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Pininfarina
has announced its full year financial results with
production contracting by 62.4 percent and parts of its
business sold off, however the firm believes it has
turned the corner and that the results are in line with
the company's financial plans.
The 2009
preliminary year-end data of the Pininfarina Group are
consistent with the projections of the Financial Plan
adopted by Pininfarina S.p.A. in accordance with the
Framework Agreement signed with the Lender Institutions on
December 31, 2008. Consequently, the consolidated operating
and financial results reviewed by the Board enabled the
Group to comply with the covenants of the Rescheduling
Agreement currently in effect. The capital increase
successfully carried out by Pininfarina S.p.A. in the summer
of 2009 produced a stronger shareholders’ equity and
improved the net financial position of the Company and the
Group.
In 2009, the
value of production decreased by 62.4% compared with amount
reported in 2008, due mainly to a sharp drop in orders for
car manufactured under contract for Alfa Romeo and Ford and
to the absence, in 2009, of vehicles produced under a
contract with Mitsubishi that ended in July 2008. Despite
such a significant shortfall in business volume, the Group
reported positive EBITDA and a substantially smaller EBIT
loss. A positive result from operations, combined with the
beneficial impact of net financial income and a net positive
contribution by the companies consolidated by the equity
method, enabled the Group to cut by 85% the large net loss
it reported in 2008.
EBITDA were
positive, reflecting the effect of regained profitability at
the operating level and the impact of extraordinary
transactions involving the sale of manufacturing operations
to De Tomaso Automobili S.p.A. and of the Grugliasco plant
to S.I.T. (Piedmont regional Administration), both executed
on December 31, 2009. In order to understand more clearly
the substantial improvement in EBIT, it is helpful to
differentiate between operating losses and extraordinary
writedowns. Accordingly, the loss of 35.9 million euros
reported in 2009 can be broken down into operating losses of
25.5 million euros and write downs required by the
impairment test totaling 10.4 million euros, which were
recognised mainly to reflect expectation of reductions in
the volumes projected under the Alfa Romeo and Ford
contracts until their expiration.
The loss from
operations was 57% smaller than the loss of 58.8 million
euros reported at the end of 2008, while write downs of
financial receivables and other assets decreased from 119
million euros in 2008 to 10.4 million euros in 2009, as
mentioned above. Financial transactions generated net
financial income of 3.1 million euros, as against net
financial expense of 21.6 million euros in 2008. The switch
from a negative to a positive balance in this account is due
the beneficial impact of the Rescheduling Agreement signed
with the Lender Institutions on December 31, 2008, pursuant
to which no interest payments are due on the remaining debt
until 2012, and reflects the Group’s ability to maintain a
balanced cash flow and, consequently, hold an adequate level
of liquidity. The contribution of the Pininfarina Sverige
joint venture was positive by 4 million euros (4.3 million
euros in 2008), while the consolidation of Véhicules
Electriques Pininfarina Bollorè had a negative impact of 1.7
million euros (charge of 6.4 million euros in 2008).
The loss for the
year, after taxes of 0.2 million euros (2.6 million euros at
December 31, 2008), amounted to 30.7 million euros, compared
with a net loss of 204.1 million euros in 2008. The
implementation of the second phase of the Framework
Agreement signed with the Lender Institutions on December
31, 2008, which enabled Pininfarina S.p.A. to increase its
share capital through a rights offering carried out in the
summer of 2009, is the main reason for the substantial
improvements that occurred in shareholders’ equity, which
increased by 38.7 million euros, and in the net financial
position, which, while still negative by 43.7 million euros,
was significantly better than at the end of 2008, when the
negative balance was 100.1 million euros. To a large extent,
the comments provided when reviewing the consolidated data
are also applicable to those of Pininfarina S.p.A.
There were no
new developments concerning the dispute with Mitsubishi
Motor Europe, however in good news for the company,
Pininfarina has reported that it has won its tax appeal. The
Regional Tax Commission has ruled that the VAT assessment by
the Turin Revenue Office was unlawful and concurred with the
argument that Pininfarina S.p.A. put forth. The focus of the
dispute was the contention that VAT should have been levied
on the amounts invoiced in 2002 and 2003 by Industrie
Pininfarina S.p.A. (merged into Pininfarina S.p.A. in 2004)
to Peugeot Citroen Automobiles, whose tax representative in
Italy was Gefco Italia S.p.A. On December 14, 2007, the
Turin Internal Revenue Agency served on the Company two
notices of assessment for additional VAT owed for 2002 and
2003, amounting to 17.7 million euros and 11.7 million euros,
respectively. The total amount that the Turin Internal
Revenue Agency claimed the Company owed for the two years in
question (including taxes and penalties) was about 69.5
million euros.
According to
Pininfarina: "Projections for 2010 call for value of
production to decrease by about 20%, compared with the 2009
preliminary year-end data, and for a further significant
reduction in the operating loss and net loss. The net
financial position is expected to show a balance in line
with the amount reported in 2009. In any case, the
projections for 2010 are consistent with those of the
Industrial Plan and should enable the Group to comply with
the covenants of the agreements currently in effect with the
Lender Institutions."
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