STEZZANO, ITALY— During the fourth quarter of 2008, the global financial crisis directly affected Brembo market segments causing a sizeable decline of passenger cars and light commercial vehicles demand. Most automakers reacted to the market scenario reducing fourth-quarter production and extending the year-end holiday season shutdown. In 2009 all extraordinary actions to reduce costs will continue, in particular in Europe and NAFTA, for an amount of about $38 million to $50 million.

Brembo reacted to the market slowdown by adopting extraordinary measures with a view to align its production levels to demand; workforce has been reduced in most plants in Italy and in its group subsidiaries. In addition, in Italy Brembo said it has begun temporary layoffs for factory workers. Brembo also implemented measures to control costs and working capital and curtailed or postponed some investment plans in order to limit the impact of the slowdown on margins and financial position.

Due to the above described scenario, fourth quarter revenues amounted to approximately $291 million, down 3.4 percent over previous year. This includes $28.6 million from recently acquired companies. Year to year, the quarter revenues are down 12.9 percent.

In particular, sales of applications for commercial vehicles sharply declined (-24.9 percent) after a long positive cycle and passenger car segment closed the quarter down 4.6 percent. Racing applications sales recorded a sound growth (+26.8 percent), in spite of the market uncertainty, and motorcycles sales were flat, confirming the trend started during the third quarter.

From a geographic point of view, the main drivers of sales slowdown were Brazil (-34.5 percent) and the European countries, in particular United Kingdom (-28 percent); NAFTA and Asia continued to grow thanks to the contribution of the recent acquisitions.

During the quarter, the cost of sales and other net operating costs amounted to $193.7 million, with a ratio of 66.6 percent to sales, compared to 63.3 percent for the same period in the previous year. Development costs capitalized as intangible assets amounted to $3.6 million ($8.4 million in 2007 forth quarter).

EBITDA for the 2008 fourth quarter amounted to $34.5 million (11.9 percent of revenues), compared to $47.5 million of previous year (15.8 percent of revenues).

For the quarter, revenues grew by 16.3 percent to $1,348.2 million. Such an amount includes $125 million connected with the recent acquisitions made in China, India, Italy, Spain and the U.S. Year to year revenue growth is 5.4 percent.

Net profit for the period was $49.6 million, down 35.2 percent compared to 2007 profit that benefited from positive non-recurring items.

During the month of January, passenger car sales were as sluggish as the previous months recording a decline of about 25 percent compared to the previous year and the coming months forecasts are not showing any signs of recovery. Consequently production levels of most car makers are significantly below last year.
In this scenario, Brembo order book is weak and the company said it will continue to adopt all the extraordinary measures needed to align production to demand.

Brembo will also continue with all actions implemented during the fourth quarter of 2008 to reduce costs, inventory and investments and to ensure customers honor payment terms. Furthermore, Brembo said it will expand its temporary layoffs to all headquarters employees in Italy, starting in March.  The number of employees as of Dec. 31, 2008 was 5,847 (5,304 at Dec. 31, 2007). Year to year, Brembo personnel is down 205 employees.