Brembo S p A : Trascrizione della conf.call sui risultati dei 9M 2022 (in lingua inglese)

Brembo S.p.A

"9 Months, 2022 Financial Results Conference Call"

Wednesday, November 09, 2022, 14:30 ITA

MODERATORS: MATTEO TIRABOSCHI, CHAIRMAN

DANIELE SCHILLACI, CHIEF EXECUTIVE OFFICER

LAURA PANSERI, HEAD OF INVESTOR RELATIONS

OPERATOR:Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Brembo9 Months, 2022 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: Good afternoon, everybody. Thank you for joining us today to discuss Brembo Group's 9 months, 2022 financial results. This call will be hosted by Matteo Tiraboschi, Chairman, and by Daniele Schillaci, CEO of Brembo. As usually, the slide presentation has been made available on our website, therefore, we suggest to go directly to the Q&A session.

During this call, we will discuss our business outlook and we'll make forward-looking statements which are based on prediction 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. Thank you.

Q&A

OPERATOR:Thank you. 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." We kindly ask to use handsets 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.

MONICA BOSIO: Hi, good afternoon, everyone, and thanks for taking my question. I had 3. The first one is on the order intake trend. Can you comment on these and on the outlook ahead? My question is, are you seeing any sign of slowdown?

My second question is on 2023. I think that for the next year, the Group should benefit from the pricing actions implemented in 2022. How long do we [indiscernible] of the raw materials? On the flip side, the Group will have to face higher energy costs that I estimate in the region of 6% of the revenues and higher labor costs. The question is, do you feel confident in maintaining the same margins in 2023 or do you see some downward pressure? I know that it's early to ask, but I try.

And the very last is on the CAPEX, which rose a lot in the third quarter. Can you give us more flavor on this? And are you keeping your €250 million CAPEX guidance by year end? And should we expect a similar level for 2023? Thank you.

DANIELE SCHILLACI: Okay, ciao, Monica. Daniele speaking. In terms of both order intake and order bank, I must say that for the rest of the year the situation for us remains in line with what you have seen in the first 9 months. So, it's pretty solid in China, in US and despite the geopolitical issue in Europe, too. We don't see any big concern now.

It's clear, though, that with the inflation rate we are seeing and with the interest rates now increasing more and more, we might see a kind of slowdown in 2023, but mainly in Europe and probably more on the mass market segments. But on the premium markets, which is where we operate, the order bank for us is quite solid, so far.

Regarding the pricing actions we have been taking in 2022, for 2023 we will follow the same structural process that we have implemented this year. As I said during the last conference call, we have put in place a structural process with all our customers, to discuss the raw material and energy cost adjustments. This process is working pretty well, I would say, because for the first 9 months of 2022 we have essentially recovered all the costs, which is for us a very good achievement. And this is what will do also in 2023, hoping that some utilities and raw material now will come back to a normal trend; somehow we are already seeing it, especially for some raw materials like aluminium and steel, where prices are going down.

In terms of margin, it's too early to talk about 2023 because we are still finalizing our budget. But, if we follow the method and methodology that we have been following since 14-15 months now, we are optimistic that we can keep the current level of margins also for the future.

Regarding the CAPEX, I leave it to Matteo.

MATTEO TIRABOSCHI: Yes, thank you. About the CAPEX, during the last conference call, we said it would be something around €250 million. We confirm more or less the same number; if it is not €250 million, it could be €260 million, €270 million. For next year, it is too early to speak, but more or less, I think it could be a similar number.

MONICA BOSIO: Okay, thank you very much. Thank you.

DANIELE SCHILLACI: You're welcome.

OPERATOR:The next question is from Martino De Ambroggi with Equita. Please go ahead.

MARTINO DE AMBROGGI: Thank you. Good afternoon, everybody. Last time, you talked about capacity utilization around 90%. In this quarter, you got €100 million of additional sales. So, first question, what's the percentage of capacity utilization in Q3? And what's the percentage of CAPEX, which is just maintenance? So…and the remaining I suppose will be for additional capacity. This is my first question.

MATTEO TIRABOSCHI: The maintenance capex it is something around €50-€60 million per year, more or less.

DANIELE SCHILLACI: And for the capacity utilization, we are still very close to full capacity, around 85%-90%,yes.

MARTINO DE AMBROGGI: Sure, more or less at the same level of Q2, despite a€100 million of additional sales, which is not entirely due to price effect.

DANIELE SCHILLACI: Exactly, yes.

MARTINO DE AMBROGGI: Okay. And for the additional capacity with the new CAPEX, is it still valid, the rule of thumb of €1 million CAPEX equal to €1 million additional sales in 12-18 months?

MATTEO TIRABOSCHI: No, probably today €1 million CAPEX brings something around 0.7 in revenues; of course after a certain period of ramp up.

MARTINO DE AMBROGGI: Okay, thank you. And the second question is on Sensify. I know you don't want to talk about it, but just maybe the flavor. So, the first client is adopting Sensify just for one model or is planning to adopt it for the whole product portfolio or at least a big portion of it?

DANIELE SCHILLACI: As you know, Martino, on Sensify, we are extremely disciplined in our answers. So, let me repeat what I said in previous occasions: in 2024 we will launch Sensify with a prestigious customer, but today, I cannot tell you if it's only on one platform or more.