Brembo S p A : Transcript of the conf. on H1 2022 results

Brembo S.p.A.

"First Half 2022 Financial Results Conference Call"

Thursday, July 28, 2022, 14:00 ITA

MODERATORS: MATTEO TIRABOSCHI, CHAIRMAN

DANIELE SCHILLACI, CHIEF EXECUTIVE OFFICER

LAURA PANSERI, HEAD OF INVESTOR RELATIONS

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OPERATOR:Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Brembo First Half 2022Financial 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: Thank you and good afternoon ladies and gentlemen. Thank you for joining us today to discuss Brembo Group's first half 2022 financial results. Today's call will be hosted by Matteo Tiraboschi, Chairman, and by Daniele Schillaci, CEO of Brembo. The slide presentation has been made available on our website in advance, therefore we suggest to go directly to the Q&A session.

During this call, we will discuss our business outlook, and will make forward-looking statements which are based on predictions and expectations as of today. These comments are subject to risks and uncertainties that can cause the actual results to be materially different. I also remind you that this call is being recorded.

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

Q&A

OPERATOR:Thank you. Ladies and gentlemen, 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.

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The first question is from Renato Gargiulo with Stifel. Please go ahead sir.

RENATO GARGIULO: Yes, good afternoon. Well, my first question is on your full year outlook. Let's say that there should be some factors which should be improving in the second half compared to the first part. Some of your clients are talking about a possible acceleration in shares in the second half versus the first one, with the chip shortage issue also gradually improving. You should have a better situation in China, especially versus the second quarter with the lockdowns? And then at margin level, clearly you've given your delay of 3-6 months on price adjustment mechanism. Maybe we should see an improving impact in the second half. So just wondering if your guidance is, let's say somewhat prudent, conservative or there are any specific factors, risks, going forward over the next months?

Then the second question is on energy and logistic costs. Last time you were pointing out that you were expecting to recover around 80% of this during the year, given the negotiations with clients. I was just wondering if you can give us an update, if you are being, let's say successful with clients in your negotiation, and if you are achieving this target? Thank you.

MATTEO TIRABOSCHI: Yes, hi, Matteo speaking. Good afternoon and good morning to everybody. To be honest, I don't think we are too conservative in the forecast for this year. We are trying to replicate in H2 what we did in H1, this means something like €3.5 bn revenues for the full year, which is quite not bad; the same for margins... So from our point of view, it is quite challenging to achieve this result. Of course this forecast is based on the current conditions in terms of geopolitical situation, currency and raw material prices. For the logistic cost, I leave it to Daniele.

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DANIELE SCHILLACI:	Yes, Matteo, thank you. Hi, Renato. Regarding the energy, fuel
	costs and costs in general, you're right, indeed: the last time we said that in
	Q1 we had recovered roughly 66%, and now year-to-date the first half we've
	recovered already 81%, so this in exactly in line with the target we gave
	you. But more importantly, I want to point out that since the crisis has
	started, we've structured a very efficient process with all our customers to
	manage the current difficult situation in terms of raw material, energy and
	logistic costs. So now, it's no longer a matter of spot conversations or
	negotiations with customers when we see price increases, it is a very well
	structured method, which is proving to work very well, thanks to which we
	have already achieved more than 80% of price recovery.
RENATO GARGIULO:	If I may, a very last question on CAPEX. You…it was 121 in the
	first half. If you can give us any kind of guidance for the full year? Thank
	you.
DANIELE SCHILLACI :	We confirm €250 million for the FY.
RENATO GARGIULO: Perfect, thank you. Thank you very much.
DANIELE SCHILLACI :	You're welcome.
OPERATOR:	The next question is from Monica Bosio with Intesa Sanpaolo. Please go
	ahead, madam.
MONICA BOSIO:	Good afternoon. I hope you can hear me. The first question is on the top
	line guidance which seems very robust in the first half the FOREX impact
	was in the region of 5%. So I believe that in the second half the FOREX

impact will be weaker. So I was just wondering if the second half year would be in the region of plus 20, it seems so, but just a check from you.

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And the second question is on Sensify. Have you any news flow on this…from this side?

Finally, the third one is on the net debt, if you can give us some more flavor on the net debt, which was quite high, I can imagine that it was due to the extra stocks you want to keep to face customers requirements. Thank you very much.

MATTEO TIRABOSCHI: The indication we gave includes everything, price, forex, etc. So I don't know exactly what will be the forex contribution for the next 6 months, but what we said includes everything.

DANIELE SCHILLACI: Regarding Sensify, no, I don't think we're going to have some specific announcement by the end of the year. What I can tell you is that we confirm the timeline to be on the market on 2024. We are working with many customers in different regions, they are, of course, asking a lot of information and details about Sensify, which is excellent. But in terms of new announcement, as soon as we can, of course, we'll let you know.

MONICA BOSIO: Okay. If I may ask, just a follow up, can you give us just a rough indication of the weight of sales coming from EVs? Is it meaningful, is it rising?

MATTEO TIRABOSCHI: To be honest, we don't have a specific breakdown for revenues by applications.

MONICA BOSIO: Okay. My last question was on the net debt, which was a bit higher than my expectation. I can imagine that it's due to the extra stocks, if you can comment a little bit.

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