Ferrari (NYSE:RACE) New Car Sales + 11% in Q-3, Profit Doubles
Ferrari’s (NYSE:RACE) sales mix favored the entry level Portofino convertible in Q-3 rather than its high-margin Limited-Edition models on availability, weighing a bit on the Italian company’s earnings.
Investors are looking for reassurance that CEO Louis Camilleri can maintain Ferrari’s strong growth achieved under Sergio Marchionne who more than 2X the value of the group since he took it public in Y 2015. Mr. Marchionne died unexpectedly in July.
Ferrari’s Q-3 results delivered Monday showed strong demand for the Portofino, an 8-cylinder model priced at around $200,000 and 12-cylinder 812 Superfast.
But the higher shipments + 11% partially offset lower volumes of the $2-M LaFerrari Aperta hybrid convertible that is finishing its limited series run.
“The negative mix is driven to a great part by the success of the Portofino,” Camilleri said.
On a conference call with analysts, CEO Camilleri said the negative impact from the model sales mix would be short lived, as the entry-level Portofino helped to attract new customers who “tend to become loyal to the brand, go up the range and eventually buy the special series or limited edition models”.
Shares of Ferrari closed down 1.63% on the day in NYC.
Today’s results should be enough to keep us Ferrari Bulls content as Ferrari continues to grow earnings despite higher investments and the benefits of the LaFerrari Aperta wearing off, but the new Icona Monzas are just getting started.
The Q-3 is the 2nd set of results presented by CEO Camilleri. The sudden change at the Top jolted shareholders who had expected Mr. Marchionne to remain at the helm until Y 2021.
Investors did welcome a mid-term plan presented by CEO Camilleri in September, where he promised 15 new models, including hybrids, a utility FUV, and Special Editions in a drive to boost margins to more than 38%.
Mr. Camilleri said Monday 2 new models would be launched in 1-H of next year, he declined to give details.
He said the company’s order book remained “significant” and had expanded across all regions. Ferrari also had “considerable flexibility” to adjust to any potential trade issues, he added.
Asked about any potential US tariffs, he said these would have no material impact.
“We would pass that on to our customers and we don’t feel that would have a material impact,” he said.
Ferrari says its net earnings 2X’d in Q-3 thanks mostly to 1-off tax benefit.
The Iconic Italian sports car maker said that net earnings were EUR 287-M ($327-M) compared with EUR 141-M a year earlier.
The company said earnings grew 5% when excluding the patent box tax break, agreed on with Italian authorities, covering use of copyrights, patents, trademarks, design and know-how.
Ferrari’s deliveries were +11% to 2,262 vehicles driven by sales of the 812 Superfast and the Ferrari Portofino.
Europe and Middle East sales were up by double digits to 1,005. The Americas grew by 5% and greater China by 7%.
Ferrari forecast full-year sales at over 9,000 cars with profits of EUR 1.1-B.
There was a 19-M Euro hit to Q-3 earnings from currency swings, mainly from a fall in USD Vs USD.
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