Ferrari Earnings: A Solid Profit as Shipments Jump

Strong demand for the new 488 GTB helped Ferrari deliver a 21% year-over-year increase in shipments in the third quarter. Image source: Ferrari

Forza! Ferrari (RACE -0.81%) made its first-ever quarterly earnings report as a public company on Oct. 28, reporting a net profit of 94 million euros ($103 million) for the third quarter.

Here's what you need to know.

Ferrari results: The raw numbers

All financial results are in euros.

Net profit was 94 million euros. Free cash flow was positive 74 million euros. Ferrari had 827 million euros of net cash as of September 30.

What happened with Ferrari in the third quarter?
Broadly speaking, Ferrari's exotic sports cars come in two flavors: Those with V8 engines, and those with V12s. The V12-powered Ferraris are considerably more expensive, more exclusive, and (it is believed) more profitable. The more affordable (by Ferrari standards, at least) V8-powered models have accounted for the majority of Ferrari's sales since their introduction in the 1970s.

Ferrari shipped 1,949 cars in the third quarter, up 21% from a year ago. The good news is that shipments of V8-powered models rose 33%. Sales of the first of the new 488 series, which feature a turbocharged 3.9 liter V8 engine, together with continued strong sales of the V8-powered California T convertible model were more than enough to offset the discontinuation of the old naturally aspirated 458 models.

The not-so-good news is that V12 sales fell 17% on a year-over-year basis. In its presentation to investors, Ferrari noted that its V12-powered two-seat coupe, the F12 Berlinetta, is in the fourth year of its run. A sales decline isn't surprising.

Sales of V12 Ferraris, including the F12 Berlinetta, fell 17% in the third quarter. Image source: Ferrari

Regionally, Ferrari's shipments to the Americas were up by 30%. That was driven primarily by a bump in sales of the California T in the United States. The U.S. is Ferrari's largest single market. 

European shipments rose 16%. That was driven by a very good result in the U.K. (up 51%), as well as strong gains in Germany, France, and Italy. Ferrari attributed this primarily to demand for the first of the new 488 models, the 488 GTB.

Ferrari also posted gains in Japan and Australia -- but not in China. China has been an important market for all luxury-car makers, but it has slumped in 2015. Ferrari's shipments to China were down 40% in the third quarter.

Ferrari also supplies engines to FCA's luxury Maserati brand. With Maserati sales down, that business declined in the third quarter, but the 25-million-euro drop in revenue was more than offset by the increase in Ferrari's own sales volumes.

Wasn't Ferrari's IPO in the fourth quarter?
Yes. Ferrari wasn't a public company until after the third quarter ended: Its initial public offering happened on Oct. 21. Before that, it was controlled by Fiat Chrysler Automobiles (FCAU), which owned 90% of Ferrari. FCA is in the process of spinning off Ferrari. FCA sold 10% of its Ferrari stake in the IPO, and the remainder will be distributed to FCA shareholders over the next few months.

What's ahead for Ferrari?
Ferrari's guidance is upbeat. For the full year, it expects shipments to come in around 7,700 cars, including the hyper-expensive limited-edition LaFerrari. It expects adjusted EBITDA to come in between 725 million euros and 745 million euros, on net revenue of about 2.8 billion euros. 

Ferrari will begin shipping the next model in its 488 series, the convertible 488 Spider, before the end of the year. It has also sold out all 799 units of a limited edition of the F12 Berlinetta, called the F12 TdF (for "Tour de France," a reference to a historic Ferrari model from the 1950s) that it announced earlier in October.