Q3 2016 Results

11/7/2016

Brembo: revenues at 30 September 2016 up 10.6% to €1,713.7 million, EBITDA at €337.1 million (+26.3%), EBIT at €254.1 million (+37.8%). Expansion of the polish plant in Dabrowa planned in view of a strategic project for Daimler

Compared to the first nine months of 2015:

• Revenues grew by 10.6% to €1,713.7 million (+11.8% on like-for-like consolidation and exchange rate basis) .
• Good margin performance: EBITDA +26.3% to €337.1 million; EBIT +37.8% to €254.1 million.
• Net profit +40.9% to €186.2 million.
• Net investments totalled €175.6 million.
• Net financial debt slightly decreased compared to 30 June 2016, to €256.6 million

Results at 30 September 2016:

(€ million)	2016	2015	Change
Revenues	1,713.7	1,549.1	+10.6%
EBITDA % on revenues	337.1 19.7%	266.8 17.2%	+26.3%
EBIT % on revenues	254.1 14.8%	184.4 11.9%	+37.8%
Pre-tax profit % on revenues	242.3 14.1%	178.6 11.5%	+35.6%
Net profit % on revenues	186.2 10.9%	132.1 8.5%	+40.9%
	30.09.16	30.06.16
Net financial debt	256.6	259.4	-2.8

Q3 2016 results:

(€ million)	2016	2015	Change
Ricavi	566.8	510.2	+11.1%
EBITDA % sui ricavi	110,6 19.5%	91.9 18.0%	+20.3%
EBIT % sui ricavi	80.7 14.2%	63.1 12.4%	+28.0%
Utile pre-tasse % sui ricavi	76.3 13.5%	60.8 11.9%	+25.4%
Utile netto % sui ricavi	59.1 10.4%	43.2 8.5%	+37.0%

Chairman Alberto Bombassei stated: “We are very satisfied with the good results we were able to achieve also in the third quarter of 2016. The double-digit growth further confirmed the efficacy of our global strategies focusing on investment and ongoing process and product innovation in Italy and in all the countries where we operate. I am particularly pleased - just a few days after the inauguration of the new Mexican plant in Escobedo and the laying of the foundation stone of the adjacent foundry - to announce a significant expansion of the plant in Dabrowa, Poland. Along with the completion of the new U.S. plant in Homer, this constant evolution of Brembo’s industrial and production capacity through the addition of cutting-edge plants projects the Company into a future of strong geographical consolidation and growing collaborative dynamism with our clients throughout the world.”

Executive Deputy Chairman Matteo Tiraboschi stated: “Among the most positive aspects of the results approved today, I think it is important to emphasise the ability of the business to generate cash in support of the new cycle of strategic investments. Besides the construction of the new plants in Mexico and Poland, the investment plan we launched in the quarter just ended envisages the completion of the new plant in Nanjing in the summer of 2017.”

Q3 2016 Results

Brembo’s Board of Directors chaired by Alberto Bombassei met today and approved Brembo Group’s quarterly results at 30 September 2016.

Brembo Group’s net consolidated revenues for the third quarter of 2016 amounted to €566.8 million, up 11.1% compared to the same period of the previous year. On a like-for-like consolidation basis — therefore excluding the contribution of the recently acquired Asimco Meilian Braking Systems — the increase for the quarter was 8.0%.

Car applications once again contributed the most to revenue growth with a 13.3% increase. The motorbike sector also performed well, growing by 12.5%; the racing sector grew, though more slightly, showing a +3.4% increase, whereas the commercial vehicles sector remained virtually unchanged (+0.5%).

At geographical level, compared to the third quarter of 2015, sales increased in Italy (+8.5%), Germany (+3.7%) and the United Kingdom (+17.7%), whereas in France sales declined by 10.0%. In Asia, the Indian market rose by 7.1% (+11.0% net of exchange rate effect). China performed well, growing 123.0%, also thanks to the inclusion of the recently acquired Asimco Meilian Braking Systems in the scope of consolidation. Growth in China was strong at 61.8% also on a like-for-like consolidation basis.

North America (USA, Canada and Mexico) showed a 5.5% increase in sales for the reporting quarter. South America (Argentina and Brazil) showed a turnaround after a long period of downtrend, growing 6.4% (+25.1% on a like-for-like exchange rate basis).

In the third quarter of 2016, the cost of sales and other net operating expenses amounted to €362.8 million, up by 7.4% compared to €337.7 million for the same period of the previous year. In percentage terms, the ratio to sales of this item decreased to 64.0% from 66.2% for the third quarter of 2015.

Personnel expenses totalled €96.3 million, with a 17.0% ratio to revenues, slightly up compared to 16.3% for the same period of the previous year. At 30 September 2016, workforce numbered 9,007 (7,867 at 31 December 2015 and 7,809 at 30 September 2015). The increase of 1,140 employees compared to 31 December 2015 was attributable for 654 resources to the Asimco Meilian Braking Systems’ inclusion in the scope of consolidation, and for the remainder to the Group’s production expansion at global level.

EBITDA for Q3 2016 amounted to €110.6 million (EBITDA margin: 19.5%), up by 20.3% compared to the same period of 2015.
Amortisation, depreciation and impairment losses rose by 3.5% to €29.8 million.

EBIT amounted to €80.7 million (EBIT margin: 14.2%), up 28.0% compared to Q3 2015.

Net interest expense for Q3 2016 totalled €4.5 million (€2.3 million for Q3 2015). This item includes interest expense amounting to €2.5 million (€2.8 million in Q3 2015) and net exchange losses for €2.0 million (exchange gains of €0.5 million for the same period of the previous year).

Pre-tax profit was €76.3 million (13.5% of revenues), compared to €60.8 million for the same period of 2015.
Based on the tax rates applicable under current tax regulations, estimated taxes amounted to €16.2 million (€17.6 million in Q3 2015), with a tax rate of 21.2% compared to 28.9% for the same period of 2015.

The reporting period ended with a net profit of €59.1 million, up 37.0% compared to €43.2 million for the same period of the previous year.

Net financial debt at 30 September 2016 was €256.6 million, compared to €160.7 million at 31 December 2015, and essentially in line with the figure at 30 June 2016 (€259.4 million).

Cumulative results year to 30 September 2016

In the period ended 30 September 2016, net consolidated revenues of the Brembo Group amounted to €1,713.7 million, up 10.6%.

On a like-for-like consolidation and exchange rate basis, revenues grew by 11.8%. EBITDA for the period amounted to €337.1 million (EBITDA margin: 19.7%), up by 26.3% compared to the same period of 2015.

EBIT amounted to €254.1 million (EBIT margin: 14.8%), up 37.8% compared to the first nine months of 2015.

The period ended with a net profit of €186.2 million, up 40.9% compared to €132.1 million for the same period of the previous year.

€100 million investment launched to expand the Polish plant in Dabrowa

Brembo will begin the expansion of its production hub in Dabrowa Gornicza by year-end. The project involves the construction of an additional 22,000sq m to host a third foundry line and 12 machining lines. Production capacity will be increased by 100,000 tonnes a year, with the option of producing both grey cast iron (traditionally used for brake discs) and nodular cast iron (used to cast calipers intended for light commercial vehicles).

The new production area, developed according to Brembo’s highest standards, will be integrated into the existing facility and will represent the state of the art in terms of quality and competitiveness. This important new industrial project is the response to Europe’s constant increase in demand for brake discs and floating calipers. In addition, this project is the result of Brembo’s acquisition of two new Mercedes-Benz contracts for cars and commercial vehicles: Brembo has been selected as the supplier of OEM brake discs for the next generation of rear-wheel drive vehicles manufactured by the German firm (classes E, C, S and derivatives). Moreover, Brembo has been chosen as supplier of discs and calipers for the new Mercedes Sprinter.

Foreseeable Evolution

Order book projections confirm a good revenue growth also for the last quarter of the year and allow us to look towards the coming months with cautious optimism.