17th November 2008 - BREMBO Revenues Up 23.4%, Net Profit Up 9.5%

The Board of Directors of Brembo approves the financial results for the period ended 30 September 2008:

compared to the same period of last year.

Shareholders are convened on 18th December in order to appoint a new director and for the authorization to buy and sell own shares.

Third Quarter 2008:

Net sales for Q3 2008 amounted to €262 million, up 21.2% compared to the same period of 2007.

Comparison of the two financial periods is not homogeneous due to the change in the consolidation area: the acquisition of Hayes Lemmerz contributed €21.2 million to the increase in sales, almost all in the United States and on car applications; Sabelt in Italy contributed €4.6 million, the acquisition of NYABS in China €4 million.

On a like-for-like basis, net sales increased 7.5%, also supported by the recovery of the raw material and energy costs on sales prices.

The main growth driver were car applications (+26.1%), thanks to the recent acquisitions, although the sales of original equipment discs showed signs of slowdown. Commercial vehicles applications growth rate in Q3 2008 was significantly lower (+5%) compared to the long trend of expansion observed in prior periods.

The racing segment posted a 24.3% increase in sales, reaffirming Brembo’s technical and market leadership in the most prestigious car and motorbike championships.

Sales of motorbike applications, which saw strong increases in the first half of the year due to a growth in market share, were flat in the third quarter, in line with market trends. In geographical terms, development was achieved mainly in NAFTA countries (+66.4%). Germany and Italy remain the Group’s primary markets and represented 43.8% of Brembo’s total turnover.

During the quarter, the cost of sales and other net operating costs amount to €179.5 million, with a ratio of 68.5% to sales, compared to 67% for the same period in the previous year. The increase in the ratio is due to a mix of lower value-added applications and higher raw materials costs. Although the cost increases were almost completely absorbed through higher sale prices, they nevertheless diluted margins.

Personnel expenses in the third quarter of 2008 amounted to €48.5 million or 18.5% of sales, a slight increase compared to the same period of the previous year (18.2%). Ebitda increased 5.9%: in the quarter it was €34.1 million (13% of sales) compared to €32.2 million in the third quarter of 2007 (14.9% of sales).

Ebit amounted to €18.3 million (7% of sales) compared to €20.3 million (9.4% of sales) for the third quarter of the previous year. Depreciation and amortization in the quarter amount to €15.8 million, against €11.8 million in the third quarter of 2007; the increase is due to the considerable investments in both plant and machinery as well as to capitalized development costs. Net financial charges amount to €5.1 million (€3 million for the third quarter 2007), due to both a higher level of indebtedness and an increase in interest rates. Estimated taxes amount to €1.5 million equal to 11% of income before taxes (27.7% in the third quarter of 2007). The Tax Rate of the quarter benefits from a non-recurring reduction of deferred taxes due to the application of a tax incentive allowed by Financial Law 2008 in Italy. The company's net debt at 30 September 2008 was €359.3, compared to €235.9 at 31 December 2007 and €330.2 at 30 June 2008. The increase during the quarter was mainly due to the company's investment programme, the acquisition of a 50% share of BCBS and an increase in inventory levels.

Results of the nine-month period ended 30 September 2008.

Consolidated revenues of the first nine months of 2008 amount to €830 million, up 23.4% over the same period of last year.  After deducting cost of goods sold and other operating costs for €554.3 million and personnel expenses for €161 million, EBITDA amounts to €114.7 million (+15.5%).  Amortization and depreciation of the period are €44.7 million, up 32.2% over the same period of last year due to higher investments made in the last few quarters.  EBIT amounts to €70 million, up 6.9% over previous year.  Net profit for the period is €43.1 million, up 9.5%.

Shareholders’ Meeting

The Shareholders are convened to the Ordinary General Meeting on 18th December 2008 to approve the appointment of a member of the BoD and the authorization to buy and sell own shares.

Significant events after the close of the quarter.

On 27th October 2008 Brembo SpA signed an agreement with Bosch Chassis Systems India Ltd. for the acquisition of 50% of KBX motorbike Products Private Ltd (KBX), based in Pune (India), until now a 50-50 joint-venture. On the basis of the joint-venture agreement, the agreed upon price is equal to €10.7 million and the acquisition will be probably executed in the near future.  KBX is leader in development and production of brake systems for motorbikes in India and its 2008 expected sales are 1.050 million Rupies (€17 million), the 2008 expected EBIT is 93 million Rupies (€1.5 million); KBX has no financial debt.  No other significant events occurred following the close of the third quarter of 2007.

Foreseeable evolution.

September marked the beginning of a significant market slowdown, as a result of the climate of uncertainty brought on by the collapse of major financial institutions. This generated a higher selectivity in granting access to credit and, consequently, purchases of durable consumer goods under instalment plans or leases declined sharply. These payment methods are considerable in the car and light commercial vehicle segments, and automakers reacted to the market scenario by planning fourth-quarter halts in production and extending the year-end holiday season shutdown.  Brembo reacted to this situation of uncertainty by adapting its production levels to the expected slowdown in demand and implementing measures to control costs and working capital and curtailing or postponing investment plans. The goal of these initiatives is to limit the impact on the Group's margins and financial position in the fourth quarter of 2008.  An improvement or at least a stabilization of market conditions does not seem possible before the second half of 2009.

Source: BREMBO Press Release