, I decided to focus only on the pipeline of orders for full EV products or cars. Why? Because for hybrid cars, in fact, our products are, for most of them, already 100% compatible. We have currently a very good portfolio of business in quotation in the pipe. You can see in this page that 60% are for Air & Cooling today, and 34% of our quotation for the whole group are for full EV products or cars.
That's quite interesting for the future, because what is very important is that this quotation will obviously transform in business award, and then will transform to turnover very quickly, in 2023, 2022, or 2024, which is very different from business for ICE application. If we go to page 22, here we have a few examples of the business on which we have been awarded during this year. You can see that we have two new businesses compared to June. One is for a premium German car maker, and another for an American 100% LCV pure electrical player. Page 23, this is the illustration of the project for the German premium car maker. What is very important to understand here is that, in fact, in a project such as this one, we have five times more added value than an average manifold for Air & Cooling .
Also the process is very important because we have been awarded in this business thanks to a new welding process, very clean welding process that we developed especially for this kind of products. In page 24, it's a reminder of our innovation for Filtration with a filter HEPA, so very high protective filter. We have been awarded already in aftermarket in north countries of Europe, such Norway and Sweden. I'm sure that in the coming quarters and years, it will become very important in the rest of Europe, too. We are very confident about this product range. If we go now to the market outlook, page 26. As you can see and know, IHS is forecasting a very low quarter four at -20% versus 2019. Here I have to be very transparent with you.
It's not a surprise for us, basically, because as you may remember, we are saying for one year now that we were prepared and preparing a very low 2021 year. For us here, there is no surprise. Page 27, a focus on steel. As Yann mentioned, we have been impacted in quarter three by the steel prices and the pass-through to customers. Here in this page and until today, we were presenting to you only one index. What is important to understand in Sogefi business model is that, in fact, we are purchasing four types of steel, and we don't purchase raw steel. We purchase already transformed steel. Each of the steel has an index to follow the trend of the prices. As you can see, and as you all know, of course, the indexes have increased a lot in one year.
What is very important is what I will show in the next slide. Slide 28. Here you have a comparison versus the market price and our pricing. You can see, in fact, in the curve of the Sogefi prices, which is in red, that there is a lag of three to six months between the evolution of the index, increase or decrease, and the impact in our pricing. Why? Because it is what I mentioned before. We are purchasing transformed steel and not raw steel. That is why in Q3 the impact is so big compared to the two first quarters, is because during the first two quarters, we have been able first to resist the increase, and second, there is this lag of three to six months between the impact in our prices and the indexes.
If we move on to page 30, as a kind of conclusion, if I may say, there has been, unfortunately, no surprise, as I was saying, on the volume. We were ready and prepared for a very low 2021 year with very uncertain markets. We expect in Q4 still low volumes and instability in volumes and purchasing price. We have reacted very well and quickly to these market conditions. All plants have integrated various actions in order to mitigate the market impact. We confirm the view that we expressed during the first semester results, means to achieve a full year EBIT margin at least equal to the one that we recorded in 2019, which is a reference year for us. We have finished with the presentation. Thank you for your attention. I propose we move on to the questions.
We will now begin the question and answer session.
Thank you.
We will now begin the question and discussion. Anyone who wishes to ask a question may press star and one on their touchstone 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 Monica Bosio with Intesa Sanpaolo. Please go ahead, madam.
Good morning, everyone, and thanks for taking my questions. I have three questions. The first one is on the performance. With no doubt, Sogefi outperformed the market over the nine months. I didn't see the slide regarding the third quarter, if you can give us some highlights on the performance on just the third quarter of the year. The second question is if you can quantify the impact of the raw material prices increases as a delta in the third quarter, and if you can give us some flavor on the last quarter of the year. In term of EV supply, 34% of the quotations are for EV. This will transform into revenues. Just a flavor. In, let's say three, four, five years time, what could be the % of EV sales as for Sogefi? The very last is on Romania.
When do you expect to achieve the breakeven for the Romanian plant? Thank you.
Thank you, Monica, for your question. I think your first question was about the Q3, right? The focus on Q3 performance. We have it in page 12, in fact. Here we have done a comparison versus the quarter three 2020 and 2019. As Yann was mentioning, yes, the quarter has been difficult, mainly due to the fact that we had the impact of the steel concentrated in this quarter. I think it was your second question. Basically, to make it clear on the Q3 increase, it is exactly the one that we were expecting and that we mentioned during the June results. At the end, the pass-through that we have been able to do to the customers has been very low during the quarter. Remember, in fact, we have to wait end of the quarter in order to start the negotiations with our customers.
Okay.
To give a flavor, in the Q3, we have been able to recover 1/3 of the increase, and this is mainly the contractual part. All the negotiation part is postponed to the quarter four. The specificity of quarter four, in quarter four, we'll recover the contractual part of Q4, one part of it, and the negotiation part for the Q3. In the Q4, we still, let's say, expect material increase because even if the index are stabilized now, you have a kind of irrationality in the prices proposed by the suppliers, also due to the increase of energy and CO2 and so on. For now, the assumptions that we have, and I think we are pretty accurate on it, is that we will be able to recover in the Q4 half of the increase expected in the last quarter.
The impact will be less than in Q3. I can give you this flavor. My assumption is that we will also improve the profitability of Suspension, thanks to the actions we launched compared to Q3 by 1% on the material and gross margin effect. Now for the EV, I think it was your third question. For the EV, yeah, it's very dynamic. Basically, our conversion rate currently, on ICE application used to be, let's say, 25%. Means if you had a quotation of EUR 100 million, you were able to convert EUR 25 million. On E-mobility, it's difficult to say because we don't have the same story and background. Our expectation basically, as you can see in our pipeline of orders currently, we are beating the market in full EV.
De facto, whatever it will be the percentage of EV penetration in the next years in the market, we will beat this rate, except if of course there is a big revolution next year that I don't see. Currently, in our projections, we are beating the market from a EV penetration point of view. We can already see it in our sales of 2022 and 2023, which is a good thing, because In the EV right now, it's very difficult to predict what's going to happen after 2023, 2025, 2024. 2022, 2023 are very soon, and we can see that we are always above the market, especially of course, in Air & Cooling, where we started the negotiation five years ago, and it gives us a big advantage with the customers, because we have acquired a knowhow and a customer intimacy during these past five years.
I have to say also the good surprise in Suspension, basically, not because the products are special for EV, of course, it's the same product, but because we are already, let's say, we have a good position on EV platforms of our customers. My feeling is that Suspension too could achieve a good penetration in EV products and cars and platforms. Right now we are focusing, of course, on new customers wanting EV in order to increase this rate of EV. For Romania, this new plant, of course, we had to create this plant in a difficult year. Last year was not the, let's say, the most easy year to create a facility in Romania. We had issues with our suppliers in order to industrialize. Now we are catching up.
We are normalizing the situation from an industrialization point of view and installations point of view, and we are now focusing to make it, let's say, profitable day after day, focusing on our material, steel consumption, material rate, labor rate, CapEx, and free cash flow consumption. I would say that usually when you create such a big facility in a new country, it can take three to four years to make it profitable, especially in such an environment like we are facing today, where the instability is big from a supplier point of view. Still the COVID situation is not easy because our suppliers may be based in China and so on. I would expect to come back to profitability as soon as it stabilizes from an industrialization point of view, and that the material consumption is normalized.
Thank you very much. Very clear. Thank you.
You're welcome, Monica. Thank you for your questions.
The next question is from Martino De Ambroggi with Equita SIM. Please go ahead.
Thank you. Good morning, everybody. Sorry to bother you on raw mat, probably I missed the figure, or if it's not available, just a rough indication of what was the impact of raw materials in Q3? First question.
It's exactly like we anticipated. It's very close to two-digit impacts, the gross figure, and then the recovery, as I said, is 1/3 .
Okay. Net is probably EUR 5 million-EUR 6 million.
Yeah, you are very close to it. Yes.
Okay. Probably will be less in Q4 we mentioned .
If the indexes are forecasted, it will be a bit less. What is very difficult to estimate is the irrationality of the prices from our suppliers. I think you have all heard about it, but you have a kind of crisis on the energy prices, energy availability, and currently the suppliers are leveraging on it, saying, "Okay, the indexes are decreasing, but on the other end, we have a crisis on the energy. We may have to shut down some factories during winter in order to save energy." This will create an inflation in the prices, or at least the price will remain the same. The fight that we have today with our suppliers, is to have the index effect of the decrease or the stabilization in next quarter.
It's quite difficult to predict because you have in one side an uncertainty in the index, and in the other end, let's say, a push from the suppliers in order to contain the prices as they are. If everything remains as we forecasted, yes, in Q4, the impact should be less, and also our capacity to recover from customers should be higher.
Okay. Can we say, if I remember correctly from the past calls, you are able to recover through negotiations in three, six months, let's say 70%, 80% of the change in raw mat?
It's very close. In fact, it's not only from negotiation. You have a part of it which is indexed in the contract. This one, even if it's a fight with the customers because they never volunteer to apply it, you've got it. Then the remaining portion is based on negotiations. It could be negotiations to compensate the increase of prices or not give the productivity that is, each year we have productivity to give to the customers. We do a kind of deal, saying, "We don't give you the productivity this year, next year," and okay, we compensate. Your ratio is correct. The two together are covering 70%-80%.
The big issue that we have in quarter three, it's the time difference between the time you have the increase and you are able to pass through to your customers. You have a time effect, and of course, our customers are very good to play with this time, and we are shaving in order to get what we have to get.
Okay, thank you. Very last on raw mat, always. Can we say that if the market doesn't change a lot, it remains stable, you are able to recover in the first half of next year, you are able to fully recover this 70%-80%?
Fully recover from an absolute value is difficult because you don't have many occasions to have retroactivity. To recuperate in absolute value is difficult. Nevertheless, to recover in index point of view in order to not have a carryover for the next years is our target. As you said, it means that the prices of index are stable. If it's stable, it's a game of, you are right, where we need to go back to the index where we need to be. If it decreased, it's another game and another negotiation with the customers. That's why we are tracking very carefully where it will go in 2022 because it will be important for us.
Okay. The last point on my side is on the guidance. First of all, IHS Markit is projecting higher volumes in Q4 sequentially compared to Q3, up 15%. I don't know, should we expect you are able to outperform the market also in Q4 versus Q3? Should expect a double-digit top-line growth? Obviously, it's difficult because we never know if the client stop production in the middle of December instead of Christmas time. Just to have an idea, what is the trend in Q4 for top line and also for free cash flow. What should we expect for free cash flow in Q4?
Yeah. Good question, and good point about December. My feeling is that December is going to be a long month of closing for the automotive, especially, I would say, the German and the French. We are preparing for that in case it happens. Means usually it was closed in 10 days. It could close longer in December, which will make sense for with the whole industry because rather than cutting on November and October, the customers may decide to have a long break during December in order to save as much as possible costs. My position is to be ready as we have done until today for the low market, for a low December. De facto, as we have done until today, we will beat the market, whatever is the market. The question is to know exactly what will be the market. Yes, we will beat it.
I prefer to be ready for big cuts and not forecasted cuts, which is the worst because you don't have time to prepare. That's why we are very agile, and each week we prepare the potential closure of our customers in order to react very quickly, and sometimes even to anticipate. This is my strategy for the last quarter. I expect a low quarter, but to beat the market. From a cash point of view, we will continue all the actions that we have implemented in the first three quarter, especially from a normalized point of view. I don't see a reason why our cash flow trends should deteriorate. I'm continuing to push a lot on the working capital.
One thing about the negotiations with customers and suppliers that we have, for sure we try to get the price increase from our customers and the price decrease or stable from our suppliers. We are also pushing on the payment terms because at the end, cash is also a key in our business. I don't see any reasons why in Q4 we should have bad surprise. From a reporting point of view, as Yann said, we have been able to generate the cash that we presented to you without pushing too much the factoring and other normalization tools. If the market remains as forecasted, we will continue in this way.
Okay. We should expect free cash flow generation ex-factoring, so in Q4, standalone.
As we have done the first quarter, the cash that we presented in normalized was without the factoring. Yann mentioned that we have not pushed the factoring. Even without pushing it or reported is improving a lot versus 2019 and 2020. Yes, we will continue to push the cash in quarter four, it's key. I don't expect any bad surprises in cash landing of this year.
A figure question, Martino. Free cash flow for the full year should be close to what it is at the end of Q3.
Okay. Basically zero in Q4.
It might be slightly negative, but we are pushing to get to even.
Okay. Thank you very much.
The next question is from François Villard with Intermonte. Please go ahead.
Hi, everyone. Thank you for taking my question. First one is on the P&L that you have in your press release. I see that you have EUR 18 million for other non-recurring expenses in the third quarter. Can you please give us just more color on that?
Sure. It is linked to the special project we mentioned, and which is distorting the Q3 figures. In fact, that's why we normalized it to present it to you in slide 12. In fact, we have a turnover in the revenues, and we have an invoice to our customers in the line revenues. We have offset this positive effect that we have in revenues in the line that you mentioned. Right now, the assumption in Q3 is that this project is neutral from an EBIT point of view. We have the positive effect in revenues and the offset of this positive effect in the non-operating. That's why, in fact, that's the main impact.
Okay. All right, because it was quite a bump in your fixed cost structure. Can you give us just more detail on what that project was? I guess I missed it. Can you tell us more?
No, you don't miss it because I don't say it. In fact, I cannot give you all the details because, of course, I have some confidentiality to respect for my customer. What I can say is that, in fact, it was a special project on which BMW awarded us two years ago. They asked us to work on this very special project. Then in July, they decided to cancel it. It was supposed to generate turnover in 2022 and 2023, it was not a long-term project. It has nothing to do with the diesel impact or electrification or whatever. It was a very special project. The good thing about it is that, in fact, from the beginning, we defined what's going to happen if we invest R&D machinery and spend time on it, and that it is canceled because we knew that it may happen.
BMW was looking for some alternative. At the end, they decided to cancel it. I would say that the settlement has been fair, more than fair between BMW and us, and we will not have any loss about that in Q4. It will be even, I think, the opposite. We are still negotiating to settle some position with our suppliers, but I expect a positive effect of it. I cannot disclose what was this special project because it's very confidential on BMW side. It is not a recurring effect. This is my point. It's not linked to the diesel decree, EV or whatever. It was something totally different.
Okay. All right. You had EUR 10 million of positive one-offs in the first half. Any other one-off we should be aware of in the third quarter?
Yann, I don't think except the BMW that we had very special over beginning impact compared to June, right? The big chunk was concentrated in June, year to date, if I remember well.
Absolutely correct. The increase is linked to this special project.
Remember in June, year to date June, in fact, it were mainly provisions, of course, non-recurring such tax settlements of the previous year, pension settlements. These were the main impacts. De facto non-recurring in Q4 or next year.
Just on CapEx for the year, can you give us some kind of guidance for this quarter? You already gave for free cash flow, but just to have a bit more granularity on the composition for this quarter.
In fact, our CapEx right now, the composition is very different from what we used to have in normal years. Right now, we concentrate, as Yann said, our CapEx for the Romania project to have everything ready for customers on time. It's also linked to what I said about EV. The good thing about EV products, once you are awarded, the turnover is generated 18 months after compared to 36 in the ICE. The negative effect is that you need to invest very quickly. For the two big programs on which we have been awarded on EV, we will have to invest in Q4. One of these programs will already generate turnover next year. It's quite impressive the time difference with ICE and EV application. Nevertheless, we don't expect, of course, to spend more CapEx than forecasted over previous years.
We are being quite conservative in the first nine months, and I will continue to have a smart allocation of our CapEx. The idea is always the same. Rather than focusing on the amount, we focus on what generates value on the short, medium, and long term. For right now, I allocate the CapEx of the group where we know we will generate money and value on the long term, and it's mainly focused on EV products for except Romania plant that we are finalizing.
To your question, François, we are shooting for EUR 6 million-EUR 7 million less CapEx on a full year basis than in 2019.
Thank you very much.
The next question is from Roland Könen with Value-Holdings. Please go ahead.
Yes, good morning from my side. Thanks for taking my questions. First question would be an add-on, on the special project sale. If I look at the non-operating income after Q2, we have a positive EUR 5.1 million. We have roughly EUR 80 million minus. It's a delta of roughly EUR 23 million. The special sales project sales number was just EUR 14.2. The difference is the loss on this project. Could you confirm this? The second question would be on the outlook for 2022. It's a bit early, I know. The IHS figures state for roughly 10 million or 11 million + in the global production. Last year for this year, 2020 to 2021, you were very cautious, in the end it was absolutely right. What is your guess for the next year?
Do you think the 10%-11% would be fine, or are you also for the next year a bit cautious? Thanks a lot.
Thank you for the question. Yann, maybe I let you comment the first question, and then I answer to the second.
The first question, Fred mentioned it was related mainly to the special project. I'm not sure I get your point, Roland.
Yes. You had a positive non-operating or other operating income after the first two quarters of roughly EUR 5 million. After nine months, you have negative expense of roughly EUR 80 million. It's a delta just in the third quarter of roughly EUR 23 million. If I deduct the special project sale of roughly EUR 40 million, I have a negative loss of EUR 7 million-EUR 8 million. Is this the loss you have to book on this settlement or this special project? Are there any other things in there?
There is no loss on the special project, as Fred mentioned. It might even turn positive. We've been quite prudent in our assumptions. I need to double-check the one-offs because there's nothing really significant in Q3 apart from the special project. I'll get back to you on this.
Okay. That's looking great. Thanks.
Yeah, to answer to your second question, Roland, of course, I don't pretend to know better than IHS or whatever. It's more a managerial condition that I have. I prefer to be cautious, honestly, in the first six months of 2022, because still a lot of uncertainty. The way I see it, I don't see a miracle for first quarter and second quarter of 2022, versus what we are facing today from a volume point of view and supply chain point of view and so on. The assumptions that I'm building is that most likely NAFTA will restart quicker than Europe once the supply chain issues will be solved. In Q3 and Q4 next year, we can anticipate good news from NAFTA. For Europe, I prefer to have, let's say, a position where I'm a bit cautious.
It's a bit too early to give accurate figures, so we will do it beginning of next year when we present you the full year figures. Yes, we'll be a bit more cautious than IHS, because we don't have macro signs that everything's going to be better next year. This is our first feeling on that. My first feeling. We are building up the next year's forecast based on cautious assumptions, at least for the first part of the year.
Okay, thanks. Thanks a lot. Maybe 1 additional question on your restructuring costs. They were very low in the first three months as recorded. Having in mind the very difficult environment we are in, do we have to calculate with more restructurings in the next three to six months?
We-
Well, I think--
Sorry, Yann.
No. We do expect further restructuring in the region of EUR 2 million-EUR 3 million, no more, for Q4.
Okay, great. Thanks a lot. Have a nice day.
Thank you. Well, I think we don't have other questions.
There doesn't seem to be any follow-up question. Operator, can you confirm, please?
Excuse me. There is a question from Gabriele Gambarova from Banca Akros. Please go ahead, sir.
Thank you.
Yes. Thank you. Just a couple of questions on the tax rate, 35% in the nine months. I was wondering, what could be for the whole year and going forward in 2022 and in following years after the disposal of Latin America. I didn't get, sorry, what you said about CapEx vis-a-vis 2019 and possibly also for 2022.
Gabriele, the tax rate for operating activities, because we should take apart the disposal of Latin America, it should be in the region of 40% on operating activities on a full year basis. We are aiming to improve it, to reduce it for the coming years. On CapEx, I said that all in all, for 2021, we were currently shooting for EUR 6 million-EUR million less CapEx than in 2019, despite the Romania investment.
Okay, regarding 2022, is it possible or is it too early to understand what could be the level of CapEx?
I would say it's a bit too early to give you accurate figures, but there is no reason that it should be higher than this year.
Okay.
This is the indication I can give.
Okay. Despite the Romanian plant.
Because Romanian plant, big investment have already been done this year and last year. I don't see a very different figure for next year, but I see a different composition. Of course, Romania will continue to have some CapEx, but I see a composition focused a lot on EV products already awarded. This is where we will go. I don't see a big delta versus 2021 amount.
Okay. Thank you. Thank you very much.
Thank you for your question.
The next question is from Martino De Ambroggi with Equita SIM. Please go ahead.
Thank you. Just a follow-up on the guidance, because you are guiding for return on sales in excess of 3.3%. It was 5% in the nine months. I don't know if you could elaborate a bit more on this, specifying what are the non-recurring items which are factored in your guidance this year. Frankly, I do not expect Q4 to be loss-making, to be just slightly above 3.3%. Just to have an idea of what do you include as non-recurring. If you can summarize what happened in the nine months, because you have many different positive and negatives which are non-recurring.
Sure. In fact, you are right. In the beginning of the year, in the first nine months, we had very positive non-recurring impacts. The first one, as we mentioned in the June presentation, a tax item that we settled in Mercosur, which is EUR 4.4 million. We settled also with the pensions for U.K., very old subject, about EUR 2.5 million. We had also in the first nine months, positive impact for exchange, EUR 2 million. We had reimbursement from insurance for fire that we had some years ago for EUR 2 million. You can see that in fact, in the first nine months, we had an alignment of non-recurring and non-operating positive effects. De facto, in fact, once you had EUR 2 million exchange impact positive in first nine months, we don't expect the last part of the year to be so positive.
Insurance, we don't have anything anymore to be reimbursed, and the tax and pension items were really one-off. In fact, one of the big delta between the first nine months EBIT you mentioned and the last part, is that we consider that we won't have any more of this kind of positive one-off impact in the last quarter. You are right, this year was an alignment of positive non-operating effects and one-off impacts in the first nine months.
Your guidance is including all of them, I suppose.
Our guidance, of course, is including the first nine months plus the forecast of the three months.
Yeah. Because at the end, my question would be, okay, in excess of 3.3%, but is it possible to have a narrower range for the full year?
Right now, I think due to all the uncertainty, as I have done until today, I have done it in June, I have done it in March, I would avoid to give very accurate percentage. I know it can be frustrating for you. Nevertheless, to give an accurate percentage nowadays with all the uncertainty, it's too unstable to give an accurate percentage. That's why I prefer to keep this recommendation and hope, as we have done until today, have a good news when we will be in front of you beginning of next year.
No, it's clear. I share your view. Okay. Thank you.
Without giving you a number, we are still shooting to beat 2019 by a fair margin.
Yeah. Really, I don't want you to think, all of you, that we don't want to give an amount. It's more that there are so much uncertainty that we are focusing on beating the market, doing all the actions, and we prefer to come with good news versus what we expected, rather than overshooting and then a bad surprise arrive. Right now in the current environment, the bad surprise could arrive each day, and we are facing them each day as we have done until today.
Okay. Thank you very much, Fred.
Thank you.
Gentlemen, there are no more questions registered at this time.
Thank you to everybody for your questions and attendance. Have a nice day, and thank you again. Bye-bye.
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