Ferrari call reveals storm clouds on the financial horizon

Ferrari CEO Louis Camilleri tried to sugarcoat things, telling analysts in a conference call that the Italian exotic car maker’s orders are at record levels and confirming that it will be introducing three new models by the end of this year. Still, there are financial storm clouds on the horizon in sunny Maranello.

While the company’s sales are still growing, that pace has slowed to eight percent over last year’s second quarter, a dramatic drop from the first quarter’s 23-percent rise. Demand in China, the world’s biggest automotive market, has fallen off 12 percent in the first half of 2019, and sales in North America also slipped, attributed to the current model mix. Adjusted earnings (before interest and amortization) continued to rise, to 314 million euros ($349 million) falling just short of the 315.1 million euros that analysts had expected. Ferrari’s net profit for the second quarter was up to 184 million euros ($204 million) from 160 million euros in 2018.

All of that news sent shares in Ferrari NV tumbling as much as 6.9 percent. That decline comes after stock values have risen 70 percent this year, and Q2 profits still were up 14 percent over the same period in 2018. Ferrari investors are not exactly hurting, but the trendlines aren’t good.

While the entry-level Portofino continues to do well, as does the 812 Superfast, deliveries of some of the more expensive Ferraris, like the 488 GTB, have slowed.

Camilleri said that the three new models are part of Ferrari’s business plan that has a goal of about $5.6 billion in revenue by 2022. The CEO declined to reveal anything about the new vehicles, two of which will be revealed at Ferrari headquarters in September. Bloomberg reports that there actually might be as many as five new Ferraris by the end of the year. Regardless of the speculation, we do know that by 2022 we’ll be seeing the Purosangue SUV, more grand tourers, and the limited-edition Icona series of cars that will only be available to those favored by Ferrari.

“We will privilege revenue over volume,” Camilleri said, citing the $1.2 million, nearly 1000-horsepower SF90 Stradale plug-in hybrid that was launched in May. The SF90 Stradale is a good example, the CEO said, of “opening up a new price segment within our range of cars.”

Total shipments were up 8 percent over last year, to 2671, but that included increased shipments to China in advance of anticipated emissions regulations there. Total deliveries this year will likely run right up against the 10,000-unit level, the cap small manufacturers have to meet to get emissions waivers.