Brembo targets 18.5%-19% core earnings margin after strong Q1

Brembo targets 18.5%-19% core earnings margin after strong Q1

Italian premium brakes maker Brembo (BRBI.MI) aims for full-year revenue to grow around 15%and margins on core earnings to come in at between 18.5% and 19% this year after posting strong first quarter results, its executive deputy chairman said on Monday.

The company will be able to pass on to clients most of the increases in raw material prices, including steel, iron ore materials and aluminium alloys, Matteo Tiraboschi said.

“Most of our contracts are indexed to raw materials,” he said in a phone interview after presenting the company’s results to analysts.

Tiraboschi said forecasts included the effect of raw material price increases and recently made acquisitions.

Brembo, which makes brakes for automakers including Ferrari (RACE.MI) and Tesla (TSLA.O) as well as several Formula One teams, last month agreed to buy Spanish motorcycle brake maker J.Juan for around 70 million euros ($85 million) in cash.

“We always stand ready to pick M&A opportunities to support our growth, if they create value for the company,” Tiraboschi said, adding, however, that no new deal was being considered at the moment.

Brembo’s first-quarter earnings before interests, taxes, depreciation and amortization (EBITDA) rose 33% to 135.6 million euros, helped by a robust recovery across its businesses and markets. Margins on EBITDA grew to 20.1% in the same period from 17.7% a year ago.

Brembo said its “order levels confirm that the year has begun on a positive note”, adding the impact of the chip shortage on its clients’ supply chain was difficult to estimate at present.

“We’ve got enough inventories of the chips we use, so problems have been marginal for us so far. But the issue in the industry is getting more and more serious; we need to be cautious,” Tiraboschi said.

By 1445 GMT shares were 1.1% higher, versus a 0.7% rise in Milan’s All-Share index (.FTITLMS).

($1 = 0.8219 euros)