Ferrari Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2024

There are 13 speakers on the call.

Operator

day and thank you for standing by. Welcome to the Ferrari 2024 Q2 Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Aldo Benetti, Investor Relations Manager. Please go ahead.

Speaker 1

Thank you, Evan, and welcome to everyone who is joining us. Today, we plan to cover the group's operating results of the Q2 of 2024 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 the Group's CFO, Mr. Antonio Picca Picca.

Speaker 1

All the relevant materials are available in the Investors section of the Sergari 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

Thank you, everyone, for joining us today. I'd like to open today's call with a heartfelt thank you. Firstly, to our clients for their continuous trust in our brand. Secondly, to all our partners, suppliers, BSR sponsors with whom we are continuing to strengthen our relations. And last but not least, to all our Ferrari colleagues for their outstanding work and passion supported by a strong sense of belonging.

Speaker 2

Many important milestone and positive achievements took place in this Q2, among which our victory in the 24 hour of Le Mans for the 2nd year in a row. During today's call, I will touch upon the following 4 key achievements. 1, very strong Q2 financial result and the continued smooth execution of the year 2, a solid order book, which has evolved as expected with the new dodeci chillin, respiring, coop guiding the order intake. 3, a full week of activities in June dedicated to sustainable innovation. This involved all our stakeholders and culminated in the enumeration of the Ethiopian exactly 2 years from its announcement at the Capital Market Day.

Speaker 2

We really made it. 4th, due to progress in raising a lifestyle, we've enhanced the cohesion across our company's free source. So let's start with the financial result of the 2nd quarters, which demonstrates again strong execution and continued growth. First, revenues. They were at €1,700,000,000 up 16% versus the previous year, sustained by the continued strength of the product mix and the growing demand for personalization.

Speaker 2

2nd, profitability, which improved with adjusted EBITDA at about €670,000,000 and a remarkable 39% margin. And third, the net profit, which reached EUR 413,000,000. On the back of stronger personalizations and increased visibility for the remaining part of the year, we upgraded our 2024 guidance and Antonio will show you the details later in the call. The solidity of this quarter results was accompanied by continued strong brand momentum, which brings me to my second key point for today, the enthusiastic reception of our latest new sports cars, the DoDICI Cilindri and the DoDICI Cilindri Spiders drove the order collection in the quarter, adding to an already solid order book on current models, which covers well into 2026. Such visibility relies on the loyalty of our existing customers as all over the world as well as the brand appeal to the new ones.

Speaker 2

On that and keeping an eye on current macro developments market by market, we continue to allocate our products strategically across the different regions to enhance our brand strength and exclusivity. After the world premiere in Miami, we offset several regional launches of our new Re 2 boards, naturally aspirated 12 cylinder sport stars in all major markets, and they will continue in the second half of the year. I attended some of these beautiful events, and I met clients from different European countries. They all praised the Doddy Chichlindri's perfect synthesis between the past and the future. The front of the Nodichi Cilindri that recalls the 1968 365 GTB4 with the whole styling interpreted in a very futuristic way.

Speaker 2

And now we go to the 3rd point of today's call. Innovation is sustainability and sustainability is innovation. This is our profound belief. Sustainable innovation has been the focus of a series of events that we hosted in Maranemu this June involving all Ferrari stakeholders. We had a workshop with around 30 of our Ferrari partners aimed at sharing experiences and practices to reduce environmental impact.

Speaker 2

A full day was devoted to suppliers. They play a key role in our company's drive for innovation. This annual event brought together about 500 people from a few 100 suppliers from all over the world for a discussion on their contribution to sustainable innovation, which is increasingly central to our supply chain. And then a weekend was dedicated to Ferrari's employees, their families and friends, a record presence of more than 30,000 people visiting our factory, such a great emotion. I stayed there the full Saturday and it was for me the first time and I will never forget this beautiful unique experience.

Speaker 2

And during that intense week, we also inaugurated the new E Building, where E stands for energy, evolution and environment. And based on the concept of technological neutrality and flexibility, this new facility will house the development and production of ICE, hybrid and full electric models. Here, let me remark once again our belief. We believe that there is no single solution to future automotive power trains, and this is particularly true during the current technology transition. Technological neutrality is a key principle for us and consistent with our strategy, and we continue to invest in the 3 powertrains: in telecom engine, hybrid and full electric to provide our clients with maximum freedom of choice.

Speaker 2

In the building, we will also engineer and handicap the strategic electrical components that are highly relevant to differentiating Ferrari's technology and performance, high voltage batteries, electric motors and axles. Indeed, the full electric Ferrari requires new technologies, new components and processes and ebuilding will enable us to keep our critical know how in house and maintain our competitive advantage in the years to come. Advantages of the new building do not end years. It will also enable us to decouple people wise the production of limited edition cars such as Taycona, from the development of new models. And this will allow us to place the research and development team closer to manufacturing, shortening the product development phase and time to market.

Speaker 2

And here, I would like to be very clear on one point. We did not realize the building with the aim of growing our volumes. Our ethos remains the same, quality, quality of revenues over quantity. On June 21, we completed the skeleton rebuilding and installed the equipment. Now we are focused on testing the processes and debugging the lines to start production of hybrid and ICE models from the beginning of 2025.

Speaker 2

For this achievement, a special thanks goes to all the colleagues who have been able to maintain the rebuilding schedule despite all the difficulties that we experienced during these times. It has been not easy, but they may be taken by acting nimbly with focus and determination. During the quarter, we made further progresses both in racing and lifestyle, creating stronger cohesion across our company's 3 souls. Let's start with the racing world. In our 2nd season, in the top class of the World Endurance Championship, we achieved an extraordinary success with our 499P at the 24 hours of Le Mans.

Speaker 2

And this is second Le Mans victory for our aircraft. This outstanding result deserves huge praise and is a testament to the exceptional teamwork of all colleagues and their perseverance. The same spirit and will to progress is vivid among our Formula 1 team. Scuderia Ferrari HP approached the 2024 Formula 1 season with the aim of always fighting at the front. We entered the summer break with encouraging signs.

Speaker 2

We scored 2 wins versus 0 last year and 50% more points per race compared to last year. The team remains focused and united and is pushing Arbic to continue to improve the performance of the cars. Our recent racing and sports car event have also been the perfect stage to gather our most loyal clients and showcase our lifestyle dimension. And this brings me on to my last point for today. We have recently been much more deliberate about including our lifestyle collections at our exclusive events and sharing our latest creations with our community.

Speaker 2

The successful activation in Pebble Beach and Las Vegas last year were a first step. This year, at the beginning of May, we took a further step forward. We organized a series of engaging and unique experiences in Miami for our community. This encapsulated the elegance of our sports cast, the lure of Ferrari lifestyle and the excitement of racing. This was more than just hosting events.

Speaker 2

It created a coherent, coordinated and inclusive narrative across each of our three stores. A similar approach was also taken during the most iconic endurance race at Le Mans with the creation of a pop up store at our Casa Ferrari, which received a very positive feedback from clients, resulting in improved sales and encouraging signs for the future. We are aware that Ferrari is an incredible powerful and unique brand, being extremely exclusive on our side when you think of our sports cars at the same time being very inclusive. If you think of our racing DNA and the millions of Difosi and brand enthusiasts that we inspire all over the world. Among them, new in the Formula 1 Grand Prix at Imola, 2 Ferrari enthusiasts had a once in a lifetime opportunity to spend a night inside our iconic museum in Maranello, which was the setting for a unique Airbnb stay, an experience not usually available to the public.

Speaker 2

We were able to create this activation by leveraging our existing assets, Our museums in Maranello Moderna and here for the first time we passed the threshold of 100,000 visitors in May alone, the Furano restaurant and our historic Tavalino restaurant. To conclude, this Q2 of 2024 has been full of significant milestones, and I believe this achievement marks the continuation of our journey as we are driven on by our ways to progress and the driver for excellence in everything we do, always keeping 4 wheels on the ground. And on this note, I hand over to Antonio to review the Q2 2024 financial results. Please, Antonio.

Speaker 3

Greetings, Benedetto, and good morning or afternoon to everyone joining us today. I'll start on Page 6, where we present the highlights of the Q2. Convenience the trends from the Q1, the growth rate of revenues and profitability outpaced that of our deliveries, mainly thanks to the enriched product mix and increased personalizations. Therefore, while shipments grew by less than 3%, revenues were up 16%, adjusted EBIT up 17% with a 29.9% margin. Adjusted EBITDA increased 14% with a 39.1% margin and such economic results led to a remarkable industrial free cash flow generation despite higher capital expenditure and tax payments.

Speaker 3

Moving to page 7. We review our shipments for the Q2, which increased by 92 units. As already mentioned by Benedetto, we leverage our order book visibility and production flexibility to design our product allocation across the different regions consistently with the developments observed in each respective market. As a result, deliveries increased in EMEA, Americas and rest of APAC, while decreased by roughly 60 units in Mainland China, Hong Kong and Taiwan. The increase in deliveries was driven by the Purosangue, the Roma Spyder and the 296 GTS.

Speaker 3

Additionally, we commenced the 1st deliveries of the SF90XX Stradale, the special series hybrid with run of 799 units. The allocation of the iPhone SE3 grew in the quarter compared to the prior year, but were lower than in Q1, in line with our plan. The shipments of the Roma and the Special Series A12 Competizione decreased approaching the end of their life cycle while the SF90 Stradale and the A12 JTS phased out. In the quarter, the hybrid share reached 48%, in line with product cadence and mainly driven by the 296 GTS. On Page 8, you can see the net revenues bridge, which shows a 19% growth versus prior year at constant currency.

Speaker 3

The increase in cars and spare parts was the most relevant contributor driven by the richer product mix and country mix as well as higher personalizations. In the quarter, personalization further strengthened and almost 20% of total revenues from cars and spare parts, mainly supported by the Purosangue and the Daytona SP3. Sponsorship commercial and brand increased thanks to new sponsorships related to our rating activities and improvements in life style. The increase in sponsorships reflect the latest sponsors additions including HP as the new type of sponsor of Scuderia Ferrari in F1. Other revenues were almost flat with improved contribution from financial services activities substantially offset by the Maserati contract expiration.

Speaker 3

Currency net of hedges in place has a negative net impact mainly due to the adverse dynamics of the U. S. Dollar, the Japanese yen and the Chinese yuan versus the euro. Moving to Page 9, the change in adjusted EBIT is explained by the following variances: volume positive and reflecting the unit increase versus the prior year Mix and price, strongly positive, thanks to the robust product mix sustained by the Dayton SP3 and the few 499p Modificata sales, the increased contribution from personalizations and the positive country mix mainly supported by the increased weight of the Americas. Industrial and R and D expenses were almost flat in the quarter.

Speaker 3

SG and A increased and reflected marketing and brand investments and the ongoing development of our digital infrastructure and organization. The events we had in Miami and Le Mans exemplify our brand investments, perfectly integrating the sports car lifestyle and racing souls. Other was almost flat in the quarter. The increased contribution of our new sponsorships and a new release of current environmental provisions worth approximately €10,000,000 were mostly offset by higher costs for racing also due to better Formula 1 in season ranking. Lastly, the total net impact of currency was negative for €35,000,000 And as a result, the EBITDA margin stood at 39.1%.

Speaker 3

As a reminder, the exceptional EBITDA margin of 40% in Q2 2023 was supported by certain timing and other positive effects which in part took place also this quarter. The EBIT margin reached 29.9 percent and benefited from flattish depreciation and amortization compared to the prior year as a result of the production cadence of current models. Turning to Page 10. In the Q2, our industrial free cash flow generation was €121,000,000 reflecting the increase in profitability, partially offset by capital expenditure that are higher than last year and in line with the pace of development of our products as well as of the new infrastructure in Maranello. As previously mentioned, capital expenditure this year are progressing more linearly compared to our usual cadence due to advanced development of the product pipeline and the ongoing spending for the new paint shop.

Speaker 3

Tax payments and an increase in net working capital provisions and other, primarily driven by higher inventory, which reflects both our production plans and the enriched product mix. In the end of June, the company was in a net industrial debt position for €441,000,000 to €1,000,000 since the dividend payment and the share repurchases occurred in the quarter more than offset the positive industrial free cash flow. Moving to page 11, we revised upward the 2024 guidance mainly to reflect the improved visibility on stronger personalization following the very solid results of the 1st 6 months. We are also projecting higher R and D expenses for racing and other innovation activities as well as for marketing and brand initiatives for the rest of the year. This leads us to confirm the EBITDA margin target for the year while upgrading the EBIT margin to reflect the operating leverage on G and A.

Speaker 3

The improved EPS also reflects the new estimate on the tax rate for 2024, now in the region of 19.5%, which benefits from the temporary coexistence of the 2 different patent box regimes. The strong profitability also turns into higher industrial free cash flow notwithstanding the increased pace of our capital expenditure above the initial €950,000,000 target also reflecting the updated timeline for the new paint shop which has been accelerated compared to our plans as per the last Capital Market Day. To sum up and focus on the second half of the year, we therefore expect a positive product mix even though to a lesser extent compared to the first half, given the lower Daytona deliveries in line with our plans. The mentioned increase in R and D, OpEx and SG and A and IRD and A in line with the start of production of new models and the digital infrastructure. With respect to the quarterly pace, we confirm the already flat softer Q3 intentionally designed in terms of volumes, model and country mix allocation to ease the whole company in its transition to the new ERP, the enterprise resource planning software for our collection, production and sales management that will go live at the end of August.

Speaker 3

To conclude, the financial results that we present today underscore the solid fundamentals of our business and a flawless execution. Such results and the visibility that we enjoy give us renewed confidence to sustain this positive momentum and keep on delivering on our commitment. I thank you for your attention and I now turn the call over to Ado.

Speaker 1

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

Operator

Thank you. Our first question comes from the line of John Murphy of BofAS. Please go ahead. Your line is open.

Speaker 4

Good afternoon, everybody. I do want to ask 2 maybe kind of relatively simple, but important questions. Benoit, when you talk about the order book being full through 2026, that's sort of an indication that you know what your units are going to be or planning on what your units are going to be through the next 2.5 years. I'm just curious as you know that and you plan for that, is there just a much greater focus on price and mix with very slow growth in units? Or could we see maybe a little bit of an acceleration in unit growth and a slightly less emphasis on price and mix.

Speaker 4

I mean, how do you think about balancing those and sort of really the volume growth for the next two and a half years?

Speaker 2

And the second question?

Speaker 4

And the second question is the margins are bumping up against sort of the high end of the range of the 2026 outlook. Is there a way to maybe potentially think about recasting margin potential in the company really in light of the first question?

Speaker 2

Okay. So I think the first one and the second that will Antonio will have, John. Thanks for your question. Coming to the first one is, would give let's say, what we see is an advantage in terms of mix and price and a slower growth, okay? Coming back to your first question.

Speaker 2

The second, Johnny, if

Speaker 3

I got your question right, in terms of the guidance on margin, this is very much driven by the development of our mix going forward and obviously the incidence of expenses. So if you look at Q2, I think the rationale for that is clear. But if we look forward to the second half of the year, I think there is additional costs that are partly seasonal that are tempting into the continuation of the similar level of profitability.

Speaker 5

As to 2025

Speaker 3

and 2026, 2026 is out there in terms of the guidance and remains there and 2026 we will speak later on beginning of next year.

Operator

Our next question comes from the line of Michael Binetti of Evercore ISI. Please go ahead. Your line is open.

Speaker 6

Hey, guys. Emma, congratulations on a great execution quarter. A couple just two questions for me. 1 on personalization. Can you help us understand the increase in personalization?

Speaker 6

I think you said almost 20%, maybe break down what's helping move that higher, any headwinds? And I'm curious how much the mix of cars is influencing that and if the early shipments of the SF90XX special models are suggesting that personalization will be in line with averages or above as we move past 2Q? And then the second question is, as we think ahead to the EV next year, it's interesting to look back and see how the company has rolled out new technologies in the past. The LaFerrari introduced the curves hybrid system and you guys chose to bring that out at a very high price €1,000,000 plus supercar price point. Conversely, the ProSang, you brought that out as a premium priced road car with a higher unit count than the strictly limited LaFerrari.

Speaker 6

As you think about those two examples, what are the most important elements of the strategy that you think about in launching the EV?

Speaker 2

I think the let's with the first one, the personalization, Michael. Thanks for your question and the complimenting to all the team. The story of the personalization, we answered this question several times. What we see and we are focusing in supporting the demand of increased personalization from our client. I would like you all to remember a couple of things.

Speaker 2

1, the personalization level is does not depend too much on the model. It's about 20%. Clearly, in absolute term, when you sell something that is more expensive, in absolute term, it's bigger. But in any case, it's around 20%. And the second thing that I told I would like to share with you is that the dimension of the personalization that is that our client like a lot is the carbon finish.

Speaker 2

We keep analyzing what is the take rate the different optionals that we offer and we see a clear dominance of everything that is carbon finish. And we have been looking at this both inside in the car and outside the cars. So we are putting our supply we are strengthening support, strengthening the supply chain in a way that we can accommodate the different client needs. So this is about the personalization. These are the two facts that are supported by data analysis of what we see in terms of behaviors of our client.

Speaker 2

The second instead is about the EV strategy. Here I would like to remind that it was May 2022 before the CMD, when we had the several discussion in the company. It was clear at that time that it wouldn't make sense to push only one kind of propulsion. Economical neutrality is a key when you have, let's say, the market is not does not know where to go. So for us, making the EV is a way to show our client that whatever is the technology, we can harness in a unique way to deliver them unique driving trails.

Speaker 2

So one message that I said when I made the introduction the introduction is that we continue to believe in technology neutrality. We are acting in that direction and our plan our product, let's say, our plan of EV introduction 2025 and we believe we are able we will be able to deliver unique driving experience to our customers with any kind of cars that we are going to make in the e building.

Speaker 6

Thank you very much guys.

Speaker 2

Thank you.

Operator

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of George Galvez from Goldman Sachs. Please go ahead.

Operator

Your line is open.

Speaker 7

Yes. Thank you very much for taking my questions. Obviously, it sounds like you are seeing very strong demand still for all of your products. And obviously, you have a very healthy order book. Obviously, just mindful of what we're hearing other luxury companies talk about.

Speaker 7

As you've built up the order book of the Duodice Cielindre, have you seen any areas where perhaps the market has not been as strong as you might have expected? And potentially any areas where that's been more than compensated for by very high demand? Is there any sort of geographic development there that has caused you to sort of raise an eyebrow? And then the second question I had was just with respect to the very strong pricemix during the quarter. Can you give us any insights into how much of that was from the contribution from DAYTONA SP3 and the 499?

Speaker 7

And with respect to the 499, if you're able to provide any sort of insights around the volume in the quarter, the volumes we should expect over the remainder of the year, I think that would be very helpful. Thank you.

Speaker 2

Thank you, George. I'll take the first one. The second, Antonio will reply. So the first one, maybe the question is about the Doddichichirindri order book, right? That's what you said, Doddichirindri.

Speaker 2

So I can tell you that the traction of these of both models is very strong across all the countries. There is only one country, but we knew already by design, one country where the order book is not so strong like in other countries, because it's not digital entry, because there is, let me say, additional tax burden that is China. But remember that when we show you the when we share with you the Capital Market during Capital Market Day, the plan for the 4 years, together with the technological neutrality, we said another important thing because of the product pipeline we were developing, we said that China would have been always lower than 10%, greater China. So I would say no surprise in this respect. I would say instead one thing that the traction of the Doddy Ciel Indri has been stronger, I would say even much stronger than the 2 predecessors in the same category.

Speaker 2

I'm talking about the 8 12 GTS and the 8 12 Superfast. So very we are happy about the traction of this model with the different client that I've seen. And the second is for you, Antoine. Yes.

Speaker 3

Hi, George. During the quarter, we shipped 74 Daytona. That's why I said less than in Q1 and obviously higher than last year. And going forward, you remember, we said that they'll decline over the course of the second half in order to have a sort of average for the year, which is slightly above 60 per quarter. And the 499P, sorry, we shipped 5 in the quarter.

Speaker 3

That is not to be expected an even pace of delivery going forward, but more or less that could be the region, I mean, 4 to 5 depending on the quarter for clients.

Speaker 7

Fantastic. Thank you very much.

Operator

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Thomas Besson of Kepler Cheuvreux. Please go ahead.

Operator

Your line is open.

Speaker 8

Thank you very much for taking my questions and congratulations on the numbers. I'd like to discuss with you the possibility of seeing your average selling prices moving even higher or not in the second half. I mean, I was impressed by the step up in Q2 versus Q1. With what you said, we should expect a substantially lower number of SP3, but a much higher level of data now and FX, I guess. Could you help us assess whether the average thing price in the second half could be higher than the first half or not?

Speaker 8

And also mention the impact of the declining China share on that calculation? That's the first question. And the second, your the SF facility is finished now. Could you talk about the expected evolution of the hybrid share in the coming quarters? It has reached a high level driven by now the 296 CCS.

Speaker 8

What should we expect in the coming quarters? And when should we expect you to release a new hybrid car?

Speaker 2

I think the second, Antonio will take the first. Here, maybe I would like to share with you one important point. Today, when we you see the number of the share of the cars, hybrid as I see, more or less, we are around fifty-fifty. Well, I think that there is a continues to be a strong traction for our hybrid model. And just yesterday, I was with a few clients that they were extremely happy about the 296GTD compared with the 458 that was thermal.

Speaker 2

And so what I want to say is that we expect the traction of the hybrid going forward in the same level as it has been so far. And we start to see also some positive comment about the initiative we launched at the beginning of this month sorry, the past month in July, when we extend also the warranty to the high voltage battery of the hybrid car. So we don't see any, let's say, strange sign on hybrid. On the contrary, we see a strong positive interest and attention in driving trails that our clients are experiencing when they drive this hybrid car. So that's I think the second and then Antonio Yes, because

Speaker 3

the trivial numbers. Anyway, the second in terms of ASP for the second half of the year, I would expect it to be not very different, maybe slightly lower compared to the first half. While with respect to the and this is mainly due to the fact that Daytona is going down in terms of number of shipments. True, there will be some more S90XX that this will be growing. We have delivered until now few tens of this car.

Speaker 3

There will be in the region of 100 or slightly more of this in the second half. But overall, the net impact should be the one that I mentioned.

Speaker 8

Thank you very much.

Speaker 9

I have one question on personalization, please. I believe at Q1 stage, we talked about a level of slightly higher than 19%. And at the time, you said it was above average, what you're expecting going forward. We're now talking, I believe, more like 20%, and you are not talking about above average anymore. So is it fair to say that at this point, the expectations for personalization have shifted up and you're now expecting more sustainably a level of 20%?

Speaker 9

And the second question perhaps on residuals. I know we've been talking about residual normalization. If you could just share your latest observations and thoughts. I know you think that residual value should start to normalize to a greater degree than that perhaps during the COVID and semiconductor period. Do you think at all that could affect your ability going forward to price successor models at as large a markup as you have currently done once your buyers start to consider perhaps a more normalized development in residual value, say?

Speaker 9

But also more broadly, any considerations you would share around residuals would be greatly appreciated. Thank you very much.

Speaker 2

Henninger, so the first one, personalization. I mean, forecasting the behavior of the client, you know very well, is not easy. What we can what the only thing, allow me to say, the best antidote or the best way to manage this is to become to be agile, to accommodate the needs to have some flexibility. That's the reason why we are so much proud about our rebuilding because of the flexibility that allows us. So for the rest of the year, we expect, in any case, something that is in the range of 19%.

Speaker 2

It can go up a little bit, 19.5%, but that 19% is what you can consider also for the rest of the year. That's what we are planning for. The second question instead is a good occasion to clarify a couple of points. The first one, the residual value remains strong. There is some there are some geographies, okay, like I mentioned, for example, U.

Speaker 2

K, well, let's say, they are a little bit weaker, but I can tell you that we have been analyzing 20,000 transactions, 20,000 transactions that have been happening in the last years. And we have seen that there are the functional personalization that are keeping their value. Then there are some personalizations like the painting, some special painting, something that is not, let's say, maybe not so appreciated by the second client that are a little bit impacted. But I can tell you that, let's say, the trend remains strong. And maybe this is a good occasion to clarify everyone.

Speaker 2

Sometimes you keep reading that the people are afraid about residual value of the hybrid cars. Well, we have been investigated. We have been working and listening to our clients. We have been working in the last 7, 8 months. We announced this warranty program that starts in July this year for all our hybrid cars in a way that we gave the peace of mind to all the clients that have the hybrid.

Speaker 2

So basically, the battery, is like many others, let me say, objects in the cars and is protected by warranty. So thanks for your question.

Speaker 9

May I squeeze a follow-up question? Sure. To Antonio, please. Sorry, Antonio, you said some of the positive one off effects in the bridge in the other bucket at the time of Q2 2023, I think it was when you were talking about EBITDA. You said some of these were also present this quarter.

Speaker 9

Could you be a little bit more concrete on that please?

Speaker 3

Absolutely. Sorry, I thought you remember. Anyway, last year in Q2, we had a release of current environmental provisions and also we adjusted our expectations for the ranking of the year to the 2nd place. While this year, we had a similar release of environmental provisions and we maintain for the time being our assumption in terms of being first in Formula 1. Thank you

Speaker 9

so much. Thank you.

Operator

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Steven Reitman of Bernstein. Please go ahead.

Operator

Your line is open.

Speaker 10

Yes. Thank you. Again, also congratulations on your results. I had a question again on personalization. I think you've said in the past that Purosangue surprised you in the sense that demand was much stronger than you'd anticipated and you close the order book and then it's reopening again and it stretches out very far.

Speaker 10

You said that I think in the Q1, the personalization rate was very heavily influenced by collectors who were personalizing a very high level and maybe I had the impression you were thinking maybe this rate of personalization would not continue once these collectors have been satisfied. Maybe you could comment on what the personalization rate is looking like on Chris Lombardi as we go through as we went into the Q2 and the rest of the year. And secondly, again, congratulations, I think it's a very good idea with the warranty extended warranty program for the hybrid components addressing that concern. What is actually the feedback you've actually been getting from that already? It's obviously not many cars yet at the end of their warranty on the vehicle yet, but have you already seen some take up of the plan?

Speaker 10

Thank you.

Speaker 2

Thank you, Steve. And as I said also, the compliments go to all the team here. So let's start with the personalization. You are right. In Q1, we see the collectors, let's say, pushing out the personalization.

Speaker 2

What I can tell you, I don't know if it is a sign also for the future or not. We'll see. But we see also that the new clients are particularly keen in personalization. So the good point is that we are collecting a lot of data. We are analyzing them.

Speaker 2

While we can say with certainty that the carbon finish is definitely something together with the painting, it's a personalization that shows a clear trend, a clear appeal for the client. We start to see also that the new client in Q2, we start to see the new client are appreciating and want to do personalize more and more the cash. But we don't feel confident yet to say that this is a trend like it is for collectors. We need to collect more data. That's the reason why I told you before that we expect personalization to be always in the range of 19%.

Speaker 2

We'll see. We will update you as soon as we understand and we pick up a signal. The second instead, we've been working around 7 months to set up this idea of high voltage battery warranty. And as you can understand, I mean, this is online since 27 days. And we I can tell you that the feedback of the client, some feedback of the client were very positive because they understand that in the car, there is something that is a limited life and we, Ferrari, realize it and we apply this warranty.

Speaker 2

So the first feedback are positive. We'll see what is the take rate in the quarters to come also because the first cars that are approaching the end of the 5 years are SF 19, 19 plus 5 is 24. So we'll keep you updated, Stephen. The first feedback are very, very positive because the people understand that they can we understand and we care about the peace of mind of our client.

Speaker 10

Can I just ask one more question please as well? And that is, obviously, there have been concerns about the general luxury market, but we saw last week very strong results in from Mermen's in their iconic leather and sandalry business, which really defines the brand. What are you seeing what feedback you're getting from your dealers in terms of footfall, people visiting the showroom and the duties of interest? How would you say that compares to in any period you prefer to compare it against?

Speaker 2

Look, we don't see any sign of weakness. We see there is no trend in at all in reduction of visit. I can tell you that after the Doddy Chilindre announcement in Miami, we had a lot of events all over Europe. I've been attending personally several of them because we organized them close to the racetrack in Furano and they were full, full of clients. The clients we were inviting were in the range of 100 per night.

Speaker 2

And we were offering also dinners. Most of the time, they were spending close to the cars. They did not care about what we were offering for dinners. And so there is no weakness sign that is perceived either by us directly or by our dealers. I can tell you that there are also some clients that want they are pushing us to have 2, both, both for the digital Indre.

Speaker 2

So let's say, we keep monitoring obviously, but we don't see any sign of weakness in this respect.

Speaker 10

Very clear. Thank you very much.

Operator

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Martino De Ambroggi of Orica. Please go ahead.

Operator

Your line is open.

Speaker 11

Thank you. Good afternoon, everybody. Marti Loiam Brogi from Equita. Again, on mix. Am I right in estimating that probably 1 third, if not more, of the mix effect in the first half of this year came from the growing personalization?

Speaker 11

This is my first question.

Speaker 3

I'm not able to give you confirmation. I think it's high. It's probably not far away from reality, but I'm not able to confirm as of now. We'll follow-up on this.

Speaker 11

Okay. And I understand you do not provide future guidance for the weight of personalization. But I was wondering if you had you suffered any kind of constraint and you were not able to satisfy customers' demand in the past because you are increasing the flexibility with the new building. So presumably, you are ready or you expect, I don't know, maybe both, to catch more than 20%.

Speaker 2

Look, I understand you are trying to understand what is the future. What I can tell you is that if someone had the right recipe in the world, it would be much richer. Today, we are planning based on the data we have. What I can assure you, Martino, is that we have been working with our suppliers for the personalizations that are more, let's say, appreciated by our client and we put them in place to be agile, okay. Because I mean, just yesterday, for example, we were analyzing in detail that with the commercial team and also the production team what is the take rate.

Speaker 2

And the carbon, the carbon is clearly an area that the carbon finish is an area of interest. We are sometimes in the past, the carbon the client the supplier, sorry, were not ready as and agile like the client wants. Now we are improving and strengthening their capability of delivering us what we need, what the client needs. This is what we can tell you. For the future is what I said before.

Speaker 2

That's what we were planning for.

Speaker 3

In the meantime, I just checked the number and actually I'm not far away from reality assuming 1 third of the pricemix effect in H1 comes from personalization.

Speaker 11

Okay. Thank you very much. You're welcome.

Operator

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Anthony Dick of ODDO BHF. Please go ahead.

Operator

Your line is open.

Speaker 5

Yes. Hello and again congrats for the amazing results. My first question is on the dodeci cylindri. Great to hear your comments on the order momentum versus previous generations. I was just wondering if you might share the length of the order book of that car.

Speaker 5

You haven't said it's sold out, so I'd assume it's less than 2 years. But if you can confirm that, that would be very useful. And then related to this question, during Q1 results, you mentioned order book normalization because most of your cars were sold out. So now with this new car, is the order book higher than Q1, broadly the same or lower? And then if I have time, I could squeeze a second question on ASP.

Speaker 5

Also very impressed by the sequential ASP increase even despite lower Daytonas and even stripping out the 4990. So to put this in the context of your previous comments, you expected a 10% ASP increase for the full year. Is this still your expectation? Or should we expect something higher? Thank you.

Speaker 2

Okay. The first question is the order book depends a little bit if it is Dori Gildindre, the coupe or the Dori Gildindre, the spiders, because we started already production of the Dori Giro Indri coupe. And this one is more than, let's say, 20 months. Consider also one point that for the VJ Linde Respider, it's more than 2 years. Consider that usually, we did you may remember, we said that with this launch of the cars, we did an experiment because we wanted we launched it together for the first time in our history.

Speaker 2

We launched it together, spider and the coupe. And we see that the ratio between coupe and spiders, the spider is winning more around 60%, 65% for the order that we have in the books already. So this is the first question. The second question is, we see, let me say, for sure, the orders are coming from the model that are not sold out. So the model that are not sold out are these 2.

Speaker 2

So these 2 will continue to grow the order book and order book portfolio. And then you said the ASP, what is it?

Speaker 3

Yes, whether the ASP the first one on the order book, I think it's fair to say that it remained flat because basically we had the expected decline of the orders on the previous portfolio since we are delivering the new we are delivering the cars and at the same time, we are growing in terms of the synergy. I mean, please consider that depending on the model that we launch, the order book may go up or down. If it is a limited volume car, obviously, it does not add too many volumes to a portfolio where we keep on delivering at the same pace. To the opposite, if we add a volume car, it's going to be different direction. In terms of the ASP plus 1% versus in H2, I think we keep on confirming what the expectation for the full year.

Speaker 3

So this having an average ASP about in the region of 10% over last year.

Speaker 5

Okay. Thank you very much.

Speaker 2

Thank you.

Operator

We will now take our next question. Please stand by. Our next question comes from the line of Monica Bozia of Intesa Sanpaolo. Please go ahead. Your line is open.

Speaker 12

Good afternoon, everyone. Most of my questions have been already answered, but I have 2 left. One is a general curiosity. In the previous conference call, at Ventimberto, you said that 74% of the new cars were sold to existing clients. That's fine.

Speaker 12

I'm curious about the new Ferrari. Any color on the pattern of the new Ferrari could be helpful. How is the distribution by country, age, powertrain? You already told us that the personalization appeal is quite high. So any color also would be helpful.

Speaker 12

And the second question is for the housekeeping. In the second quarter, there was no impact from the financial charges. I was wondering if Antonio can give us a rough indication by year end. Thank you very much.

Speaker 2

Monica, thank you. So I can tell you this. I think that the share among new client repeaters, let me say, does not change so much, especially when you talk quarter over quarter. If we want I mean, we keep analyzing what is the demographic, how is changing the client profile that are approaching. One thing that we see is that also the new client like to personalize a little bit more the cars.

Speaker 2

But also here, Monica, depends on the geography. It depends a little bit on the geography. There are some places where the personalization level is higher and some others where instead it's lower. So also the ratio of repeated a new client depends a little bit on the model. Maybe just as a callers, I can tell you that there are some cars that are in higher percentage of women, okay?

Speaker 2

They go to fire them even to 7%, some other cars are a little bit lower. But there is not a clear sign.

Speaker 12

Okay. And in terms of country distribution and the powertrain requirements across no sign.

Speaker 2

No sign in terms of count and no sign in terms of age also. No sign in terms of age, no, because one thing one foot was the following. Maybe we have been analyzing the correlation between the preference of the model, the powertrain and age, 0, because we thought that maybe the people that are 55, they prefer the IC instead of hybrid, not at all true. I mean, there is no correlation.

Speaker 12

Perfect. Very clear. Thank you.

Speaker 3

On the second one, Monica, you may assume a number not far away from that of last year.

Speaker 12

Okay.

Speaker 3

So in the region of 15, very small.

Speaker 12

Perfect. Thank you, Daniel.

Speaker 3

Welcome.

Operator

Thank you. There are no further questions. I will now hand over to Benedendo Vigna for closing remarks.

Speaker 2

Thanks, Ola. Thanks for your time today and also for your questions. These strong Q2 results and also the continuing desirability of our brand all over the world fuel our confidence for the development of the year and for the years to come. And I wish you a good afternoon and also relaxing summer break for the ones who are going to have it. Thanks again.

Speaker 2

Thanks for your attention. Gracias.

Operator

This concludes today's conference call.

Remove Ads
Powered by Quartr
Earnings Conference Call
Ferrari Q2 2024
00:00 / 00:00
Remove Ads