Ferrari (NYSE:RACE) Beats, Profits Up Sharply, Stock Spikes

Ferrari (NYSE:RACE) Beats, Profits Up Sharply, Stock Spikes

Ferrari (NYSE:RACE) Beats, Profits Up Sharply, Stock Spikes

$RACE

Thursday, Ferrari (NYSE:RACE), the iconic Italian maker of Supersports and racing cars, reported a 60% increase in Q-1 net profit (22% operating profit margin) on strong sales of some of its highest-powered and highest-priced models.

Ferrari’s revenue and profit both beat all analyst expectations, and shares rose sharply after the news was released before the bell on 4 May.

All financial numbers are shown in Euros (EUR).

On 4 May, 1 Euro = about 1.09 USD.

Metric Q-1 2017 Q-1 2016 Change
Revenue 821-M 675-M 22%
Vehicles shipped 2,003 1,882 6%
Earnings before interest and tax (EBIT) 177-M 121-M 46%
EBIT margin 21.6% 18% 3.6 ppts
Net profit 124-M 78-M 60%
Earnings per share (EUR) 0.65 0.41 60%

Data source: Ferrari N.V. “PPTS” = percentage points.

Ferrari’s 22% spike in revenue and its 3.6% gainer in EBIT margin were driven by increased sales of production and SE cars, plus an increase in sales of engines to other automakers.

Sales of Ferrari’s higher-priced 12-cyl models rose 50% from a year ago, offset a bit by a 3% decline in sales of less-profitable 8-cyl models.

Strong demand for the new 12-cylinder GTC4Lusso helped power Ferrari’s Q-1 profit gain.

 Ferrari has 4 lines of business, they are as follows:
  1. It designs, builds and sells a line of Supersports cars to retail buyers and sells spare parts for those cars and for older Ferraris.
  2. Its F1 racing team generates revenue via sponsorship’s and commercial opportunities.
  3. It builds engines for other automakers and racing teams.
  4. It licenses it name for luxury goods and collateral commercial opportunities
Revenue from cars and spare parts rose 21% from a year ago, to ERU 581-M. That gainer was driven by higher overall sales volumes, price increases, and a rise in sales of 12-cylinder models, including the GTC4Lusso, the F12tdf two-seater, and the limited-production LaFerrari Aperta HyperSupercar.

Ferrari built just 209 examples of the open-top  $3.4-M LaFerrari Aperta, that sold out immediately

Ferrari is also boosting revenue and profit on its sports cars via a bespoke program that allows customers ordering Ferraris to add exclusive features.

Revenue from sponsorship, commercial, and brand opportunities rose 4%, to EUR 123-M, on higher sponsorship revenue related to Ferrari’s F1 racing team.

Revenue from engines spiked 81%, to EUR 104-M.

Ferrari supplies engines to Fiat Chrysler Automobiles’ (NYSE:FCAU) Maserati brand, and Maserati sales rose 89% in the first quarter on strong results for its new Levante SUV. The gain from increased engine sales to Maserati was offset slightly by the end of an agreement to rent Ferrari racing engines to a rival F1 team.

Ferrari noted that its research and development costs rose by about EUR 15-M from a year ago, on efforts related to the development of gasoline-electric hybrid technology for its road and racing cars.

Ferrari’s Formula One team has won two of the 1st 4 races of the Y 2017 season.

Ferrari’s debt fell to about EUR 1.3-B from 1.4-B at the end of Y 2016, while its cash on hand rose to EUR 569 from 458-M at year-end. Ferrari’s non-GAAP “net industrial debt,” fell to EUR 578-M from 653-M at the end of Y 2016.

Ferrari maintained its positive guidance for the full year, management expects to beat its strong Y 2016 results as follows:
  1. Shipments of about 8,400 vehicles Vs Y 2016 at 8,014 cars.
  2. Net revenue greater than EUR 3.3-B Vs Y 2016 at EUR 2.85-B
  3. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) greater than EUR 950-M Vs Y 2016 at EUR 748-M.
  4. Net industrial debt to fall to about EUR 500 Vs Y 2016 at EUR 653-M.
Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 81.61 4 May 2017 5.59 78.63 81.74 78.52 1,612,388
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Bullish (0.45) Bullish (0.44) Bullish (0.46) Bullish (0.46)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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