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February 18, 2018

Ferrari’s supercar sales fuel second quarter earnings beat

By Agnieszka Flak

MILAN (Reuters) – Italian luxury carmaker Ferrari posted better-than-expected quarterly earnings on Tuesday, helped by strong demand for its supercars from Europe and China and margins strengthened by special edition and personalised models.

The company, spun off from Fiat Chrysler Automobiles at the start of the year, confirmed its full-year profit guidance, adding it was on track for another record.

Chief Executive Sergio Marchionne said the full-year forecasts were “the minimum points” expected and predicted a “phenomenal 2016”.

Some analysts have said they expect Ferrari to raise its guidance before the year is over.

Its New York-listed shares rose nearly 3 percent to touch their highest levels since January, but were still short of its IPO price of $52.

Supercar deliveries in the quarter rose 8 percent to 2,214 vehicles, helped by strong sales of Ferrari’s 8-cyclinder models, especially the newly launched 488 GTB and 488 Spider.

Sales of 12-cylinder vehicles fell with the end of its limited series 1 million euro ($1.1 million) LaFerrari hybrid offer, though this was partly offset by the introduction of the new limited-edition F12tdf supercar.

Marchionne has sought to position Ferrari as a luxury goods business to win the trading multiples of companies such as Hermes and Prada and intends to expand the brand beyond cars.

More details of that strategy will be unveiled next year.

Until then, the CEO pledged to boost earnings by introducing more limited-edition vehicles like the convertible version of the LaFerrari to be shown at the Paris car show in October, and more personalised versions to woo the super rich.

Ferrari expects to ship around 8,000 vehicles this year, part of Marchionne’s goal to gradually raise volumes to 9,000 by 2019 without sacrificing brand exclusivity.

The carmaker said adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the April-June period rose 12 percent to 217 million euros, compared with 194 million euros in a Thomson Reuters analyst consensus.

“Ferrari’s strong second quarter demonstrates management’s ability to crystallise the value of the brand through innovative management of special edition models,” Stuart Pearson, an analyst at Exane BNP Paribas said in a note.

“However the debate at Ferrari remains the cyclicality of underlying demand for core models,” he said.

Revenue was up 6 percent at 811 million euros, above expectations, while net industrial debt fell to 763 million euros at the end of June from 782 million three months earlier.

Greater China, still a small market for Ferrari, impressed with a 26 percent rise in shipments, while sales in Europe grew 14 percent.

Marchionne said flat sales in the Americas were related to product flow issues, with numbers recovering in the second half.

“As a matter of fact, I can confirm the strength of the order book in the Americas,” he said.

(Reporting by Agnieszka Flak; editing by Susan Thomas/Ruth Pitchford)

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