Please ensure Javascript is enabled for purposes of website accessibility

Ferrari's Profit Rose 8%, but Sales Growth Slowed

By John Rosevear - Aug 2, 2019 at 4:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company did well, but was it enough to satisfy investors?

Italian supercar manufacturer Ferrari (RACE 2.46%) said that its adjusted operating profit rose 10% from a year ago to 239 million euros ($264 million), on an 8% increase in global shipments driven primarily by demand for eight-cylinder models.

Ferrari also confirmed most of its previous guidance for the full year, raising only its cash-flow expectation. But some analysts had expected a more dramatic upgrade to guidance, and shares fell in early trading after the news was released.

A silver Ferrari Portofino, a sleek front-engined convertible sports car, parked on a beach.

Worldwide demand for Ferrari's V-8-powered Portofino convertible remained high in the second quarter. Image source: Ferrari.

The raw numbers

Ferrari had no special items in the most recent quarter, but in the second quarter of 2018, it took a one-time credit of 1 million euros related to a prior charge for expenses from the 2016 Takata airbag recall.

Metric Q2 2019 Change vs. Q2 2018
Revenue 984 million euros 9%
Vehicle shipments 2,671 8%
Adjusted earnings before interest and tax (EBIT) 239 million euros 10%
Adjusted EBIT margin 24.3% 0.4 pp higher
Net profit  184 million euros 14%
Industrial free cash flow 139 million euros 78.2%

Data source: Ferrari; pp = percentage points. As of Aug. 2, 1 euro = $1.10. Adjusted figures exclude special items. Industrial free cash flow is from Ferrari's core automaking business and excludes its financial-services unit.

What happened at Ferrari in the second quarter

  • Sales growth slowed from the first quarter, when shipments increased by 23% year over year. Second-quarter shipments increased by 208 units (8.4%) from the year-ago period, driven by an 12.3% increase in V-8 powered models, primarily the Portofino convertible. Shipments of V-12 models, which generally carry higher profit margins, fell slightly from a year ago.
  • Ferrari is seeing particularly high demand for the V-8 Portofino and the V-12 812 Superfast models.
  • Deliveries of V-8 488-series models slipped in the second quarter. The 488 is nearing the end of its run; the company has already shown its successor, the F8 Tributo.
  • Deliveries to Mainland China, Hong Kong, and Taiwan rose 63% from a year ago; deliveries to North and South America fell 6%, and deliveries to Europe rose 11%.
  • The increase in China was the result of a decision to try to deliver as many vehicles as possible ahead of upcoming new emissions regulations in the country. Shipments to the U.S. fell because of lower demand for the outgoing 488 series.
  • In May, Ferrari introduced a new hybrid, the SF90 Stradale. It pairs a V-8 with a race-derived all-wheel battery-electric-hybrid system to deliver what Ferrari calls "unprecedented" performance. It will sit at the top of the regular model range, above the 812 Superfast.

Looking ahead

Ferrari maintained most of the full-year guidance it gave in January. It increased its target for industrial free cash flow, and said that, assuming interest rates remain constant, it currently expects results to approach "the high end of the range on all metrics."

Metric 2019 Guidance 2018 Actual
Revenue More than 3.5 billion euros 3.4 billion euros
Adjusted EBITDA Between 1.2 billion and 1.25 billion euros 1.1 billion euros
Adjusted EBITDA margin Around 34% 32.6%
Adjusted EBIT Between 850 million and 900 million euros 825 million euros
Adjusted EBIT margin Around 24.5% 24.1%
Adjusted earnings per share Between 3.50 and 3.70 euros 3.40 euros
Industrial free cash flow Greater than 550 million euros. (Previous guidance: around 450 million euros) 400 million euros

Data source: Ferrari. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ferrari N.V. Stock Quote
Ferrari N.V.
$201.86 (2.46%) $4.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.