Results for the first half year 2016

7/28/2016

BREMBO: H1 2016 REVENUES UP 10.4% NET PROFIT +42.8% PROJECT FOR A NEW PLANT IN CHINA LAUNCHED

Compared to H1 2015:
• Revenues grew by 10.4% to €1,146.8 million (+12.2% on a like-for-like exchange rate basis)
• EBITDA +29.5% to €226.5 million; EBIT +42.9% to €173.3 million
• Net investments amounted to €113.2 million
• Net financial debt amounted to €259.4 million, slightly up compared to the first half of 2015 due to the significant investments made

H1 2016 results:
€ (million)	2016	2015	Change
Revenues	1,146.8	1,038.9	10.4%
EBITDA % on revenues	226.5 19.8%	175.0 16.8%	29.5%
EBIT % on revenues	173.3 15.1%	121.3 11.7%	42.9%
Pre-tax profit % on revenues	166.0 14.5%	117.8 11.3%	40.9%
Net profit % on revenues	127.1 11.1%	89.0 8.6%	42.8%
	30/06/2016	30/06/2015
Net financial debt	259.4	249.8	+9.6

Chairman Alberto Bombassei stated:

“The results achieved in the first six months of the year confirm the effectiveness of Brembo’s global expansion strategy. In fact, the Group continues to grow and strengthen its industrial footprint both in rapidly growing markets, such as China and India, and in the company's main markets, such as North America and Europe. However, I would like to highlight that Italy continues to be key to Brembo's plans. This is not only because our Research Centre, which is designing the future of the entire Group, is based in Italy, in the Kilometro Rosso Scientific and Technological Park, but also for the irreplaceable productions of the Curno and Mapello plants. Lastly, I would like to recall that in a few days’ time, construction work will start for the new manufacturing plant in Nanjing. Just two months from the finalisation of the acquisition of a 66% stake in Asimco Meilian Braking Systems, the new Chinese plant is a further, tangible sign of our determination to grow in this strategic market, and to position as a top player in this geographical area as well. Thanks to the expertise of the Brembo team, which concluded, amongst others, the work at the Homer site in the USA and at the Escobedo plant in Mexico — which is to be inaugurated by the end of 2016 — the Nanjing plant will be completed at a record speed and will be a centre of excellence in terms of process innovation and vertical integration.”

Executive Deputy Chairman Matteo Tiraboschi stated:

“Among the main indicators which, also in this half-year report, underline our Group’s operational and future solidity, I deem it appropriate to highlight the significant increase in margins and net profit. It should also be recalled that in the second half of the year, as forecast and previously announced, the ramp-up costs of the new American manufacturing sites will start to be incurred. The new investment on the Chinese industrial hub not only strengthens our commitment to this particular market, but also represents a new, important example of the ongoing development of the strategy through which Brembo intends to combine growth and solidity, global vision and local presence to support our customers in any country.”

H1 2016 Results

Brembo’s Board of Directors chaired by Alberto Bombassei approved the Group’s half-year results at 30 June 2016.

Brembo Group’s net consolidated revenues amounted to €1,146.8 million in the first half of 2016, up by 10.4% compared to the same period of the previous year. On a like-for-like exchange rate basis, revenues increased by 12.2%.

All market segments in which the Group operates positively contributed to the results of the reporting period, with the exception of the racing sector that declined by 18.1% due to the exit of Sabelt S.p.A. and Belt & Buckle S.r.o. from the consolidation area; on a like-for-like comparison, there was an increase of 5.6%. Car applications rose by 14.3%, commercial vehicles by 13.8% and motorbikes by 3.3%.

At geographical level, sales in Germany increased by 14.8%, in the United Kingdom by 22.2%, in France by 11.4% and in Italy by 1.0%. The positive trend of Asian countries continued in the period: India grew by 8.8% (+16.4% on a like-for-like exchange rate basis), China by 35.9%, also thanks to the €11.3 million contribution of Asimco Meilian Braking Systems (+15.9% on a like-for-like consolidation basis and +42.8% on a like-for-like exchange rate basis), and Japan by 24.5%. The North American market also performed well, with sales in the United States, Mexico and Canada up by 8.6%, whereas in South America (Brazil and Argentina) sales further declined by 27.6% (-0.5% on a like-for-like exchange rate basis), due to the continuing difficulties of the macroeconomic and market situation.

In H1 2016, the cost of sales and other net operating costs amounted to €734.0 million, with a 64.0% ratio to sales, down in percentage terms compared to the same period of the previous year (66.1% ratio to sales for €686.3 million).

Personnel expenses amounted to €192.2 million, with a 16.8% ratio to sales, down in percentage terms compared to the first half of 2015, when they were €181.5 million (17.5% of revenues). At 30 June 2016, workforce numbered 8,883, increasing by 1,016 employees compared to 31 December 2015, 657 of which due to the inclusion of Asimco Meilian Braking Systems in the consolidation area.

EBITDA for H1 2016 amounted to €226.5 million (EBITDA margin: 19.8%), up by 29.5% compared to the same period of 2015.

EBIT amounted to €173.3 million (EBIT margin: 15.1%), up 42.9% compared to H1 2015.

Net interest expense for H1 2016 amounted to €7.3 million (€3.5 million in H1 2015); this item includes interest expense amounting to €4.6 million (€6.9 million in H1 2015) and net exchange losses for €2.8 million (exchange gains of €3.5 million in H1 2015).

Pre-tax profit was €166.0 million (14.5% of revenues), compared to €117.8 million for H1 2015.

Based on the applicable tax rates, estimated taxes amounted to €38.6 million (€27.3 million in H1 2015), with a tax rate of 23.2%, stable compared to the same period of the previous year.

The reporting period ended with a net profit of €127.1 million, up 42.8% compared to €89.0 million for the same period of the previous year.

Net financial debt at 30 June 2016 amounted to €259.4 million, slightly up (€9.6 million) compared to 30 June 2015.

New €100 million investment launched for the aluminium caliper production facility in Nanjing

Brembo will build the new aluminium caliper production facility in Nanjing, China, near the current plant dedicated to the production of brake disks.The total planned investment amounts to about €100 million in the three-year period 2016-2018.

Construction work for the plant, which is expected to start production in early 2018, will begin in a few days and will be completed by the end of 2017. The new manufacturing hub will be at the forefront of process integration and automation.

The plant will extend on an area of about 40,000 square meters, have a casting capacity of over 15 thousand tonnes, and a total manufacturing capacity of over 2 million pieces a year (calipers and knuckles). The products manufactured in the new plant will be destined to leading European, Asian, and American OEM manufacturers with production plants in China.

When fully operational, the plant will employ 450 people and will contribute about €100 million per year to the Group’s turnover.

Foreseeable Evolution

Order book projections confirm a good revenue growth also for the second half of the year and allow us to look towards the coming months with cautious optimism. Moreover, it should be recalled that in the second part of the year the ramp-up costs relating to the new American and Mexican production facilities will start to be incurred.