Ferrari Profit Jumps in Q2

Posted on August 2, 2016.

The following article by Eric Sylvers was posted on the Wall Street Journal website:

Ferrari NV said profit jumped by almost a third in the second quarter as the Italian luxury sports-car manufacturer sold more vehicles and paid a lower tax rate.

The financial results are the first to be released since Chief Executive Sergio Marchionne took over in May. Mr. Marchionne didn’t bring a strategic revolution in the past three months as he was already Ferrari chairman as well as CEO of former Ferrari owner Fiat Chrysler Automobiles NV, but by taking the reins he highlighted his commitment to seeing Ferrari through a steady increase in production.

Mr. Marchionne shook up Ferrari’s longstanding strategy of capping production at about 7,000 a year when in 2014 he first hinted of his desire to push unit sales higher. Volume has been creeping up ever since, something Mr. Marchionne has managed without damaging Ferrari’s exclusivity appeal. The company often keeps buyers on a waiting list for about a year before they get their cars.

Ferrari Tuesday confirmed plans to boost shipments this year to about 8,000 as it works its way toward a goal of 9,000 in 2019. Shipments in the second quarter rose 8% from a year earlier to 2,214, pushing the first-half figure to 4,096.

Ferrari is seeking to tap less served markets such as China, where shipments reached 160 in the second quarter. While that is still just a fraction of the 774 sold in the Americas and the 953 in Europe, the Middle East and Africa, the 26% increase in Greater China far outstripped the other regions.

Net profit rose to €97 million ($108 million) in the three months to the end of June from €76 million in the same period last year. Revenue climbed 6% to €811 million as the company shipped 2,214 vehicles, an increase of 8%.

Ferrari was taxed at 30.7% in the second quarter, down from 33.5% in the same quarter last year after the Italian government lowered the nominal tax rate.

Maranello, Italy-based Ferrari confirmed a forecast to generate more than €3 billion euros in revenue and €800 million in adjusted gross operating profit this year.

The results beat analysts’ expectations, helping push up Ferrari shares 1.7% to $46.57. Nine months after its initial share sale, the company has been unable to claw its way back to its IPO price of $52.