A record third quarter on the way to 1 billion euro adj. EBITDA

Publication date: 
02 Nov 2017
  • Total shipments of 2,046 units, up 68 units (+3.4%)
  • Net revenues grew to Euro 836 million, up 6.7% (+9.3% at constant currencies)
  • Adjusted EBITDA(1) of Euro 266 million, margin at 31.8% (30.4% without FX hedges(2)
  • Adjusted EBIT(1) of Euro 202 million, 220 bps margin increase to 24.2% (22.6% without FX hedges(2))
  • Adjusted net profit(1) up 24% to Euro 141 million
  • Net industrial debt(1) down to Euro 485 million from December 31, 2016
For the nine months ended September 30, (In Euro million unless otherwise stated)   For the three months ended September 30,
2017 2016 Change 2017 2016 Change
6,381 6,074 307 5% Shipments (in units) 2,046 1,978 68 3%
2,577 2,269 308 14% Net revenues 836 783 53 7%
778 619 159 25% EBITDA(1) 266 234 32 13%
778 629 149 23% Adjusted EBITDA(1) 266 234 32 13%
581 439 142 32% EBIT 202 172 30 17%
581 449 132 29% Adjusted EBIT(1) 202 172 30 17%
401 288 113 39% Net profit 141 113 28 24%
401 295 106 35% Adjusted net profit(1) 141 113 28 24%
2.11 1.52 0.59 39%

Basic and diluted earnings per share (in Euro)

0.74 0.59 0.15 25%
2.11 1.56 0.55 35% Adjusted earnings per share(1) (in Euro) 0.74 0.59 0.15 25%

Sept. 30, 2017 Dec. 31, 2016 Change (Euro million) Sept. 30, 2017 Jun. 30, 2017 Change
(485) (653) 168 Net industrial debt(1) (485) (627) 142

2017 Outlook revised upward

The Group revised upward its 2017 outlook as follows

  • Shipments: ~ 8,400 including supercars
  • Net revenues: ~ Euro 3.4 billion (up from > Euro 3.3 billion)
  • Adjusted EBITDA: ~ Euro 1 billion (up from > Euro 950 million) 
  • Net industrial debt(3): < Euro 500 million (down from ~ Euro 500 million)

Maranello (Italy), November 2, 2017 - Ferrari N.V. (NYSE/MTA: RACE) (“Ferrari” or the “Company”) today announces its consolidated preliminary results(4)for the third quarter and nine months ended September 30, 2017.

Shipments

For the nine months ended September 30, Shipments(5(units)   For the three months ended September 30,
2017 2016 Change 2017 2016 Change
2,938 2,762 176 6% EMEA 903 859 44 5%
2,078 1,998 80 4% Americas 736 701 35 5%
453 496 (43) (9%)

China, Hong Kong and Taiwan,  on a combined basis

152 180 (28) (16%)
912 818 94 11% Rest of APAC 255 238 17 7%
6,381 6,074 307 5% Total Shipments 2,046 1,978 68 3%

Shipments totaled 2,046 units in Q3 2017, up 68 units or +3.4% vs. prior year. This achievement was driven by a 27% increase in sales of our 12 cylinder models (V12), while the 8 cylinder models (V8) posted few units decrease mostly due to the California T phasing-out. The V12 strong performance was led by the GTC4Lusso and LaFerrari Aperta, partially offset by the F12berlinetta phasing-out as well as the F12tdf, that is finishing its limited series run. The 812 Superfast has just arrived in EMEA and already has a strong waiting list beyond 2018. V8 performance was impacted by the phase-out of the California T, mostly offset by the 488 family and the GTC4Lusso T. Deliveries of the newly presented Ferrari Portofino will start in 2018.

EMEA(5)expanded by 5.1%, with France and Italy growing at double-digit pace, while United Kingdom recorded mid-single-digit growth and Germany was in line with prior year. 

Americas(5) increased by 5.0% and Rest of APAC(5) was up 7.1%. China, Hong Kong and Taiwan(5), on a combined basis, posted a 15.6% decrease due to the slowdown in Hong Kong as the new dealership became fully operational in Q3 2017.

Total net revenues

For the nine months ended September 30, (Euro million) For the three months ended September 30,
2017 2016 Change 2017 2016 Change
1,855 1,607 248 15% Cars and spare parts(6) 605 537 68 13%
292 225 67 30% Engines(7) 88 97 (9) (10%)
370 360 10 3% Sponsorship, commercial and brand(8) 124 125 (1) (1%)
60 77 (17) (23%) Other(9) 19 24 (5) (19%)
2,577 2,269 308 14% Total net revenues 836 783 53 7%

Net revenues for Q3 2017 were Euro 836 million, an increase of Euro 53 million or +6.7% (+9.3% at constant currencies, mainly due to USD weakening vs. Euro) from Q3 2016. Revenues in Cars and spare parts(6) (Euro 605 million) were up 12.7% vs. prior year, supported by higher volumes and positive mix led by the 488 and the GTC4Lusso families as well as LaFerrari Aperta, along with a greater contribution from our personalization programs and pricing increases. This was partially offset by the non-registered racing car FXX K completing its limited series run in 2016. Engines(7) revenues (Euro 88 million, -9.8%) posted a slight decrease mostly due to the termination of the rental agreement with a Formula 1 racing team and slightly lower sales to Maserati due to a different production schedule. Sponsorship, commercial and brand(8) revenues (Euro 124 million, -1.3%) were almost in line with prior year mostly due to lower 2016 championship ranking compared to 2015, partially offset by higher sponsorship revenues and brand related revenues. Other(9) revenues (Euro 19 million, -18.8%) were down mainly due to the deconsolidation of the European Financial Services business since November 2016.

Adjusted EBITDA(1) and Adjusted EBIT(1)

For the nine months ended September 30, (Euro million) For the three months ended September 30,
2017 2016 Change 2017 2016 Change
778 629 149 23% Adjusted EBITDA(1) 266 234 32 13%
30.2% 27.8% +240bps   Adjusted EBITDA margin 31.8% 30.0% +180bps  
581 449 132 29% Adjusted EBIT(1) 202 172 30 17%
22.6% 19.8% +280bps   Adjusted EBIT margin 24.2% 22.0% +220bps  

Q3 2017 adjusted EBIT(1) was Euro 202 million, up Euro 30 million (+17.3%) vs. prior year. This was a result of higher volumes (Euro 14 million) thanks to the GTC4Lusso and the 488 families, together with positive contribution from our personalization programs. This was partially offset by the California T and the F12berlinetta phasing-out. Mix was positively impacted (Euro 23 million) by LaFerrari Aperta as well as pricing increases, partially offset by the non-registered racing car FXX K completing its limited series run in 2016. Research and development costs and industrial costs grew Euro 8 million mainly due to higher R&D expenses to support product range and components innovation for hybrid technology. This was partially offset by lower spending in F1 activities. SG&A was slightly higher than prior year (Euro 2 million) as it was impacted by higher costs related to the 70th anniversary celebrations and the approved Long-Term Incentive plan. This was partially offset by the deconsolidation of the European Financial Services business since November 2016. FX, excluding hedges, had a negative impact (Euro 21 million) mainly due to USD, JPY and GBP depreciation. Other was in line with previous year due to the positive contribution from supporting activities, offset by lower 2016 championship ranking compared to 2015, the termination of the rental agreement with a Formula 1 racing team and the deconsolidation of the European Financial Services business since November 2016.

The tax rate was reduced to 27.6% in Q3 2017 from 29.8% in Q3 2016. This was mostly due to the combined effect of the Italian Government’s decision to reduce the nominal tax rate to 24% from 27.5% in 2017, as well as the effect of deductions related to eligible research and development costs and depreciations of fixed assets in accordance with the Italian tax legislation.

As a result of the items described above, adjusted net profit(1) for the Q3 2017 was Euro 141 million, up Euro 28 million (+24%).

Industrial free cash flow(1) for the three months ended September 30, 2017 was Euro 147 million, driven by strong adjusted EBITDA(1) of Euro 266 million. This was partially offset by net change in working capital of Euro 34 million as a result of decreases in trade payables and inventory due to seasonality in conjunction with the scheduled summer shutdown and net capex of Euro 93 million. Other was positively impacted by accruals and reserves related to deferred compensations as well as provisions partially offset by lack of contribution from advances of LaFerrari Aperta.

Net industrial debt(1) at September 30, 2017 decreased to Euro 485 million from Euro 653 million at December 31, 2016 thanks to the strong industrial free cash flow(1) generation.

2017 Outlook revised upward

The Group revised upward its 2017 outlook as follows:

  • Shipments: ~ 8,400 including supercars
  • Net revenues: ~ Euro 3.4 billion (up from > Euro 3.3 billion)
  • Adjusted EBITDA: ~ Euro 1 billion (up from > Euro 950 million)
  • Net industrial debt: < Euro 500 million (down from ~ Euro 500 million), including a cash distribution to the holders of common shares and excluding potential share repurchases

Renewal of the agreements between Scuderia Ferrari, Sebastian Vettel and Kimi Raikkonen

Scuderia Ferrari renewed its technical and racing agreements with drivers Sebastian Vettel and Kimi Raikkonen, respectively for the 2018, 2019, 2020 and 2018 racing seasons.

Scuderia Ferrari renewed its partnership with Philip Morris International

On September 4, 2017 Ferrari renewed its multi-year partnership with Philip Morris International, continuing a collaboration lasting over 40 years.

70th Anniversary Celebrations hosted in Maranello

On September 9 and 10, 2017, Ferrari hosted at the Fiorano track the pinnacle of the 70th anniversary celebrations. Among the several activities, which involved over 4,000 clients and almost 1,000 cars, an auction organized with RM Sotheby’s saw the sale of one-of-a-kind LaFerrari Aperta to benefit the charity Save the Children for Euro 8.3 million, a new record for a 21st century car.

The Ferrari Portofino: the Italian Grand Tourer par excellence

On September 7 and 8, 2017 Ferrari hosted the exclusive World Premiere in Portofino to unveil the new V8 GT Ferrari Portofino. Subsequently, on September 12, 2017 the Ferrari Portofino was presented at the Frankfurt Motor Show. Capable of unleashing 600cv, the Ferrari Portofino is the most powerful convertible to combine the advantages of a retractable hard top, a roomy boot and generous cockpit space. Shipments of the new Ferrari Portofino will commence in 2018.

Non-GAAP financial measures

Operations are monitored through the use of various Non-GAAP financial measures that may not be comparable to other similarly titled measures of other companies.

Accordingly, investors and analysts should exercise appropriate caution in comparing these supplemental financial measures to similarly titled financial measures reported by other companies.

We believe that these supplemental financial measures provide comparable measures of financial performance which then facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions.

Certain totals in the tables included in this document may not add due to rounding.

EBITDA is defined as net profit before income tax expense, net financial expenses and depreciation and amortization.

Adjusted EBITDA is defined as EBITDA as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

For the nine months ended September 30, (Euro million) For the three months ended September 30,
2017 2016 Change 2017 2016 Change
401 288 113 Net profit 141 113 28
155 126 29 Income tax expense 53 48 5
25 25 - Net financial expenses 8 11 (3)
197 180 17 Amortization and depreciation 64 62 2
778 619 159 EBITDA 266 234 32

For the nine months ended September 30, (Euro million) For the three months ended September 30,
2017 2016 Change 2017 2016 Change
778 619 159 EBITDA 266 234 32
- 10 (10) Charges for Takata airbag inflator recalls - - -
778 629 149 Adjusted EBITDA 266 234 32

Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”) represents EBIT as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

For the nine months ended September 30, (Euro million) For the three months ended September 30,
2017 2016 Change 2017 2016 Change
581 439 142 EBIT 202 172 30
- 10 (10) Charges for Takata airbag inflator recalls - - -
581 449 132 Adjusted EBIT 202 172 30

Adjusted net profit represents net profit as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

For the nine months ended September 30, (Euro million) For the three months ended September 30,
2017 2016 Change 2017 2016 Change
401 288 113 Net profit 141 113 28
- 7 (7) Charges for Takata airbag inflator recalls
(net of tax effect)
- - -
401 295 106 Adjusted net profit 141 113 28

Adjusted EPS represents EPS as adjusted for income and costs, which are significant in nature, but expected to occur infrequently.

For the nine months ended September 30, (Euro per common share) For the three months ended September 30,
2017 2016 Change 2017 2016 Change
2.11 1.52 0.59 EPS 0.74 0.59 0.15
- 0.04 (0.04) Charges for Takata airbag inflator recalls
(net of tax effect)
- - -
2.11 1.56 0.55 Adjusted EPS 0.74 0.59 0.15

Basic and diluted EPS

For the nine months ended September 30,(Euro million, unless otherwise stated)For the three months ended September 30,
2017 2016 Change 2017 2016 Change
400 288 112 Net profit attributable to owners of the Company 140 113 27
188,951 188,923   Weighted average number of common shares (thousand) 188,954 188,923  
2.11 1.52 0.59 Basic EPS (in Euro) 0.74 0.59 0.15
189,759 188,923   Weighted average number of common shares for diluted earnings per common share (thousand) 189,759 188,923  
2.11 1.52 0.59 Diluted EPS (in Euro) 0.74 0.59 0.15

Net Industrial Debt: defined as total Net Debt excluding the funded portion of the self-liquidating financial receivables portfolio, is the primary measure to analyze our financial leverage and capital structure, and is one of the key indicators used to measure our financial position.

(Euro million) Sept. 30 2017 Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016
Net Industrial debt (485) (627) (578) (653)
Funded portion of the self-liquidating financial receivables portfolio 694 705 723 737
Net debt (1,179) (1,332) (1,301) (1,390)
Cash and cash equivalents 619 423 569 458
Gross debt (1,798) (1,755) (1,870) (1,848)

Free Cash Flow and Free Cash Flow from Industrial Activities are two of management’s primary key performance indicators to measure the Group’s performance. Free Cash flow is defined as net cash generated from operations less cash flows used in investing activities. Free Cash Flow from Industrial Activities is defined as Free Cash Flow adjusted for the change in the in the self-liquidating financial receivables portfolio.

For the nine months ended September 30, (Euro million) For the three months ended September 30,
2017 2016 2017 2016
515 566 Cash flow from operating activities 227 250
(247) (232) Cash flows used in investing activities(10) (93) (75)
268 334 Free Cash Flow 134 175
47 17 Change in the self-liquidating financial receivables portfolio 13 3
315 351 Free Cash Flow from Industrial Activities 147 178

On November 2, 2017, at 4 p.m. CET, management will hold a conference call to present the Q3 2017 to financial analysts and institutional investors. The call can be followed live and a recording will subsequently be available on the Group website http://corporate.ferrari.com/en/investors. The supporting document will be made available on the website prior to the call.

(1) Refer to specific note on Non-GAAP financial measures.
(2) Margins without FX hedges have been calculated excluding FX hedges impact from net revenues, adjusted EBIT and adjusted EBITDA, please refer to Q3 2017 results presentation for further detail.
(3) Including a cash distribution to the holders of common shares and excluding potential share repurchases.
(4) These results have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and IFRS as endorsed by the European Union.
(5) EMEA includes: Italy, UK, Germany, Switzerland, France, Middle East (includes the United Arab Emirates, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait) and Rest of EMEA (includes Africa and the other European markets not separately identified); Americas includes: United States of America, Canada, Mexico, the Caribbean and Central and South America; China, Hong Kong and Taiwan includes, on a combined basis: China, Hong Kong and Taiwan; Rest of APAC mainly includes: Japan, Australia, Singapore, Indonesia and South Korea.
(6) Includes the net revenues generated from shipments of our cars, including any personalization revenue generated on these cars and sales of spare parts.
(7) Includes the net revenues generated from the sale of engines to Maserati for use in their cars, and the revenues generated from the rental of engines to other Formula 1 racing teams.
(8) Includes the net revenues earned by our Formula 1 racing team through sponsorship agreements and our share of the Formula 1 World Championship commercial revenues and net revenues generated through the Ferrari brand, including merchandising, licensing and royalty income.
(9) Primarily includes interest income generated by our financial services activities and net revenues from the management of the Mugello racetrack.
(10) Cash flow used in investing activities for the nine months ended September 30, 2017 excludes proceeds from exercising the Delta Topco option of Euro 8 million.