Campbell Soup Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 1, 2024

There are 12 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Ferrari 2023 Full Year Results Conference Call and Webcast. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Speaker 1

Thank you, and welcome to everyone who is joining us. Today, we plan to cover the group's full year 2023 operating results and 2024 guidance and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the Group CEO, Mr. Before we begin, let me remind you 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, Nicoletta, and thank you everyone for joining us today. 2023 will be remembered as the years in which we accomplished the many achievements and we strengthened our brand across each Racing, Sport Cars and Lifestyle. For this, I would like to thank all the women and men of Ferrari for their outstanding work, all our clients for their continuous trust in our brand and all our partners, suppliers, dealers and sponsors with whom we have continued to strengthen our relations. Among the many achievements realized in 2023, I'd like to mention 3. The first, historic victory at Le Mans.

Speaker 2

The second is the 5 new model launches, further enriching our beautiful product offering together with a variety of new clients engagement experiences And last but not least, the new iconic bag, the Maranello clutch that stands out to the cooperation between colleagues in Maranello belongs to sport car team and those in Milan of our lifestyle department. These achievements are reflected in our record full year financial results across all metrics. So let's start reviewing together a few key numbers for year 2023. Revenues were at approximately €6,000,000,000 EBITDA at €2,280,000,000 with record yearly EBITDA margin of 38.2%. Net profit first in our history well over €1,000,000,000 threshold with a remarkable net profit margin of 21% and industrial free cash flow generation of approximately €930,000,000 of which about €800,000,000 distributed to shareholders between dividends and share buyback.

Speaker 2

And now After the numbers, let's deep dive into our racing activities. Winning the 24 hour rolling months What an unforgettable day for our history. I was there and I will never forget June 11 afternoon because it So our victorious return to the top class of the World Endurance Championship on the centenary of this January 24 hour race. The February 4,99 piece win was a true team effort. Every area of our company Worked together to contribute to our hypercash success and I'm really proud of everyone.

Speaker 2

As we say, we are and we act as 1 Ferrari. In Formula 1, we fought still the very last race, Even though the last season has been a difficult one, often short on satisfaction, we know We must continue to work tirelessly to return to the level that our Tifosi rightly expect of us and we look forward to it. The continuous will to progress is striving for excellence in leasing and everything we do testify our effort and our willingness to always push the boundaries of technology and innovation audaciously. And this leads me to the achievements we reached in our sports cars. In 2023, we unveiled 5 new models out of the 15 models announced at 2022 Capital Market Day.

Speaker 2

3 models for the road: Chroma spiders, SF90xx Stradale and SF90xx spiders. They all raised the bar of technology and design still forward to meet and exceed the desires of our clients And 2 models for the track. During the finale Mondiale, at the Mugello circuit last quarter, we unveiled The 296 challenge in the 499P Modificata, both of which will set new benchmarks in trucks driving thrills of our most passionate chasing clients. Consistently and coherently, we follow our strategy of different Ferrari for different moments, different Ferrari for different Ferrari history. This year, We continue to engage with our sales clients with many experience on the road and on the track.

Speaker 2

I refer to unique and truly engaging location such as the Finale Mondiale, our cavalcades, the legacy tour Our legacy tools to mention just a few of them. These are old experiences which continue to bond our community even further and evoke a true sense of belonging. These exclusive events enable our clients, our Tifosi and enthusiasts to interact with the brand and live experiences together. 2023 has been a year of learning for our lifestyle activities, which have shown positive indicators, among which improved retail performances, successful activation in conjunction and this is reality, in conjunction with racing and brand events and record museums visitors. In fact, 700 and 40,000 brand lovers visited our museums in Maranello and Modena in the years, almost 20% more people than 1 year ago confirming the strength of the brand and the passion of our community.

Speaker 2

Throughout all the years, throughout 2023, we have also done relevant progresses in our carbon neutrality journey. Indeed, we reduced our Scope 1 and Scope 2 emission by 7% in 2023 and by 16% versus 2021. We built our first prototype engine from recycled aluminum. We also installed solar panels providing an extra 2.4 megawatt peak power compared to last year's. An additional 1 megawatt peak power will become available in the coming months from the renewable energy community, The first ever energy community in Italy to be backed by an industrial company for the benefit of its local area.

Speaker 2

And This is only one demonstration of the moral obligation we feel to give back to local community. All of these developments as well as the record results have been possible thanks to the passion and dedication of all my colleagues And toward their achievement in line with the company's strong performance indicators, I am pleased to announce the yearly competitive award of up to nearly €13,500 for our employees. We are also proud to mention the additional 4 welfare initiatives that we have announced last November 13, A broad based shared ownership plan for our 5,000 plus employees, the extension of health checkups, parenting support as well as 250 new hires. On top, we have also received the equal salary certification On a global level for the first time, a result we can all be proud of. 2023 was characterized by global tensions, Neopolitical conflicts, supply chain disruption and cost inflation, all challenge we have learned a lot from.

Speaker 2

Our flexibility, our agility together with the constant support of our clients and partners allow us to look at 2024 with confidence. Such confidence also derives from the positive momentum that we continue to experience. Notwithstanding the current challenging macroeconomic environment, the vitality of our business is once again confirmed by the order book on current models, which remain strong across all geographies and covers the entire 2025. During last month, I've been visiting several dealerships in Europe, USA and different countries in Asia. And I can tell you that the traction of our brand is really strong.

Speaker 2

You can really breathe. When you meet our clients into the dealership And you see how they interact with our dealers, you can easily understand the strong attachment to our brand. Our dealerships are a great point of aggregation for our clients and events organized by our dealers help to give a boost to the spontaneous aggregation of our loyal clients. The residual values remain sound with different dynamics in the region and normalizing from the peaks registered in the post pandemic period when a lack of new product boosted them. The visibility granted by the order book give us the confidence to look at the future, But at the same time, we need to keep always 4 wheels on the ground.

Speaker 2

Confident, humility and will to progress have been our and will be our North Star during the execution of our business plan. Following an initial phase Of our business plan characterized by revenues and profitability expansion, in 2024, we continue to grow our top line, while consolidating percentage margins, which we expect to further expand towards the end of the current business plan. The record result of 2023, the exceptional visibility on our order book and the extraordinary Performance of our business allow us to look at the high end of the 2026 target with strongest confidence. But beyond the core numbers, what to expect in 2024 from us? In racing, targeting 8, We will compete at the top in Formula 1 and Endurance.

Speaker 2

We have recently confirmed the World Endurance Championship team In Formula 1, we have reinforced back in Cartene and expanded the manufacturing area, which is already up and running. And during the last weekend, we won 24 hours of Daytona in GTB Pro Class with our 296GT3 cars, Definitely a great start to the 296 career. On top, we have just announced that we are expanding our presence in the racing world with the intention of setting records also by racing on the seas of the entire world. In sports cars, we will inaugurate the building in June, exactly 2 years later than the last Capital Market Day. We will further enrich the product offering with 3 new model launches, and we will continue to enhance our client experiences, both on track End of Road, not only on brand new cars, but also taking care of Ferrarisi owning Pre owned models with tailored events.

Speaker 2

In our history, we crafted about 250 different models of Ferrari and for us, They are all equally important. They are all our kids. In lifestyle, 2024 will be the year of progress with an array of activities designed to build the scale while elevating and expanding visibility. Among our priorities, we continue to focus On our carbon neutrality journey, which is farmer boosted by the ultimate goal to shut down the 3 generators within the next 18 months, We look ahead at 2024 with energy, agility and confident humidity, but above all with enthusiasm for the new exciting challenges in front of us. And now I hand over to Antonio to review the 2023 results and 2024 guidance.

Speaker 3

Thank you, Benedetto, And good morning or afternoon to everyone joining us today. Starting on page 7, we present the highlights of the results for the entire 2020. As Benedetto just mentioned, 2023 was another record year for our company With all financial metrics once again growing double digit and with a significant margin expansion of 3 percentage points at the EBIT level and even more at the EBITDA level. Even if our 4 year plan from the last Capital Market Day is rather front loaded by design, Such results went beyond our expectations considering the modest shipments increase and the inflation headwind affecting our input costs, a visible real life application of the obsession to privilege value upon volume and to control allocations to promote exclusivity. Let's dive into the details to try and shed some light on our path forward.

Speaker 3

Our strong business performance in 2023 was sustained by 3 main factors: A rich product mix per se, further emphasized by a surprisingly strong personalization uptick, coupled with a favorable country mix. These led to revenues up 17%, Adjusted EBITDA growing roughly 28.5 percent that is €500,000,000 with a very solid margin standing at 38.2 percent adjusted EBIT up approximately 32% with a yearly record 27.1 percent margin. Net profit of 1,000,000,000 €260,000,000 leading to an adjusted diluted earnings per share of €6,900,000 from less than 5.1% last year. Of a particular note, the industrial free cash flow generation will reach €932,000,000 Moving to Page 8, you can see the details of the full year shipment. In the year, deliveries increased less than 4 50 units after 2 post pandemic years of strong double digit increase.

Speaker 3

As usual, geographies reflect our choices of volume and product allocation in the different markets. EMEA and the Americas were up versus prior year, representing more than 70% of our total shipments. Class of Air packs was almost flat at 17% and mainland China Hong Kong and Taiwan reduced their share by few cents of units to 11% in line with our long term targets for this area considering its relative use and evident dilution impact on our percentage margins. Shifting to the product, the most significant change in the year was the doubling of the idle share to 44% of the total volumes underpinned by the growth of the SF90 and 296 family. The highly anticipated Purosangue ramped up during the second half of the year to finally reached its cruising altitude in 2024.

Speaker 3

The Roma Spider, which was unveiled in the Q1, already commenced the delivery in the last quarter of 2023. Specialty A's represented by the A12 Competition F and E increased compared to 1 year ago, thanks to the deliveries of the Acelsa version, while the Daytona SP3 shipment continued according to our plans between 30 40 units per quarter. Lastly, in the year, the F8 family concluded its life cycle with the Portofino M was also approaching its end. On Page 9, you can see the net revenues bridge, posting a robust 17% growth versus prior year, also at constant currency. The increase in cars and spare parts was evidently the main contributor, driven by the richer mix, personalization, pricing and slightly higher volumes.

Speaker 3

Price increases during the year were differentiated by product and geography in accordance with the decisions taken in the second half 2022 to protect our margins from the surge of inflation. Personalization continued to strengthen And in the last quarter, we witnessed consolidations of the trend registered in the 1st 9 months. In 2023, Personalization stood at approximately 19% in proportion to revenues from cars and spare parts mainly driven by paints, deliveries and the use of carbon. Sponsorship Commercial and Brand reflected higher sponsorships including Formula 1 and World Endurance Championship Racing activities, higher Formula 1 commercial revenues and the better ranking achieved in 2022 compared to 2021 as well as the growing contribution from LifeVie's activities. Engines revenues declined in line with the reduction of supplies to Maserati, whose contract expired at the end of 2023.

Speaker 3

Therefore, from the Q1 2024 onward, any residual contribution from the sales of engines to third parties, whether for forecast or racing will be reported in the bar named Other. Currency had a small negative net impact, mainly reflecting the opposite dynamics of the U. S. Dollar, Japanese yen and Chinese yuan. Moving to page 10, the change in adjusted EBIT is explained by the following variances: Volume positive and reflecting the limited increase in shipments.

Speaker 3

Mix and price also positive and very strong for €461,000,000 thanks to very favorable product mix sustained by the Reitone SP3, the January 2019, China 3 mix driven by generic hubs and Mainland China, Hong Kong and Taiwan, despite the small decrease in deliveries in the year and today increased contribution from personalization and pricing. Industrial and R and D expenses grew €166,000,000 mainly due to higher depreciation and amortization, cost inflation and higher Formula 1 expenses. SG and A were negative for €43,000,000 mainly reflecting the continuous development of the company's digital infrastructure and organization. In addition, We kept on adding resources to enhance our brand investment, which encompass all our marketing, lifestyle and other initiatives designed to enhance the brand recognition among clients. Other was positive for €81,000,000 combining higher Formula 1 commercial revenues as well as better ranking in 2022 versus 2021, new sponsorships, higher contribution from lifestyle activities and certain releases of provisions already discussed during the year.

Speaker 3

The total net impact of currency was positive for €15,000,000 With the positive net support of these variances, we reached the yearly records of EBITDA and EBIT margins that we commenced. Turning to page 11, our industrial free cash flow generation was remarkable in the year reaching €932,000,000 reflecting the increased profitability, partially offset by financial charges and taxes and most of all Capital expenditure for €869,000,000 increase in line with the pace of development of our products and infrastructure. We already flagged significant increase in the working capital, which reflects both the inventory expansion built to protect our delivery plans and the enriched product mix. Net industrial debt at the end of December improved below the €100,000,000 mark, Reflecting the robust industrial free cash flow generation partially offset by our initiatives to reward shareholders. Dividends and buyback were worth approximately €800,000,000 altogether implying a distribution of roughly 85% of the industrial fleet ex floating operation.

Speaker 3

Finally, let's move to page 12. Building upon the visibility we enjoy, we outlined the guidance for 2024 as a further solid step towards our target for the years to come. Let me explain the drivers sustained in 2024 along the growth trajectory that we have designed. On store sales, product and currency mix will be positive and much more relevant volume once again with an increased contribution from the Daytona SP3 and a constant personalization rate. Commercial ratings from phasing in Formula 1 will be affected by the lower ranking achieved in 2023 compared to 2022, despite a higher number of races in the 2024 FIFO activities will continue to increase the support of the top line, while investing a larger share of resources to speed up pace of development.

Speaker 3

Cost inflation is expected to proceed through the supply chain And SG and A will increase in line with revenues due to continued brand investment and digital development. The above will contribute to the further profitability expansion, while we expect inflation, brand and infrastructural expense as well as increased Formula 1 spending due to the higher budget cash to flatten our percentage margin in line with 2023. The industrial free cash flow generation will be sustained by our profitability, partially offset by capital expenditure of approximately €950,000,000 As many projects will enter in their advanced stage of development, a still negative change in working capital is broader meaning, mainly due to lower net advances collected from clients and increased tax payments proportional to the growth of our income in 2023. The underlying assumption on the U. S.

Speaker 3

Dollar exchange rate is that it will fluctuate around 1.1 implying a negative FX impact compared to 2023 including hedges. That said, we are obviously conscious of the stronger business performance recorded to SAAR despite the higher cost inflation. Such performance has been driven by the product mix, which will remain rich over the business plan and then this has been further enhanced by both the actions on pricing and the exceptional demand for personalization. For sure, we continue to stay focused on pricing and product enrichment And reassured by the visibility granted by our order book, we affirm the confidence into the high end of our 2026 target as many as I just said. I thank you for your attention.

Speaker 3

And I now turn the call over to Nicoletta.

Speaker 1

Thank you, Antonio. We are now ready to open the Q and A session.

Operator

Thank you. Thank you. We are now going to proceed with our first question. And the questions come from the line of John Murphy from Bank of America Securities. Please ask your question.

Operator

Your line is open.

Speaker 4

Hey, good morning. This is John Babcock actually on the line for John Murphy. Just quickly, you talked about doubling the hybrid share from 2022 to 20 3, from 22% of shipments to 44%. Out of curiosity, do hybrids tend to be favorable for mix? And then also, can you talk about what the customer reception has been to hybrid engines and if this is something they're asking for?

Speaker 2

Okay. I will comment about this. Yes, it's true. We doubled our share of hybrid. This testifies that we are able in Ferrari to use The technology in a way that is unique.

Speaker 2

Coming back to the specific question, I would say that 2 points. Number 1, the profile of Customer using this technology is not so much different from the one using the thermal traditional cars. And number 2 profit wise, we are within the same ballpark as all the other cars. For us, each car is a business initiative and all of them have to deliver according to our standards.

Speaker 4

Okay. Appreciate that. And then also just given what's going on in the Red Sea, could you just quickly discuss that this is creating any challenges for Ferrari?

Speaker 2

A challenge The Red Sea is basically we don't see it at all. We double checked with our suppliers. There is nothing that is impacting us. So no impact on our production or the dividend of cash.

Speaker 4

Okay. That's great to hear. All right. That's all I have for now. Thank you.

Operator

Thank you. We are now going to proceed with our next question. And the questions come from the line of Michael Binetti from Evercore ISI. Please ask your question. Your line is open.

Speaker 5

Hey guys, congrats on finishing up a terrific year. Thanks for taking our questions here. I guess, first off, Antonio, could you give a little context around the guidance for free cash flow lower this year? Is there I'm wondering if there's an acceleration in some of the development spend and any maybe any delta in the deposits for supercars included in the free cash flow outlook or excluded? And then on personalization, maybe just a little bit on the strategy there going forward after a really good year on personalization Last year, is there an opportunity to take some pricing to help offset some of the cost increases that you're seeing across the business there?

Speaker 2

Hi, Michael. I think the second one, the FCS related question, Antonio will elaborate. So yes, the personalization, I mean, we are a luxury company, which we have to do that. Personalization is an important vector of growth for us. And It offers also an opportunity for pricing up.

Speaker 2

And we started these years to review the price up in the mid digit area. So percentage is important, yes. 2, we are going to touch the price for this important dimension. The free cash flow, Antonio? Yes.

Speaker 3

I'll try and explain three reasons. The first is clerical. We're just paying more taxes. The second one is we are spending more on CapEx, dollars 950,000,000 is what we have in mind for the year. And this is just because we have products that are now very close to the launch and number of products.

Speaker 3

And the third is the deposit cycle, this is just signing basically. There are I mean, we collected over quite a bit in 2022 and 2023. We have kind of net reversal Any addition, some new advances collected in 2024, but the negative impact overall is negative, modestly negative. Okay.

Speaker 5

And I guess if I could squeeze one more in, guess with the e building still on track for mid year, Benedetto, can you tell us how we'll see early on as far as as you guys start to commercialize What are some of the first things we'll see from outside the company as you guys start to look to commercialize that?

Speaker 2

Good morning. Me and Antonio were in deep building. So we are on track. It will be up and running starting this June. And This will be the place where we will assemble not only electric cars.

Speaker 2

Electric cars, As you know, we'll be ready and we are on track for Q4 2025. So also on the electrification journey, We are fully on track with our plan.

Speaker 3

Thanks again. Enjoy your year, guys.

Speaker 2

Thank you, Michael.

Operator

Thank you. We are now going to proceed with our next question. And the questions come from the line of Susie Tibaldi from UBS. Please ask your question.

Speaker 6

Hello, good afternoon. I have 3. I'll ask one at a time. So first one on the demand. Within the luxury sector, we are seeing some softening of demand, but it appears that the higher end exposed to the wealthier cohort is still doing extremely well.

Speaker 6

And it seems also from your opening remarks that Based on residual values, on feedback from dealers, you're not really seeing anything. But just to double check, Is the economic picture at the moment having any impact at all on the Ferrari customer? Is there any comment any additional color you can provide?

Speaker 2

As we said in the call myself and also Jose Antonio, the demand that our order book is very strong. It goes well into 2025. The end of 2025, indeed, in some cases, even more. We do not see any negative signal, I think it was negative signal on this topic. We keep, let's say, doing as planned.

Speaker 2

Clearly, there is not in our client base, there is not an impact In any kind of in any respect. So

Speaker 6

Thanks. This

Speaker 2

is if you want us to give you some more color. We have been we had the dealer annual meeting. And on November, We have also we have been visiting several dealerships in USA, in Asia, in different countries, in Europe and there is really a strong traction towards our brand.

Speaker 6

Thanks. On the margin guidance for 2024, which basically implies flattish margin. I wanted to understand if your core cars and spare parts business is also seeing flattish margins? Or perhaps that core business is seeing some underlying improvement, but then is offset by the dilution of some of the other segments where you are choosing to invest a little bit more. So it will be quite interesting to understand the dynamics in your various segments?

Speaker 3

That impacted the explanation, Susie. I'll try and explain it. So our product mix and personalization are obviously a bit, but we expect the cost base below that to impact us and to flatten the margin. If we wish within the cost of goods sold, It's just the budget cap on which is growing on the F1 racing activities that is growing year after year. And that's by the in the upper side of the P and L.

Speaker 6

Okay. And last question. For 2024, when we think about the phasing, is it Fair to assume that the year is going to be a little bit more front end loaded given the mix evolution? Or is it going to be quite Similar quarter on quarter?

Speaker 3

I don't see a significant difference yet and that there might be Nuances, but not significant change. Usually Q4 remains slightly softer, particularly in terms of volume allocations. But as of now, nothing to

Speaker 6

Okay. Thank you.

Speaker 3

I said the 4th slot in the quarter, the first. Sorry.

Operator

Thank you. We are now going to proceed with our next question. And the questions come from the line of Steven Reitman from Societe Generale. Please ask your question.

Speaker 7

Yes, Again, congratulations for the very strong result. Also, congratulate you also on the quality of the result. And we certainly noticed that The positive impact from R and D capitalization was considerably lower in 2023 than in 2022 or 2021. So points of the higher quality there as well, I think. Question, you mentioned about the Pure Sunway has now gotten to a cruising speed in terms of production.

Speaker 7

Does that suggest that we are on track to see that reach the 20% of the sort of annual sales because it looks like in 2023 it was only in the 100, that would be a considerable ramp up. And if you could comment on what the personalization level is looking like, I mentioned that people are paying a lot of money in terms of personalization in order to secure bill slots as well for these in terms of to make their orders attractive. And secondly, if you could comment on China. You did mention that you are strategically looking at that market in terms of also managing in terms of the margin implication on sales in China. But I think there was an expectation that sales were going to maybe increase a little bit in Q4 because they'd be deferred from the Q3 in 2023.

Speaker 7

We actually saw quite a big drop in 2020 in the Q4. So I'm just wondering if you could say, are there any issues about the sort of like the demand in that market as well? Thank you.

Speaker 2

Thank you, Steve. And thank you, Jose. I hope you have

Speaker 4

a great

Speaker 2

congratulations that we will pass to all the team that made it possible. Coming back to the story of Purosangue. In 2023, We shipped a few 100 Purosangue. In 2024, we will be at a cruising speed that is 20% of the total. So basically, I mean, your assumption, your calculation are pretty in line with what with our plan.

Speaker 2

The personalization,

Speaker 3

but if I may, Benedetto, just to complete on that. I wouldn't focus on 20% of each single year. We said 20% of the yearly sales On average, when we communicated around the Capital Markets Day, so don't take matters and mathematically even if Benedetto is a mathematician.

Speaker 2

Yes, we are not

Speaker 3

very much.

Speaker 2

No, look, The story of Burosangue depersonalization, Stephen, clearly the Burosangue offers a lot of degree of depersonalization. We see clients that are looking at the rims, the levers, the painting, the roof. So there are some opportunities over there. And last year, we have been working a lot to strengthen our supply chain for all the personalization that the card is offering to all the clients. The second question was about China.

Speaker 2

Well, China for us, I would like to say that there are 3 words about China. The number one for us is a young market. Young market, it means that the client, let's say, the number of cars that we ship This market is not so many. To me, the market is very young. We have to let it grow with the right speed To avoid, let me say, indigestion, undigestion, okay?

Speaker 2

The second, it's a niche market Still, because if you make the math, we are talking about 1200 car, it is written in the chart. We had a slightly decrease this year, but we are talking about a decrease in the range of few tens of units that the market is small, it may look a few percent over there. And then the number 3, we said since the beginning that we will keep China, let's say, around 10% because we believe because it is not margin accretive. But again, it's important that in each country, as our history testifies, we Let grow the attachment to the brand with the right speed, because if you grow too fast, The clients don't get used to what is Ferrari. This is what we have done in other countries and this is what we intend to do also in China.

Speaker 3

Thank you.

Speaker 2

Thank you.

Operator

Thank you. We are now going to proceed with our next question. And the questions come from the line of Tom Narayan RBC Capital Markets. Please ask your question.

Speaker 8

Yes, thanks for taking the question. Question on the strong plug in hybrid performance. Just curious if you could extrapolate that for the eventual BEVs, full electrics that you plan to sell. Is there really a translation there to say that consumer demand for the plug in hybrids could potentially mean that This cohort would be interested in inflowlectrics or are those buying the plug in hybrids just across the board similar to your existing portfolio of customers?

Speaker 2

Look, we post ourselves many times this question. We've been talking to our client, the director and indirect, I mean, through the dealers. I don't think there is any extrapolation possible in this respect. I believe that we will have clients that will only take the red car, the ICE. We will have clients that will take IC and hybrid as today.

Speaker 2

We will have clients that will get in our family only because we have electric cars. So I believe that we see very often the answer is that I need electric cars

Speaker 3

I need to go in places that will not be allowed by the correction.

Speaker 2

So I think any combination of these three colors, red, the blue and the green is going to be possible and I don't think that the hybrid cars is in acceleration. The only thing we take as a lesson is that, of course, I mean, looking at what happened in 2023, that is There is always a way to use the technology in a unique way in the Ferrari way that also Client skeptical at the beginning of hybrid turned to the hybrid. This is the point. Remember once I had a breakfast with a client that was skeptical about the hybrid and then he went to try it and he bought the hybrid and this is pretty common. So this is a confirmation that our strategy to keep alive the 3 colors, the red, the blue and the green He's an excellent.

Speaker 8

Okay. Thank you. And my follow-up, with obviously everyone really interested in your guys' electrification journey that will happen. Just curious if we can expect Capital Markets events for investors and for ourselves as well coming up this year potentially or next year?

Speaker 2

This year for sure not. We are working for next year, but not for sure for this year. Only one point, The electrification journey not really happening. It's already started to happen since a while. So this is important.

Speaker 2

This is a key message we pass it to the on the Capital Market Day 2 years ago. We are already on the replicating journey since a few years.

Speaker 4

Understood. Thank you.

Speaker 2

Thank you.

Operator

Thank you. We are now going to proceed with our next question. And the questions come from the line of Thomas Pessell from Hello, Mr. Besson. Your line is open.

Operator

If you can hear us, your line is open. And the questions come from the line of Henning Cosman from Barclays. Please ask your question.

Speaker 9

Yes. Hi, good afternoon. Thank you very much for taking the question. Interesting that you're emphasizing price and personalization so much. I'm not sure I understood you correctly, Benedetto.

Speaker 9

Did you say you would raise price in the mid single digit percentage range on personalization specifically, if you could just confirm that? And if you would also Yes, great. And on pricing in general, are you willing to make Some comments there. I think we recently talked a bit about the commercial opportunities on pricing in general, not just on the personalization. I know there's always the balance, of course, not upsetting your loyal customers who've been waiting for so long.

Speaker 9

But then again, you have Because the order book is so long already and you're virtually sold out, if you could update us on the commercial pricing opportunities there. And then 2nd question on personalization. If I understood Antonio correctly, the exit rate of 2023 was 19%. If I'm not You're guiding 18% for 2024. You typically have 3 months of visibility.

Speaker 9

So I was just wondering how it's trending into Q1 where I believe you have some degree of visibility already. Is it in line with the 2018 or is it still on the level of the exit rate, if that's not too precise. And then finally, third question on the DAYTONA. Antonio confirmed again in the Opening remarks, 30 to 40 per quarter. I believe you sold around 150 so far out of the 600.

Speaker 9

So that would imply you still have 12 more quarters to sell worth of Daytonas. That seems pretty long. So I'm wondering if you would accelerate the Daytona volumes at some point so that it doesn't become such a long life cycle. Thank you very much.

Speaker 2

Thank you. Personalization that's on are for Antonio. I take the ASP. So as I told you, the answer to the first question, yes, it's confirmed. We increased the price of the personalization exactly like you understood.

Speaker 2

When it comes to the price of the cars, don't forget that last year, through all the year we have been increasing the price And it's also important that we consider that on the other side, there is a client that has been, Let me say, looking at Ferrari and we have to behave properly when it comes to the pricing increase. We already executed And we have to be respectful of our clients. While for personalization in Dayton Antonio you can Sure.

Speaker 3

On personalization, you got me right. Meaning in 2023, we are almost at 19% and 2024 is based on an assumption that we'll maintain more risk debt rate. Visibility as of now is in that direction. And the last question on Daytona, yes, you're right. We to grow there to be to move from 30%, 40% to approximately 60% per quarter next year.

Speaker 9

Very good. Thank you so much.

Speaker 3

You're welcome.

Operator

Thank you. We are now going to proceed with our And the questions come from the line of Monica Busio from Intesa Sanpaolo. Please ask your question.

Speaker 10

Good afternoon. I hope you can hear me and thanks for taking my questions. The first one is on the EBITDA margin that you guided Slideisha for 2024, I understood that it is due to a cost base related to the production of more complex product. I can imagine that there is also a weight of the cost of labor. So I'm just wondering if you can give us some indication what is the weight Of the cost of labor on this flattish guidance, any hint could be useful for us.

Speaker 10

The second question is on the lifestyle. In the preliminary remarks, Benedetto anticipated that You're expecting an increase in the lifestyle revenues. Can you please help us to figure out growth rate for 2024. And 3rd question is on the Adanis from FP90xx and the Spider. I remember that in the last call you said that you are going to collect advances on the car.

Speaker 10

I'm wondering if you can give up any indication on the amount and on the time frame across the year. Thank you very much.

Speaker 2

Thank you, Monica. Antonio will take 13, and then I will reply to your numbers 2.

Speaker 3

Yes, apologies. I thought you would start. Anyway, on EBITDA margin, it's not due to the higher cost base, actually, or related to Better. It's not related to the additional complexity of the production. I mentioned basically 3 elements.

Speaker 3

1, Cost inflation. Cost inflation is still there. It includes cost of labor. We have an agreement in place with trade unions for an increase year over year of 4 which is embedded in the assumption. But even components and generally speaking is a supply chain that is still Embedded in current pricing, the impact of the inflation that has been going through the economy in the last 12 months.

Speaker 3

That is an element. It's not the complexity. The second one are expenses for brand development, including lifestyle, of course, we are investing to grow the business as we see in the package. And also our digital We are growing and we need to grow even in that respect, including a significant rejuvenation of what we currently use. And the last element, which is buying both cost of goods sold and R and D expenses to the P and L The expenses for the Formula 1, since the budget cap, which was originally meant to decrease over time, is actually growing Since it has been agreed among the various teams to index spending to inflation, so year over year, it's got a negative impact,

Speaker 2

Okay. Okay.

Speaker 3

And in terms of your last question on the advantages on the SF90, yes, we are We did not disclose yet which are the targets. I just said year over year take into consideration that The difference will be negative. So 2024 smaller than 2023.

Speaker 10

Okay.

Speaker 2

So Monica, for the lifestyle, let's say 2023, 3 important things. Number 1, we improved the retail performances there is more traction towards our collection. 2, we saw there is a strong I mean, a strong successful activation when you have event in conjunction with our racing and brand event. And 3, we had a record museum visitors around 750,000 is a lot. In 2024, If I have to define it, I define it as a year of progress because we have a list of activities that are aiming to build the scale and also to expand the network and

Speaker 9

let me

Speaker 2

say our network, While if you want, we elevate the visibility of our brand. So it's a year where we are aiming to grow as well. And also in this respect, we are in line with what we declared in June 2022 with our target to double this activity, the revenues of this activity by 2026.

Speaker 10

Okay. Thank you, Bernadette.

Speaker 2

Thank you.

Speaker 10

Very helpful. If I can add just a follow-up on the country mix. You said that the country mix will keep positive in 2024. I'm just wondering if it will be similar to the one seen in full year 2023.

Speaker 3

Yes. And say, as of now, I wouldn't consider country mix being an additional pause within 24.

Speaker 10

Okay. Thank you very much.

Speaker 3

More or less later.

Speaker 10

Thank you. Thank you.

Operator

Thank you. We are now going to proceed with our next question. And the questions come from the line of George Carlais from Goldman Sachs. Please ask your question.

Speaker 11

Good afternoon and thank you for taking my questions. Obviously, one of the standouts of 2023 was the very strong pricemix. And we look at your 5 year plan, you were targeting around the EUR 700,000,000 improvement in EBIT from pricemix by 2026. We're only 2 years into the plan, and you've delivered close to 65% of that target. Obviously, on this You've been mentioning new initiatives around personalization and pricing, and there are clearly still several important new launches to come.

Speaker 11

So is it fair to say there is a decent amount of upside to that original EUR 700,000,000 that you flagged back at the CMD? The second question was also relating to something you talked about at the CMD, which was how you were going to leverage partnerships to co develop best in class solutions with respect to electrification. I was wondering if you could give us some insights into how those partnerships have evolved. Have there been any unanticipated challenges? And conversely, have there been any areas where your partners have really surprised you positively?

Speaker 11

And if yes, would you be able to give us any small examples or snippets?

Speaker 2

Thank you, George. I think the second one and the first one, I will ask Antonio to reply. So you remember very well during Capital Market Day, we clearly said we leverage the partnership for a propagation, but also for other technologies, because don't forget that we are making luxury cars and we there is much more than simple electrification. So we are doing lot of innovation also on the hybrid cars, on thermal cars. So having said that, We are having a positive surprise on the willingness of the partners to work with us.

Speaker 2

We have partners in different places going through new generation materials to new generation, let me say, advanced electronics to advance the display and we are having as I said, we are very positively surprised By all our partners and we are working with partners in Asia, in USA and also in Europe. I can mention the one that the 11 operator the one that we publicly released, the 11 April was with Samsung for the next generation cars. But there is another one I cannot mention. I can tell you that we are working also On the way material that we import for the cars are realized, because as we said multiple times, the carbon the sustainability is important. We want to be carbon neutral by end of this decade and we realize that to achieve our goal, to go to proceed along our way, We need to work with partners that are also involved in the material preparation.

Speaker 2

So very positive surprise across the globe, very happy both, Because I have regular meetings with them, we are active on our side, they are also active on their side.

Speaker 3

So Antonio, you for the meeting. Sure. You're on strong price mix. I mean, if we compare with our assumption in the Capital Market Day, You are right. We have been doing better.

Speaker 3

And I think we flagged a number of times this year that personalization particularly surprised us in terms of their strength. However, it's fair to say that even the cost base has been much higher than we would have expected. The positive, of course, is the fact that the Improvement from personalization pricing has been such that allowed us to more than offset the impact of inflation. Now if we look forward, is there an opportunity for an upside on personalization? If the trend continued the way we have seen potentially yes in terms of revenues.

Speaker 3

Whether this will flow through the P and L, it will very much depend on what happens to the cost base. Exactly. Parallel with what happened in 2023.

Speaker 11

Thank

Speaker 3

you.

Operator

Thank you. I will now hand back to Mr. Benedetto Vigna, CEO for closing remarks. Thank you.

Speaker 2

Thank you. Thanks all of you for your time today and also for your question. The strong 2023 result Basically, and are the result of our strong brand desirability and also the confidence that we are having on this year forward is thanks to the traction that our product have with all our clients. I wish you a good afternoon and I thank you together with all the Ferrari team here for your attention and for your interest in our brand. Thank you so much.

Operator

Thank you. Ladies and gentlemen, this concludes today's conference thank you for participating. You may now disconnect your lines. Thank you and have a good day.

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Campbell Soup Q4 2023
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