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Ferrari Q3 Profit Comes Up Short

Nov. 5, 2018
Automaker faced stronger euro, weaker model mix.

Ferrari NV reported a third-quarter profit that slightly missed expectations as the Italian carmaker faced currency headwinds and a less favorable model mix that included higher sales volumes of its entry level supercar.

Key Insights

Adjusted EBITDA missed an average analyst estimate of 282 million euros (US$321 million) by 1.5%. New Chief Executive Officer Louis Carey Camilleri is pushing for the sale of more limited-edition sportscars that can top 1 million euros to boost profit margins in the next five years.

Unfavorable currency movements, mainly from the dollar’s depreciation versus the euro, resulted in a 19 million-euro drag on third-quarter profit. Ferrari sold 34% of its cars in the Americas during the period. Profit was also held back by strong demand for the $200,000 Portofino model, just as sales of the LaFerrari Aperta, which costs about ten times that amount, is nearing the end of a limited-series run.

Ferrari is seeking an EBITDA margin of 38% of revenue by 2022, equal to Hermes, the French luxury fashion group. With the Purosangue SUV due just at the end of the plan in 2022, Ferrari needs lucrative special-edition models to help get there.

Market Reaction

“Ferrari remains a relative safe haven,” said Evercore ISI analyst George Galliers, as other auto manufacturers face major uncertainty from raw materials prices and tariffs. “Results, while not spectacular, should be enough to keep bulls content as Ferrari continues to grow earnings.”

Shares fell as much as 2.6% to 101.50 euros, before making up some of the price drop. The stock has lost 15% since Camilleri, a veteran of Philip Morris International Inc., replaced Marchionne as CEO, a few days before the Italian-Canadian manager died in July.

By Tommaso Ebhardt

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