Posted on February 5, 2016.
From the Financial Times of 3 February, by Andy Sharman
Shares in Ferrari tumbled more than 10 per cent on Tuesday after the Italian supercar maker issued conservative guidance for its first year as an independent company.
Alongside maiden annual results since separating from parent company Fiat Chrysler Automobiles in January, Ferrari said it expected earnings before interest, tax depreciation and amortisation to come in at more than €770m this year — only €22m more than 2015.
The company’s New York-traded shares were down 12.85 per cent at $34.80 on Tuesday afternoon. That means shares in the company have now fallen by a third since listing in October on a wave of enthusiasm for one of the most cherished brands in the auto industry.
Sergio Marchionne, chairman of Ferrari and chief executive of Fiat Chrysler, had long argued that the company should be considered a luxury goods group rather than a carmaker, and should therefore command a higher valuation than conventional auto stocks.
Speaking to analysts on Tuesday, Mr Marchionne said of the falling share price: “I don’t understand the reaction.” He added: “The order book continues to be as strong as ever. Notwithstanding what the capital markets followers are saying, we’re OK.”
Analysts said Ferrari had become the victim of the lofty stock market multiples assigned to the marque when it listed in New York. The cautious outlook for earnings and slowing growth in deliveries — expected to reach 7,900 versus about 7,700 last year — prompted a correction in the share price.
“Ferrari is getting punished for the lack of earnings growth,” said George Galliers, analyst at Evercore ISI. He added that the expected improvement in EBITDA to €770m — versus €748m registered in 2015, which was up 8 per cent on the year before — would be more than explained by beneficial movements in foreign exchange. “Investors don’t pay 10 times EBITDA for FX,” said Mr Galliers.
Ferrari’s fourth-quarter numbers also gave some analysts pause for thought. Adjusted earnings before interest and tax fell 5 per cent to €109m while net income fell by a third to €55m — as reported by Fiat Chrysler last week.
Deliveries in China fell by almost a quarter in 2015, though the country accounts for only 5 per cent of sales.
Accounting for engine sales to Maserati, full-year net revenues for 2015 came in at €2.85bn as shipments increased 6 per cent, while the net income figure was up 10 per cent at €290m.
One potential route to further growth seems closed for Ferrari. Asked whether the maker of the LaFerrari hypercar would ever build a “crossover” — a small sport utility vehicle — Mr Marchionne said: “You’d have to shoot me first.”
