Good morning. This is the conference call operator. Welcome and thank you for joining the Sogefi First Half 2025 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. Olivier Proust, Chief Financial Officer. Please go ahead, sir.
Hi, everybody, and thanks a lot for joining this call. As usual, I will make a quick introduction. You have already expressed the need that we could meet on Friday for the presentation, so it will be a very short introduction, and then we will jump immediately to the Q&A. Talking about our performance, in the first half of 2025, we are in line with our forecasting expectation, i.e., we have a 3% decline in revenue, compared to the first half of 2024, down 1.2% at constant exchange level. This was expected. Nevertheless, the group achieved improved operating results and higher profit from continuing operation compared to the first half of 2024. Our EBITDA amounted to EUR 16.5 million. That's from EUR 67 million in the first quarter of 2024, with the margin rising to 13.7% from 12.8%.
The EBIT is at EUR 22.7 million compared to EUR 27.8 million in 2024, with an EBIT margin up to 5.3%. As a result, our net profit from ongoing operation amounted to roughly EUR 20 million compared to EUR 11 million in 2024, thanks to lower financial expense, following the repayment of our debt last year. The free cash flow from continuing operation amounted to EUR 15.2 million compared to EUR 21 million in 2024. I remind you that in 2024, we had non-recurring positive cash flow related to the settlement of the intercompany payable with our Filtration Business unit prior to the sale. Our net debt at June 30, after the payment of roughly EUR 18 million in dividends, amounted to EUR 19 million, excluding IFRS 16, EUR 59 million if we include IFRS 16.
We are a little bit higher than December 2024, but due to the fact that we made a distribution of EUR 18 million in the first semester. Pretty in line with, very in line with our forecast. I will not expand on the second quarter, which reflects the same comments. I'll immediately jump to the tariffs, the big topic of this first semester. As already explained, Sogefi is not directly significantly impacted by direct impact with regards to the spreads. We are a local producer. We are producing in Europe for Europe, China for China, and NAFTA for NAFTA. The direct impacts are not significant at present.
The point is that this commercial, which might be much spent for, even what has been spent over the last few days, the impact for Sogefi could be only indirect due to, if any, a drop on sales due to the increase of the car price on the U.S. market. For the time being, we haven't seen such a drop. We are not forecasting a huge drop, but it's extremely difficult to predict what will happen. This group is exposed to indirect impact, if any, but direct impacts are not significant. Based on this, what is our outlook for the last semester? Sogefi confirms its forecast for 2025, expecting a mid-single-digit revenue to decline and an EBIT margin to grow slightly compared to what we recorded in 2024.
As stated, these forecasts do not factor in the effects of the ongoing trade war on the global economy and automotive production, as such impacts are difficult to predict. However, a sharper decline in sales than currently anticipated in the same month cannot be ruled out. Sogefi, as we did in the past, is ready to face any potential crisis. Okay, that was for my introduction. I hope it was clear. If you don't mind, we can jump now to the Q&A.
Thank you, sir. 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 a receiver when asking questions. The first question comes from Monica Bosio of Intesa Sanpaolo.
Good morning, all. I hope you can hear me well. I have two questions. The first is on the free cash flow. Can you just help to figure out what free cash flow are you expecting for the full year 2025? If you can indicate us the level of sector streams for the year. The second question relates to Suspension. What margins do you see for the final year for Suspension? What could be the margins on a sustainable basis? Still on Suspension, what are the margins that you are looking for for the Romanian plants? Would it make sense to transfer part of this reduction brought to the Romanian plants and thus achieving a good efficiency level? The very last question is on the customer mix in the Heavy Duty segment. Can you elaborate a little bit on this? Thank you very much.
Okay. Thanks a lot, Monica. Regarding the question, our guidance was and remains a perseveration between EUR 15 million and EUR 18 million per year, as taken into consideration our current level of capital. That's our guidance, and we will remain on this, not taking into consideration, of course, the dividend distribution. With regards to Suspension, let's say that we are progressing well in Suspension, improving our margin in a positive way. As said already in the past, we are expecting a double-digit margin on the EBITDA. The Romanian plant will reach our level of expectation in the coming months. It's not already done, but we are in a good direction. I cannot expand on your question with regards to transfer of production to Romania, but I think that we demonstrated in the past that we know how to reallocate production in the proper way. You can understand that I cannot expand.
Thank you. Can we expect that Suspension will keep the margins already achieved in the first half? That's a factor. If you can remind me the factoring, the expected factoring for 2025, and the last one, the customer mix on the Heavy Duty.
Yeah, sure. We improve the margin of Suspension, and we will continue to improve the margin of Suspension. That's for answering your question. With regards to the customer mix in the Heavy Duty segment, we are working on new potential areas in Heavy Duty. We can target the defense sector. We can target the railways. That's something we are working on. It's a little bit too early for talking about a shift of our customer mix in Heavy Duty. For sure, there is room for a kind of diversification.
Okay. Thank you, Olivier. The factoring for the full year?
Oh, factoring for the full year. Sorry. My bad. Factoring at the end of December will be a little bit lower than what we have at the end of June. It's always a bit higher at the end of June than December, simply due to the fact that we have much more sales in May and June than in November and December. Factoring is a kind of a ratio on our sales. Okay. We do not expect an increase of the factoring by the end of the year. It will be proportionally in line with what we have in June, so i.e., a slight reduction.
Thank you very much, Olivier. Thank you.
You're welcome.
The next question is from Martino de Ambroggi at Equita.
Thank you. Good morning, everybody. The first question is on the Argentina contribution. Just to understand, is it possible to have an idea of what could be the contribution in the second half? Because it was a major contributor to the Suspension improvement, because I suppose it is 100% for suspensions. You mentioned free cash flow EUR 15 million, EUR 18 million. Could you remind us what is the CapEx assumption? In terms of pre-buy, did you benefit from pre-buy in North America? Still on duties, did you receive any requests from customers in terms of additional price pressure? Nothing happened?
With regards to Argentina, yes, Argentina is fully on Suspension. We have the benefit from Argentina in the first semester. We are in a good shape in Argentina. We have a very efficient plant there. We have a strong customer. There is no reason to foresee a slowdown in Argentina for the second semester. Suspension has got to benefit from Argentina. The economic situation of Argentina is much better than growth. We have been able to repatriate part of our cash from there. The situation is just normal, but going towards something more business-friendly. With regards to our CapEx, I just have an issue with my speaking notes here. We expect something around EUR 80 million in 2025, EUR 80 million, compared to EUR 70 million in 2024. I forgot your third question.
Was it you benefited from pre-buy in NAFTA region, and if there was any price pressure that had come in because of tariffs and so on?
I forget it because we are always under price pressure. Every month, every six months, our customer push, push on price. We are used to this. I remind you that we are not a commodity producer. Our products are specific, so we are able to relieve to this price pressure, and we do not foresee a deterioration of our margin due to a price war, especially in NAFTA.
Did you benefit from pre-buy in North America?
Pre-buy? No, that's not something which is significant. What do you mean exactly by pre-buy?
Just anticipation of orders because of the tariff start. We haven't seen for sure. We can suspect, but we haven't seen a massive increase of the inventory due to the tariffs.
Okay. Thank you, Olivier.
You're welcome.
As a reminder, if you wish to register for a question, please press star and one on your touch-tone telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is a follow-up from Mr. Martino de Ambroggi of Equita.
Thank you. Olivier, you mentioned the railways, defense, new potential businesses, and this kind of thing. Is this something that could materialize, at least in terms of orders in 2026 or maybe later?
Later than 2026. Maybe the first round in 2026. If you have something significant, it will be later. As a reminder, we are not a commodity producer. That means that when we have a positive answer in Q, we usually have 12 to 18 months of development. We can have an increase due to what we already have in portfolio, but the new business impact will be late 2026 or 2027.
Okay. Depending on restructuring, they were very, very small in the first half. What is included in your guidance? Your guidance is on the adjusted EBITDA, so including the restructuring.
Including restructuring.
Including. Okay.
Yes.
What is the assumption included in your guidance for the restructuring line?
We'll send the whole as well, that too.
Yes, if I remember correctly.
Yeah.
Okay. Thank you.
The next question is from Andrea Todeschini of Banca Akros.
Good morning, everyone. Thank you for taking my questions. We're already going through a lot. We're talking from my colleagues. I just have a quick question regarding Precision Springs Division. If I remember correctly, you didn't say that you do not consider virtualization, of course, to be covered within the Suspension business. I was wondering if you might be considering disclosing a bit because, if I remember correctly, this is going to incorporate probably three dedicated clients. It would actually be quite easy to spin off if someone would want to. Is it something that the company has or might consider in the future? Thank you.
I cannot answer to the question. I just said that Precision Springs is not strategic for us. We can, of course, estimate any potential opportunity. It's the only thing I can say. It's not strategic.
All right. Yes, you've been clear. Thank you.
The next question is a follow-up from Monica Bosio of Intesa Sanpaolo.
Okay. Hello. Sorry. I was cut off from the call for a while, but I don't know if someone else has already asked. Looking at the second half, what performance did you expect in North America in the second half? I'm asking this because in the first half, the company materially overperformed the market. Just a flavor on what are you expecting. Are you still expecting to keep outperforming the North American market in the second part of the year?
We are quite confident with our guidance, i.e., a slight decrease in our sales and a bit in line with, in line or slightly better with what we did in 2024. It is extremely difficult to forecast anything with regards to the volumes in North America. We are ready to have any potential events come later.
Oh, okay.
Let's expand on this prediction.
Oh, okay. No problem.
Always cautious.
Thank you, Olivier.
You're welcome.
Thank you.
Once again, if you wish to ask a question, please press star and one on your touch-tone telephone. For any further questions, please press star and one on your telephone. Mr. Proust, there are no questions registered at this time.
You're allowed. I'll talk to you again at the next call.
Thanks a lot. Bye.
Bye.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.