Ferrari Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 2, 2023

There are 14 speakers on the call.

Operator

Good day, and thank you for standing by, and welcome to the Ferrari 2023 Q2 Results Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer I would now like to hand the conference over your speaker today, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Speaker 1

Thank you, Roberto, and welcome to everyone who is joining us. Today, we plan to cover the group's Q2 2023 operating results and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the Group CEO, Mr. Benedetto Vina and Group CFO, Mr. Antonio Picca Piccon.

Speaker 1

All relevant materials are available in the Investors section of the Ferrari corporate website. And at the end of the presentation, we will be available to answer your questions. Before we begin, let me remind you that any forward looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on Page 2 of today's presentation and the call will be governed by this language. With that said, I'd like to turn the call over to Benedetto.

Speaker 2

Good afternoon, Colette. Thank you, everyone, for joining us today. I would like to start by thanking all the women and men at Ferrari for their passion, dedication and sense of belonging. Without them, without their agility and nimbleness, the exceptional result of the past quarter would not have been possible. Definitely, Q2 was a quarter dense of many positive milestones on all fronts.

Speaker 2

4 are the key messages of this call that Antonio and I intend to pass to you. 1, record high exceptional results driven by product mix and personalizations. Stronger than expected personalization lead us to increase the full year guidance on all fronts. 2, our order book remains stunningly high across all geographies and the full product range, Thanks to robust order intake. 3, the geographical pattern of our shipment in the last quarter As in all, the other quarters reflect our deliberate allocation plans Along the controlled growth trajectory and that not at all correlated with the respective market track.

Speaker 2

In the 1st semester, our shipments grew by 4% year over year with all regions up, Remarkable 14% up of Mainland China, Hong Kong and Taiwan, and 7% up of the Americas. 4, we are on track with our product strategy and carbon neutrality journey. So now let's start from our exceptional second quarter earnings. And I'm very pleased to highlight the following three key Data. Revenues at nearly €1,500,000,000 up 14% versus the prior year, Even more remarkable in light of shipments substantially flat year over year.

Speaker 2

Adjusted EBITDA is about €590,000,000 with a 40% margin. Industrial free cash flow generation is approximately €140,000,000 Interesting to note that it took us only 6 months to surpass the €1,000,000,000 EBITDA threshold, while it took the entire 2017 to pass that same level, A result that everyone at Ferrari contributed to reach. Beyond these strong financial results, In the quarter, there were other important milestones, which deserve to take the spotlight. Racing world first. Sunday afternoon, June 11, 2023, was an unforgettable day for Ferrari.

Speaker 2

58 years after our last participation, We return to victory in the top class of the WEC with the podium at Le Mans on the centenary of the world's most famous endurance race. A few days later, With a parade through the street of the city here in Maranello and in our factory, we celebrated the victory with the 499P team, All Ferrari colleagues, our partners and our enlarged community, why It is important for all of us to celebrate this victory because once again, it testifies the effort and the willingness to always push The boundaries of technology and innovation. Racing is our heritage, and more than ever, it is a stimulus to further innovate. It's the will to progress that we always need to keep alive. It's the inheritance of our founders that we need to nurture constantly With confident humility, with the same spirit, we started a few months ago the F1 championship, but with a competitiveness level below our expectation.

Speaker 2

In some recent races, Such as the last one of last weekend in Spa Francorchamps, we saw some sign of improvement. Clearly, We want to keep improving and we are working day and night to make our cars more competitive. Now let's talk about sports cars And in particular about our newly born special limited series SF90xxstradale and Spider. Derived from SF90, they have more than 1,000 horsepower, are amazingly beautiful, Embed the recently patented Extra Boost Vehicle Dynamics feature directly derived from Formula 1 And they use radical new aerodynamic solution, including a fixed rear spoilers. The last time We saw it on a Ferrari was in the mid-90s with the F50 supercars.

Speaker 2

Apart from these unique technical features, I'd also like to underline the strong client traction. And in fact, both of them were already sold out to our most loyal clients Prior to the official unveil. The extremely positive reaction to these two launches is the most recent signal To the strong desirability of our brand, further indicators to that are: Firstly, The enthusiastic reception to our exceptional product offering led by the Roma Spiders, Tempurosangue, which commenced deliveries in June as planned. Secondly, the very robust order book in all geographies, Further consolidating the visibility that we continue to enjoy well into 2025. Thirdly, the overall persisting dynamism of the Ferrari pre owned market, which translates Impossound's residual values.

Speaker 2

And last but not least, the impressive attendance level To the world of Ferrari experiences, where as we said during the last Capital Market Day, we want to focus our attention more and more in the future. Indeed, in the quarter, we organized 3 highly engaging activities With our community to further strengthen the bonds, the tribute to Le Mans in France, Univeso Ferrari in South Korea and the Cavalcade in Italy. The tribute to Reman took place with 40 crews Together with Casa Ferrari, a dedicated and exclusive hospitality, which saw over 500 clients, dealers And partners enjoyed the race over the long weekend. It was also the stage for the launch of the Hyper Club. What is it?

Speaker 2

It's a 3 year program, limited to 100 membership already sold out that gives Privileged access to the 24 hours of Le Mans, it's on track facilities and the 499P race team. This is the first time we launched such a club and this successful reception is a confirmation of the goodness of our strategy to enrich the experience we are offering to our clients. And now, Universal Ferrari. Universal Ferrari is An immersive exhibition showcasing the world of Ferrari. In June beginning of June, we brought Maranello to Seoul.

Speaker 2

It was the first time It opened its doors in Korea, hosting more than 3,000 people spanning from clients to fans. I attended it And I could experience personally the desirability of our brand in a country where we increased our deliveries 3 times in the last 5 years Where the average age of our client is well below 40 years. For the cavalcade, Instead, approximately 120 Ferraris come from all over the world to Rome. The event ended with a charity auction For initiatives to educate young people, one of the pillars of Ferrari's ESG activities. All the proceeds From the auction, we'll go to Save the Children to support educational projects in a local school.

Speaker 2

It's very important for us to thank The local communities that host our events. We also continue tirelessly to improve the efficiency of all our processes. In Q2, we wanted to play our part in inspiring a wider change with 3 additional steps aiming to reach Carbon neutrality by 2,030 as we committed during last Capital Market Day. The first one, it's since May, we have the first engine built from 100% Recycled aluminum in our foundry, a prototype that we are currently testing. The second, we are on track With the construction of the building, we are completing the walls and we are ready to start to install the equipment in September To be up and running in June 24 as committed during the Capital Market Day of June 2022.

Speaker 2

In 2 years, the entire building will run on renewable energy. Last but not least, we hosted over 60 sponsors and partners at our 1st sustainability workshop, a chance to discuss carbon reduction projects Acting as a catalyst for change. And now switching gears to the lifestyle, I'd like to underline that we continued To execute against our strategy, we have a nimble approach and we saw encouraging signs to support our vision. Le Mans Was the perfect stage for a Ferrari shop in the fun zone with an enthusiastic response from client. And in Le Mans, we also recorded an increase in average ticket at our corner boutique in Casa Ferrari as we saw in Rome with our cavalcade clients.

Speaker 2

Lastly, our museum performed extremely well with a +30 4 percent Year over year traffic presence increased in the 1st 6 months. And now I will leave the stage to Antonio to enter into the earnings details.

Speaker 3

Thank you, Benedetto, And good morning or afternoon to everyone joining us today. Starting on Page 4, We present the highlights of the 2nd quarter results, which show a robust progress of the year. In fact, as we guided last time we spoke, the Q2 of 2023 was very strong, Sustained by a continuing remarkable business performance with a rich product mix and highly personalized products. There were also positive timing effects and other occurrences, which contain our net operating expenses in the quarter and brought to the exceptionally high percentage margins that we report. Therefore, with shipments basically flat versus the prior year, Revenues were up more than 14% and adjusted EBITDA increased roughly 32%.

Speaker 3

Adjusted EBITDA and EBIT margins reached 40% and 29.7%, respectively, leading to an adjusted net profit margin of 22.7%. On this basis, We have decided to upgrade our guidance for the year on all metrics as we'll discuss in few minutes. On page 5, you can see the details of the Q2 2023 shipments. As mentioned by Benedetto, in the quarter, We continue to serve a very high order book with deliveries which rebalanced the 1st semester and in line with our volume, Geographic and product mix strategy for the year. Thus, we draw EMEA up double digit versus the prior year, While deliveries in Americas, Mainland China, Hong Kong and Taiwan and rest of APAC ended up being lower compared to Q2 2022.

Speaker 3

Shipments in the quarter were mainly driven by the 296GTB, the Roma and the Portofino M, While the Tuning6 GTS and the A12 Competizione were in ramp up phase. The allocations of the Daitrona SP3 continued as planned and we commenced the Thursdays of the Purosangue. As we continue to execute on our electrification journey, the hybrid weight on total deliveries has further improved, Reaching 43%, more than doubled compared to last year. On Page 6, you can see the walk of our group net revenues growing 12.8% at constant currency. The growth in cars and spare parts was driven by a richer product mix sustained by the Daytona SP3 And the A12 Competizione family as well as a continuing very strong contribution from personalizations and pricing.

Speaker 3

Personalizations mainly sustained by Carbon Look and Liberty's offering were widely Spread among the portfolio and stood at 18% in proportion to revenues from cars and spare parts. Sponsorship commercial and brand reflected the better prior year Formula 1 ranking, new sponsorships And the contribution from lifestyle activities, mainly led by entertainment and retail. Engines revenues declined in line with the reduction of supplies to Maserati as the agreement gets closer to its maturity. Currency had a positive impact, mainly following the U. S.

Speaker 3

Dollar dynamics. Moving to page 7, the change in adjusted EBIT is explained by the following variances: Volume flat and reflecting the quarterly allocations plan. Mix and price strongly positive For €94,000,000 driven by the richer product mix sustained by the Dayton SPTV and the A12 Competizione and ESF90 families, The increased contribution from personalization and pricing. Industrial and R and D expenses grew EUR 36,000,000 Mainly due to higher depreciation and amortization and once again I want to flag it, continuing cost inflation partially offset by quarter specific lower Formula 1 expenses net of technology related government incentives. SG and A were negative for €15,000,000 mainly reflecting the company's digital infrastructure and organizational development as well as marketing activities.

Speaker 3

Other was positive for €54,000,000 mainly reflecting the combined effect of Higher commercial revenues from better prior year Formula 1 ranking and the lower cost due to the revised Formula 1 in season ranking New sponsorships, higher contribution from lifestyle activities and a positive adjustment to car environmental provisions Due to more favorable market conditions, the total net impact of currency was positive for €20,000,000 Based on the just listed items, we reached an exceptional EBITDA margin of 40%. Excluding the mentioned timing and other positive effects, The EBITDA margin in the quarter would have been anyhow the highest of the year and slightly above our full year guidance. Turning to page 8, our industrial free cash flow generation for the quarter was solid At €138,000,000 reflecting the increased profitability, partially offset by A negative change in working capital provisions and other mainly linked to the increased inventory value both in relation to the yearly production planning and to the richer product mix. As flagged in the previous quarter, our inventories will remain high throughout the year to preserve our agility to manage the still complex dynamics of our supply chain. Capital expenditure for €198,000,000 in line with our product and infrastructure development and consistent with the full year target of approximately €850,000,000 Net industrial debt at the end of June was €331,000,000 higher compared to March 23, Reflecting our capital allocation strategy, we paid EUR328,000,000 in dividend in line with our increased dividend policy €83,000,000 of share repurchases in the quarter, €359,000,000 since the 2022 Capital Markets Day.

Speaker 3

To conclude, on Page 9, we upgraded 2023 guidance as thereby described. This It's essentially driven by the trend of personalization that we are confident will continue stronger than originally anticipated And higher racing revenues from sponsorships and commercial albeit to a lesser extent. We consider all of this net of the inflationary pressure that I mentioned also for the quarter and which leads us to confirm our percentage margins for the full year. The very robust results we presented today together with the continued strong momentum we are enjoying Truly give us further confidence in the execution of our business plan. With that said, I turn the call over to Nicoletta.

Speaker 3

Thank you.

Speaker 1

Thank you, Antonio. Roberto, we are now ready to start the Q and A session.

Operator

We are now taking the first question. Please standby. The first question from Susie Tibaldi from UBS. Please go ahead. Your line is open.

Speaker 4

Hi, good afternoon. Thanks for taking my questions. My first one would be on the impact of inflation that you have mentioned a few times. Would you be able to give us a quantitative indication on of how much this is weighing on your OpEx of profitability? And also are you planning to make any price adjustments to offset this?

Speaker 4

Secondly, in the 1st few months of the year, Have you observed any I mean, so far any change in the way your consumers and prospective consumers behave? It sounds like there hasn't been really Any change in the demand patterns that you're seeing? So I just wanted to confirm that. And whether you expect for the rest of the year any change at all? And then lastly on your e building, which will open in mid-twenty 24, Given that the expectation of the first EV unveils in 2025, how should we think about the ramp up of this new ebuilding?

Speaker 4

Thank you.

Speaker 2

Thank you, Susie. So let's start from the third one. The building, it's will be, Let me say up and running. We have all equipment in mid next year in June, exactly 2 years after we added the Capital Market Day here. And this will be in a building that will develop strategic component for the electric cars, but also will Guarantee us the flexibility to assemble cars that are not only electric.

Speaker 2

In fact, we will start also to assemble over there cars that are not electric. When it comes to another important dimension of e building, let's consider that this will be a building that will use more state of the art equipment Perhaps, let's say, we've all the renewable energy and we'll have the flexibility that we need in a company such as Ferrari that is Always pushing for uniqueness and desirability. Another important point for the Part of your question is that we are on track because we will unveil our electric Ferrari in Q4 end of 2025 And some component as we said to you last year will be assembled over there. So The team I think did a great job because we are completely on track in the last year for some Component like the cement, the concrete or whatever, it was not easy. So here, if you pass by our company, you can see the mushroom getting taller and taller Any day.

Speaker 2

The second point was about the customer, the client behavior. Well, I can tell you that We do not have any change. We don't see any change on the consumer behavior. If I go to see the order Sure, compliment that as I told you very, very high and it goes well into 2025. Well, I see that The split among the different regions of the order book is very good.

Speaker 2

They are all growing. So we don't see any change. The only thing I can add is that there are some region like what I mentioned before in Korea, for example, That are growing at a good pace. But all the client in all the region Let me say, do not show any change in their, I would say, in their pattern To order our cash. For the inflation and the price,

Speaker 3

Yes. Thank you. Thanks for the question. I think what we are assuming here is to be in line with the general economy, so between 4% 5% as an overall impact over the year. And with respect to price increase, obviously, we are mindful and willing to protect our margins And that's what we keep on doing.

Speaker 3

Obviously, at the same time, we have a strong order book, so we need to manage it very carefully and Basically preserve it while maintaining a clear and fair relationship with our clients.

Speaker 4

Thanks. And just a quick follow-up on the E Building as you're planning also to assemble some of non electric car. Shall we still think about this 15,000 units during the current plan as a cap or does the new building give you more flexibility?

Speaker 2

I understand there is a lot of curiosity in these numbers. What I can tell you is that we will Always sell 1 car less than the market demands. And today what the e building will do for us It's 2 things. Number 1, to guarantee us more flexibility, so we can accommodate more, let me say, Freedom in the personalization we offer to our clients. So this is the flexibility.

Speaker 2

The second is about having a process It is more sustainable, the manufacturing process. It is more sustainable because we are using state of the art equipment that Let's say, help us to go in the direction of the carbon neutrality by 2,030. So flexibility It's key for us and use of, let me say, state of the art equipment.

Speaker 4

Perfect. Thank you.

Speaker 3

Thank you.

Operator

Thank you for your question. We are now taking the next question. Please standby. The next question from Giulio Pescatore from BNP Paribas. Please go ahead.

Operator

Your line is open.

Speaker 5

Hi, thanks for taking my question. The first one for Antonio on the guidance. Why should we expect a decline in margin sequentially in H2 Of about 3.50 bps compared to the first half, especially if we consider the model momentum that you have in the second half with, I guess, higher Shipments of the Purosangue, higher shipments of the Comperezza, higher shipments of the GTS. So I mean your model momentum seems to be Improving in second half and you're guiding for a very steep decline in margin. Then the second one on the Prosango deliveries, It feels like deliveries in the 2nd quarter weren't very elevated.

Speaker 5

Can you maybe confirm or give us an indication of where you stand in terms of the ramp up? And if you could also give us an indication of what percentage of the full year shipments roughly will be made up of the Boursandway this year? So the last question on the margins. In Q2, you were not far from 30% on the EBIT level. I mean that's the upper end of your 2026 target.

Speaker 5

And while I know that it's just 1 quarter and we shouldn't extrapolate, that's what you're going to tell me. But I was wondering if you're planning to maybe invite us back to Maranello Potentially for the unveil of the new plant next year for an update on the business plan. Thank you.

Speaker 2

So the last one, you are invited to come to see the plant, but we will not have the Capital Market Day in June next year. I'll comment about the percentage. Okay, to Purosangue, sorry, we started to deliver Porosango in Q2 as planned. So we will have a ramp up basically In the second half of the year, I can tell you that the volume of the Porrasangu this year will be below 10% In terms of the annual production volume?

Speaker 3

And with respect to your first question, Giulio, thanks for that. I'll try and explain Through the review of the slides, how we see the rest of the year and how we Q2 basically performed. I think that's well. Q2 was designed to be the stronger quarter of the year. I think we mentioned a couple of times in previous calls.

Speaker 3

And this happened actually, and the margin for that quarter was already higher than the guidance for the full year. But it was enhanced by a couple of elements. One, some timing effects, meaning positive that were already in our numbers expected for Q3 and that happened to come earlier. Some other there were adjustments unexpected adjustments to our assumption that will not be repeated. And the 3rd element is, of course, the strong flow of personalization.

Speaker 3

That was also a surprise. At the same time, if I take out the timing impact and the let me call it non repeatable element And I look at the 2nd part of the year, I think the then take into consideration also the inflation that is continuing stronger than we would have expected on It's difficult for us to guide you to a level of margins that is strongly above the levels that we Guided at the very beginning of the year. That's why we confirm 38%. Because obviously the cost base is higher because of the inflation And that's basically taking a part of the positive impact from the additional revenues from personalization responses.

Speaker 5

Okay. Thank you. And just following up on that, is it fair to say that reversal of the bonuses from Formula 1, Which normally happens in Q3

Speaker 3

and this time happens in Q2. Is it fair

Speaker 5

to say that it should be around EUR 10,000,000, EUR 15,000,000, maybe EUR 20,000,000? Can you give us maybe an order of magnitude on this element?

Speaker 3

Yes. Obviously hopefully, it should not happen, not in the second nor in the Q3 or But anyway, it happened. We recognized in the Q2 the fact that we cannot win this year mathematically So we basically adjusted our estimate to the assumption to get the assumption to get second and the impact is approximately EUR 10,000,000 in the quarter.

Speaker 5

Perfect. Thank you very much and good luck.

Speaker 2

Thank

Operator

you. Thank you for your question. We are now taking the next question. And the next question from Monica Bossio from Intesa Sanpaolo. Please go ahead.

Operator

Your line is open.

Speaker 6

Thank you and good afternoon. I have Two questions. The first one is on Purosangue. You opened the order book for 2026. I was wondering if you can give us some flavor on how it's going and how long that the order book For Purosang, where it stands now.

Speaker 6

The second question, I have 3 actually. The second is on China. I perfectly understand that the distribution of the shipments for the quarter do not reflect The trend of the demand. But I remember that in the Q1, you told us that by year end, Shipments in China will not be in excess of 10%, is it right? Can you confirm also in this occasion?

Speaker 6

And the third one is on the new special series. I was wondering if you can give us a flavor on the breakdown Of the customers by regions, there is a specific Concentration in one region or in another. And if you think that the new special series will carry And higher weight of personalization or not, specifically as for the carbon component.

Speaker 2

Thank you, Monica. So let's start from the first one, the story of the Purosangue. As we told you last time in May, we reopened the orders for 2026. And I can tell you that it's going very well. We are collecting, let's say, orders for the final tail, okay?

Speaker 2

So here, it's The car continues to have a very, very strong traction. The second one was about China shipment. You remember very well. We said that we deliberately fixed, let's say, the sales the shapes of Our shipment, let me say, to 10%, 10%, 11%. And I think This is I mean, we are on track with this plan.

Speaker 2

And then about the customer, if I understand well, I will repeat. What is If you see any change in the customer base pattern, that's what I understood, because the customer penetration. Let's say the special series, let me say that we are SF90XX Both Stradale and Spider, let's say, we are reflecting, if you want, The same pattern of the top end VIP clients. So there are some regions clearly that do not have yet too many Client that do not have a big allocation. Just remember that the special series is reserved to the top part Of our client pyramid, let's say.

Speaker 2

So the traction of this car has been very strong. The people I mean, I attended a couple Session of the presentation of our colleague from engineers, the marketers and I can tell you that when the car was unveiled, Even without stepping in the car, the several people, I was with European, I was with Asian, I was with American and Japanese, They all loved, let me say, the cars. So when it comes to The story of personalization, it's what Antonio, what I said during this our introduction. We see this trend that is Better than expected. The people are, let's say, more and more happy to add personalization to the cash.

Speaker 2

The carbon look It's something that we are discovering as an interesting trend, definitely. Okay.

Speaker 6

Thank you, Bernadette. Thank you.

Operator

We are now taking the next question. And the next question from Henning Cosman from Barclays. Please go ahead. Your line is

Speaker 7

open. Hi, thank you very much for taking the question. The first one is on the order book. I just want to make sure I'm not missing something or reading too much or too little into the attributes you're using for your order book and order intake. So when you say solid Order book or robust order intake, is that in any way less than you have previously indicated?

Speaker 7

I thought we had Previously talked about record as an attribute or even sold out when discussing Individual model. So I just want to make sure we're not missing anything there. If there's anything So that you want us to read into the attributes, if you could please let us know. And perhaps another way about Asking about the margin trajectory in H2 as a second question. When we talk about personalizations, I appreciate it was a positive surprise In H1, both Q1 and Q2.

Speaker 7

And Antonio, you said it's reflected in the full year guidance increase already. I understand that. But Could you please perhaps help us understand if we are now expecting a Continuously higher personalization rates. So are we basically now at the new run rate and we are extrapolating that? Or are your expectations for the second half that it's as low as you had originally expected and you think one was more of a one off and we're now dropping back to your original expectations, both perhaps for the full year 2023 and beyond if you could?

Speaker 7

Thank you very much.

Speaker 2

Thank you, Henning. I think that I think the first one and Antonio will take a second on the personalization trend and the margin. I like your question when you say solid or robust. Well, for us, solid or robust means that the order book This quarter is higher than the previous quarter. It's a good point.

Speaker 2

We'll make sure that in the next call we'll have only one name, one objective. What this means for us means that today is bigger than it was. So trust us, next year, next quarter Well, there's only one word. The personalization and margin

Speaker 3

Maybe before coming to that, I think you asked us about the order intake. Be mindful that this depends also on the number of models that are available for order. So they may change from month to month. So there are period of time when we are open for taking order for a number a larger number of model and some other period such as today, for example, where we just have 2.

Speaker 2

So today we have 2 hybrid and 2 thermal. We have

Speaker 3

4 26 GTS, GTV. With respect to your question, which is a very important one, personalization, I think I mentioned already in a number of Thanks. On personalization, we give the flexibility of our clients to define what they want to have on their car between 4 3 months before delivery, which gives visibility, which is partial during the course of the year. Based on what we know today, I think we are confident that For the rest of 2023, we remain in line with the flow that we have seen during the first half, okay? But obviously, it becomes difficult to project any further.

Speaker 3

And this has been one of the reasons why we said this is at the root Of the improvement of the guidance that we have just delivered today of the sales.

Operator

We are now taking the next question. And the next question from Steven Reitman from Societe Generale. Please go ahead. Your line is open.

Speaker 8

Thank you. Good afternoon. Question first of all on Ipirusangue. As you reopened the order book for 20 26 build slots, having closed it earlier this year when you said that the demand was 4 to 5 times higher than you'd been anticipating when you first launched the vehicle. I think the question was asked before, but I didn't quite maybe get the answer of how long is it likely this The order window is going to be open on the 26 build slots or you're already looking at 2027 build slots as well.

Speaker 8

You also mentioned on the personalization that it was Spread across the models. It would seem to me that one of the reasons why the personalization was also going up was because in order to secure even a build slot for a pure Sangue, it probably makes sense for your customers to order as heavily personalized as possible in order to increase the attractiveness and to make them a more desirable customer Than a vehicle that is maybe less heavily spec. Thank you.

Speaker 2

Hi, Stephen. So You're right. At the beginning, we had to stop the order taking order of Porosango because the speed of order intake was 4, 5 times higher than we planned. Then we settled, we organized it also with all the supply chain. So we are planning to take order on Porosango for all 2026.

Speaker 2

Okay. This is the answer to your first question. Clearly, when you have a car with 4 seats Instead of 2, you have more option on the personalization to offer to the client. But I can tell you that If I go to see the trend of the personalization across all, let me say, the model, all the cars, I mean, there is a trend that is touching all our model and this is true across all geographies. I think that the people considering that we said it clearly, we do not want to increase a lot the volume.

Speaker 2

They are more Tailoring the cars like their personal dress. So they are putting a lot of features. Carbon look is one of these deliveries. The Scudetto, I think There are a lot of features that in the past the client were not looking at so much. This is what we see.

Speaker 2

This is what we see. It can be also reflected Really, we see it in Europe, we see in Asia, we see in U. S. So that's where we are, Stephen.

Speaker 8

Are there limitations that you have internally in terms of having enough craftsman to fulfill all the desires of the customers? And How important will your new paint shop be when you open that?

Speaker 2

No, we don't have this limitation. I can tell you that For sure, when you talk about the carbon look, the process to make carbon look component is very much, Let's say handcrafted, but we have a solid supply chain over there with different suppliers With whom we have really strategic relation. So we feel that we are confident that we can address the personalization in the right way. If you want the stress test we did ourselves last year overall on the volume increase, it has been very Helpful. And a posteriori, it has been a wise decision.

Speaker 8

Thank you very much.

Speaker 2

Thank you, Stephen.

Operator

Thank you for your question. We are now taking the next question. Please stand by. And the next question from Anthony Diks from ODDO BHF. Please go ahead.

Operator

Your line is open.

Speaker 9

Yes. Hi. Thank you for taking my question. My first question was on the EBIT bridge. You have the others bucket at €54,000,000 impact in Q2.

Speaker 9

So you mentioned some of the drivers and thank you for giving us the F1 provision amounts. But can you possibly provide some further granularity into the other components of that item? And also is that €54,000,000 The non repeatable impact, as you mentioned, or is there some that carry through to H2? And also in terms of the F1 provision, in particular, think I heard that you are now basing your assumptions on 2nd place in the Constancler's ranking. You're currently 4th place today.

Speaker 9

So I mean hypothetically, if you were to maintain that 4th place position, should we expect the similar magnitude of provision reversal at a later point in the year. And then I had a quick second question on the FX impact, which turned negative in the quarter. So I was just wondering if you could provide some further information on how you expect that to evolve considering your hedging policy. And then a very small third one also. I was wondering if you could provide the amount of Dayton SB3s That you delivered in Q2.

Speaker 9

Thank you.

Speaker 3

The question or the question not for me. Okay. Let's start from the last one. I think in terms of the Daytona, we are about around 30 units in the quarter. The FX, don't be mistaken, it's actually positive the overall impact, which is the sum up of the impact of the hedges of last year and the negatives in terms of the Exchange rates, so it's the second and the second before last column in the EBIT chart.

Speaker 3

In terms of the reconciliation between What we have in other and what we have in terms of the revenues from, Let me say items that are different from cars, parts and engines. I think it's important that I explain. In other, we have all the positives that come from the resin revenues. We have obviously the part of the portion, which is related to ranking our positioning in In the F1 championship. And then we have the let me call it non repeatable items.

Speaker 3

In this quarter, really no repeatable, I think we had the downward adjustment of the provisions for the carbon emissions, Which is about EUR 10,000,000 in the quarter. So this basically allows you a full reconciliation between what you would expect Our revenues and what you have in the EBIT in other EBIT column. And then you asked about the impact from Possibly becoming hopefully unlikely 4th rather than 2nd. And the impact is Lower it's lower compared to what we have from the first to the second.

Speaker 9

Okay, perfect. Thank you very much.

Speaker 3

Welcome.

Operator

Thank you for your question. We are now taking the next question. And the next question from Philippe Coutuos from Jefferies. Please go ahead. Your line is open.

Speaker 10

Yes. Thank you and good afternoon and thank you very much for explanation about When you say every quarter, you're surprised by personalization. I understand that people adjust what they want in their cars in the 1st few months before the delivery. That was very helpful. Most of my questions were asked.

Speaker 10

And I was wondering though about racing. You did very well in the Le Mans 24 hour races this year. And I'm just wondering, do you think there's scope for another big racing Event or whether the endurance races could be repeated like 4 times a year instead of an annual event, Something that would create a business similar or kind of semi spirited is what we've seen in F1 because there's been an amazing revival of F1 and there's no reason why there's no for other races and whether maybe you even take the lead in trying to organize bigger events and that would be a bigger part of your business model? Thank you.

Speaker 2

Yes. I'll take this question. So when it comes to racing today, let's say, we have, I would say 3 area of focus. 1 is F1. The second is what is the Endurance And where Le Man belongs to.

Speaker 2

And the third one is more on the customer relationship management, like the Corsek Liente, The challenge of the finale Mondiale, well these are the areas where we are focused today and where we intend to be focused also for the future. So today, we want to be when we say that one of the values of our company is heritage and innovation, when You know that Ferrari has been starting a lot with the endurance championships in the beginning. So we are present over there and we are present in Formula 1. We want to offer this kind of unique experience on the track also to our clients. That's where we are.

Speaker 2

Thank you, Philippe.

Operator

Thank you for your question. We're now taking the next question. And the next question from Tomi Narayan from RBCCM, please go ahead. Your line is open.

Speaker 11

Hi, thanks for taking the question. A quick clarification on the E building, So that will be ready in 2024, but I guess the first full electric Ferrari won't be introduced until the end of 2025. Just curious, maybe why that gap? I understand it will also be used for ICE cars as well, but just curious if I could just understand that better. And then on Pure Songwe, it would be helpful to just understand some of the customer demographics, the take rate there.

Speaker 11

Is it Is there a percentage of buyers perhaps that are new to Ferrari? Presumably, this is a very different customer subset. Just curious now that you've seen Some of the deliveries, who really is taking these. And then lastly, the SF90 Stradale uses Yaasa Motor, I believe. We learned recently from a luxury carmaker, recently announcing it'd be using Powertrain electric components from a pure play EV maker.

Speaker 11

Just curious as to what went into your selection of Yahsat? And If you consider other providers here and does this necessarily indicate how you think about your future EV aspirations? Thanks.

Speaker 2

Thank you, Tom. So I start from the first one, the story of e building. And I understand that you want some clarification. So let's remember, June 22, we said we are going to be ready for the building in June 24 And that will happen. In June 24, we'll start to produce something in this line that is different from electric cash.

Speaker 2

Then end of 2025, we will have in the EBITDA, we will announce direct recast And clearly, the day after the year after, we will have the electric car getting out of that building. So this is the schedule. And that's the reason why I insisted a lot on an E building that is on one side flexible Because it allows to build a different kind of cars. On the other side, by using renewable energy, fully renewable energy, it allows to develop strategic component for our electric cars. The second about the Burosang with the demographics.

Speaker 2

Well, The demographics of the Bora San Juan is not so much different from the overall demographics. What I can tell you is that very often we will see behind The name of the Ferrarista, we will have a name of a Ferrarista, a man, But most of the time, the user will be the partners, the women, because I told us the previous call, when we attended the event of loan to Purosangue in September, very often the people were asking if they could get 2, Because for sure one and only one would have been used by the partners. The third one is about SF90XX. Well, when you talk about an electric car, for sure, there are 3 important blocks. 1 is the battery, 1 is the engine And then there is another block that is very important is the power electronics in the middle.

Speaker 2

It's not one alone that is making It's the interplay of these three elements, the way they work together that That work that make a difference. In the future, as we said in Capital Market Day, We will have also our own electric engine F1 derived that will be used together with a new kind of electronics.

Speaker 11

Okay, got it. Thanks.

Speaker 2

Thank you.

Operator

Thank you for your question. We are now taking the next question. And the next question from George Gallegos from GS. Please go ahead. Your line is open.

Speaker 12

Great. Thank you and thank you for taking my questions. I had two questions really. The first one is just on special series. Given the very strong demand you always see for special series, Would you consider having more than one special series in production at the same time?

Speaker 12

At the moment, it feels like You introduced them sequentially, but presumably they would be equally special if you had a special series variant, the SF90 And the 296 in production at the same time, given they are 2 different models. So that was the first question. The second one was whether you could just Clarify where you are in terms of DAYTONA shipments. Out of the total units that you plan to deliver, Are you roughly 30% through, 50% through or any color there would be much appreciated? Thank you.

Speaker 2

Okay. So for the special series, we do not we limit all of the superposition between special series. There is some special series superposition sometimes between the tail of production of the previous one and the ramp up of the following one. About A12 competition and SF90 ex extra dollar, but the superposition is very minimal, Okay. They are pretty much, let's say, evenly distributed.

Speaker 2

And then there is the other Question was on the Dayton

Speaker 3

and the number of units for the quarter compared to the year. I think you can assume they were even evenly distributed for the quarter.

Operator

Thank you for your question.

Speaker 2

Thank you, Jos.

Operator

We are now taking the next question. And the next question is from Martino D'Ambrogi from Equita. Please go ahead. Your line is open.

Speaker 13

Thank you. Yes, thank you. Good afternoon, good morning, everybody. My first question is a general question on the hybrid because you are now in the region of 40% of volumes in hybrid. So I know a lot depends on the mix of specific models and so on, but is there any big difference between ICE and hybrid Profitability, trying to explain a trend today and maybe also going forward.

Speaker 13

And the second question is on the price mix. This year, for sure, very strong. What's the speed that you see and we should

Speaker 3

Okay. I'll take it, Martino. I think it's important that we explain That you should not consider different margin for different power units. The way we look at our product range and its profitability is The ability is very much based on the positioning of each single car, irrespective of the power unit that it carries. And with respect to the development of the mix, I think we said at the Capital Market Day, we are aiming at having A very balanced product mix over the next 4 years.

Speaker 3

This is always our goal For a number of reasons. 1st, because it allows us to serve our clients the best possible way. Secondly, because it allow us to manage the product development And manufacturing activities in a balanced way. And ultimately, because also the profitability Would move gradually up along with the development of the product range. Hope this helps.

Speaker 5

Okay. Thank you.

Operator

Thank you for your question. We are now running out of time, so we won't take any further questions. And I would like to hand the conference to Benedetto for closing remarks. Please go ahead.

Speaker 2

Thank you all. Thank you for your time and also for all Your questions. The Q2 of 2023 really represents another important milestone for our company With the podium at Lehmann, the enthusiastic reception of both the SF90xx Stradares Spyder and the incredible level of attendance to our client events. And this is also fueling our confidence for the development of these years. And now I would like to wish you a good afternoon, good morning, And thank you also for your attention.

Speaker 2

Thank you.

Remove Ads
Powered by Quartr
Earnings Conference Call
Ferrari Q2 2023
00:00 / 00:00
Remove Ads