Ferrari Results Do Not Dissapoint…

Ferrari disappoints on the track, but not in the accounting. The Italian sports car manufacturer is not able to face up to Mercedes in Formula 1 circuits, but things are much better in “the office». Ferrari won €78 million in the first quarter, 19% more than a year ago. Meanwhile, revenue rose almost 9% to €675 million. The company has been able to increase its profitability, as both Ebitda and Ebit grew more than revenue. Both figures are well above analysts’ forecasts.

The improvement has been led by sales. Specifically, it sold 1,882 units in the quarter, 15% more than in the same period of 2015. These figures come -for the moment- to sustain strategy of Fiat CEO´s Sergio Marchionne´s, who in 2014 forced the dismissal of Luca di Montezemolo, at that time Chairman of Ferrari,  due to their differences over the strategy of the Italian manufacturer of super-sports.

While Montezemolo defended limit sales to maintain exclusivity, Marchionne thought that Ferrari could contribute further to the results of its parent Fiat. According to estimates provided by the company, Ferrari plans to gradually sell some 7,900 vehicles this year, 13% above the maximum limit allowed by the ex-chairman.

Results have brought a couple of important announcements. First, the retirement of Ferrari CEO Amadeo Felisa after more than 25 years in the company. His place is taken by… surprise! Sergio Marchionne, who adds a new charge to its already bulging portfolio. On the other hand, Ferrari has raised its forecasts for this year after the results of the first three months. Apart from the 7,900 vehicles sold, it expects its sales will reach €3 billion euros and Ebitda will exceed €800 million.

… Although Its Stock Market Performance Is Not As Expected
If the company´s results are very strong, it´s not the case with its shares. The market was very optimistic on its debut, with a placement price of $52 per share (the highest of the previous ranges) and with a bullish start that led it to almost $57 per share. Since then it has received only sticks that could not be offset by the results. Today is trading below $5, so investors who attended the OPV are losing around 14% of their investments.

Among the possible reasons for this behavior, are the difficulty to keep growth pace, uncertainty on the medium-term impact of the increase in production in its “exclusivity”, the doubts generated by the fact that Marchionne will hold the position of CEO -rather than appoint someone dedicated body and soul to Ferrari- and the poor performance in Formula 1, which is a very expensive adventure for the Italian manufacturer.

Disclosure: The Luxonomist is not responsible for the views expressed in the article. The text has been written freely expressing their own ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.