Brembo, an Italian manufacturer of brake systems, has adjusted its sales growth forecast for the year 2023, citing a significant deterioration in global political and economic conditions and the impact of recent strikes by the United Auto Workers (UAW) in the United States.
Previously anticipating a growth rate of around 10% for its 2023 full-year revenue, the company now expects mid to high single-digit growth.
Matteo Tiraboschi, the Executive Chairman of Brembo, explained that this adjustment reflects the need for a more cautious approach. Factors contributing to this shift include the challenges faced by the Chinese market, which struggled more than expected, and unfavorable exchange rates.
Tiraboschi noted that Brembo serves clients like Stellantis, GM, and Ford, and the UAW strikes in the U.S. have disrupted some of their production facilities throughout October and part of September.
Consequently, these interruptions have caused a slowdown in business for their suppliers, including Brembo.
As a result of this announcement, Brembo’s shares experienced a 1.5% decline by 1610 GMT, underperforming Italy’s blue-chip index.
Despite the adjustments in revenue growth expectations, Brembo remains committed to maintaining a core profit margin percentage in line with the previous year.
In the third quarter of 2023, Brembo reported a 1.3% decline in revenue, totaling 969 million euros (approximately $1.03 billion).
Additionally, earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by 11.8% to 156 million euros.
Regarding Brembo’s plan to relocate its registered office to the Netherlands, Tiraboschi stated that the company is currently proceeding with this plan.
However, it will assess the impact of new Italian rules on this matter once they are officially approved.
Italy’s parliament is currently deliberating on new capital market legislation, which would allow listed companies to issue shares granting key investors up to 10 times voting rights.
This move aims to solidify their control over the companies, mirroring the advantages offered by similar structures in the Netherlands.
Tiraboschi emphasized that while Brembo is continuing with its current plan, they will closely monitor and evaluate the implications of the legislation once it is finalized and all details become clear.