Ferrari (NYSE:RACE) Beats, Profits Up Sharply, Stock Spikes
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.
|Metric||Q-1 2017||Q-1 2016||Change|
|Earnings before interest and tax (EBIT)||177-M||121-M||46%|
|EBIT margin||21.6%||18%||3.6 ppts|
|Earnings per share (EUR)||0.65||0.41||60%|
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.
- It designs, builds and sells a line of Supersports cars to retail buyers and sells spare parts for those cars and for older Ferraris.
- Its F1 racing team generates revenue via sponsorship’s and commercial opportunities.
- It builds engines for other automakers and racing teams.
- It licenses it name for luxury goods and collateral commercial opportunities
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 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 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.
- Shipments of about 8,400 vehicles Vs Y 2016 at 8,014 cars.
- Net revenue greater than EUR 3.3-B Vs Y 2016 at EUR 2.85-B
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) greater than EUR 950-M Vs Y 2016 at EUR 748-M.
- Net industrial debt to fall to about EUR 500 Vs Y 2016 at EUR 653-M.
|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)|