Brembo S p A : TRANSCRIPT CONF. CALL Q1 2021

Brembo S.p.A

"First Quarter 2021 Results Conference Call"

Monday, May 10, 2021, 14:00 ITA Time

MODERATORS: DANIELE SCHILLACI, CHIEF EXECUTIVE OFFICER

MATTEO TIRABOSCHI, EXECUTIVE DEPUTY CHAIRMAN

LAURA PANSERI, INVESTOR RELATIONS

OPERATOR:Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Brembo First Quarter 2021 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing "*" and "0" on their telephone.

At this time, I would like to turn the conference over to Ms. Laura Panseri, Head of Investor Relations. Please go ahead, madam.

LAURA PANSERI: Yes, good afternoon to everybody. Thank you for joining us today to discuss Brembo Group's first quarter 2021 financial results. Today's call will be hosted by Matteo Tiraboschi, Executive Deputy Chairman and by Daniele Schillaci, CEO of Brembo. A slide presentation has been made available on our website in advance. Therefore we suggest to go directly to the Q&A session.

Q&A

OPERATOR:

Before we begin, let me remind you that any forward-looking statements we may make during the call are subject to risks and uncertainties that can cause actual results to be materially different. I also remind you that this call is being recorded.

Having said that, we can start with a Q&A session. Thank you.

Excuse me; this is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone, to remove yourself from the question queue, please press "*" and "2." Please pick up

the receiver when asking questions. Anyone who has a question, may press "*" and "1" at this time.

The first question is from Monica Bosio with Intesa SanPaolo. Please go ahead madam.

MONICA BOSIO: Good afternoon everyone, and thanks for taking my questions. The first one is on the order book trend. The first quarter was well ahead of our expectations, obviously there are uncertainties ahead due to the semiconductor shortage. So if you can comment on the order book trend and the visibility that you have for the coming quarters, I would really appreciate it. Also on the outlook, I remember that at the end of the 2020, you guided for a market…car market up between 11% and 12% with Brembo outperforming the market. Is it still the case or have you changed your outlook for the year on the back of the semiconductor shortage. And the same if I may, on the EBITDA margin, you were very cautious and at the end of 2020 you guided for something between 18%, 19%, something between 2019 and 2020. So would you feel more confident now after these strong results in the first quarter? Thank you very much.

DANIELE SCHILLACI : Yes, thank you, Monica for your question and good afternoon to everybody. Yes, the order book for Q2, and I would say also the visibility that we have on Q3, remain strong, so no change compared to what we said during the last call. The outlook for the global automotive market is around +12% versus 2020 at around 83.8 million, 84 million units, so we remain quite confident, as we said also last time, to outperform the market.

MATEO TIRABOSCHI: Regard the guidance, it is not easy to answer in this moment, but I think that for the full year, we can see revenues up by around 15% versus last year, and EBITDA margin for the full year around 18.5%-19%.

MONICA BOSIO: 18.5%,19%, okay. Thank you very much. I'll come back to the queue. Thank you.

OPERATOR:The next question is from Andrea Balloni with Medio Banca. Please go ahead.

ANDREA BALLONI: Thanks. Thanks for taking my question. My first question is about profitability. I noted that your gross profit was even better compared to last year, despite the raw material cost increase. So can you explain us how you manage the cost inflation, and what should we forecast over the rest of year?

And my second question is about your over performance. I…we understand your previous answer, so with the market of up of about 12% how much should we assume Brembo to outperform? And my last question is about your CAPEX trend which is the guidance for the full year? Thank you.

MATTEO TIRABOSCHI: Regarding the capex, for the full year it will be something around €200- €250 million, similar to what we said the last time.

About profitability, yes, we are trying to manage the P&L in the best way, we are trying to maintain the same rigorousness learnt during 2020 and this was evident in the first quarter.

DANIELE SCHILLACI: Yes, as a complement on the profitability, I'd like to add that we are keeping a very tight cost control in our operations, and this is working quite well also in 2021. We are not seeing any pricing deviance from our customers, and this two factors allowed us to have a good profitabilitymin the quarter.

Regarding the over-performance that was your last point, the market as I said should be around, 11%-12% above 2020, we think our growth should be in the range of +15%.

ANDREA BALLONI: Okay, and just a follow-up again about profitability. The price increase was almost zero in the quarter we have seen the impact in your presentation of the top line. What should we assume for the rest of the year? … In the previous conference call, we talked about potential price increase for your product and in order to hedge against the raw material cost inflation, but in the end in the first quarter we saw in the presentation, the price increase was almost zero in term of impact on your top line trend. I was wondering, what should we assume over the rest of the year in terms of price increase?

DANIELE SCHILLACI: As I said before, this is also due to the efficiency of our manufacturing and the tight cost control, so we don't see any major issue in this regards. Regarding the raw material prices you are mentioning, just for you to know, the large majority of contracts with our customers are indexed, so

	this means that there is a pass-through process to our customers.
ANDREA BALLONI:	Okay, thank you.
OPERATOR:	The next question is from Martino De Ambroggi with Equita. Please go
	ahead, sir.

MARTINO DE AMBROGGI: Good afternoon, everybody. The first question is on…follow up on the raw materials just to understand what was the impact of raw materials net of price increase in Q1? And what should we factor in for the rest of the year? In the sense, I suppose the raw materials probably were already negative in Q1 and probably will be offset during the year by price increases. So just to have a flavor of what is the…this variable on