Ferrari Profit Eases, As Mainstream Autos Skid Off The Track.
“Our negativity is more related to future orders than 2020 disruption”
Things must be really bad in the coronavirus-weakened world economy. The super-rich are apparently hesitating for a second or two before deciding to splurge between $180,000 and $450,000 on a new Ferrari.
That’s the message from the Italian luxury sports-car maker Monday, after it cut its estimate for earnings before interest, tax, depreciation and amortisation (EBITDA) for the year just a little bit to between 1.05 and 1.2 billion euros ($1.2 billion to $1.3 billion). In February, before the extent of the coronavirus rampage became apparent, Ferrari cut its estimate to between 1.38 and 1.43 billion euros ($1.5 to $1.6 billion).
Ferrari, which is controlled by Italy’s Agnelli family through Exor, reported EBITDA profits of 1.27 billion euros ($1.4 billion) in 2019.
The storied sports car makers said it restarted operations at its plants in Maranello and Modena. It reported first quarter adjusted EBITDA rose 1.9% to 317 million euros ($350 million).
Investment bank Morgan Stanley was impressed.
“This extraordinary level of stability in an economic crisis takes top place at the podium and expect investors to use any weakness as a buying opportunity,” Morgan Stanley analyst Adam Jonas said in a research note.
Investment researcher Jefferies was a little more reserved, with its “underperform” rating on the stock. The fact that Ferrari was able to make an informed guess about its prospects for the year, itself sets it apart from the shell-shocked global auto industry.
“(Ferrari’s) Outlook revised more materially than we expected, although we note exceptional circumstances and the fact few companies are able to guide. Our negative stance on the shares is more related to future order intake than 2020 industrial disruption,” Jefferies asnalyst Philippe Houchois said.
Citi Research noted Ferrari will lose up to 150 million euros ($164 million) because of delays in the Formula 1 racing season, and that the lockdown had disrupted production more than could be recouped in the current quarter.
“We expect investors to look through short-term disruption”
“F1 revenues will fall significantly in 2020 and production volumes will take time to rebound. Nonetheless, it looks as though these factors should be largely transitory with the revised guidance at first take assuming only a small demand impact. With 2021 estimates still looking relatively healthy we expect investors to largely look through the short-term disruption,” Citi Research analyst Angus Tweedie said.
In a note published in mind-April, Morgan Stanley pointed out that even a company as successful as Ferrari, had to beware of new developments.
“These are (a) the need to shift nearly 100% of the portfolio to all electric power trains (no tailpipe); and (b) the unquantifiable risk around conspicuous consumption for vehicles as exotic as Ferraris, which aren’t just an expression of the 1%… but more like the 0.001%,” Jonas said.
Ferrari shares closed Monday at 145.10 euros, up 1.19% on the day, according to Reuters’ data.
In 2019, Ferrari sold 10,131 vehicles, up 9.5% on the previous year, boosted by sales of the Portofino and 812 Superfast. It launched its first plug-in hybrid, the SF90 Stradale.
Ferrari new models in 2020 include the Roma, which slots into the line-up as a new V8 powered, fixed roof Berlinetta – a front-engined coupe sitting below the mid-engined F8Tributo but above the convertible Portofino.