Brembo open to further investment in Chinese JV as H1 profit tops forecast

MILAN (Reuters) - Brembo could consider expanding its investment in a newly announced joint venture in China with Gold Phoenix, its executive chairman told Reuters after the Italian brakes maker posted a 13% rise in first-half core earnings.

Brembo this week said it and Gold Phoenix had agreed to create a 50/50 JV to build in China Brembo's first large scale facility fully dedicated to producing pads for the aftermarket, with an overall investment of about 35 million euros over the next three years.

Brembo's Matteo Tiraboschi said that the market was "potentially huge".

"It might be that we decide to invest more than we have announced, and that this JV sees an acceleration compared to what we have initially imagined."

In the first half of the year Brembo's earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 305 million euros, helped by a 28% jump in sales and strong performance across all sectors.

Both sales and EBITDA exceeded an analysts' consensus provided by Intesa Sanpaolo.

Shares in the company rose as much as 6.6% after results were published and were up 3% by 1505 GMT.

EBITDA margin however weakened slightly to 17.5% from 19.9%, as a consequence of rising raw material costs.

"We are recovering part of the higher costs of raw materials, energy and logistics, which have hugely increased since the beginning of the year," Tiraboschi said. "But they keep rising, so we're somehow trailing".

The company said its order backlog remained robust and it expects a second half in line with the first six months in terms of revenues and margins, barring any extraordinary changes in the geopolitical situation, exchange rates and costs.

This means a full-year target of around 3.5 billion euros for revenues and of 600 million euros for EBITDA, Tiraboschi said.

(Reporting by Agnieszka Flak and Giulio Piovaccari; Editing by Keith Weir)