China helps Italy’s Brembo to defy auto industry weakness

Italian premium brake maker Brembo on Tuesday posted moderate gains in first-half core earnings and revenue, with its Asian markets and its business helping to maintain older vehicles helping to counter a darker outlook for the automotive sector.

As earnings of several major carmakers have shown, including Stellantis, Porsche and Mercedes, the carmotive market went through a contraction in the first part of the year, while a recovery looks uncertain for the months ahead.

"The market is struggling, including in its premium segment," executive chair Matteo Tiraboschi said in a post-earnings interview with Reuters.

"With this background, increasing revenue and preserving profitability was an achievement".

Brembo's earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 2.1% to €351.4m (R6.97bn) for the six months to June 30.

Its revenue rose 2.8% to top €2bn (R39.62bn) for the first time, led by 7.2% growth in China and 21.1% growth in India.

"Asia is a key area for us, with a protracted growth, mainly with China but not only with China," Tiraboschi said.

"India is very important too, specially for the motorbike segment".

Brembo's first half EBITDA margin came in at 17.5%, broadly unchanged from 17.6% a year earlier.

Tiraboschi said the aftermarket business also supported Brembo's results.

"(Car) sales going down mean fewer people changing their cars and more doing maintenance," he said, "so the after market is bringing benefits".

The Bergamo-based group, whose clients include carmakers such as Tesla, BMW, and Chinese EV giant BYD, reiterated its full-year forecasts for moderate revenue growth and stable margins.