Source: Brembo announcement
CURNO, Italy – Impacted by the continued international pandemic, Brembo announced first quarter profits some 24 percent down from the same period last year. In addition, though overly optimistic, the company expects Covid-19 to have a further impact on financial results for the remainder of the year.
The following is excerpted from Brembo’s official announcement about the quarterly results as well as specifics about how the company has adapted to public-health crisis and reduced global economic activities:
“Brembo’s results for the first quarter of the year were impacted by the crisis triggered by a pandemic without equal in contemporary history,” said Brembo Chairman Alberto Bombassei. “In a context of global emergency, Brembo’s reaction was based on four key drivers, and, of course, on ensuring the total safety of human capital that has faced this moment with a sense of responsibility:
– increasing innovation investments through new technologically advanced and eco-friendly products and services based on Artificial Intelligence (AI)
– keeping daily and constructive collaboration relationships with all the customers and suppliers worldwide
– strengthening the Net Financial Position, through reduced characteristic investments and the suspension of dividends
– a long-term, growth-oriented vision, also including M&As.
Although the sector where we operate is one of the most impacted by the general uncertainty, we are confident we will resume growth, with even greater strength and determination, in the medium/long-term.”
Results for the First Quarter of 2020
In the first quarter of 2020, net consolidated revenues amounted to €575.9 million, down 13.7 percent compared to the first quarter of the previous year (-13.3 percent on a like-for-like consolidation basis, i.e., excluding the effects of the reclassification of the figures relating to the company Brembo Argentina S.A. to the item “Result from discontinued operations”).
As expected, Q1 2020 results were severely impacted by the gradual spread of the COVID-19 pandemic at global level. Within this scenario, Brembo’s sales for the car segment declined by 13.4 percent, motorbike applications by 11.7 percent, applications for commercial vehicles by 19.3 percent and those for racing vehicles by 10.5 percent compared to the same quarter of 2019.
Measures adopted to combat the COVID-19 emergency
Brembo has been following developments relating to the spread of the COVID-19 very closely since its outbreak, establishing a dedicated task force and promptly adopting all necessary measures to monitor, prevent and contain the pandemic at all of its locations worldwide.
In view of reopening, further extraordinary measures aimed at combating the virus and protecting the health of employees and contractors have been taken (rearrangement of production layouts, sanitization of the premises, personal protective equipment, temperature measurement, heat scans, blood tests, hygiene rules and social distancing, extended remote working, etc.).
In addition, after an initial donation of €150,000 in support of treatment facilities at Bergamo’s Pope John XXIII Hospital, Brembo decided to support research into combating COVID-19 by donating €1 million to three première Bergamo institutions: Pope John XIII Hospital, the Bergamo Hospital Research Foundation (FROM) and the Mario Negri Institute, which are committed to the area most severely affected by the pandemic, through a combination of clinical and pharmacological research.
With reference to financial aspects, in adopting the prudential approach proposed by the Board of Directors in its extraordinary meeting on March 20, 2020, the shareholders’ meeting held on April 23 resolved not to distribute dividends drawing on the 2019 profit. This decision was made to support the group’s financial solidity and limit future economic and financial impacts. A dividend may be proposed when the current situation relating to COVID-19 has been overcome.
To face this difficult time for the market, between April and May 2020, the group’s financial structure was further reinforced by entering into new medium/long-term loans for a total amount of €425 million, in addition to available short-term credit lines for €348 million, which have not been used. These new loans enabled the group to extend the average life of its debt, at costs in line with current levels.
The Group decisively designed and implemented a series of measures intended to mitigate the financial impact of COVID-19, focusing in particular on strengthening investment on innovation, significant cost-cutting, protecting net financial position and reinforcing its already sound financial position.
The results of these actions will become more visible in the coming quarters, although the general lockdown measures adopted in most countries worldwide will continue to reflect the adverse effects of COVID-19.
Given the present state of uncertainty as to the future course of the pandemic, the measures to be adopted by governments and the swiftness of the recovery of the economic cycle — and of the automotive sector in particular — it is difficult to make quantitative projections on the Group’s economic and financial performance; however, the effects are expected to remain significant also in the coming quarters of 2020.
The Company continues to monitor events very closely and is prepared to manage this situation professionally and with the utmost commitment, maintaining the forward-looking perspective that has always set it apart.
The entire announcement, including comprehensive charts, can be viewed by clicking HERE.