Letter to the Shareholders


Another record year for the company!

We started with exactly the same words last year too. With great pride, we repeat ourselves. In 2015, Interpump Group achieved the best results in the history of the Group, confirming the trend established over the previous 5 years. Net sales have almost doubled during this period, from 472 million euro in 2011 to 895 million euro in 2015. More importantly, EBITDA has also practically doubled, from 95 to 180 million euro. Despite the acquisition of numerous companies with margins lower than the Interpump Group standards EBITDA margin remained at 20.1%, demonstrating the ability of the Group to absorb the new companies and improve their profitability, thus creating value with respect to the price paid for their acquisition. The Group intends to keep pursuing the same strategy over the coming years.

However, there is an even more important aspect of this growth that makes the Company not just larger, but even more solid and reliable.

While strengthening the Group's presence in established markets and businesses, the acquisition of new companies also opens up new markets and businesses that are both full of potential and highly innovative. These new opportunities constantly lower the exposure to business-cycle risks and enhance the Company's ability to grow.

In order to optimize this growth, a rationalization process is also needed. Accordingly, 2015 was also an important year in terms of operational rationalization in acquired companies. This involved intensive work in the countries where the Group's presence has grown the most, in order to strengthen the local competitive positioning and sales organizations. This was especially the case in Brazil, Bulgaria and Romania, while the grounds were set for further optimization during 2016 in India, China, South Africa and other countries. In addition, 4 companies were absorbed in Italy as part of the ongoing streamlining of the group structure.

As a result of this intensive activity and our strong competitive position, the Company achieved the following results:
- Sales rose by 33.2% compared to 2014 (+8.9% on a like-for-like basis). Analysis by business sector highlights a 41.4% sales increase in the Hydraulic Sector (+5.0% like for like) and 21.3% sales growth in the Water Jetting Sector (+14.6% like for like);
- EBITDA reached 180.3 million euro, equivalent to 20.1% of sales. In 2014, EBITDA was 136.1 million euro (20.3% of sales): a year-on-year increase of 32.4%. On a like-for-like basis, EBITDA grew 10.6%;
- Free cash flow more than doubled reaching 85.2 million euro (38.3 million euro in 2014);
- Net profit of 118.3 million euro was also more than double the 57.7 million euro reported in 2014, partly as a result of non-recurring income amounting to 32.0 million euro.

The Group invested 145.2 million euro in acquisitions during the year, along with 27.7 million euro in fixed assets to keep up with technological change. A further 32.7 million euro was spent to buy treasury shares. Despite this total investment of 205.6 million euro, net financial indebtedness rose from 152 million euro to just 255 million euro, thus confirming the ability of the Group to generate liquidity. With a financial leverage ratio (financial indebtedness to EBITDA) of just 1.4, the Group is well positioned to look at the future with peace of mind.

External growth

Four acquisitions were made in 2015.

Without a doubt, the most important of these was the Walvoil Group. The Walvoil Group, based in Reggio Emilia (Italy), is one of the key international players in the production and sales of hydraulic valves and directional controls. 2015 sales of the Walvoil Group totaled 145.2 million euro, with a consolidated EBITDA of 24.1 million and net indebtedness of 15.1 million. The final contractual price for the purchase of 100% of the Walvoil Group was 116.1 million euro. Interpump sees the Walvoil acquisition as highly strategic because it:
- places Interpump among the top international players in hydraulic directional controls, which are of strategic importance in industrial hydraulic circuits;
- strengthens the Group's presence in the sizeable agricultural applications sector;
- consolidates and expands presence on international markets thanks to Walvoil's production and commercial operations;
- extends the potential synergies with Interpump's Hydraulic Sector operations because Walvoil has production companies in the US, India, China, Brazil and South Korea, and sales operations in France and Austria.

Albeit smaller, the acquisitions of Inoxihp, Bertoli and Osper (Brazil) were also of strategic importance.

Inoxihp S.r.l., based in Nova Milanese (Italy), produces high- and very-high-pressure water installations, with a leadership position in applications for the steel industry, which strengthens the Group’s presence in the sector. Inoxihp’s 2015 sales amounted to 10.8 million euro, with EBITDA in excess of 31% of sales and liquidity of 1.4 million euro. The price for the purchase of 52.72% of Inoxihp was 8.6 million euro.

Bertoli S.r.l., based in the province of Parma (Italy), is a world leader in the design and construction of high-pressure homogenizers with piston pumps, primarily for the food sector, but also for chemicals and cosmetics. Bertoli’s 2015 sales totaled 12.7 million euro, with EBITDA of about 23% and liquidity of 1.9 million euro. The price paid for 100% of Bertoli was 7.3 million euro. This acquisition allows Interpump to enter new markets, such as food processing and pharmaceuticals, which offer vast potential for future growth.

Osper, based in Caxia do Sul (Brazil), is a leading Brazilian company in the production and sales of power take-offs and hydraulic cylinders. The price agreed for the purchase of 100% of Osper was BRL 21.7 million (approximately 5 million euro). The purchase of Osper makes Interpump the Brazilian market leader in the power take-off sector.

Strategies for 2016 and future years

Interpump Group intends to keep pursuing the current growth strategy. Aside from remunerating the shareholders, all resources generated will be employed for internal growth and acquisitions. This is consistent with the history of the Group, which has successfully made more than 30 acquisitions since the stock exchange listing in 1996. In addition to its ‘traditional’ acquisitons, Interpump has embarked on a plan to strengthen the Group's direct presence in various international markets by purchasing local sales organizations, with the aim of improving geographic coverage.

The financial resources needed for acquisitions are guaranteed by the Group's high level of liquidity, low financial leverage and high free cash flow generated.

The essential prerequisite to continue with our external growth strategy is a stringent control of costs and finance management in order to maximize the generation of free cash flow.


The Board of Directors has proposed that the shareholders' meeting distribute a dividend of 19 euro cents per share (18 euro cents in the prior year).
If approved, the dividend will be payable on May 25, with May 23 as the ex-dividend date (record date May 24).

Thank you for the trust you have put in Interpump Group S.p.A. Through the efforts of all our personnel and my own personal commitment, it is my conviction that the Group will continue to generate adequate resources for growth and increase its value for the benefit of all our shareholders.


Cordially yours,

Sant’Ilario d’Enza (RE), April 2016



Fulvio Montipò

The manager responsible for preparing company accounting documents, Carlo Banci, declares, pursuant to the terms of section 2 article 154-(2) of the Italian Consolidated Finance Act, that the accounting disclosures in this document correspond to the documentary evidence, the company books and the accounting entries.

Sant’Ilario d’Enza (RE), April 2016