Q2 2020 Ferrari NV Earnings Call
[music].
Thank you for stepping back and welcome to the Turabi second quarter results Conference call. At this time, all participants are in listen only mode.
So to speak of presentation, there will be the question and answer session to ask a question given the session was only two press star and won on the tell from Keybanc.
The advisor that this conference is being recorded today from the third the full with 2020 I.
I would now like turn the conference over to affect Speaker today Nicoletta Russo. Please go ahead Madam.
Thank you an idea and welcome to I would want always joining today's call will be offset by the group's CEO Louie Camilleri and group CFO Antonov pickup is gone all relevant the materials are available in the Investor section of the fibrotic corporate website and at the end of the presentation will be available to answer your questions.
Before we begin let me remind you that any forward looking statements. We may make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on page two of today's presentation and Nicole will be governed by these language with that said I'd like to during the call over to Louise.
Thank you Nicholas welcome everyone and thank you for joining us.
As we had anticipated during our May fall earnings call.
Second quarter results were weak across all key metrics.
But frankly in line with our expectations.
These results clearly reflect the very challenging times that we have all enjoyed in recent months on many levels.
I do wish however to salute the resilience commitment and determination.
That has been exhibited by all of my colleagues here in Myron and.
And in our markets.
While the headline numbers clearly not a reflection of what this great company is capable of achieving.
One notable metric is that despite everything we had to come from our core business generated an EBITDA margin of about 30% in the second quarter.
And about 40% in the first half.
As I previously mentioned the disruptions caused by the Covis 19 pandemic, we're in themselves a huge challenge to some amount.
But is timing was doubly unfortunate.
As it Didnt Ghost us other critical time in the delicate industrialization phase of the new models that we presented last year.
In particular as it relates to the SF Ninetys traditionally which contains more than 2000, new components from our supply chain.
While we are confident that deliveries to our clients will begin early in the fourth quarter the ramp up in production will inevitably be delayed.
Which is the predominant reason for the adjustment to the midpoint of our guidance for the full year.
In terms of the overall dynamics and the health of the business. These remain strong as ever.
Demand remains vibrant and our order book is up significantly versus the corresponding prior year period.
Allowing for the obvious favorable impact on our order book of the lower deliveries, resulting from the more than seven week production shut down.
It is still up double digits versus last year in absolute terms.
Order cancellations to date, a well within historical norms and actually a lower than what we had feared may well have occurred given our experience during the financial crisis.
But we recognize that it's still early days.
The premium market, which was relatively dormant in April and May is quite active again and indications are that residual values have remained stable and in certain instances have actually written impart due to the absence of the sufficient supply of new cars.
Given the strength of our order book, we have given serious consideration to shortening the August factory holiday.
However.
Such an action would seriously hamper our critical preventive maintenance program and delay the installation of some new equipment necessary for our paint shop to accommodate capacity needs.
As such we have decided that such an action would be far from wise.
In addition, given the very challenging circumstances that all her face it is our view that everyone, especially those on the production lines needs a break.
We will nevertheless, I had a number of working Saturdays to at least very partially makeup for the production shortfall.
We're also working tirelessly with our suppliers to strive to accelerate the ramp up in production of the SF 90 stronger dollar and overcome the issues that I just mentioned.
But this will be a very tall order given the complexity of this particular module.
I will now handover the call to Antonio who will review, our second quarter results and our guidance for the year Antonio.
Thank you Laurie and good morning, or afternoon to everyone joining us today.
Starting on page four as expected the second quarter of Twentytwenty reflects the consequences of the covenant 19, pandemic, which caused the production and delivery suspension.
With seven weeks unavailable to manufacture and Delever our shipments in the second quarter nearly hobbs versus prior year to 1003 on the and 89 units.
[noise] group net revenues were 571 million euro posting a 42% decrease compared to prior year.
This reflects the just mentioned volume decreased and the anticipated impacts of the pandemic on the Formula One championship.
Our other sports and brand related activities as well as the reduced demand for engines from MISO tracking.
Adjusted EBIT was 23 million euro down more than 90% versus the second quarter of 29 team, reflecting the actions taken to contain costs, while maintaining a level of investment to support our long term growth.
Adjusted EBITDA was 124 million euro.
Within adjusted EBITDA margin of 21.9%.
Our net resolved for the quarter was also positive all by small with an adjusted net profit at 9 million Euro, resulting in adjusted diluted EPS of 40 Euro cents versus 96 euro cents of prior year.
On the other end in thus traffic a slow for the quarter was negative for one under the then a 58 million euro inline with our expectations.
Essentially due to ongoing investments inventory build up and the actions taken to support our distribution network.
Moving to page five you can see the details of the second quarter Twentytwenty shipments.
During the quarter there was a contraction of volumes as a consequence of the full suspension of our production until may four and the only gradual restart of deliveries in conjunction with the sequential dealer network reopening according to local have protocols.
Total shipments for the quarter decreased 48% with eight cylinders models down, 49.4% and 12 cylinder also down 42.9%.
The first a few deliveries of the S. Eight spy, there and da 12, GTS commencing the quarter, while the for 88 pistol family approaches the end of its lifecycle.
In terms of geographic performance EMEA was down 40.9%.
America declined by 52.6%.
Shipments to mainland, China, Hong Kong, and Taiwan, where it used to a few times, mostly as a consequence of the deliberate anticipation of deliveries in 2019.
Why deliveries threats to fight back decreased by 27.9%.
As discussed by doing the F. Ninetys Teradata Willett the markets have been section of the fourth quarter as a result of the delays experienced anything the physician phase due to the shutdown.
The Ferrari at all not will follow immediately thereafter.
Finally, we're happy to confirm our two unveilings in the second off of Twentytwenty.
Turning to page six you can see here displayed the walk of our group net revenues for the second quarter of Twentytwenty severity impacted by the pandemic.
Revenues from cars and spare parts were down 42% at constant currency as the result of the locked down period that led to lower deliveries.
Which consequently also generated and lower contribution from personalization only partially offset by the deliveries of the pheromones SP one NSP too.
Despite this the weight of personalization grew to almost 22% of cars and spare parts revenues. Thanks to the favorable mix of car sold namely the for 88. This the family and the pheromones as tier one NSP too.
[noise] engines revenues declined 33 million during the quarter, reflecting lower shipments to Maserati.
Revenues from sponsorship commercial and brand were down 48 million euro impacted by the spread of the carbon 19 pandemic, which resulted in Q4 in few where formula one racing related revenues accrued in the quarter as well as reduced in store traffic and museum.
Envied visitors.
For the purpose of accruing revenues from Formula one in the quarter, our assumptions in respect of the calendar and our sponsorship were essentially unchanged compared to the previous quarter.
Other revenues decreased 16 million euro mostly affected by the cancellation of the Moto GP at the merger the racetrack and reduce other sports related activities.
Currency, including translation and transaction impact as well as foreign currency hedges at the positive contribution of 8 million euro mainly reflecting the strength of the U.S. dollar.
Moving to page seven let me review the change in our adjusted EBIT.
As anticipated it fell to 23 million Euro from 239 million Euro in the second quarter of 2019.
With volume, which the ROE drove an over an unfavorable variance of one under the then 52 million euro due to the lever is being house versus prior year as there is out of the production and delivery suspension.
Mix price variance and decreased 7 million Euro primarily as a consequence of the lower total dollar value of personalization programs. Following the decreasing shipments partially offset by the deliveries of the pheromones SP one NSP too.
Please note that the mix price variance in the EBIT bridge reflect the top of degrees of the contribution from personalization, mostly due to volume reduction.
These explains why such a body and does not reflect the otherwise visible increase in our average selling price, which is entirely due to the weight of the pheromones us.
Industrial costs research and development costs increased 15 million euro, mainly reflecting higher depreciation and amortization of fixed assets as the production lines for the new model the started being operated.
Partially offset by the effects of technology incentives recognized in the quarter.
As DNA decreased 9 million euro, mainly driven by fewer marketing initiatives in the quarter.
Other was down 58 million Euro you did you already mentioned calming 19 impact on the Formula One racing calendar lower traffic for brand related activities cancellation of them up the GP at the Magenta rights track as well as lower engine phase two Maserati.
The Taliban net positive impact of currency was 7 million euro year over year did walk the nineth resolved of four more favourable market right.
Actually mitigated by the edges in place.
As Lou you already mentioned it is worth noting that even in this challenging quarter, the EBIT and EBITDA margin of our core business, excluding if one brand trading activities and engines for Maserati remain solidly above 30%.
Turning to page eight industrial free cash flow for the quarter was negative for 158 million Euro driven by a change in working capital provisions and other essentially due to higher inventories and the supportive actions in favor of our dealers.
On which temporarily extensions of the apparent that terms and early pay out of commercial incentives.
We continue to fuel our long term product development investing 133 million euro.
As a reminder to better interpret the comparison prior year end after a free cash flow was supported by the collection of the pheromones us advances.
Net enlisted our that because of the end of June was 776 million euro compared to four under than 1 million Euro as of March and Twentytwenty also reflecting that 209 million euro dividend payout.
At the end of the second quarter Twentytwenty total available liquidity, including Undrawn committed could decline for 700 million Euro was 1 billion and 810 12 million Euro, which compares with approximately 1 billion and 250 million Euro as that last December to differ.
Yes, and slightly less than 1.400 billion Euro one year before.
Our solid liquidity position was further strengthened by the proceeds from the recent issuance of 650 million Euro notes during May 20 to 25 as the result of the decision to earlier finance part of the upcoming debt maturities and keep on securing longer term financing.
Moving to page nine as anticipated by Louie, we narrowed our guidance to reflect the visibility we have now and some necessary refinements of the assumptions we outlined at the beginning of May.
We are currently programming our manufacturing capacity for the second half of the year. According to a trajectory that will ultimately bring us to catch up around 500 cars out of the approximately 2000 units loss during the seven weeks of suspension.
This corresponds to an intermediate scenario versus what we presented in may that imply recovery of about 1000 cars for the Iran and close to nine for the low range.
To do so we plan to at the number of working Saturdays in age to why leaving untouched our plant maintenance program during the summer holiday and activities to prepare our newly out for the potential.
Since our order book remains very strong and as of now is actually further improved versus last year. We also factors such a decision to contain our manufacturing cadence may provide us with a certain age in case the pace of the net order intake is dampened the gain in fall due to the long.
Again of the pandemic.
Our product mix is now softer and reflects a delay in your passion on startup process of yourself 90, Strada determined by the shutdown period.
We kept unchanged our assumptions in respect of deferment of format of the Formula One championship and the number of phrases at the low end over the target range as the calendar remains uncertain with only 13 race is confirmed so far.
Projections for our brand activities continue to suffer this assumption reduction of turnover from directly operated and franchise store museums and licensing.
Only very partially offset by positive development of the online channel.
Delivery of engines to Maserati reflect their current annual targets.
It remains through that will contain our S. DNA spending in light of the postponement of our most impactful in person events.
Together with an effective shift toward digital marketing activities to any way maintained strong and vital relationships with our dealers and customers. So the pandemic.
Our R&D spending, but capex and opex, including four competing in the new Formula one environment remain unchanged versus what we said in our first quarter earnings call. We'd have you to protect all investment that we deemed necessary for the continuing success and future development of Ferrari.
As a consequence capital expenditures are confirmed to be around 750 million euros.
We reaffirmed the consideration that is narrowed guidance does not take into account there is that the global spread of the pandemic late two new locked down in production suspension period.
However, as we are facing unprecedented times at somebody will never stop caring about or people vetoes suppliers business partners and customers such a chance should occur.
With that said our guidance for the year has been narrowed the as a as shown on page 10.
Net revenue is greater than 3.4 billion euro to reflect a drop in deliveries of nearly 9% versus 2000 and dean.
And conservative assumptions in respect of the calendar with the Formula One championship the pace of restart of our brand activities and demand from engines from Missouri.
Adjusted EBITDA between 1.075 billion Euro and 1 billion and 125 million Euro.
With percentage margin between 31 and 32.5%.
The reduction in margins reflect the softer mix due to the delay in this standardization phase onea centsninety for the habit.
Adjusted EBITDA between 650, and 700 million Euro.
With target, an EBIT margin between 18.5, and 20%, which reflect the inevitably higher pace of our DNA. Following the Capex increase of most recent years.
Adjusted diluted EPS between 2.6, and 2.8 euro per share assuming a tax rate substantially in line with went in and team at around 20%.
As a reminder, the assumption here is that we keep on enjoying the benefit of patent box tax break under the new Italian regime alibi slightly reduced.
Industrial free cash flow between 101 on 150 million Euro with a heavier bar then from some extended payment terms on trade receivables and capex of around 750 million euros as mentioned.
Please note that such figures reflect an assumption that foreign exchange rates stay on average where they've been predominantly during the last month.
Current volatility is obviously an element to watch out for in the next month.
Finally on page 11.
It shows that while the first off was heavily affected by the spread of the Cogs 19, particularly in Q2 within adjusted EBITDA for the all six months period, almost 30% lower than last year.
Our narrowed guidance now implies a second das inline or better than in 2019.
Even it's skewed on Q4.
With the midrange fully our target just 13% lower.
As we said in May however, while the overall global environment remains dedicated to say the list.
Flexibility and adaptability will be the name of the game to serve these exceptional times with a single objective driving our actions, which is nurturing our clients and protecting our business partners. So as to come back as strong as ever before.
With that said I'd like to turn the call over 20 collector.
Thank you Anthony out we're now ready to start the Q any session. Please not that go ahead.
Yes.
Mhm.
Hello, not Yap Liza Canyon family opened the Q and a session.
Thank you, ladies and gentlemen, I'll now ask question answer session.
If you wish does completion.
And one on your telephone keypad.
Im comfortable line of Gen <unk> from Bank of America. Please ask your question.
Good morning, and good afternoon everybody.
Hi, albeit a quick question sort of following up.
Joel you tell me they think that you said the units would decline about 9% in.
In in 2020, so it looks like we're dealing with a base in 2020 of about 9200, maybe a bit more in shipments.
Just curious as we think about 2021 in 2022.
And assuming that there is some normalcy that emerges in the world.
How we should think about.
The growth. It is gross you always manage on it very measures.
Yes healthy pace.
Should it be viewed as coming off that depressed base in 2020 and that we should we think were 2022 may ultimately land it sort of the prior outlook.
So could you step up we'll levels that you were previously.
Looking at delivering and shipping in 21 in 22.
Which would indicate much higher grade offers very depressed base in 2020, Detroit theoretically how you are approaching their future growth all this depressed dates.
Thanks, John.
Yeah, as Antonio said was sort of forecasting around 9% volume decline.
If you think the where our shutdown was seven weeks that's roughly.
Close to 15% of the time, so we are catching up as we said tourism Saturdays.
The order book clearly is very strong.
And actually was quite heartening is that.
Particularly with the Romo.
But also a with the state.
Tree Bhutto in spite of the entire family.
We have a higher level of new customers.
Relative to the previous sensors be at the portofino the four intake range.
Essentially had an equal stage in their respective life cycles since the launch.
So that's very encouraging.
And this really before we were able to gallery dynamic activities and test drives.
Oh, so those are starting in September.
And honestly a June was a pretty strong month in terms of orders and July was also pretty strong.
So [noise].
Yes, you're right we will it keep its things keep going the way they are and all things being equal we should end up the year with a strong order book, how they use a tad early to discuss 2021 John.
Clearly it should be a strong year, driven probably more by supply and demand.
But I would hesitate now to give you any.
Any sort of sense for 2021 other than yes, we're we're working on a week base and it should be a strong year.
Beyond that I think it would be improvement of me.
Given the uncertainties and unpredictability as we've seen in the U.S. or would the trajectory of the pandemic and as you know the U.S. is our biggest market.
And maybe if I could just follow up sort of more philosophically as opposed to exact numbers as you think about 123 years out as far as you're targeting and business planning assuming once again, you know that seems kind of returning to normal has anything changed in your mind set of where you could be in the out years as far as.
Volumes and financial performance, because you can be managed growth in a very measured healthy way and I'm. Just curious if you would allow for it things normal had a step up your back to that normalcy or have we reset to this lower depressed number from 2020 as the basis year for girls I guess.
And that's a philosophical not an exact number question.
Well, let's stay philosophical then.
In terms.
Paul.
The key parameters that we look at is the strength of the order book in terms of its mix you customers duration or geographic mix as well.
And there's other factors.
Huh.
And those will really determine what we want to achieve clearly.
Hi, waiting lists as an important parameter we would know wish the waiting lists to be too far out.
For fear of losing customers, particularly new customers. So it's something that we have to way very carefully.
Especially for those products Roma stands out where we have pretty big ambitions in terms of attracting new customers.
So it's a balancing act Joan.
But obviously the starting point is a stronger order book and I'm quite confident that we'll get the all things being equal does that help you.
Yeah. That's back I think I think philosophically that gets need exactly where I need to go and then just a second and last question. When you think about your business partners at the moment being a supply chain and the dealer network I'm. Just curious if you can just comment on the state of supply chain and if there's anything that's really holding you back.
From that standpoint, and then on the yield network. If you could just give us a little bit more details about the eight given to dealers you know in the in the quarter because it sounds like you know that reverse that eat repurchase will normalize is you could even seen cash flow close to breakeven in any quarter inch trying to understand but those two dynamics between supply.
Dealer network.
Well in terms of the supply chain I think things are going quite well.
Clearly certain things have been delayed, particularly with DSS 90, which is a very complex Beast you can imagine that we have very strict tolerance levels in terms of the industrialization phase.
And therefore, our conformity in terms of high volumes is not easy to achieve.
That's what we're facing today other than that I think the supply chain has to be commended.
For making huge efforts to meet our requirements.
In terms of the dealer network as we flagged back in May we said that we would help them in terms of payment terms as well as an acceleration.
In paying that bonuses.
So that's a cash flow hit one, which I think is wise to do to help support our important dealer network I.
I would add the in terms of our supply chain, we have increased our in those countries as Antonio said in terms of raw materials and components, which again given the uncertainties is something that's wise, but obviously as hit on cash flow.
In the second quarter.
Does that address your question.
Yes, so if we were to take the increasing inventory because a.
Conservatism was why change there, helping payment terms due to dealers plus the accelerated bonuses how much of that would how much would that add up referred to that 135 to change in working capital they bring on slide eight.
I'm not sure.
But it's it's a big chunk of it.
Got it okay. So industrial free cash flow would have been much closer to breakeven without those changes. Okay. That's very helpful. Thanks much.
Thank you Kim next question comes through line of Massimo Vecchio from Dubai Bancorp. Please ask your question.
Hi, good afternoon, everybody Hello.
There's only money or my main question is.
Can you I would you describe the move your customers right now or the I'd be it I'm worried there they simply no postponing purchase is.
He does a temporary issue and then everything will be would be okay.
The worried about how they could use caused us to go around these Ah you know sticking to them that I'm sorry, I was just trying to understand what what's your feeling is on that when were you referring customers telling him.
I would say generally morale is pretty high.
As reflected in the orders and the fact that will not experiencing.
Significant cancellations.
I think there's an element of rewarding oneself at a time of difficulty.
And I think from everything I read.
People are going to drive today causes a more than use public transportation for obvious reasons.
So it all sort of fits into the fact that if you take a reward and that people want to enjoy driving a it's sort of fits.
Our profile in the sense that we provide a the most exciting and fun to drive Cogs in the world.
Yes.
So all in all I would say there's a positive.
Positive sentiment and I think the reaction or two new models has been very positive as I mentioned earlier and the test drives a done by the media both on the S. S 90 in the role model as well as.
The fate family has been very very positive.
Okay. Thank you very much its a.
Squares with water and using from other companies you sense segments. It's a so to me.
Ah coherent.
It was indication knee on your opening remarks.
You said that yoga movies is double digit.
Can you can you specify a little bit better able to putting about the growth year over year over year.
Yes.
I'm talking about the absolute number excluding the effect of the production shut down.
Exactly.
Yeah, Yeah. It's good. Thank you very much week. Thank you very much Massimo.
Thank you. The next question comes from a line George Galliers from Goldman Sachs. Please ask your question.
Thank you. Thank you for taking my question.
The first question I was going to all squid just on had somebody like they should you commented on that being part of the reason, but negative mix effect.
Could you just remind that was to keep my team and especially strong quarter personalization relative to the rest of last year.
All.
With that something specific in terms of vehicles shadier leg in the production system or your order book.
In the ligation being weak.
It's quota.
Hi charges Antonio speaking.
If you remember the trend of personalization last year.
Actually the improvement in terms of or they are weighed on revenues and starting in Q3.
So what we see today as I mentioned in my remarks is due to the fact that we have a mix that is favorable to personalization.
And actually the level of 22% as a way to revenues for cardy bott reflect that.
However, when you look to mix and pricing, even zions you need to take into account that the old volume impact is also in that science.
And these more than offset the positive timing from the say essentially the number of months or that we sold into quarter.
Just clarifying.
Understood.
Very helpful.
And then second question just on Formula WAM.
I believe your chairman and then you would get that Oh, well, it's both up and apologies but.
We're not creation.
What I believe he gave you where he suggested it would be difficult for already so we tend to winning way both twentytwenty too.
I was just wondering if you could help give us some indication on the PML impact.
Yeah.
Yeah relative to 29 team from Formula one.
And when you factor in all of a different parts right. So the revenue implications.
The cost.
The employee bonuses.
Is it a headwind didn't the into millions tens of millions or several tens of millions, Ohio, which builds to bite I'm quite that thank you.
Thank you George.
So listen the starting point is that there's no denying.
The we're facing a very difficult season.
The car that lots to foam and some several levels.
Oh competitors and Mercedes in particular are incredibly strong and hats off to them.
Oh I can assure you that the team is working day and night.
To improve the car and that somehow addresses the cost impact.
Although we have to recognize that many elements have been frozen by the regulators.
ER and the regulations that will put in place given the young economic uncertainty, resulting from the covert pandemic.
I believe we have a very strong talent pool, which we will continue to strengthen.
And I have every confidence him a t. a and his team going fold.
As Joe Milk and said it will take time, but the focus and determination to meet our ambitions remains intact.
To your question a formula one is this year will be.
In terms of the piano, the because hit we face.
Because of the reduction in the revenues we receive.
From the commercial rights holder as well as reductions in sponsorships.
Given the reduction in races.
So it's clearly in the high tens of millions.
In terms of the hate.
Oh, we'll see in terms of next year, it should be better because hopefully by next year, we'll be back to a full race schedule and we will get the necessary revenues in terms of sponsorship and from a commercial rights.
Oh, so it's a bit difficult to compare 20 to 21, but definitely in twentytwenty. It is a very sizable hit as we had anticipated in early may decide to address your question.
That's very helpful. Thank you probably much thank you George.
Thank you next question comes from line of Michael Binetti from Credit Suisse. Please ask your question.
Hey, guys. Good afternoon. Thanks for taking my question congrats on making it through a very accordingly, hi, Michael.
Hi, Yes, let me follow up on one of the earlier question and maybe in a little bit of a different way.
Unlike a lot of the companies that we watch your maintaining a very high level of Capex investment, which I think is a fairly important differentiator for you as you as you look at the next few years the investment plan that underlies. The 2022 plan that you laid out of the capital markets day, What's your confidence you can continue to make all those investments close to the schedule that you saw.
Got versus areas that might be on a different schedule now and I guess.
Like a sub question would be one of the big initiatives. Once you get the entirety of the fleet up to 60% hybrid, but a lot of that some of the very newest technology and part of the line. That's proven more complex here. This year with that's up 90 being pushed out naive to more launches coming this year I'd have to guests the fleet and start moving.
Towards more hybrid maybe you could just help US reconcile you know some of the somebody investments behind those things.
Well the first point is that as Antonio said, where we're rotating flexibility and adaptability.
Back in early May we said that.
Some memorials and some investments were delayed by about three months.
And others, possibly by nine months.
Again, depending on the cadence of our deliveries and how things were working out in the market.
So we want to continue to invest.
Are you have mentioned Walt is necessary going forward.
The S 90, United is really our first range hybrid them more we're taking learnings from that it's clearly not gonna be the only one.
In terms of the models that we had said enough capital markets day was still very much on track.
Some may be rather delayed.
But next year, we have some exciting models there will be presented.
Oh, which should help in terms of the latter half of 21 and the obviously for Twentytwenty too.
So things are slightly delayed but the plan remains intact and we're very focused on continuing our investments.
To make sure that we remain competitive and meet our targets.
And I'll just I'll just ask if there was such a focus and an exciting part of the analyst day, but is that it does that include the deep schedule for the person being the same as it was at that time.
Correct.
And then I guess, just one last one from me maybe a better question for Antonio The you mentioned keeping an eye on a currency trends and you I think you referenced the guidance is based on the average over the past a month, but could you if they if the euro versus the key currencies like the dollar stay where they're at today.
Hi, there is there additional headwinds to the back half that we should think about.
Yes, as you know, we follow and hedging policy.
On a 12 month, but all in basis.
The impact would be mitigated by didn't hedges in place.
But of course, we need to be careful where the exchange rates go for the future months even beyond.
The second enough of Twentytwenty <unk>.
We prepared these now guidance based on the average of dislikes 15, sorry, just like 30 days.
With whereby a significant move in the U.S. dollar towards the versus the Euro has been witness obviously, we'll monitor that carefully because the impact maybe significant.
Okay. Thanks, a lot guys congrats again.
Thank you.
Thank you. Good next question comes on line item units from Morgan Stanley. Please ask your question.
Thanks, everybody, Hey, Lilly how are you.
Adam I'm well thanks.
Good Crazy Crazy times excellent execution as noted by by earlier.
It just depends on the call I have a question as I normally ask about climate change, which I think we agree is if it's not the number one driver of your business over the next that data, it's pretty damn close maybe it as the top one.
But as you as you can I get closer to the industrial strategy really moving into addressing that while well just stand so true to the brand on a product the bringing amazing experiences and product structure customers.
How are you thinking about that the talent the type of talent and people that you have in your organization as you moved to things like E mobility and software and.
You know away from some of that traditional hardware due yet do you have who you need and how are you hearing and getting the top talent you know from them all down into places like tap swap.
My first question and on a follow up.
Okay, well climate change clearly a is an area of focus.
A lot of the work has been done because you go to starwood the old carbon footprint.
A lot of work has been to to determine the actual footprints.
Our.
From cradle to grave little low in terms of Ferrari there isn't really a grave.
And we've done a lot of work and we're now focusing on how well we can do to reduce that carbon footprint and ultimately to become neutral because I think that would be is a huge positive.
For the company and for our clients.
So it is a big focus.
In terms of the actual talent pool a into other software.
We have increased.
Talent in terms of a software dynamics, we work very closely with key partners.
And I think we're in relatively good shape or in terms of that.
In terms is you know he mobility of say, a that's not something that really sets with Ferrari it'll be adopted a teaching people how to drive a ferrari appropriately.
But it is clearly an area of focus and has the quarters unfold I think we'll be in a position so a lot more about that.
Thank you Laurie.
Yeah.
No I appreciate the answer just a follow up is.
When I've asked you about competencies and electrification and software and connectivity and safety.
I think you'd left us with the impression that where you that Ferrari really would like to do a lot.
Themselves as you traditionally done where you can where appropriate keep things in house.
Not everything, but but main elements that really really define the experience in that.
So so as well.
As this unfolds.
With.
When investors anticipate.
That maybe Ferrari has an opportunity to bite and some technology that it currently does not have.
Kind of like Oh, like up like a capitalized R&D purchase like acquire or that that nature or or is the approach really do it organically from whether I'm.
Appreciate that.
It's predominantly organic and clearly you know as we mentioned Oh, we are buying quite a lot of land.
So we are going to save a make versus buy.
And clearly a various elements and components, we hope to be making it internally to keep our competitive advantage.
Does that address your question.
Very clear thanks Louise Thanks, Thank you.
Thank you, but I would add sorry, I would add the it's in line with the previous question, which was the investments that we're making longer term huh.
Hi, I'm actually begun taking over next question from Monica Bosio from.
And that doesn't polyp he asked a question.
Yes, good that's going on I hope it kinda three m. right.
[laughter] can you explain that again, sorry about this [laughter] did you see via their decision on that.
Why are you have to decide that to recall right, John Hi, I'm glad that you need to add all that's why I was any you only ask your order book is that and that.
Ladies and there is the way to do something more or maybe not one Taliban not that's something more than pipe enclave, that's got that Dakota on base.
Thank you.
Thank you Monika.
We've looked at a hard.
I was essentially it's two reasons.
Back in May we thought that it was possible.
To add to one week in August.
Which we would have helped considerably in terms of catching up the volume.
However, we decided that given the need to do the very critical maintenance as well as the tied to we need to add some equipment.
Embarrass departments, but primarily in the paint job.
To me top quality and capacity needs.
We decided or that we would.
Continue the break in August.
As he was originally scheduled.
I think also that in recognition of [noise].
I'm, sorry, the welfare and well being of our employees.
If you think of what they have to do on the production line wearing masks and hold the constraints that they face they really need a break.
So in keeping with the high priority.
We felt that it was very important to gives them that break.
Okay Monica.
Okay. So I mean after just a follow up but 2021 now we keep well [laughter] to show in my view at thronged growth.
Okay, how about that somebody they show net yeah. They were trying to convert sad thing if we exclude that that's below where personalization from the <unk> from the lower body and [laughter] do you think we'd be happy it's reasonable to keep up the basic said this level. That's an elevation going out does well maybe could be.
More reasonable that quite frankly once again, thank you very much.
Hi, Monica Antonio answering Hello.
Our weight of person I know there finalization on revenues it is pretty much the depending on the mix of products that we said.
I'm, sorry, Q2 was particularly high.
Basically because of record volumes were not could be down.
Low and we had added at the high at the high impact on them on to us.
Going forward I will not back on these remaining as high as it's been in Q2 for good reason that as I said it has been particularly.
Impacted by the volumes that Riyadh.
No one and reduce the top and volumes on the other inflated di di percentage weight.
Okay. Thank you very much very clear thank you.
Thank you Monika.
Thank you I imagine the next question comes through nine months, you got the Ambroggi from equally <unk>. Please ask your question.
Thank you good morning, good afternoon everybody.
The first question is on the EBIT breach, referring to that price mix.
How will it doubled in the second one else and what has changed the taking into account assets 90.
Delayed.
And what's the visibility for next year on price mix up based on the order backlog, which is building up but.
It was up five done or demand as you mentioned.
Hi, Matt you know you don't on here I'm looking forward I, we expect that positive.
From the SMC assets 90, hitting the market.
Solved, but equally Q4 and next year.
And this is supported by the order backlog up from the D assess 90 [noise].
Yeah, he yeah, sorry centers.
Yes, it's definitely supported by a the order book.
Yeah, I think we said it back in May.
The high margin products and those that generally.
Have higher personalization of levels are the ones with the highest waiting lists.
So does that help you.
Yep Yep, Thank you and a on a formula one one more question.
And the right in assuming that the your guidance or factors in the 18 races that for the current year.
No.
It's less than that.
And if they don't official figure or a so far the count the official calendar is 13 races.
We will see what from a identify any does in terms of announcing further races, but today, it's somebody to team takes us through the end of September early October.
Okay. So did you see ascension underlying I go to your guidance.
And I know or somewhere in the middle [laughter]. Okay. Okay. Thank you [laughter] ER and sponsorship commercial in brands in the cycle and also could be just slightly higher on walk you recorded in the first falls.
No because essentially we're crude based on the number of races, we anticipate for that year.
So the hit on a commercial revenues and sponsorship how we'll be there.
Okay. Okay. Thank you.
Thank you Marty you know.
Thank you very much and next question comes online.
That's been from definition for all please ask your question.
I told us.
I have to Oh.
Quick question.
Can you comment on the two portions of the business, we haven't disclosed jobs, which.
Namely.
Often engines.
Discussed hospice you can just stuff that's developed we managed to.
<unk>.
Yeah.
The margins.
And just remind us the trajectory to a low levels for engine somebody.
Well in terms of the engines, it's just a reflection of the orders we received from Maserati.
So there was a significant decline and we'll see what happens in this in the second half.
In terms of spare parts, it's sort of holding up.
In fact, a while those service centers were open a number of clients send in the cause.
To be serviced.
So spare parts is certainly not a hindrance to a piano if I can put it that way.
Okay.
Good.
Good question looking up competition, it seems like Youre gaining shelf substantially.
Even with.
You find that week.
How much of four of up front can you hold on to adopt luff or what do you think we're going to see.
Although it looks recall them going for reasonable student.
You're gonna have taken deal for backup.
[laughter] I don't have a crystal ball I think we we clearly have competitive advantages.
Oh I'm encouraged that some of our competitors are focusing on price rather than volume.
Oh, which clearly is good for us.
But we like strong competition keeps us on autos.
Okay I haven't lost wonderful.
Sometimes give us a nimble.
Uh huh.
You.
In the quarter can you show up number results for Q2 versus Q1 them.
You'd be able to a privilege equally once you do go so.
<unk>.
Yeah, you asked me the same question Huh, it's the first quarter. So first quarter was around 40, a second quota it was just less than 30.
Thank you.
You're welcome.
Thank you.
Income from line of Stephen Reitman from to see occasionally <unk>. Please ask your question.
Yes, good afternoon, I think probably the most positive things coming out of this call is clearly being the strength of your order book, which was I guess the questions. We lost the most about.
First quarter.
Could you comment ready on the waiting times and I think you mentioned before those the suffice sturdily a couple of calls ago. You said it had about an 18 month waiting time, given the delay as well has was to be development the almost whenever the models as well.
I can give you a specific number but it's a significantly higher than the 18 months that we had mentioned.
Ah so clearly we need to ramp up production to bring that down because it's reached a level that in our eyes is a bit too high.
And do you mentioned as well the sort of residual values Oh, no affirming as a your retail will see you every CIO points reopened I'm can you give us some kind of I do have the cadence of over the movement.
Oh it varies by market. It's a in most instances, it's quite stable again varies by market by model age.
Et cetera, but an apples to apples.
It's up single digits in many places.
Thank you very much.
Thank you.
Thank you that on a set of questions at this time.
Handle watching the kind that tend to sell for closing remarks. Please go ahead.
Thank you and I don't think everyone to have joined US today, Yes, Timo will be soon available to answer any follow up you may have thank everyone now and that really sure 11 day best of the day Bye Bye.
Goodbye, everyone have a pleasant summer.
That does conclude teleconference for today, Thank you for.
So you may disconnect have a nice.
Please standby.
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