The Ukraine crisis is clouding prospects for Italy’s Brembo after fourth-quarter margin declines

Interview with Brembo Executive Vice Chairman Matteo Tiraboschi at Brembo headquarters
FILE PHOTO: Brembo’s logo is seen at its headquarters in Bergamo, Italy October 7, 2019. REUTERS/Flavio Lo Scalzo

March 3, 2022

(Reuters) – Italian premium brake maker Brembo said on Thursday its fourth-quarter core profits and margins were hit by higher production costs and global chip shortages, while the crisis in Ukraine made it impossible to provide guidance for the coming months.

Brembo CEO Matteo Tiraboschi told Reuters the company had started 2022 on a positive note, with a “robust” performance in January and February.

But he said the Russian invasion of Ukraine put a “big question mark” over business prospects.

“If the current geopolitical crisis lasts for weeks or, worse, months, it would be a huge problem,” he said.

The company, which operates in 15 countries including Russia, said in a statement that the direct impact of the Russia-Ukraine crisis on the group is limited as it has no manufacturing facilities in the region, but it is still closely monitoring the impact raw material supply and production costs.

Brembo, which makes brakes for several Formula 1 and MotoGP teams as well as premium carmakers like Tesla and Ferrari, said its earnings before interest, taxes, depreciation and amortization (EBITDA) for October-December were 121 million euros (134.14 million US Dollars) for the period, with the margin falling from 18.7% to 16.4%.

Tiraboschi said that raw material prices, as well as energy and logistics costs, had skyrocketed, particularly towards the end of 2021, and that Brembo’s indexed contracts only offer protection with a lag of three to six months.

“We’re in a pursuit situation and it’s been taking a toll on our margins,” he said.

Tiraboschi added that the high-end segment of the automotive market, on which Brembo focuses, was also hit by a global semiconductor shortage in the fourth quarter after being spared the previous part of the year.

Brembo shares fell as much as 6.5% after the results were released to their lowest price since November 2020. By 1535 GMT they had fallen 2.3%.

Fourth quarter revenue increased 13.4% to €735.8 million, driven by growth in all markets.

($1 = 0.9020 euros)

(Reporting by Agnese Stracquadanio and Giulio Piovaccari; Editing by Paul Simao) The Ukraine crisis is clouding prospects for Italy’s Brembo after fourth-quarter margin declines

Emma Bowman

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