High-powered sports cars drive Ferrari earnings

04 November 2020 - 08:50 By Reuters
The R8.1m Ferrari SF90 Stradale is finally starting to reach customers.
The R8.1m Ferrari SF90 Stradale is finally starting to reach customers.
Image: Supplied

Luxury car maker Ferrari expects 2020 earnings at the top of its previous guidance range after beating forecasts in the third quarter and as key new models such as the 430,000 (roughly R8,169,945) hybrid SF90 Stradale start to reach customers.

The company, known for its prancing horse logo, said on Tuesday it expected adjusted core earnings of around 1.125bn this year (roughly R21,293,430,570), compared with 1.075-1.125bn (roughly R20,286,747,023 to R21,245,237,808) previously, assuming trading conditions are not further dented by the Covid-19 pandemic.

Chief executive Louis Camilleri said the new guidance implied a "very strong" fourth quarter, with record quarterly volumes, revenues and earnings before interest, tax, depreciation and amortisation (EBITDA).

"Solid proof  we are now running on all cylinders," he told analysts.

"We'll enter 2021 with a very strong order book. We should have a pretty strong year".

Ferrari said shipments were recovering in line with a production plan set after a seven-week freeze of its operations during the first wave of Covid-19 earlier this year.

They were down 6.5% year on year in the third quarter as certain models approached the end of their lifecycle, while the F8 Spider and the 812 GTS were in ramp-up phase.

However, deliveries of powerful and highly profitable 12-cylinder cars, including the Monza, rose 15.4% in July-September.

"Deliveries of the SF90 Stradale and the Ferrari Roma are on track to start in Q4 2020," Ferrari said, referring to models unveiled last year and now coming on stream.

The company's Milan-listed shares were up 6.8% at 16.25 GMT.

"This result - a beat on Q3 and raise of the full year guide - provides strong momentum through the end of the year and to enter 2021," Morgan Stanley analysts said in a report.

Despite the coronavirus crisis, Ferrari is on track with a rapid roll out of new sports cars aimed at sustaining growth in core earnings and its share price.

A further new model will be released by the end of the year after the company in September launched the Portofino M, a modified version of its top-selling gran tourer.

In the third quarter, adjusted EBITDA rose 6.4% to 330m (roughly R6,246,893,598), above an average forecast of 299m (roughly R5,660,204,550) from analysts polled by Reuters.