Brembo Reports Positive Turnaround

Brake manufacturer Brembo reports that its results for the first quarter of 2010 show a sharp improvement in all economic indicators.

Compared to first quarter 2009, revenues were up 24.4% to 244 million Euro, EBITDA went to 31 million Euro (up 79.4%), EBIT of 13.8 million Euro (up 13.5 million compared to 31 March 2009).

All figures in Euro.

The net result is 6.7 million Euro, up 14 million Euro compared to 31 March 2009, which showed a loss of 7.3 million.

Brembo Group’s revenues for the first quarter grew 24.4% to 244 million, thanks to newly acquired businesses.

In the first quarter of the year, the newly acquired foundry of Nanjing (Brembo Nanjing Foundry Co. Ltd.) was consolidated for the first time; on a like-for-like basis the revenue increase would have amounted to 22.4%.

Growth was influenced positively by the sectors of car applications (+36.9%) and commercial vehicles (51.6%), also due to the comparison with a particularly difficult first quarter 2009.

The motorbike sector decreased 2.5%, whereas the passive safety and racing sectors continue to be affected by the difficult economic context and fell 30.7% and 15.9%, respectively.

At geographical level, in Europe the United Kingdom (+44,1%) and Germany (+28.1%) performed well, also in this case favoured by a comparison with the sharp decreases reported in the first quarter of 2009. France and Italy showed more limited growth of 7% and 0.8%, respectively.

Results in emerging countries were satisfactory: China +110.6% also due to the change in the consolidation area, India +31.8% and Brazil +49.9%.

Also the countries of the NAFTA area performed well, growing 39.9%.

During the first quarter, the cost of sales and other net operating costs amounted to 159.4 million, with a ratio of 65.3% to sales, as against 66.9% for the same period in the previous year. The improvement was linked to the recovery of sales on the one hand and the maintenance of a strict cost control on the other.

Development costs capitalised as intangible assets amounted to 2.9 million, substantially unvaried compared to the first quarter of 2009.

Personnel expenses amounted to 53.7 million, or 22% of revenues, down compared to the same period of the previous year (24.3%).

At 31 March 2010, Brembo employed 5,749 staff (5,417 staff at 31 December 2009 and 5,597 at 31 March 2009). The increase compared to 2009 is linked to the acquisition of the foundry in China.

EBITDA for the quarter totalled 31 million (12.7% of revenues), compared to 17.3 million (8.8%) for the first quarter of 2009.

EBIT was 13.8 million, or 5.6% of revenues, compared to 0.3 million for the first quarter of 2009 (0.2%), after depreciation and amortisation of 17.2 million ( 16.9 million for Q1 2009).

Net interest expenses amounted to 3.6 million (6.3 million in Q1 2009) and consist of exchange rate losses of 1.7 million (2.1 million in Q1 2009) and net interest expenses of 1.9 million (4.2 million in Q1 2009). The sharp fall in net interest expenses (-52.6%) is due to the lower level of average debt and to the reduction in the rates applied.

Income before taxes was 9.7 million, as against a loss of 5.9 million for the first quarter of 2009.

Based on tax rates applicable for the year under current tax regulations, estimated taxes amounted to 3.2 million (1,7 million in Q1 2009). The tax rate for the quarter was 33%.

The period ended with a net income of 6.7 million, compared to a net loss of 7.3 million for Q1 2009.

Net debt at 31 March amounted to 269.8 million, compared to 255 million at 31 December 2009 and 345.6 million at 31 March 2009. The slightly worsened net financial position compared to the end of 2009 was mainly linked to the acquisition of the Chinese foundry (about 8 million) and the seasonal nature of the business.

Leading credit institutions recently approved medium/long-term loans, which enable Brembo to bring the long-term portion of debt to over 70% of total debt.

Significant events after 31 March 2010

On 27 April the General Shareholders’ Meeting of Brembo voted, among other, on:

– The approval of the Annual Report of Brembo SpA for the year ended 31 December 2009 (and looked over the Group Consolidated Annual Report, that reported revenues of  825.9 million and a net profit of  10.5 million)

– the distribution of a gross dividend of 0.225 per outstanding share, excluding company’s own shares.

Outlook

During this first quarter of the year, the global scenario was less critical than in the first quarter of 2009, although there continues to be a great degree of uncertainty surrounding the evolution of the economic situation.

Within this scenario, Brembo expects a better performance, in terms of sales and margins, than in the previous year, also thanks to the positive signs from the BRIC markets, and will continue to take strict measures aimed at limiting working capital and containing costs.