Ferrari Boosts 2023 Outlook Following Exceptional Q2 Results

Ferrari #RACE Boosts 2023 Outlook Following Exceptional Q2 Results and Strong Demand for Personalization.

Some numbers for 2Q (YoY)
■ Revenue: €1.47 billion (+14%)
■ EBIT: €437 million (+35%)
■ Net income: €334 million (+33%)
■ EPS: €1.83 (vs €1.36)
■ VA and equivalents: €1.11 billion (vs €1.39 billion)
■ Debt: €2.68 billion (vs €2.81 billion)

Deliveries by region

• EMEA (Europe, Middle East, and Africa): ➡+48.3% ⬇
• Germany: +12.4%
• UK: +8.8%
• Italy: +5.2%
• Switzerland: +3.5%
• France: +3.6%
• Middle East (UAE, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman, and Kuwait): +3.6%
• Americas (USA, Canada, Mexico, Caribbean, Central, and South America): ➡+25.6%
• China, Hong Kong, and Taiwan: ➡+10%
• Rest of Asia-Pacific (Japan, Australia, Singapore, Indonesia, South Korea, Thailand, India, and Malaysia): ➡+16.1%

In a nutshell

• Spending on high-margin features, like custom paintwork, has counterbalanced ongoing cost inflation for the Italian group. Consequently, they have revised their projected adjusted profit for the current year to range between €1.51 billion and €1.54 billion, surpassing the initial forecast of €1.45 billion to €1.5 billion. Also, the revenue forecast has been elevated from €5.7 billion to €5.8 billion.
• The update revolves around the surging trend among supercar buyers who are willing to spend substantial amounts, often tens of thousands of dollars, to personalize their new models, in addition to the already high base price. This trend is observed across all models and geographical locations. Customizations like custom paintwork, differently colored brake calipers, and the inclusion of the iconic Ferrari emblem on the car’s side surface are some of the most popular brand options, contributing significantly to higher profits. Another prominent trend is the replacement of conventional car parts with carbon body elements, which is a more expensive option but offers a distinctly striking appearance, enabling owners to stand out even among other Ferraris. The company typically allows customers to specify their desired features three to four months before the delivery date, ensuring confidence that the level of personalization will remain consistent until the end of the year. This increasing demand for high-margin custom options has fueled growth in the luxury segment, with Aston Martin and Bentley also acknowledging them as significant profit drivers for this year.
• While growth in revenue and margins is anticipated as a result of the rising popularity of individual custom options, this positive impact may be offset by persistent cost inflation.

The question of how personalization will affect the resale market is relevant. No worries: there’s a lengthy waiting list to buy new Ferraris, especially for the most coveted models. Also, individual preferences like paint color, emblems, brake calipers, etc., can be altered or replaced through re-painting, wrapping, or purchasing specific parts after the sale. It’s essential to note that these customizations may not necessarily retain their value indefinitely. Although it might come at a considerable cost, Ferraris are highly desirable, and their allure persists even for models with less impressive configurations. Generally, prospective buyers of Ferraris are financially capable of affording such modifications.

P.S. Ferrari’s stock (#RACE) appears to be performing well, with a YTD (Year-to-Date) growth of 46%, demonstrating positive momentum and a sound foundation.