Pininfarina reports that the value of car production decreased by 62.4% compared to 2008, due mainly to a sharp drop in orders for cars manufactured under contract for Alfa Romeo (Brera and Spider) and Ford, although with the former there was a late-year boost in production as it carried out assembly of the special-edition Alfa Brera Italia Independent (above).

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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