This article, written by James Mackintosh, was published in the
Financial Times of
6 Jan 2004
Ferrari, the Italian sportscar maker, is losing money on every
car it sells in the US, its largest market, because of the plummeting
value of the dollar against the euro. It is also suffering a sharp
decline in Formula One racing income, since sponsors pay in dollars.
Luca di Montezemolo, chief executive, said the company, controlled
by Italy's Fiat, was prepared to wait "a couple of months"
to see if the dollar recovered before taking any action.
The dollar's decline casts a shadow over the 50th anniversary of
the iconic carmaker's presence in the US, after it sold a record
1,350 cars there last year, up 13 per cent. Mr Montezemolo said
the company made a profit last year as the dollar fell, but refused
to say if it would do so this year at the dollar's level of 78 cents
to the euro.
The weak dollar has already led to profit warnings from many European
vehicle makers. It threatens to start causing financial problems
even for BMW and Porsche, which are heavy users of hedging.
"All the European companies worry about it," Mr Montezemolo
said. "Theoretically at this level it is better to sell fewer
cars in the US. We lose 20-30 per cent not only from sales in the
US but also from [Formula One] sponsors' revenues."
The dollar fell 16.8 per cent against the euro last year. Ferrari,
the leading Formula One manufacturer's team, earns a large proportion
of its income from motor racing. Sponsor income, denominated in
dollars, makes up three-quarters of racing revenue.
Mr Montezemolo, who is also a director of Fiat, said there had
been no progress on the flotation of the company, originally planned
for last year. "Any decision regarding flotation is first of
all Mediobanca's [which owns 34 per cent] and second of all with
Fiat," he said.
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