Letter to the Shareholders

Dear Shareholders,

in 2016, for the seventh time in a row, we closed the year with record results: net sales registered 923 million euro, and EBITDA soared to 198.5 million euro. These results are doubly satisfactory since they were obtained in a weak year for the majority of our reference markets.

The increase is not only in quantity but also in quality: the ratio between EBITDA and sales has gone up, a commendable result of the never-ending optimization in acquired companies, and streamlining of the Group’s structure.

Year after year, we keep widening the range of hydraulic components in our portfolio and enlarging the potential market; we are strengthening our direct presence in many nations (also through the acquisition of Mega Pacific, formerly our distributor for Oceania); we increase diversification among application markets, the most effective defense weapon against cyclicality in the economy. We started a promising cross-selling activity, offering a more complete range of the Group’s products to customers of newly acquired companies.

Among the several corporate transactions of the year, two are worth highlighting: the merger of Bertoli S.r.l. into Interpump Group S.p.A., which represents the fulfillment of the industrial integration achieved in the previous months; and especially the merger between Hydrocontrol S.p.A. and Walvoil S.p.A., which gave birth to one of the world’s major players in hydraulic directional control valves (DCVs), with increased rates of growth and profitability compared to the pre-existing companies.

Despite the unfavorable market trends, especially as a consequence of the ongoing crisis in Oil&Gas and the pre-election freezing of investments in the US, and despite an adverse effect of foreign exchange rates, the following results have been achieved in the course of the year:

- Sales went up 3.1% compared to 2015 (-0.3% at unchanged perimeter). Analysis by sector shows an increase of 6.5% for Hydraulics (+1.8% at unchanged perimeter) and a decrease of 2.6% for Water-Jetting (-3.8% at unchanged perimeter);
- EBITDA reached 198.5 euro million, or 21.5% of sales. In the previous year, EBITDA was 180.3% or 20.1% of sales. The increase of EBITDA in absolute terms was 10.1% (6.7% at unchanged perimeter);
- Free cash flow, after the jump to 85.2 million euro registered in 2015, was further increased to 89.9 million euro;
- Net income was 94.5 million euro, 9.5% above the normalized result of 2015 of 86.3 million euro (as a reminder, the consolidated result last year was 118.3 million euro, of which 32 million euro represented a one-off financial income).

In the course of 2016, the Group invested 39.5 million euro in acquisitions, 34.1 million euro in property plants and equipment to maintain its technological edge, and 43.3 million euro in acquisition of treasury shares. Despite these 116.9 million in investments, the net financial position was substantially unchanged, demonstrating the powerful cash generation capability of the Group. Financial leverage, measured as the ratio of debt over EBITDA, was 1.3 times, a very comfortable starting point for the years to come.

External growth

Four acquisitions were made in 2016, all of them in the Hydraulic sector.

Endeavour (Hydralok brand), headquartered in Bath UK, manufactures machines and systems for the crimping of hydraulic hoses. Thanks to this acquisition, the Interpump Group is now able not only to sell the machines, but also to assemble and sell fitted hoses – a significant after-market activity – through all its branches worldwide.

The price paid was 1 million UK pounds; the company had net cash for 0.2 million pounds, sales in the previous FY were 1.9 million pounds, with an EBITDA margin of 16%.

Tubiflex S.p.A., headquartered in Orbassano near Turin, Italy, produces and manufactures flexible metal and non-metal hoses, metal expansion joints, metal bellows, corrugated hose heat exchangers, special products. The main industrial applications are: aerospace, shipbuilding, railways, air conditioning, medical equipment, energy generation, steelworks and petrochemical. The acquisition of Tubiflex enabled Interpump to enter new application markets, strengthen its presence in the wide market of hoses, and foster significant commercial synergies combining metal flexible hoses to the rubber hoses already produced by IMM.
The price paid (for 80% of Tubiflex) was 21.6 million euro plus 449,160 Interpump shares. The company had net cash for 3.9 million euro; sales in FY 2015 were 22.8 million euro, with an EBITDA margin of 23.4%.

Tekno Tubi S.r.l., headquartered in Sant’Agostino near Ferrara, Italy, operates in bending and assembly of rigid pipes in steel and other metals, and assembly of fitted flexible hoses in rubber or other plastic materials for hydraulics and automotive. The acquisition marks a further strengthening of Interpump’s presence in the market, adding rigid pipes to the flexible hoses already produced by IMM and Tubiflex.
Price paid was 4.1 million euro. Sales in the previous FY were 11.2 million euro, with an EBITDA of 1.4 million euro and a NFP of 4.5 million euro.

Mega Pacific Pty is one of the largest distribution companies for hydraulic products in Oceania, with 7 branches across Australia and New Zealand. With this acquisition, the Interpump Group makes a giant leap forward in its organized presence in the Oceanian countries.
The price paid was 12 million AUD, with sales in the previous FY of 20.5 million AUD, and an EBITDA margin of 19.5%.

Strategies for 2017 and future years

Interpump Group plans to keep pursuing the same growth strategy. All resources generated after shareholders’ remuneration will be employed for growth, both organic and through acquisitions, in line with the track record of the Group, which features dozens of successful acquisitions since its listing on the Stock Exchange in 1996.

The availability of financial resources is guaranteed by the high level of liquidity, low financial leverage, and strong generation of free cash flow, maximized – as usual – by stringent cost control and prudent finance management.


The Board of Directors has proposed that the shareholders' meeting distribute a dividend of 20 euro cents per share (19 euro cents in the prior year).

If approved, the dividend will be payable on May 17, with May 15 as the ex-dividend date (record date May 16).

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 its growth and, as a consequence, for the increase in its value.


Cordially yours,

Sant’Ilario d’Enza (RE), April 2017



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 2017