Third Quarter Report 2020

11/9/2020

BREMBO: Q3 MARGINS IN LINE WITH THE PREVIOUS YEAR DESPITE THE COMPLEX CONTEXT. NET PROFIT €51.7 MILLION

Q3 2020 results:

Revenues at -5.9% compared to Q3 of the previous year

EBITDA at €123.8 million (EBITDA margin: 20.3%)

EBIT at €71.8 million (EBIT margin: 11.8%)

Net profit t €51.7 million (8.5% of sales)

Net financial debt at €505.7 million (€320.1 million excluding the effect of IFRS 16), improving by € 91.8 million compared to 30 June 2020

Results for the period ended 30 September 2020:

Revenues at €1,559.9 million (-20.9% compared to the previous year)

EBITDA at €267.1 million (EBITDA margin: 17.1%)
EBIT at €110.6 million (EBIT margin: 7.1%)

Net investments amounted to €112.0 million

Chairman Alberto Bombassei stated: “The results for the third quarter of 2020 approved today by Brembo’s Board of Directors show that, in a year characterised by exceptionally complex, negative conditions —, which have thus far had a severe impact on all industrial sectors, including automotive — Brembo has succeeded in rapidly variabalising many of its costs, containing the negative effects on the reference market. In the third quarter, we succeeded in taking advantage of the opportunities for recovery offered by the markets, reacting to increased demand from customers very quickly and achieving a result that should be considered gratifying, despite slightly declining compared to 2019. The quarter under review mitigated the negative effects of the first part of a year that is coming to an end with the current fourth quarter, which is in turn marked by uncertainties. At such a highly uncertain time, the Company presented its new strategic vision, aimed at developing innovative products and processes, including in terms of environmental sustainability, to anticipate the needs of its customers, committed to meeting the challenges posed by the new mobility paradigms.”

Q3 2020 results

Brembo’s Board of Directors chaired by Alberto Bombassei met today and approved the Group’s results at 30 September 2020.

Brembo Group’s net consolidated revenues for the third quarter of 2020 amounted to €608.8 million, down 5.9% compared to the same period of the previous year.

At geographical level, although the negative effects of the Covid-19 pandemic continued in all countries worldwide, two markets stood in sharp contrast to the general trend: China, which grew by 15.7% in the quarter, and NAFTA (USA, Canada and Mexico), which rose by 3.9%.

More in detail, in the third quarter of 2020 sales declined by 0.6% in Italy, by 14.0% in Germany, by 15.9% in France and by 26.0% in the United Kingdom.

As far as non-EU countries are concerned, India decreased by 20.3%, Japan by 40.5% and South America by 37.4%, whereas, as mentioned above, China and North America (USA, Canada and Mexico) grew by 15.7% and 3.9%, respectively.

EBITDA amounted to €123.8 million (EBITDA margin: 20.3%) in the reporting quarter, essentially in line with the previous year and improving in percentage terms, thanks to the strong measures undertaken to contain costs and mitigate the effects of the Covid-19 pandemic.

EBIT amounted to €71.8 million (EBIT margin: 11.8%), down 3.9% compared to €74.8 million (EBIT margin: 11.6%) for the third quarter of 2019.

Pre-tax profit was €67.9 million (11.1% of sales), and net profit amounted to €51.7 million.

Results for the period ended 30 September 2020

Brembo Group's net consolidated revenues for the reporting period amounted to €1,559.9 million, declining by 20.9% compared to the same period of the previous year, due to the effects of the Covid-19 pandemic, which particularly penalised the first half of the year.

With regard to the market segments in which the Group operates, the reporting period saw car applications decreasing by 20.4%, motorbike applications by 26.8%, applications for commercial vehicles by 18.2%, and racing applications by 22.0%.

At geographical level, compared to the same period of the previous year, sales for the first nine months shrank by 18.0% in Italy, by 26.7% in Germany, by 20.4% in France and by 35.7% in the United Kingdom.

In Asia, India declined by 35.5% and Japan by 21.9%, whereas China rose by 4.0%. Sales declined by 22.3% In North America (USA, Canada and Mexico) and by 41.3% in South America.

In the period ended 30 September 2020, the cost of sales and other net operating costs amounted to €992.2 million, down 19.8% compared to €1,236.7 million for the same period of the previous year. In percentage terms, the ratio to sales of this item was 63.6%, up compared to 62.7% for the same period of 2019.

Personnel expenses amounted to €305.5 million, with a 19.6% ratio to sales, increasing compared to the same period of the previous year (17.7% of sales). At 30 September 2020, workforce numbered 10,869 (10,516 at 30 September 2019 and 10,868 at 31 December 2019).

EBITDA for the period amounted to €267.1 million (EBITDA margin: 17.1%), down 32.2% compared to the same period of 2019. Depreciation and amortisation amounted to €156.5 million, up compared to €144.8 million for the previous year.

EBIT amounted to €110.6 million (EBIT margin: 7.1%), down 55.6% compared to the same period of 2019.

In the reporting period, net interest expense totalled €18.1 million (€12.3 million in 2019). This item included net exchange losses of €7.8 million (€1.2 million for the same period of the previous year) and interest expense amounting to €10.3 million (€11.1 million at 30 September 2019).

Pre-tax profit was €92.5 million (5.9% of sales). Based on the tax rate applicable under current tax regulations, estimated taxes amounted to €19.9 million (€53.3 million in 2019), with a tax rate of 21.5%, slightly down compared to 22.5% for the previous year. The period ended with a net profit of €71.7 million.

Net financial debt at 30 September 2020 was €505.7 million, down €91.8 million compared to 30 June 2020; net of the effect of IFRS 16, it would have been €320.1 million, down €87.1 million compared to 30 June 2020 (€407.2 million).

Foreseeable Evolution

The ability to react promptly and effectively to the first wave of the pandemic, combined with the Group’s financial and capital solidity, will continue to steer the Company in the coming months, which are set to remain uncertain.