Italian supercar manufacturer Ferrari (RACE 0.83%) 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.
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%|
|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%|
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.
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|