Brembo 1Q 2005: Slow Start, Progressive Improvement of Revenues and Margins Expected.

CURNO, Italy -- Brembo

Compared to 1Q 2004:

--Sales +2.8%

--EBITDA -15.2% due to weak market, raw-material costs and start of the industrial plan

--Net profit -27.1%

Started a new production initiative in China.

Brembo Board of Directors, chaired by Alberto Bombassei, met today to examine and approve the 1Q 2005 consolidated financial results. In brief:

EUR MLN                 I trim. 05   I trim. 04  Variation %
------------------------------------------------------------
Sales                        176.4        171.5       +2.8 %
EBITDA                        23.6         27.8      -15.2 %
EBIT                          13.1         15.9      -17.2 %
Pre-tax profit                11.0         15.4      -28.3 %
Net profit                     5.9          8.1      -27.1 %
Cash-flow                     16.4         20.0      -18.4 %
------------------------------------------------------------

The quarter results can be attributed to two different factors, related both to market conditions and to operations-related issues.

All automotive manufacturers registered poor performances, impacting negatively on our volumes. The results were influenced by a lower value-added product mix and by the enduring impact of ferrous material price increases, worsening the comparison with 1Q 2004.

As far as operations are concerned, the delay in launching the industrial plan contributed to the decline in margins, as negotiations with trade unions and employees continued until end-April. This implied inefficiencies and additional costs connected with some days' strike, with labour tensions and a drop in production flexibility, and related delays in deliveries to customers. Moreover, the company is gradually equipping itself to face the expected future growth; as a consequence, the installed production capacity is temporarily underutilized.

The activity in the quarter

Revenues in the quarter amount to EUR 176.4 million, up 2.8% over 1Q 2004.

Sales trend in the various segments where the company operates are similar to what registered so far, with a positive performance of passenger cars applications (+3.6%) and a very good one of commercial vehicles (+12.8%). Racing sector is stable, while motorcycle is down 8.4%, pulled by the bad performances of some producers.

Personnel expenses amount to EUR 35.4 million, substantially unchanged over previous year; cost of goods sold and other operating costs are EUR 117.4 million, up 8.2%.

Gross operating margin is therefore EUR 23.6 million, or 13.4% of revenues, down 15.2% over the same quarter last year.

Net operating margin, after deducting amortization and depreciation for EUR 10.4 million, is EUR 13.1 million, or 7.4% of revenues and down 17.2% over 1Q 2004.

The lower amortization and depreciation level is due to the different depreciation policy applied to some assets and to the complete amortization of some multi-year expenses.

Financial charges, EUR 1.9 million, are made up of EUR 0.6 million for negative foreign exchange rate and EUR 1.2 million for net financial charges, these latter unchanged over last year.

After deducting taxes for EUR 5.1 million (with a 45.8% tax rate), net profit amounts to EUR 5.9 million, down 27.1% over the first quarter last year.

During the quarter investments have been EUR 19.6 million, mostly related to the new pig-iron foundry in Poland, located nearby the existing disc machining plant.

Net financial position comes to EUR 159.8 million at 31st March 2005, from 143.7 million at year-end 2004.

Foreseeable evolution

The reference market where the Company operates are expected to continue the trend shown in the first months of the current year, thus rather unfavorable both at macroeconomic and sector level. Despite the difficult scenario, the orders in portfolio so far show a more dynamic trend of revenues than what registered in the first quarter.

Moreover, the start of the industrial plan and the corrective actions put in place on the cost side should improve margin levels.

Concerning ferrous material costs, the trend registered in 2004 should not replicate, despite their prices keep at exceptionally high levels.

Brembo set up a new production company in China

Brembo requested a permit to establish a new Company in the Beijing area, for the production and sale of braking components for the Original Equipment, mainly addressed to the Asiatic transplants of European and Japanese customers. Total investments of EUR 10 million for the coming two years and revenues -- working at full capacity -- of about EUR 20 million are expected.