Azernews.Az

By Bloomberg

Brembo SpA, which supplies brakes to Ferrari’s Formula One race cars, is expanding into aerospace by making landing gear and brakes for helicopters and planes to reduce its reliance on carmakers.

After winning its first contracts, the Italian company is considering acquisitions in the segment to speed growth, Executive Deputy Chairman Matteo Tiraboschi said in an interview. Brembo, which is also looking for a deal to expand its automotive business in China, could spend as much as 600 million euros ($665 million) on purchases, he said.

“We are looking for an accelerator” in the aerospace sector, Tiraboschi said at the company’s headquarters near Bergamo, about 35 miles east of Milan. “It’s a way to diversify beyond the automotive sector.”

Brembo’s expansion push is a response to the volatility and limited growth prospects in the global car market. Component manufacturers are also under pressure to cut costs and expand internationally as carmakers seek to work with a fewer number of large suppliers.

The rationale for auto-industry consolidation, championed by Fiat Chrysler’s Chief Executive Officer Sergio Marchionne, “works also for component makers,” Tiraboschi said. “Consolidation to create efficiencies is inevitable,” and Brembo wants to be an “aggregator.”

Billionaire Family

The manufacturer, which is controlled by the Bombassei family, has itself been “courted” by several foreign investors, said Tiraboschi, the son-in-law of Chairman Alberto Bombassei. The family owns 56.5 percent of Brembo and has a net worth of $1.7 billion, according to the Bloomberg Billionaires Index. The Bombassei clan has no plan to sell Brembo, Tiraboschi said.

Brembo got its start more than 50 years ago after a truck carrying Dunlop brakes for Alfa Romeo cars overturned in northern Italy. Emilio Bombassei’s small machine shop was asked to inspect the components for damage. During that process, the company figured it could produce the parts itself and subsequently won a supply contract with the Italian carmaker. Brembo now employs almost 8,000 people and will supply the brakes for the new Alfa Romeo Giulia sedan.

The Italian company expects sales to rise in a range of 10 percent to 11 percent this year from 1.8 billion euros in 2014. Ebitda margins will probably be steady at around 15.5 percent of revenue, held in check by costs to start new plants in the U.S., Tiraboschi said.