SOURCE: BREMBO

July 29, 2005 12:08 ET

BREMBO : Second quarter 2005 financial results

CURNO -- (MARKET WIRE) -- July 29, 2005 -- Curno, 29 July 2005 For immediate release



Second quarter 2005 financial results. Compared to Q2 2004:



- Sales up 9% despite a tough scenario;



- EBITDA -6.6%



- Net profit -7.3%



- Strong impact on margin (1.7% of sales) due to the industrial plan start-up and labour unrest;



- Merger of Bibielle S.p.A into Brembo S.p.A.;



- Transition to IAS/IFRS.



The Board of Directors of Brembo met today, chaired by Alberto Bombassei, to examine and approve the Q2 05 consolidated financial results. In brief:


+-----------+------+------+------------+
|  E MLN    |2Q 05 |2Q 04 |Variation % |
+-----------+------+------+------------+
|Sales      |197.5 |181.1 |       +9 % |
+-----------+------+------+------------+
|EBITDA     | 26.5 | 28.4 |     -6.6 % |
+-----------+------+------+------------+
|EBIT       | 15.9 | 16.7 |    - 5.1 % |
+-----------+------+------+------------+
|Pre-tax    | 15.0 | 16.6 |     -9.9 % |
+-----------+------+------+------------+
|Net profit |  8.7 |  9.4 |     -7.3 % |
+-----------+------+------+------------+
|Cash-flow  | 19.3 | 21.0 |     -8.1 % |
+-----------+------+------+------------+
+-----------+------+------+------------+


The Q2 results



The automotive market is still characterized by a generalized weakness of most manufacturers; nevertheless sales are up 9% to E 197.5 million over the same quarter last year.



Growth was driven by sales of commercial vehicles applications, that are continuing their expansion closing the period at +18.7% over Q2 04; the racing sector is on the upswing (+12.9%) and the passenger cars segment increased by 8.2%, despite the enduring weakness of the aftermarket sector. Motorcycle sales are flat.



Sales abroad represent almost 75% of the total, with the German market reaching the Italian share. Revenues to Nafta area are slowing, also due to currency effects; UK and Brazil are instead sharply increasing



Personnel expenses totalled E 36 million in the quarter, up 5.5% over Q1 04 and accounting for 18.2% of sales (18.8% in Q2 04), due to the increasing amount of products manufactured at the foreign subsidiaries. The headcount at the end of the period is 4,201, over one third of which works for the foreign subsidiaries and premises of the Group.



Cost of goods sold, E 135 million, is up 13.8% over Q2 04 and account for 68.4 of sales. The higher incidence is due to a less favorable sales mix and to the direct and indirect costs connected with the start-up phase of the industrial plan, launched at the end of April.



EBITDA is E 26.5 million in the quarter (13.4% of sales), down 6.6% over previous year. The drop is due to the above mentioned costs of the industrial plan and of the start-up of the new foundry in Poland as well as to strong labour unrest (overall E 3.3 million, or 1.7% of sales).



Depreciation and amortization amount to E 10.6 million, compared to E 11.6 million in Q2 2004. The lower level of D&A level is due to a different depreciation policy applied to some assets and to the complete amortization of some multi-year expenses. The current level of depreciation does not include the high investment made in the quarter, as these investments are not contributing to the company results, yet.



EBIT is E 15.9 million (8.1% on sales), down 5.1% over the same period of previous year.



Net financial charges are E 1.1 million and are made up of positive translation differences for E 0.1 million (E 3 million in Q2 04 for the settlement of a debt in GBP) and of financial charges for E 1.2 million, substantially unchanged over previous year.



After deducting taxes of E 6 million (40.4% tax rate) net profit totals to E 8.7 million, down 7.3% over the same period last year.



During the quarter investments for E 23.8 million were realized, mostly connected with the start-up the new cast iron foundry in Poland (about E 13 million) and with the industrial plan in progress.



The net financial debt went from E 159.8 million at the end of March to E 169.8 at the end of June, after paying 2004 dividends of about E 12 million.



First Half results



Revenues are up 6% to E 373.9 million in the first half of the year. EBITDA (net of the costs of the above mentioned industrial plan) is E 50.1 million (13.4 % on sales), down 10.9%. EBIT is E 29 million (7.8% on sales), down 11%. Net profit amounts to E 14.7 million and is down 16.5%.



Foreseeable evolution



The reference market where the Company operates are expected to continue the trend shown in the first months of 2005, thus reflecting a rather difficult situation both at macroeconomic level and for the automotive sector overall. The order portfolio reflects for the coming months a growth trend slightly slower than what shown in these first months of 2005.



The start-up of the industrial plan, with the connected cost and inefficiencies, should bring to margin levels similar to what registered in H1.



Merger of Bibielle S.p.A. into Brembo S.p.A.



The Board of Directors, in order to simplify the group corporate structure, approved the merger of Bibielle S.p.A. into Brembo S.p.A., which already owned the 100% of the share capital of the subsidiary. The project aims at pursuing economies of scale. The two companies carry out the same production and the combination of the production volumes will enable important synergies in terms of raw material purchase and a more intense use of production assets.



Transition to IAS/IFRS



In compliance with the temporary rules issued by Consob as far as the transition to IAS/IFRS is concerned, the Quarterly report as of 30 June is issued according to the Italian GAAP and a reconciliation of the closing balance with the IAS-compliant closing balance is provided.



The impact on the company results will be commented in detail upon release of the First Half Report, when the data will be fully audited by the Independent Auditor Company.



Please find here below the detailed consolidated results and the IAS /IFRS reconciliation schedules as of 30 June 2005.



For further information:



Investor Relations



Orsi Corrado Tel. +39 035 605 884



Fax +39 035 605 518



Communication



Gianfranco De Marchi Tel. +39 035 605 708



Fax +39 035 605 273



e-mail: press@brembo.it



Roberto Vavassori



Tel. +39 035 605 223



e-mail: ir@brembo.it



web: www.brembo.com



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