Profile: Ferrari’s (NYSE:RACE) New Boss Post-Marchionne

Profile: Ferrari’s (NYSE:RACE) New Boss Post-Marchionne

Profile: Ferrari’s (NYSE:RACE) New Boss Post-Marchionne

$RACE, $FCAU

Ferrari’s (NYSE:RACE) new boss Louis Camilleri, 63 anni, is an international tobacco industry veteran just may have what is needed to guide the iconic Italian luxury Supercar maker on its next lap forward, analysts and industry insiders are saying.

Mr. Camilleri was appointed Ferrari CEO on 21 July, succeeding Sergio Marchionne who fell seriously ill and later died after suffering complications following surgery.

The sudden change shook investors who had expected Mr. Marchionne, who nearly 3X’d Ferrari’s value since taking it public in October of 2015, to stay on as CEO and Chairman until Y 2021.

Mr. Camilleri is finishing a midterm strategy that is due in September and will show how the company known for its racing pedigree and powerful engines might shift towards making an FUV (SUV) and hybrid luxury Supercars.

Those who followed Mr. Camilleri’s career at tobacco group Altria (NYSE:MO) and later at Philip Morris International (PMI) said he has proven himself in an industry with a tough legal and regulatory environment.

Like Mr. Marchionne, he is known for growing shareholder value via spin-offs: he pared off Altria’s stake in Kraft Foods and later PMI to remove it from the US litigation risks.

He understands the consumer, branding and premiumization. He is a strong executor.

Mr. Marchionne orchestrated Ferrari’s spin-off from parent Fiat Chrysler, positioned it as a luxury brand rather than a car manufacturer and managed to do what few thought possible, run through a self-imposed cap of 7,000 vehicles per year without sacrificing its pricing power and exclusive appeal.

It June Ferrari’s shares hit a record high close at 148.90, the company that sold just under 8,400 vehicles last year was worth around $28-B, almost as much as Fiat Chrysler (NYSE:FCAU), which shipped 4.7-M cars.

With profit margins of 30%, strong pricing power and a customer waiting list of well over a year, Mr. Camilleri inherits a business that is firing on all cylinders.

Ferrari has posted several years of record earnings, helped by a number of Special Edition models.

But maintaining the high valuation will not be easy as emissions rules tighten, capital spending increases and the diverging interests of investors, racing fans, owners and collectors are increasingly more difficult to balance.

Mr. Camilleri faces investors and analysts for the 1st time Wednesday when Ferrari reports Q-2 earnings.

Mr. Camilleri is no stranger to Ferrari, as Chairman and former CEO of PMI, a longtime F1 sponsor, he has been attending Grand Prix for years.

Born in Egypt to a Maltese family, Mr. Camilleri has sat on the board of the Maranello Outfit since Y 2015 and is a Ferrari collector. He was close to Mr. Marchionne, who in turn sat on the Philip Morris board.

His familiarity with Mr. Marchionne’s plans was a Key reasons behind his appointment to ensure continuity

It is CEO Camilleri’s track record at PMI, where he is a pioneer in guiding the company towards reduced-risk cigarette alternatives that make him a good choice to lead Ferrari into its next phase, analysts said.

Ferrari said in February it would 2X core earnings to EUR 2-B by Y 2022 by pushing into hybrids, FUVs and new Special Editions and by expanding its ‘Tailor Made” program.

At the time of the IPO, Mr. Marchionne had promised to expand Ferrari into other luxury categories beyond Supercars, but the plan was put on ice to focus on cars 1st, expect CEO Camilleri will further that.

One of Mr. Camilleri’s Key challenges will be alleviating fears that any push into new territories would happen on Ferrari’s terms without sacrificing its exclusivity.

Mr. Marchionne had sought to calm fears by saying any utility vehicle with the Prancing Horse logo would be “Ferrari style” for “the selected few” and its claim to fame would not be “being able to climb rocks”.

Investors say they are confident Ferrari would continue powering ahead over the next 12-24 months because its fundamentals are strong, but it may be difficult to grow a stock that already rides on multiples higher than any other auto company and above many luxury goods makers.

Ferrari is a jewel of a company and requires extreme ability to manage and maintain Aristocrat market status.

Many of us that follow Ferrari believe that Mr. Camilleri is the right man at the wheel.

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 131 30 July 2018 -0.60 131.54 131.56 129.9 667,644
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Neutral (-0.15) Neutral (-0.17) Bearish (-0.31) Neutral (0.01)

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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