Q2 2024 Earnings Summary
- Strong demand and full order books into 2026, with no signs of weakness in the luxury market. As CEO Benedetto Vigna stated, "we don't see any sign of weakness. We see -- there is no trend in at all in reduction of visit." This sustained demand supports future revenue growth.
- Increased personalization demand, contributing approximately 20% of total revenues from cars and spare parts. Clients show a strong preference for high-margin options like carbon finish, enhancing profitability. As Benedetto Vigna mentioned, "we are focusing in supporting the demand of increased personalization from our clients... it's around 20%."
- Successful launch and strong traction of new models, such as the 12-cylinder models (12Cilindri), which are experiencing stronger demand than their predecessors, the 812 GTS and 812 Superfast. This indicates effective product strategy and potential for higher sales. Vigna stated, "the traction of the 12Cilindri has been stronger, I would say, even much stronger than the 2 predecessors in the same category."
- Expected increase in operating expenses in the second half of the year, including higher R&D and marketing costs, may pressure margins and lower profitability. Management indicated that additional costs are "denting into the continuation of the similar level of profitability".
- Decrease in shipments of high-margin models like the Daytona SP3 is anticipated in the second half, potentially impacting overall revenue and profitability. Management stated that Daytona deliveries will "decline over the course of the second half" with an average of "slightly above 60 per quarter" compared to 74 units shipped in the second quarter.
- Weaker demand in China for 12-cylinder models due to "additional tax burden" leading to a "not so strong" order book in that market, which could affect sales growth in an important region.
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Margin Outlook and ASP
Q: Will average prices move higher in H2; any impact on margins?
A: Management expects average selling prices in the second half to be slightly lower compared to the first half, mainly due to a decrease in Daytona shipments, though this may be partially offset by more SF90 XX deliveries. They confirm their expectation of an average ASP increase of about 10% over last year. Margins remain driven by mix development and expenses, with additional seasonal costs expected in the second half that may dent profitability continuation at similar levels. -
Demand Trends and China Market
Q: Are there any areas where market demand is weaker than expected?
A: Demand remains strong across all products and regions, with no signs of weakness. The only exception is China, where the order book for 12-cylinder models is not as strong due to additional tax burdens, but this was anticipated and planned for. Overall, the traction of the 12-cylinder models is stronger than their predecessors, and there is no observable reduction in showroom visits or client interest. -
Order Book Length and Volume Growth
Q: What's the length of the order book for the new 12-cylinder models?
A: The order book for the 12Cilindri coupé is over 20 months, and for the 12Cilindri Spider, it's more than 2 years. Management notes that the order book remains flat overall, as new orders offset deliveries, and they continue to see orders coming from models that are not yet sold out. They anticipate slower unit growth but see advantages in mix and price. -
Personalization Trends
Q: Has personalization reached a sustainable level of 20%?
A: Personalization levels are expected to remain around 19% for the rest of the year, possibly reaching 19.5%. The increase is driven by strong client demand, particularly for carbon finish options, both inside and outside the car. New clients are also showing increased interest in personalization, though it's not yet clear if this will be a sustained trend. -
Hybrid and EV Strategy
Q: What's the outlook for hybrid share and EV launch plans?
A: The current sales mix is approximately 50:50 between hybrid and internal combustion engines, with strong traction for hybrid models expected to continue. Ferrari plans to unveil its first EV in Q4 2025, emphasizing technological neutrality to provide unique driving experiences regardless of propulsion type. -
Residual Values and Pricing Power
Q: Are residual values normalizing, affecting future pricing?
A: Residual values remain strong overall, with some weakness in specific geographies like the UK. Functional personalization retains value, while some unique customizations may impact resale. Concerns about hybrid residuals are being addressed with a new warranty program for high-voltage batteries introduced in July, providing clients with peace of mind. -
Constraints on Personalization Supply
Q: Are there constraints in meeting personalization demand?
A: Ferrari is working closely with suppliers to enhance agility and meet client personalization needs, particularly for popular options like carbon finishes. They are improving supplier capabilities to deliver required customizations, leveraging the flexibility of their new manufacturing facilities. -
One-off Financial Impacts
Q: Could you detail positive one-off effects in EBITDA?
A: In both Q2 this year and last year, there were releases of environmental provisions. Last year, expectations for Formula 1 ranking were adjusted to second place, while this year, the assumption remains for first place in Formula 1. -
Dealer Feedback on Client Interest
Q: How are showroom visits and client interest trending?
A: There is no sign of weakness in client interest or showroom visits. Events following the 12Cilindri announcement saw strong attendance, and clients are actively engaging with the brand. -
New Ferrari Owners' Demographics
Q: Any insights into the profile of new Ferrari owners?
A: The ratio of new clients to repeat clients remains consistent, with no significant changes in demographics. New clients are showing interest in personalization, and preferences do not vary notably by country, age, or powertrain. There is no correlation between age and preference for internal combustion versus hybrid models.