Financial Overview

(in million euros)

	FY2009	FY2008	Rate of change (%)	Factors
Overall
Sales	781.0	1,017.5	(23.2)	-
Filtration Division
Sales	414.8	497.5	(16.6)	1)
Operating income	22.1	43.2	(48.8)	2)
Suspension Components and Precision Spring Division
Sales revenues	368.0	521.9	(29.5)	3)
Operating income	15.0	47.5	(68.4)	-

Factors
1)
Filtration Division
-In 2009, the Division recorded a decline in consolidated sales of 16.6%, achieving 414.8 million euros compared to the 497.5 million of 2008, with a greater fall in Europe (-20.8%) than in South America (-8.7%). The contraction mainly originated from the original equipment segment (-27.4%) which, in addition to the aforementioned decreases in production, suffered an unfavourable change in the mix (lower volumes of components for high range and diesel fuelled vehicles). The aftermarket segment posted decreased revenues both in the original equipment spares (-16.1%) and in the independent segment (-8.4%).

2)
-Profitability fell due to the reduced volumes of business and the high costs incurred for reorganisation. The operating profit was equal to 22.1 million euros, down by 48.9% on the 43.2 million of the previous year, with the impact on sales falling from 8.7% to 5.3%.

3)
Suspension Components and Precision Spring Division
-The presence in the industrial vehicles segment and the absence of significant activity in aftermarket sector led to a reduction of the Division’s consolidated sales which stood at 368 million euros compared to the 521.9 million of 2008 (-29.5%). The biggest decline was experienced in the European market (-23.1%) and the North American market, where in July production activity terminated (-46.7%), in industrial vehicles (-51.6%) and precision springs (-37.3%). For the first time in recent years the raw material steel did not experience price increases in the European market and it was substantially possible to avoid reducing of the sales prices. Despite this, the considerable fall in volumes of demand led to a decline in profitability, notwithstanding the drastic cutting of costs.

R&D Expenditure

(in million euros)

	FY2009	FY2008	FY2007
Overall	18.5	20.5	21.7

Capital Expenditure

(in million euros)

	FY2009	FY2008	FY2007
Overall	22.6	41.1	35.9

-In 2009, the necessary investments were made for partial reconversion of the West Virginia (USA) plant from the previous activity in the suspensions segment to the production of filters for the customer Ford and, from year end 2010, for Fiat-Chrysler vehicles which will use multiair engines. Installations were also completed in the Shanghai plant.

-Also in 2009, investments continued for the project to create suspension products in alternative materials to steel. The new composite material components were presented to a number of important European manufacturers, of both cars and industrial vehicles, which confirmed a strong interest in the Company’s proposal.

-The main investments are reported in the subsidiary Allevard Rejna Autosuspensions S.A. for converting production lines of stabiliser bars to cold technology, in the subsidiary Shanghai Sogefi Auto Parts Co. Ltd for the new stabiliser bar production line, in the subsidiary ISSA S.L. for automation and rationalisation of the production layout, in the subsidiary S.ARA Composites S.A.S. for development of a spring prototypes line in composite material and in the subsidiary Allevard Sogefi U.S.A. Inc. for converting the plant to filter production. Numerous other smaller investments were made during the year, which focused on upgrading production plants and production layout and developing new products.

-The most important projects invested in 2009 include investments in the subsidiary Sogefi Filtration Ltd for internal development of new technologies and optimisation of machinery transferred from the Mantova plant, in the subsidiary Allevard Molas do Brasil Ltda for a new line of stabiliser bars manufactured using the cold process, for increasing production capacity and improving production layout, in the subsidiaries Filtrauto S.A. and Allevard Rejna Autosuspension S.A. for development of the equipment required for manufacture of new products and in the subsidiary Allevard Sogefi U.S.A. Inc. for converting the plant to filter production.