Q1 2021 Ferrari NV Earnings Call
[music].
Good day and thank you for standing by welcome to the February 2021, Q1 results conference call at.
At this time all the participants are in a listen only mode and please be advised that today's conference is being recorded.
After the Speakers' presentation, there would be of question and answer session to ask a question. During the session you would need to press star one on your telephone.
I would now like to hand, the conference over to you speak of today Nicoletta Russo. Please go ahead.
Thank you the Orion and welcome to everyone, who is joining US we plan to cover today. The group's Q1 2020 operating result, the lack of days of the duration of the call is expected to be around the 60 minutes today's call would be offset by the groups chairman and acting CEO of instead of doing that and group CFO.
But I'm, telling you pick up it's gone all right about the my theory, that's out of available in the investors section of the periodic corporate the website and at the end of the presentation, we will be available to answer your questions.
Before we begin let me remind you the any forward looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on the page two of today's presentation and the call will be governed by the language with that said I'd like to turn the call over to Ms.
John It's Scott.
Good afternoon, Thank you Nicholas and thank everyone for joining us today and of.
Few minutes and Tony will provide you with more color on this first quarter, but in summary, I am pleased to report an excellent set of results in terms of profitability margins and cash flow, which demonstrates the strength of our leadership team and the great work of the men and women of society, whom I want to thank.
Our results also proof that the key dynamics of our business remain strong.
With the record or the book up over 20% versus the prior year with the strongest demand coming from our most profitable models.
The elegance of the Ferrari Roma and our first average range car. Yes. That's 90 steadily mean, we're enjoying vibrant demand and order intake, especially in the U S and in China, where the size of the order book doubled in the last few months, which is of great way to start preparing Oxfordshire.
And the first read there in 2022.
On the back of the above and absent any further potential dislocation caused by the pandemic. We are confident that we are on the right track to meet the top end of our guidance for 2021 by all metrics.
As anticipated our latest annual general meeting I Am also pleased to report, we're making good progress with a shortlist of very strong candidates for the new CEO, who will lead our company and I can promise you that our future CEO will have all the right qualities.
Including an intimate understanding of the technologies required to chart a successful future full set of assets.
Innovation is deep in our DNA and we certainly see this exciting decade of accelerating change as opening up even more ways for us to extend the boundaries of excellence and passion that are at the heart of our history and will be even more so as we create our future.
Sure.
Building on our deep experience in hybridization, we're continuing to execute our electrification strategy in the highly disciplined way with the application of our technologies both in motor sport and in road cars, we have a huge opportunity to create a unique experience for our customers.
<unk>.
By way of example, DSS 93 of Dallas has the highest power weight ratio for the Niobrara call with our actual flux electric motors and best in class driving dynamics, thanks to the rates from axle with Faradic torque vectoring.
These technologies are as always driven by the Knowhow, we are applying in motor sports, where we have developed especially in formula one expertise in batteries Inverters and electric drives. We're also very excited about our first all electric society that we will then deal.
In 2025 the.
This important landmark in our story will offer us the new language to bring the uniqueness in the passion of society to new generations. We will provide you with more details of how we will incorporate this into our exciting plans for the future as our next capital markets day in 2022.
On the same location, we will take you deeper into our strong commitment to ESG.
As the company on the environmental front, we've already committed to achieving full carbon neutrality within this decade by direct and indirect means in parallel with the process to certify all our cotwo emissions and defined science based reduction targets.
We have already started identifying both the direct actions with a focus on energy consumption and the choice of the materials, we use as.
As well as appropriate initiatives to offset the remaining emissions decent.
These important commitments to our future and that of our planet are possible. Thanks to the resilience. We have demonstrated in this last year. When we acted quickly and decisively to manage the effects of the pandemic.
As you will no doubt recall, we have stated on several occasions, our decision to postpone a number of our initiatives to address the impact of the COVID-19 virus last year.
Both of on us and on our Italian suppliers.
Compared to the beginning of this year, we have decided to be more prudent on expenditures also in 2021 as we follow through with the correct decision to carefully manage the cadence of our activity.
This is also in light of the continuing uncertainties related to the pandemic, which as we know still remains unresolved in many parts of the world.
Sadly.
As the result, and also taking account of the implications of COVID-19, four of brand diversification and Thats one related activities. We now expect that even though our 2022 results will be better than 2021, which as I said.
We believe we will be very strong the achievement of our 22 financial targets will be postponed until 2023.
I also want to reconfirm today, the arrival of the pool of sand with that will be the epitope of Ferrari to driving experience in a completely new special dimension and we will be in field. This plan in 2022 to be joined in due course by product launches that will power our.
Our ambitions for 2023 and beyond.
And finally to return to the present Tomorrow is the Big day, We will then deal our first new model for this year, the new Ferrari Limited edition of the 12, which I'm delighted to announce is already sold out this confirms the strength of our business.
Model uniqueness of our products and the loyalty of our customers.
And with that let me now hand, the hand, the call over to Antonio.
Thank you Mr outcome, and good morning, or afternoon to everybody who is joining us today.
Starting from page four you can see the highlights of the Q1 2021 of the resource which represent the very good start of the year up all sorts of versus 2019 on almost all the metrics.
Our shipments were 2771 units.
One 2% compared to a strong prior year quarter since in Q1 2020, the impact on the core business of the COVID-19 pandemic was still very limited the.
The increase versus Q1 19, the six 2%.
Group net revenues were 1.011 billion euro.
Eight 5% compared to prior year, and seven 6% versus 2019, driven mainly by the stronger product mix.
EBITDA came in at 376 million up 18, 6% versus Q1, 2020 and up 29% versus Q1 19.
The EBITDA margin reached a record level of 37, 2%.
The EBIT was 266 million euro up 29% compared to 2020, and 14, 6% versus 2019 embedding IR DNA.
Net profit was 206 million Euro up 24, 1% versus Q1, 'twenty and 13, 9% versus Q1 19, resulting in diluted EPS of 111 Euro.
Compared to <unk> 90, you are of prior year and non 95 of 2019.
Industrial free cash flow for the quarter was 147 million euro.
This was also stronger than in Q1 19, both in terms of euro amount in cash conversion. If we exclude the day 170 million Euro advances from the Ferrari Monza SB, one and SB two we collected in Q1 19.
Turning to page five.
You can see the details of the first quarter of 2021 shipments up.
Three of units or one 2% versus a strong prior year quarter.
As a reminder, last year, we had a fairly limited the impact on deliveries due to the COVID-19 pandemic since we suspended the activities close to end of the quarter.
Sales of eight cylinder.
The eight 1%, while 12 cylinder were down 19, 6%.
Note, however that with the arrival of the essence of tankage Teradata and the Spider of Cape that we deviate hybrid the segmentation between the VA and Vito out of is becoming less relevant with regards to the profitability.
The family NDA towards Etfs drove the deliveries of the quarter DSO of 90, Stirabout and the Ferrari Roma with shipments commencing in Q4 'twenty remained in the ramp up phase.
During the quarter, we continued to deliver of the Ferrari Monza SB, one and SB two in line with production planning.
The 488 is the family and the Ferrari Portofino has been the phase out at the end of 2020.
Quarterly shipments were affected by our deliberate geographic allocation based on difference day in the different stages of the lifecycle of our model by region.
As a result, EMEA was down three 8%.
Erika result was almost flat.
The mainland China, Hong Kong, and Taiwan posted a strong percentage increase boosted by the arrival of new models and accentuated by the an easy comparison versus prior year.
As a reminder, with privilege deliveries in this region in the first nine months of 2019 in advance of the early implementation of new emissions regulation.
And finally, the rest of the traffic decreased by 16, 6%.
The second half of 2021, we will also see the ramp up of the year from 90 Spider and the Portofino Ami.
The product portfolio will be farther out of it with a new variety of limited edition, which will be unveiled tomorrow and already sold out as we said.
Yes.
Turning to page six.
You can see here displayed the walk of our group net revenues for the first quarter that was up 10, 8% at constant currency.
The increase in revenues from cars and spare parts.
The 11% at constant currency was generated mainly by the strong enrichment of the product mix.
The personalization we're in line with the prior year in absolute terms why the lower in proportion to revenues from cars and spare parts essentially views of the phase out of the 488 is the family.
Engines revenue.
We're up 37, 8% attributable to higher shipments to Maserati and to a lesser extent to the rental of engines to other formula one racing teams.
The increase in sponsorship commercial and brand was attributable to an improved outlook for the formula one calendar, partially offset by a lower priority of the ranking as well as the reduced brand related activities due to the COVID-19 pandemic.
Currency, including translation and transaction impact as well as foreign currency hedges at the negative contribution of 22 million Euro mainly the U S dollar.
Moving to page seven.
Let me review the change in our EBIT Bridge explained by the following <unk>.
Volume positive thanks to the previously mentioned deliveries.
Mix price variance for 48 million Euro was boosted mainly by the assets of 19th sort of dial in the Ferrari Monza.
Invested our cost research and development costs increased 19 million euro mainly due to higher DNA and then increasing spending in product innovation activities net of technology related government incentives, which were lower year over year.
SG&A decreased 6 million euro, mainly reflecting the adaptation of our communication and marketing activities to the new digital environment also due to COVID-19.
Other increased 24 million euro mainly due to the improved outlook for the Formula one calendar and higher contribution from other supporting activities as well as the Maserati.
Partially offset by lower priority of ranking and reduced brand related activities due to the COVID-19 pandemic.
The total net the impact of currency was negative 418 million euro.
And as the result of what I, just mentioned EBIT reached 266 million Euro up 28, 5% at constant currency with EBIT margin ex length of six 3%.
The strength of the mix will continue over the year why is opex, mainly marketing activities and expenses for the product innovation will increase as planned in the second half of the year, leading to 'twenty to 'twenty one guidance margins.
Turning to page eight industrial free cash flow generation for the quarter was 147 million Euro.
The positive the generation of the quarter was driven by the strong EBITDA margin.
The offset by the investment of 151 million Euro.
For reference please remind that Q1 2020 included the portion of land purchases in the nearby the mono Nigel of plant.
The capitalization ratio was approximately 38% for the quarter.
The increase versus prior year, essentially due to a timing difference in R&D spending for formula one.
The adverse working capital and other impact was mainly due to higher inventories and the reversal of deferred IV mountains of advances received in 2019.
Net interest of our debt as of the end of the quarter was 420 million euro compared to 543 million at December of last year.
Noted in March we restarted our multiyear share repurchase program with 150 million euro tranche to be executed within the end of September.
In addition at the 2021 annual General meeting of dividend distribution of 160 million Euro was approved and due on May five 2021.
At the end of the quarter total available liquidity was 1 billion of <unk> 730 million Euro following the reimbursement in January of 500 million Euro 2021 note at the including Undrawn committed credit lines improved to 750 million Euro.
On page nine we have of the 'twenty to 'twenty, one guidance already presented in February and subject of trading conditions remaining unaffected by further impact from the COVID-19 pandemic during the course of the year.
In summary with target net.
Net revenues of around.
$4 3 billion sustained by our core business with a rich mix.
Revenues from Formula one racing activities and brand the rates activities is where we still have most of the uncertainties, particularly in respect of sort of one calendar and the format of the racing events due to the evolution of the pandemic.
Adjusted EBITDA between $1 billion, and 450 million Euro and $1 billion and 500 million euros with percentage margin between 33, 7% and 34, 9%.
Adjusted EBIT between 970 million Euro and 1 billion of 20 million Euro targeting an EBIT margin between 22, 6% in 2023, 7%.
Adjusted diluted EPS of between four and 420 euro per share.
Assuming approximately 20% tax rate.
The industrial free cash flow in the region of 350 million Euro.
To conclude <unk>, our chairman and highlight our growing confidence in targeting the top end of such guidance range. As the result of the pretty satisfactory performance of the first quarter, but especially comforted by the record order book the diversity of the new order flow together with cancellations in line with our norm.
In a very dynamic pre owned market sustaining of receivables.
In addition, we expect that the prudent management of our capital expenditure also in 2021 will likely support of our cash generation for the year.
With that said I'll turn the call of a 'twenty collector.
We are now the fact, the Q&A session. Thank you.
Thank you so as a reminder to ask a question you will need to press star one on your telephone and two with two of your question you will need to price the husky.
Okay.
We will now take our first question from the line of Steven Eichmann from Societe Generale. Please go ahead. Your line is open.
Yes, good afternoon.
The revised guidance.
The.
The when you look at the factors that will even in September 2014.
EBIT.
The $7 8 billion.
Of the 38% EBIT margin.
And the free cash flow of the $1 1 billion of site.
You seem to be quite close leases or the EBITDA margin.
And considering your DNA.
The Chi.
<unk>.
Obviously, the free cash flow is where there's probably the big sort of the moment now when we announced that youre going to be receiving the large amounts of deposits for the successor to.
To the net.
The model. So I'm wondering does this indicate that the next one to one of them may be delayed by one year. So you're expensing of the big cash inflows coming 2020.
2022.
And secondly on the guidance of 2021 considering.
3% margin that you reported in the first quarter.
And what is the good.
Hey, Kevin.
The order book the.
The demand you described for your highest margin models.
One of the factors bring you back to the guidance range you gave of 32, 6% to 51, 7%.
For the full year. Thank you.
I've taken a bunch of speaking.
In respect of of 2022, I think what we just said, meaning the capital expenditure range being delayed and this implies a postponement of some.
Deliveries.
From 2022% of 'twenty to 'twenty three is the reason why we are actually postponing also the guidance to the following year.
And David of course, as an implication of both in terms of EBITDA and in terms of cash flows. In addition to that we're considering currently as of late change in mix that might have.
The contribute also on this.
With respect to the margins I mean, the we've been very pleased with the margin of Q1 this had been cigna.
Significantly supported by the.
Of the contribution of our Ferrari Monza NDS of 19th start of it going forward, we expect as I've mentioned the product mix. The remains strong. We're also we're actually planning is a gradual restart of the activities.
During the course of the year, meaning additional opex compared to what we have seen in Q1 and this is going out of basically drive us to the average of that I mentioned.
Thank you.
Yeah.
And your next question comes from the line of money cash.
From.
Please go ahead your line is open.
Yes. Good afternoon. Thanks for taking my questions just another follow up on the postponement of the guidance.
For 2021 of the comp.
<unk>, it's Dan.
To achieve the top end of the guidance, but the 2020 guidance of being postponed.
I understand that part of the Capex is being postponed the front.
1000, thank reported two.
2020, starting within the knee and the impact on the EBITDA.
It would be more useful useful for us.
More colo.
Especially how much of that the phone 19 playbook.
The board to the core business and how much is attributable to the sponsor of keeping brands every day.
Pvt.
Could be very helpful and the second question that is on the working capital trend.
How long of you're dealing with the potential supply chain shortages and what should we expect the time of working capital and in terms of inventory.
The next quarter.
You very much.
Okay.
Monica. Thank you very much for your questions.
As we have <unk>.
Communicated in 2020 and today, we have made a judicious choice of delaying expenditures and the reason we've done it is linked to the uncertainties. We are still living through linked to COVID-19.
Which means that the mix and the deliveries of models are.
Are different than what we were expecting hence the reason why we.
We are postponing to 2020 free the results we were aiming to achieve in 2022.
I would also like to make clear that we do have uncertainties on.
The brand diversification and Formula one.
Which we are assessing very judiciously as as the months go forward, but it is really on the back of lower expenditures, which have direct consequence on on deliveries and mix.
I also would like to reaffirm that our objective.
The two built and continue building for the long term the value of our company.
As of founder Enzo Ferrari.
<unk> has always made clear we want to make sure that we manage well demand and that we keep disciplined in terms of how we manage the mat.
On working capital, we believe that Q2.
We will be.
In line.
We are.
Managing all the different issues that we are seeing in supply chain and the way that we feel confident in being able to address and mitigate those risks.
I hope all of <unk>.
The events heard your questions, yes, thank you very much gentlemen.
Thank you.
And your next question comes from the line of Michael Binetti from credit.
Please go ahead your line is open.
Hey, guys. Thanks for taking our questions here I just wanted to I wanted to go back in times of February to the last call and just.
I will now and that call I think you made the statement that the.
Cars, we're on track to hit the 2020 to plan all the all of the 15 cars that were in the plan would be released I'm wondering what's true what changed since then that pushed out the 'twenty two guide was a little more specifics.
Specifics, if you could and I'm wondering how much.
If anything the declaration of 2025 being the.
The release for the electric vehicle versus previously, saying that it would be just the decade. So a little more clear there does that add some expense to the plan relative to what we what we initially we're thinking for 'twenty two.
Okay.
Hi, Michael Antonio.
Reminding in the full year call I said, the 15 launches were confirmed and this is still the case.
So what we are now considering is the pace of the deliveries that we expect to happen by the end of the 2022 and on that the postponement of better the dilution of the capital expenditure over the course of this two year has an impact.
Does this answer your first part of the call of the question.
I don't understand if all of the cars are still being launched as the is.
So the revenue and EBITDA contribution to the one eight to two point of $1 billion of EBITDA that was planned by 2022, yes, even though all 15 cars are being launched some of the revenues and EBITDA are now happening after the end date of that plan.
Yes, what we said is that basically the 15 launches will happen. So the car will be presented in line with our expectation is just the time of it of the delivery because theres going to be diluted over the course of two years.
Okay.
Comment on the weather.
The electric in 2025 ads from expense to the initial plan for 'twenty two.
So Michael that's a very good question.
And you have growth to the extensively on it.
We believe that within within the targets we have.
Of the expenditures, we are including electrification without adding to it we do believe that we will have.
Also for the measures that we've mentioned before.
The better.
2021 and.
<unk> two will be in line, where we were expecting in terms of overall investments. So we just see this as the prioritization rather than increasing the absolute number of the investment.
Okay, I guess I'm trying I'm still trying to understand if the new guidance for 2023 is 182 billion of EBITDA.
I guess that means the two year EBITDA CAGR of about nine 5% of 15 in the house and you delivered 14% in 2015 to 2019.
2021, obviously of soft years economies reopen but you've got assets 90, you've got the Monza.
Huge margin cars, you're planning five new car launches I think in 2022.
You did comment today that the assets of 90 is bringing the profitability of the ATB 12 closer together.
I'm trying to understand what what lowers the.
The CAGR because it seems like the very full in profitable growth period.
After 2020 as the baseline through 'twenty, three what causes it to be lower.
Very simple as Antonio was mentioning the rate of delivery has changed on the back of decisions. We've made plenty of continued doing in 'twenty. One in terms of right of the expenditures. So that means that we have invested less last year and we will this year the unexpected.
But it will have revenue and profit coming later than what we were expecting number one number two as I said before Michael we are intentionally managing demand and the way that we continue to build on the strength of our business model, which is really managing.
The demand side.
Thanks, guys.
And your next question comes from the line of shows from <unk>.
Goldman Sachs. Please go ahead your line is open.
Thank you. Thank you for taking my question.
The first one just following up from the last question.
Could you just help maybe.
Obviously, you've set the pace of deliveries of different next year to what you anticipated.
But is that because one of the 15 cause.
We will be shipped later in the year than you had the initially envisaged.
Or is it because.
Actively youre just going to ship fewer of the next year.
Now that you've had.
Initially envisaged.
The demand or to.
Kind of pacing of the business to maintain exclusivity.
Thank you George I think the answer is there are.
Couple of cars that are part of the project would have been postponed that will be delivered in fewer units compared to our original expectation for 2018.
Thank you the.
The second question I had was when I look at the top line Kai gone now from.
This year too.
The original 2022 target, but now 2023 targets is less than an 8% revenue.
Between the 2023, despite the introduction of the Purion, <unk>, which will presumably contribute significant volume.
When we think about the top line growth for.
Ferrari.
The longer term.
Where are you with respect to the brand extension exercises that you announced back in November 2019, I think you highlighted that you.
Manage to leverage of relatively small percentage of 800 million euros retail value of Ferrari branded goods and how important is the fashion show you that you plan to hold in June.
In capturing more of the.
Brand extension opportunity.
Ferrari.
Okay.
Thank you George.
The question can be answered this way.
As to the growth rate going forward of first I can talk only.
About what happens to 2023 and that is very clear that the growth rate is going to be reduced compared to what we originally expected. So there is less of a final can speak to 2022 and a more gradual growth as the disaster in terms of the contribution of the brand diversification. This is an array of John.
<unk> before which has been impacted the.
And by by the pandemic on that we expect to say, we are being delayed and with <unk> due to the restrictions that we have a number of countries in respect of that activities clearly we expect the.
Sure.
In terms of contribution coming from the activity that we present this year, but it is predicated upon having all of the opportunity to start restart selling.
A normal way going forward.
I think the importance of the fashion show.
In mid June is really to demonstrate the legitimacy of society as the full lineup in the luxury space.
And that is really gain that that we have.
And how much time will that be translated in revenue. It really again is the question of managing properly the cases.
Where it's much harder to be able to build organic growth in pricing points within the luxury space the versus what we used to do which was more of a licensing model.
And the show is really going to be a reflection of hopefully what you will be able to see as the potential that exists.
Great. Thank you and one quick final housekeeping one if I may just when we look at the revenue and EBIT bridge the revenue from Amgen sponsorship commercial and brand increased by 15 million, but the.
The EBIT in the other line increased by $24 million. So a higher amount can you just explain what is the.
Incremental factor driving the $24 million improvement at the.
EBIT level and the other.
The bucket. Thank you sure George.
I mentioned I mentioned in my comment I guess, one of the contribution from either of the parking activities that do not have that much in terms of revenues by the positive performance in terms of EBIT and then lower costs related to the.
The expectation in respect of the performance in half one this year.
Great. Thank you very much.
Please proceed hi.
Deposit outflows or do you see in Q1, and how much should we expect for the full year and Phil on the deposits will you be getting deposits for the 12 Super fast the charter.
On the on the deposit on the Monza.
The impact on the quarterly of about $20 million.
The reversal of the depth of it being the respect of the.
Well the special let's say the the guidance will launch tomorrow.
We're planning to have some yes.
Okay. Thank you.
And the next question comes from the line of John Murphy from Bolsa. Please go ahead, John Your line is open.
Good afternoon.
I'm, sorry to keep asking you about the guidance, but I have the benefit of of hearing a number of answers of so maybe I could ask something.
Specific and see if I can characterize the guidance.
Correctly for 2022 to 2023.
It seems like the the next iconic.
It's going to be delayed a little bit that's impacting volume to some degree of the cash flow even more and then there are some expenses that were lower in 2021 'twenty it will be caught up in 2022.
By the time, we get the 2023, we're back on track.
Hopefully.
For all of US a post COVID-19 world in a normalized year is that a correct way to characterize what's going on here.
Yeah, I think of the description of what happens to 2023 is pretty much in the in line with what you said, yes Youre right. Then of course, what we're lapping from 2023 onward will be the subject of the net capital market day that we plan to give you the necessary color to explain how you see we see the developer.
<unk> of our range going forward.
And the implications of that but yes, you just kind of at the right.
Okay.
Then the second question, if we think about the the success of those for Delek.
And.
The sort of electric hypercard.
You balance the portfolio of hybrids versus Evs.
And there's a big question of whether Ferrari really should go all electric in the long term just given how many miles of how few miles were actually driven on the vehicles each year and the negative impact of producing an EV versus an ice or in a hybrid.
I'm just curious philosophically you could certainly argue if you want 100% electric it might take 50 plus years to get the.
The benefits of the environment, but if you go hybrid.
I'll take the benefit of the torque pattern of the two powertrains together, you actually will get better performance both on the road and from the environment.
Just curious John if you think about that balance over time.
What do you think the answer is.
I think that there are great answers to those questions, but I do not want to anticipate them as that is going to be the fun about meeting next year in our capital markets day.
I also think it's important too to make sure that as we think about our electrified future. It is an improvement to our existing baseline.
Yes.
Okay, Alright, thank you very much improve.
Improve our capabilities.
Then within the applications of new technologies.
Okay. Thank you very much.
Thank you and your next question comes from the line of Philip <unk> from Jefferies. Please go ahead. Your line is open.
Thank you very much and the good afternoon I've got three questions if I can.
The first one is <unk>.
Aiming to be carbon neutral.
The LC Sami to be carbon neutral and I'm just wondering the <unk>.
Sorry, you expected to lead the industry why don't you aim to be a couple of negatives.
And also the way offset even though its little miles that is covered by the average Ferrari.
It will be a signal that you are definitely the steel leading the industry.
My first question.
The second one is <unk>.
You are telling us that you are slowing down the rig to the expanded showing you effectively slowing down.
Of the rate of growth of the business.
To some extent.
I follow the herd of your questions.
At the same time, you resume buybacks don't you think you potentially investing.
Wrong signal and about the long term growth of Ferrari by screwing down the gross and doing buybacks be curious of your views on this and the last point is I think there as I mentioned in the release about patent box benefit I believe the first around the patent box ended last year. So have you secure the new round is.
Is it for three years five years should we also expect that you will benefit going forward from between five to seven points of lower tax rate.
If that's the case that you renewed the patent box regime. Thank you.
Phillipe great questions.
We want to achieve.
The <unk>.
Our carbon neutrality within this decade with the ambition of being the first ones to achieve that objective. Once we have achieved that objective then the natural evolution of it has to be.
The positive so so look at it as an evolution rather than an end goal.
In terms of buyback we have been very coherent with what we have communicated in terms of capital distributions and our buyback is a reflection of our ability to generate cash flow.
And I will let Antonio answer on patent box.
In respect of patent box, yes, we are applying the Italian low in that which basically provides.
The difference if you if you do not require for Amitiza in advance of agreement.
To get the benefit in cash in three installments. So there is of live modification in the calculation for P&L purposes, and in terms of the cash impact the east basically diluted in three installments over the next few years alright, Okay. Thank you very much welcome.
Welcome.
And your next question comes from the line of hanging from comes from Ben. Please go ahead. Your line is open.
Thanks for taking the question.
The first one of the clarification on your opening remarks with respect to the change in the order book I believe you said that the order book is up 20% in Q1 as the whole and doubled in China.
Is that what you said and does that imply that the order of China, China, China, China. It was doubled in China, which is why I made the reference for that to be of very encouraging sign as we will celebrate our first anniversary in 2022 of China.
That's great. Thank you is it possible to say if Europe was still up directly as the region within the 'twenty Latam for the group overall.
It flattened out.
Okay. Thank you.
Yes.
The nuclear apologize to keep asking you about the guidance, but I was hoping to hear from yourselves.
The 2022 guidance on all metrics do you actually want us to assume for 2023 now of the same numbers.
Thank you actually said that yourself or could it also be above the 2022 ranges, especially considering you have to the poorest starting with them.
We will be able to have much more clarity as we approach 2022, and our capital markets day, what we have said today is that we expect the results.
We're aiming for in 2020 to be achieved in 2023, and that's a result of 2022 will be higher than the ones. We will achieve in 2021, which we expect to be very strong results.
On the high high end of our guidance, that's what we said.
Understood and then if you don't mind me clarifying finally over.
Of the capital market day.
We're expecting to give us a new 20 of 23 guidance, then giving back you've now sort of introduce the interim period of 2023 by the line or are we expecting 2020 price target.
Are you able to comment on that already please.
It would be premature.
And I think that it really is important for us to be able to give you a longer view.
As we as we meet in 2022.
The objective is really.
As we are entering the decade of great opportunity and change to the direction the <unk>.
The west side of that he wants to be.
Within this decade.
Okay I appreciate it thank you.
Thank you.
And your last question comes from the line of Thomas Besson from Kepler. Please go ahead. Your line is open.
Thank you very much of hub.
A few of the royalties from <unk>.
Could you please give us from feedback from your customers.
The decision about Cuba.
The firm to build the ease of use them to be EBIT the fossil from blood.
The seconds.
I'd like to come back to.
The last point.
In 2003, Youre going to have probably almost of food gross language, you're going to see.
If we assume it's delayed maybe its screen.
All being ramped up on the.
In Q2, but.
You will have a lot more pure cycle units in 2003, when you would of hard in 'twenty, two and in the initial scenario.
So.
As well to understand them.
The extent.
Which is quite effectively your gross routine 'twenty three.
And lastly, the I would like to clarify.
Once you've made of.
<unk>.
The brand strength.
Formula one of the optical integration.
You didn't think of all the drilling of the assumed the next.
The next year you tell us.
From a reliefs from you don't want to drawing from.
Can you help us to be more consistent with the <unk>.
That's the greener future.
This activity consistent with more of ethical and integration.
Thank you.
So there are big discussions at the moment.
On the future of Formula one.
And we are very much present in that conversation with the ambition and aspiration of being absolutely carbon neutral.
As the sport and as our activity.
Is linked to that sport. So that is exactly the direction of travel it will be hybrid technology and those hybrid technologies are very important within the V. Six.
Because that is the same capabilities that we will be using for our other motorsports activities. As you know we announced that we will be entering the endurance arena and also in terms of our road cars, which will have the six hybrid so no doubt that the.
Fred from a technical and technological standpoint.
Is it there.
Our customers' expectations are that we are continuously able to innovate and to be at the pinnacle of technology and that is why we are looking ahead.
We are very excited.
Where we can achieve more with the new technology.
Electrification are providing us and DSS 90 is a perfect example.
All of that.
In terms of how well 'twenty three.
Look like.
I think that we have answered.
Most of the question and it's probably a better topic to touch in 2022, when we meet for the capital markets day.
Thank you very much.
Thank you Tamara.
There are no further questions at this time I would like to hand back over to the speakers for the final remarks.
Thank you everyone for joining us.
The day.
Yes.
One of the Angola Capex of human GAAP for this year above the rest.
Some of the day.
This concludes today's conference call. Thank you all for participating and you may now disconnect.
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