Ferrari’s momentum on profit, shipments slows down
MILAN Supercar manufacturers typically operate in the rarefied sphere of recession-proof consumption, where wealthy customers possess enough money to drop US$300,000 or more on their purchases.
On Friday, Ferrari NV experienced the limits of that behaviour, reporting growth in the second quarter far behind the first three months of the year, sending its stock tumbling. Both profit and shipments slowed from more buoyant demand at the start of the year.
The shares fell as much as 6.9 per cent, before closing 4.4 per cent lower in Milan trading.
Ferrari fell the most in almost 10 months after climbing 70 per cent this year before Friday ’s setback. Some investors had hoped to see a raised outlook, which didn’t materialize. It shows even a supercar maker isn’t immune to a car market that has rapidly deteriorated in recent months, with companies from Daimler to BMW to Toyota cutting their goals as customers have second thoughts about purchases.
The company’s deliveries rose 8 per cent during the second quarter compared with last year, less than a 23 per cent gain during the first three months of the year, Ferrari said. Sequentially, shipments and profits were flat. The slowdown followed rival Aston Martin Lagonda this week reporting lower vehicle prices, an ominous development for an elite brand.
Still, chief executive Louis Camilleri pointed to an acceleration in demand in coming months.
“Ferrari’s order book has reached record-levels,” Camilleri told analysts on a call, with the pace of orders set to quicken during the remainder of the year.
The carmaker plans to unveil a record five new models in the coming months with a goal of delivering about 10,000 vehicles in 2019, he said. That’s up from total shipments of 9,251 cars last year.
Operating return on sales was “a touch” worse than expectations, Mediobanca analyst Andrea Balloni said in a note. Ferrari’s own forecast range on annual operating profit is below market expectations, he said.
While rising sales of the entry-level Portofino model continue to drive volumes, this was partially offset by lower deliveries of highend vehicles like the 488 GTB, Ferrari said. Adjusted earnings before interest and amortization rose to 314 million euros (US$349 million). Analysts’ estimates averaged 315.1 million euros.
Ferrari’s results remain more encouraging than the profit warnings and sharp declines in profit across other manufacturers. The industry faces an economic slowdown and trade tensions against a backdrop of the need for unprecedented spending on electric cars.
CEO Camilleri is pursuing a target to generate 2 billion euros in operating profit before some items no later than 2022 for the brand with the prancing-horse logo. To get there, he’s planning more profit-boosting limited-edition sports cars.