Italian high performance braking systems manufacturer Brembo has reported an increased turnover for last year of 912 million euros, up 13.1 pct, and a 45.3 pct rise in net profits to 62.4 million euros.

Italian high performance braking systems manufacturer Brembo has reported an increased turnover for last year of 912 million euros, up 13.1 %, and a 45.3 % rise in net profits to 62.4 million euros. Brembo closed the year with an improved fourth quarter performance and it doesn't see the current world economic climate as impacting on its performance looking forward to this year.

Brembo - Fourth Quarter/Full Year 2007 Financial Report

Results of the fourth quarter 2007

Revenues of fourth quarter amount to € 239.1 million, up 15.5% over previous year. Such amount includes € 8.1 million of the recently acquired US subsidiary. Like-for-like the yearly growth would be 11.6%. Revenue growth was driven by applications for racing (+51.2%) and for motorcycles (+47.3%), the latter primarily thanks to the new Harley Davidson Touring platform. Commercial vehicles keep on growing (+34.4%) thanks to the newly acquired platforms and to the persistent positive trend of road transportation. Passenger car segment grew by 2.1%, penalized by the comparison with 2006 fourth quarter that posted a 25% growth.

From a geographic point of view Italy and other EU countries grew well, +9% and 21.5% respectively; Germany is down 1.3% compared with a very good 2006 fourth quarter. Asia continued to grow sharply (+82.9%), thanks to the positive trend of the Japanese customers; Nafta countries grew by 53.5%, mainly thanks to applications for motorcycles. Brazil keeps on growing (+47.9%).

EBITDA of 2007 fourth quarter amounts to € 37.8 million (15.8% of revenues), up 29.2% thanks to a favourable sales mix of high value-added applications. Depreciation and amortization of the quarter are € 14.5 million, up 29% over the same quarter last year, due to the increasing investments made by the Group in recent years. EBIT is up 29.2% to € 23.3 million, or 9.8% of sales. Financial charges are negative in the quarter for € 2.5 million, compared to € 1.2 million positive of previous year; the latter benefited from positive extraordinary items. At tax level, € 9.3 million positive non-recurring items were registered in the quarter.

The Polish subsidiary Brembo Poland Spolka Zo.o. is located in a special economic zone and benefits from a tax shield. At the end of the year, considering the 2007 results and the business plan of the subsidiary, the company revised its estimates regarding the recoverability of such benefit and posted € 5.7 million deferred tax assets.

Moreover, the Italian companies benefit from a € 3.6 million reduction of deferred tax assets and liabilities, due to the 2008 Tax Law changes in terms of tax rate reduction and tax base calculation, with a view to aligning the Italian tax regime to the other European countries. Net of non recurring items, tax rate would be 33.3% in the quarter and 32.7% for the full-year respectively. Investments made in the quarter amount to € 72.0 million, € 36.8 million of which are connected with the acquisition of Hayes Lemmerz’ automotive brake components division. The remaining were made mostly in Italy and Poland in order to align the production capacity to the level of demand. Net financial indebtedness reaches € 236 million form € 193.3 million at 31 December 2006, mainly due to the US acquisition.

After the Board Meeting the Chairman of Brembo Group, Alberto Bombassei, commented: “The year just ended was another record one for Brembo. Also thanks to the recent acquisitions in America and China, 2008 sales will exceed one billion Euro. For the first time in the history of our Group the headcount abroad surpasses the Italian workforce.

Preliminary results of the period ended 31 December 2007

In the period closed at 31 December 2007 revenues grew by 13.1% to € 912,0 million. Such an amount includes € 13.1 million connected with the acquisitions made in USA and Spain during the year. Like-for-like revenue growth would be 11.5%. EBITDA amounts to € 137.1 million, or 15% of revenues, up 15.2% over previous year. Amortization and depreciation are € 48.3 million, up 22.5% due to the already mentioned capex increase of the last quarters. EBIT amounts to € 88.8 million, up 11.6% over previous year. Net profit of the period, that benefits from positive non-recurring items posted in Q4 2007, is € 62.4 million, up 45.3%.

Significant events of the quarter

On 9 November 2007 Brembo signed an agreement for the acquisition of Hayes Lemmerz’ Automotive Brake Component division, leader in the manufacturing of brake rotors for the North American passenger car and light truck markets. Brembo North America, Inc., a subsidiary of Brembo S.p.A., acquired all of the stock of two Hayes Lemmerz’ subsidiary companies that own the brake manufacturing operations in Homer, Michigan and Apodaca, Mexico. The amount paid for the transaction is approximately $ 58 million, debt-free.

Significant events after the close of the quarter

On 4 February 2008 Brembo China Brake Systems Co.Ltd, a subsidiary of Brembo, acquired a 42.25% stake of the Chinese subsidiary Nanjing Yuejin Automotive Brake System Co. Ltd. from Nanjing Automobile Corp., at a price of about $ 5.9 million. Brembo Group now owns, directly and indirectly, 70% of Nanjing Yuejin Automotive Brake System. This further expansion of Brembo on the Far East market will grant favourable growth opportunities. Foreseeable evolution: Despite the macroeconomic uncertainty, the order visibility for the months to come highlights a good growth of revenues. The raw materials and energy markets scenario is still negative.