Ferrari NV (RACE) Warns Slowdown in Sales Growth; Stock Plunges


The stock price of Ferrari NV (BIT:RACE) declined 9.5% to €33 per share in Italy after the sports car manufacturer warned of a slowdown in its sales growth for the first full-year as independent company from Fiat Chrysler Automobiles NV (NYSE:FCAU).

Ferrari completed its separation from its parent company last month. The stock price of the Italian sports car manufacturer reached its lowest level since its initial public offering (IPO) in New York on October 21. Ferrari lost over 24% of stock value year-to-date.

Ferrari financial results

During the fourth quarter of 2015, Ferrari reported that its earnings declined to €0.28 per share from €0.41 per share in to same period a year earlier.  Its net revenues declined to €744 million from €751 million.

The Italian sports car manufacturer said its EBITDA declined from €193 million to €157 million during the period and EBIT fell to €85 million from €115 million. Ferrari shipped 2,021 sports cars, up from 1,975 units during the quarter.

For the full fiscal 2015, Ferrari’s earnings increased from €1.38 to €1.52 per share. Its net revenues climbed from €7.25 billion to €7.66 billion, EBITDA rose from €678 million to €719 million; and EBIT to €44 million from €389 million.

Ferrari reported its shipments increased 6% to 7,664 units from 7,255 units due to the 17% increase in the sales for its 8 cylinder (V8) models led by California T 458 Speciale A, and the newly launched 488 GTB. The Italian sports car maker reported that its shipments for the 12 cylinder (V12) models) slid 24%.

Ferrari ended 2015 with €390 million in free cash flow. Its net debt was €1.94 million compared to its net cash position of €566 million.

Business outlook

Ferrari expected to ship approximately 7,900 units including supercars this year. The company expected to deliver net revenues of more than €2.9 billion, adjusted EBITDA of over €770 million, and estimated its net debt to less than €1.95 billion.

Vincenzo Longo, a strategist at IG Group in Milan, commented, “The slump in China is leading to a not too aggressive profit target for 2016. Last year’s results showed some weakness, and the China issue is here to stay.”

Last month, Ferrari Chairman Sergio Marchionne stated that the company could eventually increase its production above its target of 9,000 units in 2019. He also reiterated his conviction that the company “will be fine” as long as it would follow its founder’s motto and build fewer vehicles than customers’ demand.

In a conference call with analysts, Marchionne said the company has a “strong backlog of orders.  He added that Ferrari will not try to boost demand with a sport utility vehicle. According to him, “You have to shoot me first.”