Q2 2021 Ferrari NV Earnings Call

[music].

Good day, and thank you for standing by walk on and I did a Ferrari 2021, and Q2 results conference call on.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star and wanted to telephone keypad.

Advisory today's conference is being recorded today Monday, the second of August 2 childhood and train them on.

And it further assistance, please press star and zero on the.

And like to hand, the conference over their first speaking on a day Nicoletta Russo. Please go ahead.

Thank you Gino and welcome to everyone, who is joining US we plan to cover today. The group's second quarter 2021 operating results and lack of this the duration of the call is expected to be around 60 minutes today's call will be hosted by the group's chairman and acting CEO and Mr. John Addison and groups.

CFO, Mr. Anthony pick up pick on.

All right on to my theater and outside available and the investors section of the periodic cost spread website and at the end of the presentation, we will be available to answer your questions.

Before we begin and let me remind you that any forward looking statements we might make during today's call are subject to the risks and uncertainties mentioned and the Safe Harbor statement included on page 2 of today's presentation and the call will be governed by this language sales.

Our team today is connecting from different countries. Please forgive us if there are moments of silence during the call. While we manage the transition between speakers with that said I'd like to turn the call over to Mr Zone and kind of.

Thank you and eco later.

And thank you everyone for joining us today.

Very strong numbers, we're reporting on.

Once again and expression of the extraordinary skills relentless endeavors, and passion and dedication of all of the men and women of Matt on that alone.

But most of all they are testimony to the unique and enduring power of Ferrari to inspire the dreams of our loyal owners all around the world and.

The ones on new customers.

June was our record order collection month ever.

Which is.

A big achievement for us and driven by a large number of Ferrari soon to be first time owners.

Strong guarantee for our future.

And the second quarter, we delivered.

A strong set of results across all metrics above pre pandemic levels with an EBITDA margin of 37%. Thanks to the particularly rich mix of this part of the year boosted by <unk> 19 per gallon and Ferrari Monza the makes it.

Will normalize and the second half leading us to confirm our guidance on all metrics whilst for the industrial free cash flow. Thanks to working capital. We now we now project to approach 450 million euros in 2021 versus our original guidance of 30%.

And $50 million of $350 million.

Today's call is the third and final 1 I will host as Ferrari CEO. Following our announcement in June of the appointment of benefit of India as our new CEO commencing on September 1st Bill.

<unk> joined Ferrari from SD Micro electronics, where he has been responsible for creating building and leading the company's largest and most profitable business. His proven leadership qualities. His impressive track record as an entrepreneur and innovator.

Is absolute fluency and the technologies that are shaping our industry.

And it strongly with the ambitious plans we have for our future.

I'd also like to take the opportunity today to share with you. Some additional perspectives I have gained over these months and my role as CEO.

During <unk>.

Which time I've had the privilege of working more closely than ever with Mike Cirrhotic colleagues.

Most importantly, these months have allowed me to live.

More intensively the uniqueness of Ferrari.

I have seen up close to total commitment and passion and every corner of our company to ensuring that Ferrari is.

And always will be the very epitope of pure luxury and expression of exclusivity that is imitate debt, but can never be reproduced elsewhere.

That is why everything we do will always focus on being distinctively Ferrari.

Which the opportunity set of electrification electronics.

And other technologies that are coming available will allow us to make even more distinct and unique products.

And this is why every day, we're finding new ways.

To excite existing Ferrari owners, whose loyalty and repeat customers reflects the unique relationship they have developed with our company.

And we with them.

And just as importantly, we are building new strong bonds with the next generations of Ferrari owners.

And I am pleased to tell you.

That new to Ferrari customers accounted for 60% of the orders for our entry models and the first half of this year.

The average owners and <unk> is also coming down and.

And we have doubled the number of women owners and the last years with China, leading the way with 1 out of 5 buyers being a woman.

And Q2, we brought you free new model launches.

812 competitive shown it and the 812 competitor on a bathtub.

And our special series B 12 exclusively limited to a more most loyal and committed customers.

Which already sold out at launch.

And then the Ferrari 296 GTP.

First the 6 hybrid drilled car with Doctor rally batch targeting a new and younger sturdy owner.

Since the unveiling and late June orders are slowing fast.

The Ferrari 296, GTP as deferred hybrid car and our range following on from DSS 90 per diluted and Spider.

But while the latter on a range Super car day, New 296, GTP is the most fun to drive comp.

Drivers of all levels.

But what I would like to highlight most is not just the increasing pace of our electrification plants.

But our ability to use and invent technologies and a way debt is uncompromisingly and distinctively Ferrari.

And this last quarter. We have also shared with you a taste of our exciting future and a different dimension.

In addition to and dealing the latest additions to our richest and most complete model lineup ever and we stage. Our first runway event to showcase on mens and womens fashion collection and reopen the historical the historic Avellino restaurant in Maranello both too.

To great acclaim. These generated a 100 million reaches with very strong demographics, both in terms of gender 45% women.

And 55% men.

While 85% of debt being.

And the 18 to 34 age range.

These positive reactions, we received our early indications not only of the strength of Ferrari when new audiences, but also of the ability to execute and a way that is true to our history our values for our future.

Moving into new areas and are considered way and always relentlessly focus on excellence.

A further example of this is our launch on the Fortnite platform, combining virtual and physical and our core product with a capsule collections.

Further strengthening our reach.

Both in terms of audiences.

But also.

Entering new geographies and demographics at the same time, we are more focused than ever on the importance of our motor racing roots and Formula 1 are young and exciting driver pairing has brought new energy to the entire formula 1 team.

We are also working intensively on our return to the Hypercard class and in particular to the normal 24 hour rates in 2023.

Success.

And at the very highest level of motor racing is and our blood as we have proven with our victory and a 24 hour spot <unk> and the endurance Cup of GT will challenge this weekend.

Working even more closely and this month with our racing teams has only sharpened my and our determination to deliver victory on the track and to ensure that we capitalize even more on the opportunities for technology transfer from our Moto race.

<unk> activities to our road card programs just as an example, the V..6 hybrid is common to our different racing activities, but also to the new car, we just launched.

We will share much more about the ambitious plans we have for every aspect of our business and our next capital markets day. When we also be celebrating the 70 <unk> anniversary of the founding of our company by its authority.

This will set out the path, we will take during this decade, but it will be much more than this and we will provide the foundation on which we will build the continuing long term success of Ferrari as the worlds most distinctive.

And most innovative luxury brand.

Moving swiftly to create continuing growth opportunities from the changes of our fast transforming world.

But never compromising on our commitment to be the unmatched expression of Italian excellence.

<unk> total.

Our colleagues and I look forward to welcoming you to our capital markets day, and Matt on alone, which is now set to take place on June 16 next year.

Then we will take you deeply into our plans for the coming years.

In the meantime, we continue to be laser focused on outperformance and the second half of this current year.

It has been a unique privilege for me to lead the rally.

As its CEO since the end of last year and the insights. It has given me leave me even more excited about our future. It is 1 and which the opportunities for Ferrari to create emotion and value.

Stronger than ever and I look forward very much to working closely with Ben and Dave and his team to take Ferrari to new levels and every way.

I would like also and concluding.

Tell you how proud I am.

Debt in June 30th we have been awarded the free stars of fear FIA Environmental Accreditation program.

And on July 12, we have been.

Confirmed.

Equal salary company and.

And that confirmation also came in North America.

This is very important and something that we're very proud and Ferrari because it shows how our commitment to ESG.

Is a true commitment.

I would now like to hand over to Antonio who will take you through the details of a great second quarter, 2 which I would like to thank him and all the Ferrari colleagues for what they've done.

Thank you.

Thank you and Mr Chairman and good morning, or afternoon to everyone, who is joining us today.

Starting on page 6 you can see the highlights of the Q2, 2021 and earnings.

And very solid set of results.

And if Anthony up not just in comparison with the second quarter of 2020, but also compared to the same period of 2019 on almost all metrics.

And as a reminder, the COVID-19 pandemic hit us and most during the second quarter of last year, when we had the production and delivery suspension.

Okay.

Our shipments were 2000 and 695 units in Q2 this year almost doubled versus the prior year quarter, while they were almost in line with the second quarter of 2000 and team.

Group net revenues were 1.035 billion euro nearly doubled compared to prior year and up 5.2% versus 2019, driven mainly by volume and stronger product mix.

EBITDA came in at 386 million Euro.

3 times higher versus the second quarter of 2020 and up 23% versus Q2.2019.

The EBITDA margin stood at 37, 4% and continuity with the strong profitability and reduced in the first quarter of this year.

EBIT was 274 million euros, 12 times higher compared to Q2, 2020 and up 14% versus 2019.

Yes.

Net profit was 206 million euro versus 9 million Euro in Q2, and 2020 and up 12, 6% versus Q2.2019, resulting in a diluted EPS of 111 Euro.

Nearly 28 times versus prior year.

Industrial free cash flow for the quarter was robust at 113 million Euro.

Please note that Q2.2019 still benefited from the collection of advances on the Ferrari Monza.

Yes.

Turning to page 7 you can see the details of the shipments of the second quarter of 2021.

And almost doubled versus the second quarter of 2020, which was evident impacted by the production and delivery suspension due to the spread of the come and 19 pandemic.

Sales of 8 cylinder were up 111% and 12 cylinder were up almost 38%.

Please note that such segmentation is becoming less and less significant of the development of our mix since the introduction of DSS 90 extra volume.

Okay.

The deliveries of the quarter were driven by the <unk> family NDA 12, GTS together with EBITDA of 90, <unk> and the Ferrari Roma, we traced global distribution.

The Ferrari Monza <unk> and <unk> continued to be delivered in line with planning and the first deliveries of the new Ferrari Portofino and commenced in the quarter.

All geographic regions positively contributed in the quarter given the easy comparison as a result.

EMEA was up 89% Americas increased to 70%.

Mainland, China, Hong Kong, and Taiwan posted an exceptionally high and 564% increase.

Boosted by the arrival of new models, and accentuated by and ease of comparison versus prior year.

As a reminder, we privilege deliveries in this region and the first 9 months of 2019 in advance of the early implementation of new emissions regulations.

Finally rest of APAC was up 92%.

As you all know and the quarter, we unveiled 3 new models.

Well the competitor on a NDA 12, competency and our Panther, both limited series already sold out or the share.

Shipments will commence in Q1, and 2022 and Q4.2022, respectively.

And the 296 GTD, our first V-six hybrid remains and model with first deliveries to our clients will start in Q2.2022.

Moving to page 8 you can see displayed the work of our group net revenues for the second quarter up 86% at constant currency.

The increase in revenues from cars and spare parts and up 101% at cost and currency was boosted by the easy comparison on volume and the strong enrichment of the product mix along with the positive contribution from personalization.

But as organizations were up versus prior year in absolute terms sustained by volumes while in line with the historical average in proportion to revenues from cars and spare parts at around 17% due to the phase out of space of special series.

Engines revenues were up 119% the.

And the improvement is related to higher shipments to Maserati and.

And to a lesser extent to the rental of engines to other formula 1 racing teams.

The increase and sponsorship commercial and brand was attributable to the more favorable for more 1 calendar and brand related activities, partially offset by lower prior year ranking.

Currency, including translation and transaction impact as well as foreign currency hedges as a negative contribution of 30 million Euro mainly U S dollar.

Moving to page 9.

Let me review the change in our EBIT Bridge explained by the following variances.

Volume positive for 144 million euro with shipments almost doubled Q2 easy comparison.

Mixed price variance also positive for 113 million Euro.

2 the strong contribution of DSO of $93.

And the Ferrari Monza SB, 1 and SB 2 along with personalization.

Industrial costs.

R&D costs in line with prior year, which included the full cost of employees paid days of absence during the COVID-19 and production suspension.

SG&A negative by 4 million euro, mainly reflecting communication and marketing activities of 3 simple unveilings and lifestyle events.

Other positive by 24 million euro mainly due to the more favorable formula 1 calendar higher contribution from brand related and other support and activities as well as from sales to Maserati, partially offset by lower priority ranking.

The total net impact of currency was negative 425 million euro.

As a result of what I just mentioned EBIT reached 274 million Euro versus 23 million euro of the prior year and with an EBIT margin at 26, 5%.

Yes.

Turning to page 10, industrial free cash flow generation for the quarter was $113 million.

The positive generation in the quarter was driven by the strong EBITDA.

Partially offset by 166 million of investments that are progressing in line with full year guidance.

The capitalization ratio was approximately 42% for the quarter increased versus prior year essentially due to a timing difference in R&D spending in relation to formula 1 activities.

The adverse working capital and other impact was mainly due to higher inventories and the reversal of the Ferrari Monza SD Wan and NSP to advances received in 2019.

Okay.

Higher tax payments, mainly to refer to the new patent box regime, which provides for the annual benefit to be cash in <unk> III yearly installments.

Net industrial debt as of the end of June was $552 million Euro versus 420 as of the end of March.

The increase will view to the dividend distribution of 162 million euro, including and distributions to Noncontrolling interest and the share repurchase for a total of 82 million euro more than offsetting the positive industrial free cash flow generation and the quarter.

On page 11, we revised upward our 2021 guidance on industrial free cash flow generation, which is now projected to approach 450 million euro mainly sustained by and improved networking capital and thanks to the collection of advances on the new spec.

<unk> series, starting in Q3 and increase in trade payables due to our capital expenditure being weighted over the last months of the year.

We also reiterate our confidence to reach the top end of our guidance range for the remaining and metrics.

As a reminder, our guidance relies on the assumption that trading conditions remain and affected by further impact from the COVID-19 pandemic and during the course of the year.

And with regard to the development of our operating margins in the second half of this year implied by our guidance, let me remind that the mix will reflect a larger weight of the Ferrari Roma and Portofino am remaining anyway positive versus the second half of 2020.

Opex will increase as planned mainly due to marketing activities and expenses for product innovation and R&D spending for formula 1.

To conclude we remain highly confident for our on future firmly supported by the vigor of market demand.

With that said I'll turn the call over to Nicoletta.

Thank you very much on Tanya Gina. Please we are ready to offer and <expletive> Q&A session. Thank you.

And once again to ask a question over the phone please price are and while on the telephone keypad.

Our first question comes from the line of Adam Jonas from Morgan Stanley. Please go ahead, Adam Your line is now open.

And thanks, everybody for.

And I just have to say.

The choice of Mr. <unk>.

As a real genius.

Master stroke, given given the company's opportunities over the next decade, and I am telling my clients you don't want to bet against.

The Guy who hired share Jr. So.

I think you might've done and again, but a lot of work to do John.

And what gets you most excited about the EV opportunity at Ferrari and what worries you the most about that transition.

Yes.

Adam Thank you very much.

And I definitely look forward.

Continuing on on the.

On a great.

<unk> sales of leadership, which ultimately as you well know leadership is what makes the difference and then and the organization. So we're very blessed.

And that we have available to joining Ferrari.

And on.

On on.

What really excites me.

Adam, particularly for Ferrari about electrification.

It opens up a whole new world and the good thing that I'm seeing and Ferrari is that its really been taken very very much as a new and as an additional not only new and additional field and which we can really get the cars to be even better.

And all what we've learned in <unk> and on what we're learning also for the racing activity, which has been very close to our really giving us the opportunity of launch unchartered waters in terms of what we could see applied I also think that.

The opportunity set that we have and <unk> is is really 1 we're having the opportunity of having a much wider set of technologies of which electrification is 1 will enable us to be able and even more inventive and and all.

So just to sum summarized that won the spirit and which ICD organization reacting to up to the challenge.

Seeing it as a huge opportunity secondly, just imagination of things that we can do that we would never have imagined and and there are good things that that will be that we'll be announcing that are going to come up. So that's really exciting in terms of what I felt the most.

Actually.

I've been I've been really trying to look at and every angle and seeing and which ways. We could we should mitigate some some of the transitions that are happening and I must confess Adam.

Feel very very positive about what electrification does to US also because I do believe that and the next decade 2030 to 2014, we will have additional choice.

Choices, because ultimately electrification is solving 1 issue, which is emissions, but it's not solving.

Carbon footprint as we all know well so as we get to solve carbon footprint and we need to innovate not only on on the car side, but also on the sources of energy and making sure that we get 2 sources of energy debt our carbon free.

We will end up having many many more choices. So for example, I do think the development of fuels and <unk> fuels are going to allow us probably to do more on IRI breads and potentially our combustion engines.

Debt with dose technologies and.

The energy space coming up either Jen might also get us to places we have we can imagine now so I feel very very positive both on the electrification journey that we started for this decade, but even more of what we could actually see coming.

And the next decade, so that was a long answer Adam, but I hope by debt used as much and to jazz on that I feel the organization has.

Thats very realistic answer and just a quick follow up.

If you compare that 10 year growth opportunity, if I'm thinking 10 year plus longer term.

Secular growth opportunity that Ferrari has.

As an internal primarily internal combustion car company, let's say we were having this conversation on 2 or 3 years ago 2000, Eighteen's cm day.

Versus now do.

Do you see electric how do you see moving towards.

Paul electrification and that and they are at.

From that direction.

Does that change the growth profile.

Ferrari into 2030 is it is it similar.

Higher much higher I'm, just curious I don't want to put words in your mouth, but just qualitatively do you think it changes the growth.

And.

Is it.

It is ultimately dependent on on 2 on 2 variables, 1 which is our choice of trying to make sure. We are consistent with growth in order to maintain uniqueness and exclusivity secondly to the pace and cadence.

At which we're able to get to market more innovative products.

If if you get the 2 together you should actually have higher growth linked to the opportunity of of actually doing more then it's a question of how you substitute 1 technology and with the other.

Sure.

But I feel I feel that the biggest challenge Adam is being careful.

Not accelerating the <unk>.

Growth opportunity I think the overall opportunity is bigger than it was we just need to be very disciplined and not try to capture it too fast.

But waiting to have really the best and the most unique in terms of products that we can deliver.

Super thoughtful thanks, Sean.

Thank you Adam.

Thank you.

Thank you. The next question comes from the line of John Murphy from Bank of America. Please go ahead.

Good morning, everyone. This is aileen Smith on for John and I will.

Wanted to follow up on slide 4 on the commentary around the Ferrari customer base, specifically, new to Ferrari owners, comprising 60% of orders for entry level model, where has this metric trended over the past several years and as you think about the optical and make the shipments over the long term how much is comprised.

And as new owners versus existing owners, particularly at Ferrari, perhaps establishes itself as a newer technology leader and consistent with your comments on me and EDI shifts and width on and that does appointment as CEO.

That's a great question.

On.

What you would tend to have is is depending again on the decision around growth rates to make sure that you are able to to keep the uniqueness and exclusivity.

And and really having loyal customers and repeat customers, who ultimately will also migrate to some of our <unk>.

More exclusives and higher margin products.

<unk>, we increased the funnel and we need to be thoughtful about how we do that because we have 2 big.

2 big areas apart younger customers, which we are reaching 1 is China.

And the growth rate of the first half is very encouraging and China, but theres still a lot, we can do and China and secondly, women I think debt.

There is an inventory debt Ferrari is mainly net card for men and I think there are many many women who will prove that's not true.

And and.

And what's interesting is that actually that is happening and China, whereas I said 1 out of 5 cars, we're selling are to women.

Okay. So that's it that's a metric that has gone.

And it has gone up and the <unk>.

Last couple of years and could perhaps and for going forward and the new to Ferrari owners.

Sorry, I missed I missed the question.

Okay.

Sorry, just a clarification that net share percentage of new to Ferrari owners and that is something that has improved over the past several years as you're tapping into the China market or with 1 and customers and it's something that could improve going forward and thats, a correct way to interpret that.

Correct.

As I said, what we're really trying to do is work and making sure we have the right funnel because ultimately what we want is to have <unk>.

Loyal customers, which is the strength Rory has had and we need to manage the growth of those loyal customers by being able to have new Ferrari owners.

And we feel that the data that we've been working on and confirming it and the last 6 months is very encouraging what is the what's the right mix as I said will depend on the on the growth trajectory that we want to have.

As all of you know for a company like Ferrari needs to be managed extremely carefully.

Because ultimately we would rather make sure we have sustainable pricing power rather than volume capability.

Great. That's very clear and then second question on the macro side of the equation, obviously supply chain challenges are very much lingering into the second half of the semiconductor short edge and had been kind of roiling. The traditional automakers on over the past 12 months and if we look at latest projections from IHS.

On Europe appears to be 1 and the more impact in regions and the third quarter. As a reminder, for US was there any impact from the Spanish shortages that you felt and the second quarter or that you see heading and corner or have you largely abated. Some of this pressure by perhaps being able to shift production and deliveries across different models.

We have been managing it.

Very precisely as well as we're able to work for an order book that has helped us.

Plan and plan ahead.

And the volumes that we generate are also such that that we have more mid <unk> in terms of being able to face the chip shortage, but ultimately.

It will depend on how long this happens.

We are seeing.

We are now assuming that we will see and market that stabilizes and and <unk>.

2020 do of course is that if that were not to happen. Then then we will have to manage accordingly.

Okay, Great. That's very helpful color. Thanks for taking the question.

Thank you. The next question comes from the line of George and now 2 years from Goldman Sachs. Please go ahead George Your line is now open.

Thank you and thanks for taking my question.

Given the industry seemingly inevitable transition away from items by the 2013 and Europe at least.

Whether it's noise.

Emissions.

Solution.

Risks and social acceptance of ice will become increasingly challenging and the.

The same way, we have seen social et cetera.

Smoking.

On precious skins change and the last 2 decades.

And picking up on comments, you made around hydrogen and fuel.

If we look at the main players and the auto industry today.

And the investment.

Right.

Electric vehicles.

And then hydrogen and fuel.

As a result.

And the first question more infrastructure will actually be support these technologies and tools.

Going to make that investment.

Can you see Ferrari investing and infrastructure.

Product and color.

Yeah.

If you choose the technology path, which is differentiated from the main street.

Yes.

What I said was that the electrification path is what we are working during this decade.

Yes.

Well, we don't know is the technology set that will be available as we start dealing with carbon neutrality.

As we should from upstream to downstream.

Which will mean that we'll have changes within the energy supply, which could lead to.

Having alternatives for example, if fuels or hydrogen but that is really a 20.32014 and most likely midpoint 2035, where we will see this happening.

What we want to make sure is to be able to use day technologies available, which today are grid going through electric and exploiting those to the fullest and and the best way possible.

We believe that.

And that is proven and.

And many different areas that as long as you are able to produce the most extraordinary extraordinary products as we have.

And do them with what technology and what social acceptance is.

We see no limit to our to the possibilities that we have in terms of acceptance and there again I think is very interesting to see.

How Ferrari is also being perceived as I mentioned, we did the launch combined launch of our car and.

On the capsule on on the platform.

On a fortnight and you see a very strong appeal to a younger demographic.

So we believe that we are actually very encouraged by by what's ahead.

Great. Thank you and then just 1 quick question on the cash flow guidance change.

You mentioned the timing of deposits.

Deposits on a model, which you have unveiled.

That plant on pellet at some point and next year. Thank you.

I'll have on palm you'll answer, but yes, it's not although we have and unveiled.

The deposit I mentioned added emphasis on day 12 competitor on and competitor TNF App that will start in Q3.

Great. Thank you very much.

Thank you. So the next close that on just from that's just started the data point on the strength of our products, but most importantly of the desire from our loyal customers and collectors to own them.

And you would like to proceed to the next question Sir.

Yes. Please go ahead.

Since need Tebaldi from UBS. Please go ahead. Your line is now open.

And then.

Thanks for taking my question.

And my first 1 is just to go back to your full year EBIT guidance and.

And so our EBITDA guidance.

I understand you explained the various drivers of why and.

H, 2 we're going to see and mix not average.

<unk> and <unk>.

And pleasing, but the guidance effectively implies stops in H 2 we our EBITDA margin is going to be nowhere most of 2020 and also 2019.

And so if you can just add a little bit more to help us understand why we should see day.

And my second question would be on your latest launch day 296 and <unk>.

And could you discuss a little bit to the economics of this new model and.

We can see that the stack and price.

Obviously higher than your other entry level price was similar to the FAA and.

And.

And spider, but on top of that obviously has and the hybrid component and so just to think about the economics, how we think and helping the mix and margin and that will be very interesting. Thank you.

Yes.

With respect to the guidance for the rest of the year.

Mentioned 3 items 1 is mix.

Which remains strong meaning that we expect mix to be positive compared to the second half of last year, which was already a robust.

And if less than in H, 1 this year and.

And then equally importantly impacting the.

The reduction in the EBITDA margin decrease and Opex, which is either selling expenses.

Our increase in R&D expense to the PNM and those are referred to the.

<unk> spending for F..1.

Which basically reflects that.

And then next year, we'll have a new technical and sporting regulations coming in.

And then the fact that and the second half of this year, we expect to have more races.

So the 3 elements that play and equally relevant role on the 3 that I just mentioned.

With respect to the tuna and <unk> as you know we do not.

Dita and test to the precise margins you should conclude that in any event. This isn't the new entry level of the sport range of hybrid and we expect is marginality to be in line with the entry level of the sport range. We are used to.

Thank you.

The next question comes from the line of.

That's gets holiday from Nexon. Please go ahead. Your line is now open.

Thank you this is julia from from Exxon.

First question for John.

When you talk about developing new technologies to continue to excite and your customer base and more items thinking that you are not on the you're referring to speed and driving performance and in this context. What are you learning from these new Ferrari customers do they care about engine oils and they care about handling and on track performance as much as your established.

Customer base.

Yeah.

They do.

And and the truth is debt you can improve that even more.

So.

So what really is a big motivator is the uniqueness that Ferrari has in terms of what it's stable to 2 has and a car and the emotion that it provides to you as you drive it.

And and we are we are just seeing from from all the different projects. We have been working and also the launches of the car.

Of which.

We're very proud of the 1 we just launch.

Is is that you are going to have between electronics and electrification and materials software.

A huge amount of opportunities that will improve debt.

And of course there.

There is always on.

In the back of your minds.

And would the returns of those investments and how big those investments will be the reality is debt you also have and.

Investments, which are not debt bake and if you take into accounts software for example, and what effect. It can have on the actual experience.

And more importantly, the opportunity set of who you can work with and.

And that is something that Ben and data from his experience will be able to accelerate for us as a company is also going to give you a very large leverage in terms of all the different industries and.

Potential partners, you can have and that path.

Okay. Thank you and thank you for debt.

Second question is a bit more boring on the regulation I'm sure you have seen that the European Commission is considering.

Nothing on nice E band and <unk> 75, and also removing your small volume manufacturers and so can you maybe comment on on how.

And how much of a risk is that for you and.

Are you afraid of.

The cost of debt might entail.

I think that debt.

There is a.

A strong.

On the termination of getting the.

Climate agenda and.

And Europe wants to lead the way and.

And wants to be ambitious in this objective, which is 1 we subscribe as a company and as we truly believe.

And that the work that we started doing on ESG is very important and the way we are thinking and we continue to think on how we operate and the products, we do need to be mindful of what it means in terms of impact.

4.4.

Our environment I think as I said that we will be moving on from the emission.

From the emission regulations to a wider regulations around energy.

And and I believe that as we have worked as we are in getting our electrification path forward. We will have many more opportunities and many more opportunities and also being able for example, as I mentioned before and.

In cases of fuels and <unk> and synthetic fuels of Biofuels to also use some of our existing technologies and in different ways. So we see we see the regulation as well come because it's part of an ambitious plan debt.

Europe wants to have which is important for the world overall, and we believe that what it will do to our organization and I say this because I've seen it is just <unk>.

And making and creating very exciting.

Very exciting opportunities in terms of the products that we could be debt.

We will be thinking of and bringing to market.

Thank you.

Thank you. The next question comes from the line from Monica Bobby on the line is now open. Please go ahead and moniker.

Good afternoon, everyone and thanks for taking my question. The first on these on Capex guidance and the metal effect.

Second quarter Capex was a.

A little bit below my expectation would it be fair to assume roughly 800 million euros up capex by year end and.

And I would really appreciate it and give us a flavor on that next piece given that and capital market day it would be.

Neither Joe.

And the second question and I hope and not for PR.

Maggie.

And for personalization and.

You'll notice.

This line approach.

Among young new commerce, and thriving and remain excellent personalization and comparison to the past Thank you and Matt.

John and Daniel.

And yes with respect to the guidance for Dci and moniker in respect of cap ex these remains unchanged and up to 800 million Euro.

And you know the growth of the expenditure throughout the year.

Rather explanation and this explains why there is more weight on the last few months.

With respect to Capex for next year for sure.

And it to wait for and.

And the full year call and when we comment on debt.

With respect to personalization and I think we have sufficiently detailed data point on the behavior of younger clients I'd rather associate.

The difference and the degree of personalization to the type of car meaning.

Specialty areas and partly and.

And for cars, and the ones, which commands more personalization compared to the entry levels.

Okay, thank to remain and Matt.

Related to the type of car and not the catheter being there.

While.

Okay. Thank you and that the case you work on money.

Thank you.

The next question comes from the line of Henning Cosman.

Go ahead. Your line is now open.

Hi, good afternoon, and thank you for taking the question and.

Thanks for the comments around the order intake and all the color. This is Kevin.

Are you prepared to also talk about the order book, a little bit I think in the past you've share.

Your comments about the length of the whitelist and.

Of course, and view of the order intake mend and referring to the new models and <unk>.

Curious if you're able to confirm that you have now reached the inflection point, where the order book is normalizing a little bit and.

And has maybe come down so any color on debt would be much appreciated. Please thank you.

Yeah.

I'll, let Antonio address that 1.

And I said was June was our record months in terms of order book. So we've never had such a strong order book and.

And our history.

Yeah.

Yes, you on for John actually no inflection point.

We have been growing.

Okay. So it's not and it's not just and sorry adjusted to completely clarify its not just in terms of order intake. It's also the order book.

Debt still keeps on rising.

Correct correct.

Yeah and.

And.

No thats it from me and thank you very much.

Okay.

We want to leave some of those orders for Benedetto.

No I understand and in fact, if I can.

And if I can just check on net debt that you bring up the CEO succession.

And we expect.

Any additional detail around midterm financials or electrification plan.

Anytime before the CMT that <unk> has now set.

Or will you indeed leased assets.

And on until the <unk> itself is that really what we should be expecting.

Yes, that's correct, we want to we really want to make sure that Benedicto has the time to to have a comprehensive.

And comprehensive view of the company and we also want to give ourselves a longer timeline as I mentioned, so we really think debt with all the changes that are happening it's important to give.

A long range view, and and and really be able to share how.

How we're thinking about the decade to come.

So we will we will have and trim sessions for the capital markets day in June of next year.

That's clear thank you very much and maybe 1 final clarification on on the order book.

Exclusively talking in terms of units year on.

Or does it also referred to the euro value of the order book being being record high.

We always refer to unit.

So it could be lower in euro terms, given the mix of the of the more entry models.

This is not the cadence is talking about as I said, we only comment on units.

Okay. Thank you very much.

So just to be clear and pins and unit, but it will be higher in value. Okay.

Yes understood. Thank you very much.

Okay.

Okay.

And next question comes from the line of Stephen Reitman from Societe.

So standard granularity. Please go ahead. Your line is now open.

Yes. Thank you my question is about outside technology.

When you launch the assistant line Eastern all day.

Used.

Sourcing axial flux Moses from small from yes, what's most of and the UK.

And which has now been acquired by Mercedes and say, they're going to on our existing contracts.

But thus far and does this takeaway will make for everything that it needs to develop more these kind of componentry in house.

And secured by Boeing.

Manufacturers and partners in this field. Thank you.

That's a great question.

We actually have had good conversations with you as of course, but also with Daimler and.

And the level of customization that they're working with US is such that those technologies and not going to be applicable to others and working with a company as ours is very stimulating and terms of being able to just push boundaries.

Sorry debt. So that is a good example of how we do think that we are going to be able to actually partner with more counterparts and where there is.

Probably no company is Ferrari, who really can be a partner to just push boundaries and and.

And the good thing is also because of the nature of what we do and and the volumes we have.

It's a very good laboratory to really try and and see what works and how it works. So so we're very excited about the opportunity we think for you as a daimler.

Good hope and we believe that within the industry and.

More importantly outside of our industry, we are going to benefit very much from partnerships and joint joint programs.

Did Ferrari have consider acquiring and itself.

Acquiring assets.

No it has not.

Thank you.

Okay.

Thank you. Your next question comes from line Thomas Besson. Please go ahead Thomas Your line is now open.

Thank you very much it's moving forward.

2 quick questions. Please.

Can you give us a few words racing strategy and the choice.

For the.

The racing series Youre going to be part of.

More and if 1.

And the bulk of formulary and <unk>.

On winning and just kind of reasons, but sales just supporting future technological developments.

And kind of follow up question on from your comments you've made.

On the long term on the.

Hydro during the control and they'll do their local and thought we could see from development.

On the principal is it imaging and the new 1 to have.

E vehicles boards.

Sure.

Thank you.

Those those are very good questions.

We believe that <unk>.

Racing is and.

And the reason why.

We are extending our racing presence is is to be present and all the different competitions. We think formula E is not as challenging as the other ones and ultimately we want to make sure it to be part of competitions, and which we can really put our capabilities too.

Work and we have proven that we and.

This weekend as I mentioned the victory and staff local show is a good example that we have the ability of being more present and racing day.

That has 2 benefits to our business. The first 1 is we're seeing that we have.

A part of our customers, who actually are interested in that part of the business and have developed a whole line around racing and and if you think as the world is going to evolve.

Tracks are going to enjoy enjoy no doubt growth in the years to come as people will want to experience. These incredible cars on on tracks and we are seeing that as a growth area.

We also secondly believes that.

Debt can be.

<unk> can be done in terms of technology transfer from the track to the road.

And finally the.

And the racing activity has fueled a very large audience.

And of Ferrari before the cirrhotic and for which it's important for us to win and we can also work with with our very large audiences and being able to have a much clearer entertainment strategy and what we've had.

Up to now and that can very well developed and what today is broadly defined and gaming and entertainment and.

And that part of our company and our growth is very much dependent on our ability and and making sure that we occupy the right place for society and the racing space and no doubt that our formula 1.

Activity, which clearly has been very disappointing for too long.

And can learn a lot, especially as it's now going to go from changes with budget caps through minor disciplines. So we also believe that for us being stronger and multi discipline will also be a way of strengthening where today as our largest weakness.

But again as I said.

We are lucky and with 2 pilots that are young ambitious and want to win on our definitely stimulating the overall organization.

In terms of how do we think about fuel sales and other technologies as I said I think is going to be.

Our next chapter.

After we go for this electrification wave, which reduces and mission on the car we need to address upstream, how we decarbonate and and how we make sure that we.

We actually are finding solutions for our environment, which work and those will lead to new forms of energy and and we again think and Thats. The segue that the racing arena is a good 1 and which you can experiment. Some of this technology. So it was a long answer but.

And I hope it captured.

Your interest.

Okay.

Okay.

Thank you very much.

Yes, and that type of guidance.

This concludes today's conference call.

The Investor Relations team will be soon available to answer any follow up you may have and we thank you all for attending today's conference call.

Goodbye and thank.

Thank you on thank you for your support.

Okay.

Thank you very much.

[music].

And then.

Great.

Yes.

Okay.

[music].

[music].

[music].

Welcome to everyone, who is joining us.

We plan to cover today, the group's second quarter 2021 operating results and.

And lack of this the duration of the call is expected to be around 60 minutes today's call will be hosted by the group's chairman and acting CEO and Mr. Andrew on Alcon and group CFO and Mr. Antonio pick up pick on all relative onto my theory, and I thought available and the investors section of the fed or the cost spread website and at the end of the presentation and we will.

Be available to answer your questions.

Before we begin and let me remind you that any forward looking statements we might make during today's call are subject to the risks and uncertainties mentioned and in the Safe Harbor statement included on page 2 of today's presentation and the call will be governed by this language.

Since our team today is connecting from different countries. Please forgive us if there are moments of silence during the call. While we manage the transition between speakers with that said I'd like to turn the call over to me and started doing that and kind of.

Thank you Nikolas.

And thank you everyone for joining us today.

The very strong numbers, we're reporting on.

And once again and expression of the extraordinary skills relentless endeavors, and passion and dedication of all of the men and women who was not on items.

But most of all they are testimonial to the unique and enduring power.

To inspire the dreams of our loyal owners all around the world and.

The ones on new customers.

June was our record order collection month ever.

Cheers.

A big achievement for Us and <unk>.

And then by a large number of Ferrari soon to be first time owners.

Strong guarantee for our future.

And the second quarter, we delivered.

A strong set of results across all metrics above pre pandemic levels with an EBITDA margin of 37%. Thanks to the particularly rich mix of this part of the year boosted by <unk> 90, celadon and ancillary monitor the mix.

Will normalize and the second half leading us to confirm our guidance on all metrics whilst for the industrial free cash flow. Thanks to working capital. We now approach. We now project to approach 450 million euros in 2021 versus our original guidance of 30.

$50 million of $350 million.

Today's call is the third and final 1 I will host as Ferrari CEO.

Following our announcement in June of the appointment of <unk> as our new CEO commencing on September 30 day.

And then a little joined variety from SD Micro electronics, where he has been responsible for creating building and leading the company's largest and most profitable business. His proven leadership qualities. His impressive track record as an entrepreneur and innovator.

Is absolute fluency in the technologies that are shaping our industry fit strongly with the ambitious plans we have for our future.

I'd also like to take the opportunity today to share with you and some additional perspectives I have gained over these months and my role as CEO.

During <unk>.

Which time I've had the privilege of working more closely than ever with Mike Cirrhotic colleagues.

Most importantly, these months have allowed me to live.

More intensively the uniqueness of Ferrari.

I have seen up close to total commitment and passion and every corner of our company to ensuring that Ferrari is.

And always will be the very epitope of pure luxury and expression of exclusivity that is imitated but can never be reproduced elsewhere.

That is why everything we do will always focused on being distinctively Ferrari.

Which the opportunity set of electrification and.

<unk> ex.

And other technologies that are coming available will allow us to make even more distinct and unique products.

This is why every day, we're finding new ways.

And to excite existing Ferrari owners, whose loyalty and repeat customers reflects the unique relationship they have developed with our company.

And we with them.

And just as importantly, we are building new strong bonds with the next generations of Ferrari owners and.

And I am pleased to tell you.

That new to Ferrari customers accounted for 60% of the orders for our entry models and the first half of this year.

The average owners and <unk> is also coming down and.

And we have doubled the number of women owners and the last years with China, leading the way with 1 out of 5 buyers being a woman.

In Q2, we brought you free new model launches the 812 competitive shown it and the 812 competitive zone adaptor on.

Our special series B 12 exclusively limited to a more most loyal and committed customers.

Which already sold out and launch.

And then the <unk> 296 GTP.

First the 6 hybrid drilled car with Doctor rally batch and targeting a new and younger Lodi owner.

Since the unveiling and late June orders are slowing fast.

The Ferrari 296, GCB as deferred hybrid car in our range following on from DSS, 90, Chardonnay and Spider.

But while the latter a range Super car day.

296, GTP is the most fun to drive car.

And for drivers of all levels.

But what I would like to highlight most is not just the increasing pace of our electrification plants, but our ability to use and invent technologies and a way that is uncompromised currently and distinctively Ferrari.

And this last quarter. We have also shared with you a taste of our exciting future and a different dimension.

In addition to and dealing the latest additions to our richest and most complete model lineup ever and we stage. Our first runway event to showcase on mens and womens fashion collection and reopened the historical the historic Catalina restaurant in Maranello both.

To great acclaim. These generated a 100 million reaches with very strong demographics, both in terms of gender and 45% women.

And 55% men.

While 85% of them being.

And the 18 to 34 age range.

These positive reactions, we received our early indications not only of the strength of Ferrari when new audiences, but also of the ability to execute and a way that is true to our history, our values for our future move.

Moving into new areas and are considered way and always relentlessly focus on excellence.

A further example of this is our launch on the <unk> platform, combining virtual and physical and our core product with a capsule collections.

Further strengthening our reach.

But also.

Entering new geographies and demographics at the same time, we are more focused than ever on the importance of our motor racing roots and formula 1.

And exciting driver pairing has brought new energy to the entire formula 1 team.

We are also working intensively on our return to the IPO car class and in particular to the normal 24 hours rates in 2020 free success.

And at the very highest level of motor racing is and our blood as we have proven with our Victoria and a 24 hour spot Phonecalls shown and the endurance Cup of GT will challenge this weekend.

Working even more closely and this month with our racing teams has only sharpened my and our determination to deliver victory on the track and to ensure that we capitalize even more on the opportunities for technology transfer from on motor race.

Sing activities to our road card programs just as an example, the V 6 hybrid.

Is common to our different racing activities, but also to the new car, we just launched.

We will share much more about the ambitious plans we have for every aspect of our business and our next capital markets day. When we also be celebrating the 70 <unk> anniversary of the founding of our company by its authority.

And this will set out the path, we will take during this decade, but it will be much more than this and will provide the foundation on which we will build the continuing long term success of the rally as the world's most distinctive.

And most innovative luxury brand.

Moving swiftly to create and continuing growth opportunities from the changes of our fast transforming world, but never compromising on our commitment to be the unmatched expression of Italian excellence.

Ben and the stone.

Our colleagues and I look forward to welcoming you to our capital markets day in Maranello, which is now set to take place on June 16 next year.

And we will take you deeply into our plans for the coming years.

In the meantime, we continue to be laser focused on outperformance and the second half of this current year and.

It has been a unique privilege for me to lead the rally.

As its CEO since the end of last year and the insights. It has given me leave me even more excited about our future. It is 1 and which the opportunities for Ferrari to create and motion and value are stronger than ever and I look forward very.

Much to working closely with <unk> and his team to take the rally to new levels and every way.

I would like also and concluding.

Tell you how proud I am.

Debt in June 30th we have been awarded the free stars of fear FIA Environmental Accreditation program.

And on July 12, we have been.

Confirmed.

Equal salary company.

And that confirmation also came in North America.

This is very important and something that we're very proud and Ferrari because it shows how our commitment to ESG.

Is a true commitment.

I would now like to hand over to Antonio who will take you through the details of a great second quarter, 2 which I would like to thank him and all the Ferrari colleagues for what they've done.

Thank you.

Thank you and Mr Chairman and good morning, or afternoon to everyone, who is joining us today.

Starting on page 6 and you can see the highlights of the Q2, 2021 and earnings.

A very solid set of results.

Significantly up not just in comparison with the second quarter of 2020, but also compared to the same period of 2019 on almost all metrics.

As a reminder, the COVID-19 pandemic hit us the most during the second quarter of last year, when we had the production and delivery suspension.

Our shipments were 2695 units in Q2, this year almost doubled versus the prior year quarter, while they were almost in line with the second quarter of 2019.

Group net revenues were 1.035 billion euro nearly doubled compared to prior year and up 5.2% versus 2019, driven mainly by volume and stronger product mix.

EBITDA came in at 386 million neuron 3.

And 3 times higher versus the second quarter of 2020 and up 23% versus Q2.2019.

The EBITDA margin stood at 37, 4% and continuity with the strong profitability reduced in the first quarter of this year.

EBIT was 274 million euros, 12 times higher compared to Q2, 2020 and up 14% versus 2019.

Net profit was 206 million euro versus 9 million Euro and Q2, 2020, and up 12, 6% versus Q2.2019, resulting in a diluted EPS of 111 Euro.

Nearly 28 times versus prior year.

Industrial free cash flow for the quarter was robust at 113 million Euro.

Please note that Q2.2019 still benefited from the collection of advances on the Ferrari Monza.

Yes.

Turning to page 7 you can see the details of the shipments of the second quarter 2021.

Almost doubled versus the second quarter of 2020, which was heavily impacted by the production and delivery suspension due to the spread of the come and 19 pandemic.

Sales of 8 cylinder were up 111% and 12 cylinder were up almost 38%.

Please note that such segmentation is becoming less and less significant of the development of our mix since the introduction of the Fas 90 strive island.

The deliveries of the quarter were driven by DFA family NDA 12, GTS together with the <unk> of 90 day, straddle and Ferrari Roma, we traced global distribution.

The Ferrari Monza <unk> and <unk> continued to be delivered in line with planning and the first deliveries of the new Ferrari Portofino and commenced in the quarter.

All geographic regions positively contributed in the quarter given the easy comparison as a result.

<unk> was up 89% Americas increased to 70%.

Mainland, China, Hong Kong and day, 1 posted an exceptionally high and 554% increase.

And by the arrival of new models, and accentuated by and ease of comparison versus prior year.

As a reminder, we privilege deliveries in this region and the first 9 months of 2019 in advance of day early implementation of new emissions regulations.

And finally rest of APAC was up 92%.

As you all know in the quarter, we unveiled 3 new models.

Well the competitor on a NDA towards the competitor and a bed Bath limited series already sold out all the shipments will commence in Q1, and 2022 and Q4.2022, respectively.

And the 296 GTP, our first and Vuzix hybrid range model with first deliveries to our clients will start in Q2.2022.

Moving to page 8 you can see displayed the work of our group net revenues for the second quarter up 86% at constant currency.

The increase in revenues from cars and spare parts.

101% at cost and currency was boosted by the easy comparison on volume and the strong enrichment of the product mix along with the positive contribution from personalization.

But as organizations were up versus prior year in absolute terms sustained by volumes while in line with the historical average in proportion to revenues from cars and spare parts at around 17% due to the phase out of space and special series.

Engines revenues were up 119%.

The improvement is related to higher shipments to Maserati and to a lesser extent to the rental of engines to other formula 1 racing teams.

And increasingly sponsorship commercial and brand was attributable to the more favorable for more 1 calendar and brand related activities, partially offset by lower priority ranking.

Currency, including translation and transaction impact as well as foreign currency hedges and a negative contribution of 30 million Euro mainly U S dollar.

Moving to page 9.

Let me review the change in our EBIT Bridge explained by the following variances.

Volume positive for 144 million euro with shipments almost doubled Q2 easy comparison.

<unk> price variance also positive for 113 million Euro and thanks to the strong contribution of DSO of $93 and.

And the Ferrari Monza SB, 1 and SB 2 along with personalization.

Industrial costs.

R&D costs in line with prior year, which included the full cost of employees paid days of absence during the COVID-19 production suspension.

SG&A negative by 4 million euro, mainly reflecting communication and marketing activities.

For example, and <unk>.

<unk> and life Sciences events.

Other positive by 24 million euro mainly due to the more favorable formula 1 calendar higher contribution from brand related and other support from activities as well as from phase to Maserati, partially offset by lower priority ranking.

The total net impact of currency was negative 425 million euro.

As a result of what I just mentioned EBIT reached 274 million Euro versus 23 million euro of the prior year and with an EBIT margin at 26, 5%.

Yes.

Turning to page 10, industrial free cash flow generation for the quarter was 113 million Euro.

The positive generation in the quarter was driven by the strong EBITDA.

Partially offset by 166 million of investments that are progressing in line with full year guidance.

The capitalization ratio was approximately 42% for the quarter increased versus prior year essentially due to a timing difference in R&D spending in relation to formula 1 activities.

The adverse working capital and other impact was mainly due to higher inventories and the reversal of the Ferrari Monza SD Wan and <unk> advances received in 2019.

Higher tax payments, mainly to refer to the new patent box regime, which provides for the annual benefit to be cash in 3 yearly installments.

Net industrial debt as of the end of June was $552 million Euro versus 420 as of the end of March.

The increase will view to the dividend distribution of 162 million euro, including distributions to Noncontrolling interest and the share repurchase for a total of 82 million euro more than offsetting the positive industrial free cash flow generation and the quarter.

On page 11, we revised upward our 2021 guidance on industrial free cash flow generation, which is now projected to approach 450 million euro mainly sustained by and improved net working capital and thanks to the collection of advances on the new <unk>.

Actual theories starting in Q3 and increase and trade payables due to our capital expenditure being weighted over the last month of the year.

We also reiterate our confidence to reach the top end of our guidance range and for the remaining metrics.

As a reminder, our guidance relies on the assumption that trading conditions remain and affected by further impact from the COVID-19 pandemic and during the course of the year.

And with regard to the development of our operating margins in the second half of this year implied by our guidance, let me remind that the mix will reflect a larger weight of the Ferrari Roma and portofino and remaining any way positive versus the second half of 2020.

Opex will increase as planned mainly due to marketing activities and expenses for product innovation and R&D spending for formula 1.

To conclude we remain highly confident prior and future firmly supported by the vigor of market demand.

With that said I'll turn the call over to Nicoletta.

Thank you very much and Tonya Gino Plaza, we are ready to open the Q&A session. Thank you.

And I will go on with once again to ask a question over the phone please price or and 1 on the telephone keypad.

Our first question comes from the line of Adam Jonas from Morgan Stanley. Please go ahead, Adam Your line is now open.

Thanks, everybody.

And I just have to say.

The choice of Mr. <unk>.

As a real genius.

Master stroke, given given the companys opportunities over the next decade, and I I'm, telling my clients you don't want to bet against.

The Guy who hired share Joe so.

I think you might've done and again, but a lot of work to do John.

And what gets you most excited about the EV opportunity at Ferrari and what worries you the most about that transition.

Adam Thank you very much.

And I definitely look forward.

Continuing on on.

On a great.

<unk> sales of leadership, which ultimately as you well know leadership is what makes the difference and then and the organization. So we're very blessed.

And that we had relative to joining Ferrari.

And on.

On on.

What really excites me.

And I'm, particularly for Ferrari about electrification.

It opens up a whole new world and the good thing that I'm seeing and Ferrari is that its really been taken very very much as a new and as an additional not only new and additional field and which we can really get the cars to be even better.

And all what we've learned and <unk> and all what we're learning also for the racing activity, which has been very close to our really giving us the opportunity of a launch and charted waters in terms of what we could see applied I also think that.

The opportunity set that we have and severity is is really 1 we're having the opportunity of having a much wider set of technologies of which electrification is 1 will enable us to be and even more incentive and and Nava.

So just to sum summarized that won the spirit in which IC and the organization reacting to the challenge.

Seeing it as a huge opportunity secondly, just imagination of things that we can do that we would never have imagined and and there are good things that debt will be that we'll be announcing they're going to come up. So that's really exciting in terms of what I felt the most.

Actually.

I've been I've been really trying to look at and every angle and seeing and which ways. We could we should mitigate some some of the transitions that are happening and I must confess Adam.

Very very positive about what electrification does to US also because I do believe that and the next decade 2030 to 2040, we'll have additional choices because ultimately electrification is solving 1 issue, which is emissions, but its not solve day.

Carbon footprint as we all know well so as we get to solve carbon footprint and we need to innovate not only on on the car side, but also on the sources of energy and making sure that we get 2 sources of energy debt our carbon free.

We will end up having many many more choices. So for example, I do think the development of fuels and if fuels are going to allow us probably to do more on IRI breads and potentially our combustion engines with.

With that with those technologies and.

And the energy space coming up.

Jen might also get us to places we have we can imagine now so I feel very very positive.

On the electrification journey that we started.

And this decade, but even more of what we could actually see coming and the next decade. So that was a long answer Adam but I hope by diffused as much enthusiasm that I feel the organization has.

That's very realistic answer and just a quick follow up if.

If you compare that 10 year growth opportunity, if im thinking 10 year plus longer term secular growth opportunity that Ferrari has.

As an internal primarily internal combustion car company, let's say, we were having this conversation 2 or 3 years ago, or maybe 2018 cm day.

Versus now do.

Do you see electric how do you see moving towards.

Total electrification and that and they are at.

From that direction.

Does that change the growth profile.

Ferrari into 2030 is it is it similar.

Higher much higher I'm, just curious I don't want to put words in your mouth, but just.

Qualitatively do you think it changes the growth ex.

And.

Is it.

It is ultimately dependent on on 2 on 2 variables, 1 which is our choice of trying to make sure. We are consistent with growth in order to maintain uniqueness and exclusivity and secondly to the pace and cadence.

At which we're able to get to market more innovative products.

If if you get the 2 together you should actually have higher growth linked to the opportunity of of actually doing more then it's a question of how you substitute 1 technology.

Sure.

But I feel I feel that the biggest challenge Adam is being careful.

Not accelerating the <unk>.

Growth opportunity I think that the overall opportunity is bigger than it was we just need to be very disciplined and not trying to capture it too fast.

But waiting to have really the best and the most unique in terms of products that we can deliver.

Super thoughtful thanks, Sean.

Thank you Adam.

Thank you.

Thank you. The next question comes from the line of John Murphy from Bank of America. Please go ahead.

Good morning, everyone. This is aileen Smith on for John and I will.

Wanted to follow up on slide 4 on the commentary around the Ferrari customer base, specifically new to Ferrari on Earth, comprising 60% of orders for entry level model, where has this metric trended over the past several years and as you think about the optimal mix of shipments over the long term how much is comprised.

And as new owners versus existing owners, particularly as Ferrari, perhaps establishes itself as the newer technology leader and consistent with your comment that knee and EDI shafts and with that net debt to his appointment as CEO.

That's a great question.

On.

What you would tend to have is is depending again on the decision around growth rates to make sure that you are able to to keep the uniqueness and exclusivity and and really having loyal customers and repeat customers, who ultimately will also migrate to some of <unk>.

Sure.

More exclusives and higher margin products.

<unk>, we increased the funnel and we need to be thoughtful about how we do that because we have 2 big.

2 big areas of park younger customers, which we are reaching 1 is China.

And the growth rate of the first half is very encouraging and China, but theres still a lot, we can do and China and secondly, women I think that.

There is an inventory debt Ferrari is mainly net card for men and I think there are many many women who will prove that's not true.

And and.

And what's interesting is that actually that is happening and China, whereas I said 1 out of 5 cars, we're selling are to women.

Okay. So that's a metric that has done is it fair to say and it has gone up and the past couple of years and could perhaps and for going forward.

Q2 Ferrari on Earth.

Sorry, I missed I missed the question.

And so.

Sorry, just a clarification that net share percentage of new to Ferrari owners and that is something that has improved over the past several years as you're tapping into the China market or with 1 and customers and it's something that could improve going forward and thats, a correct way to interpret that.

Correct on.

As I said, what we're really trying to do is work and making sure we have the right funnel because ultimately what we want is to have.

Loyal customers, which is the strength Rory has had and.

And we need to manage the growth of those loyal customers by being able to have new Ferrari owners and we feel that the data that we've been working on and confirming it and the last 6 months is very encouraging.

It is.

What's the right mix as I said will depend on the on the growth trajectory that we want to have which as all of you know for a company like Ferrari needs to be managed extremely carefully.

Because ultimately we would rather make sure we have sustainable pricing power rather than volume capability.

Great. That's very clear and then second question on the macro side of the equation, obviously supply chain challenges are very much lingering into the second half and semiconductor short and had been kind of roiling the traditional automakers.

Pat ex the 12 months.

And if we look at latest projections from IHS Europe appears to be 1 and the more impacted regions and the third quarter. As a reminder, for US was there any impact from the Spanish shortages that you felt and the second quarter or that you see heading into third quarter or have you largely abated. Some of this pressure by perhaps being able to shift production and deliveries.

And model.

We have been managing it.

Very precisely as well as we're able to work to an order book that has helped us.

On plan plan ahead.

And the volumes that we generate are also such that that we have more mid <unk> in terms of being able to face the chip shortage, but ultimately.

It will depend on how long this happens.

We are seeing we are now assuming that we will see and market that stabilizes and.

And 2020 do of course is that if that were not to happen then and then we'll have to manage accordingly.

Okay, Great. That's very helpful color. Thanks for taking the question.

And the next question comes from the line of George and the outer years from Goldman Sachs. Please go ahead George Your line is now open.

Thank you and thanks for taking my question.

And given the industry seeming inevitable transition away from items by the 2013 and Europe at least.

Whether it's noise and.

<unk> or CRE.

<unk> solution.

And here risks that social acceptance of ice will become increasingly challenging and.

And the same way, we have seen social acceptance.

Smoking.

Im precious skins change and the last 2 decades.

And picking up on comments, you made around hydrogen and fuel.

If we look at the main players and the auto industry today.

Investment income.

Besides towards battery electric vehicles.

Other than hydrogen and fuel.

As a result, it seems reasonable to question more infrastructure will actually be support these technologies and he is going to make that investment.

Can you see Ferrari investing in infrastructure debt.

Product.

And customers.

Choose the technology path, which is differentiated from the mainstream thank you.

Yes.

What I said was that the electrification path is what we are working during this decade.

Well, we don't know is the technology set that will be available as we start dealing with carbon neutrality.

As we should from upstream to downstream.

Which will mean that we'll have changes within the energy supply, which could lead to.

Having alternatives for example, E fuels or either gen, but that is really a <unk>.

<unk> 32014, and most likely midpoint 2035, where we will see this happening.

What we want to make sure is to be able to use the technologies available, which today are brett going through electric and exploiting those to the fullest and and the best way possible.

We believe that.

And that is proven and.

And many different areas that as long as you are able to produce the most extraordinary extraordinary products as we have.

And do them with what technology and what social acceptance is.

We see no limit to our to the possibilities that we have in terms of acceptance and.

And there again I think is very interesting to see.

<unk> Ferrari is also being perceived as I mentioned, we did the launch combined launch of our car and the capsule on on the platform.

On a fortnight and you see a very strong appeal to a younger demographic.

So we believe that we are actually very encouraged by by what's ahead.

Great. Thank you and then just 1 quick question on the cash flow guidance change.

You mentioned the timing of deposits can you.

Deposits on a model, which you have no unveiled.

But plan to unveil at some point next year. Thank you.

I'll have on palm you'll answer, but yes, it's not although we have and unveiled.

Yeah, the Applegate I mentioned and that puts us on day 12 competitor on and competitor sent up App that will start in Q3.

Great. Thank you very much.

Thank you. So the next close that judge from that Justin has already.

Started the data point on the strength.

<unk> of our products, but most importantly of the desire from our loyal customers and collectors to own them.

Okay.

And he'd like to proceed to the next question Sir.

Yes. Please go ahead.

Since need Tebaldi from UBS. Please go ahead. Your line is now open.

And then.

Thanks for taking my question.

And my first on is just to go back to your EBIT.

EBIT guide on.

And so on EBITDA guidance.

And I understand you explained the various drivers of why and <unk>.

2 we're going to see and mix not as strong and close them.

But the guidance effectively implies stops in H..2 we are on EBITDA margin is going to be nowhere most of 2020 and also 2019.

And so if you can just add a little bit more to help us understand why we should see day.

And and my second question would be on your latest launch day to 196 and <unk>.

Pat.

Could you discuss on it could be to the economics of this new model.

And we can see that the stacking price.

And obviously higher than your other entry level price was similar to the <unk> 8.

And Spider man on top of that obviously has the anti hybrid component.

And just to think about the economics, how is it and.

Helping the mix and margin and that will be very interesting. Thank you.

Yeah Susan.

With respect to the guidance for the rest of the or and I mentioned 3 items 1 is mix.

Which remains strong meaning that we expect mix to be and positive compared to the second half of last year, which was already a robust.

And if less than in H, 1 and this year and then equally important entity and impacting the.

The reduction in the EBITDA margin day increase in Opex, which is either selling expenses and all.

Our increase in R&D expense to the PNM and those are referred to the.

<unk> spending for F..1.

Which basically reflects.

And then next year, we'll have a new debt can you kind of and sporting and regulation coming in.

And then the fact that and the second half of this year, we expect to have more races.

So the 3 elements that play and equally relevant for all of the 3 that I just mentioned.

With respect to the 296 GTP as you know, we do not give dita and test to the precise margins you should conclude that in any event. This isn't the new entry level of the sport range Ive read and we expect is marginality to be in line with you and.

The level of the sport range, we are used to.

Thank you.

Yes. The next question comes from the line of Julio.

That's gets holiday from next time. Please go ahead. Your line is now open.

Thank you this is julia from from Exxon.

First question for John.

When you talk about developing new technologies to continue to excite and your customer base and market and thinking that youre, not only referring to speed and driving performance and in this context. What are you learning from these new Ferrari customers and they care about and.

Noise and that kind of ball handling and on track performance as much as your established customer base.

Yeah.

They do.

And and the truth is that you can improve that even more.

So.

So what really is a big motivator is the uniqueness that Ferrari has in terms of what it's able to to have and a car and the emotion that it provides to you as you drive it.

And and we are we are just seeing from from all the different projects. We've been working and also the launches of the car.

Of which.

We're very proud of the 1 we just launch.

Is is that you are going to have between electronics and electrification and materials software.

As huge amount of opportunities that will improve that.

And of course there.

There is always a.

And the back of your minds.

Would the returns of those investments and how big those investments will be the reality is debt.

You also have investments, which are not debt bake and if you take into accounts software for example, and what effect. It can have on the actual experience.

And more importantly, the opportunity set of who you can work with and.

And that is something that's been a little from his experience will be able to accelerate for us as a company is also going to give you a very large leverage in terms of all the different industries and <unk>.

Potential partners, you can have and that path.

Okay. Thank you thank you for that.

Question is a bit more boring on the regulation I'm sure you've seen that the European Commission is considering.

Nothing on that C band and train and 75 and also removing your small volume manufacturers and so can you maybe comment on.

How much of a risk is that for you and.

Are you afraid of that.

I think that debt.

There is a.

A strong debt.

And the termination of getting the climb.

Climate agenda.

And Europe wants to lead the way and wants to be ambitious in this objective, which is 1 we subscribe as a company and as we truly believe that the work that we started doing on ESG is very important and the way we are thinking and we.

And you to think on how we operate and the products, we do need to be mindful of what it means in terms of impact.

4.4.

Our environment.

I think as I said that we will be moving on from the emission.

From the emission regulations to a wider regulations around energy.

And and I believe that as we have worked as we are in getting our electrification path forward, we will have many more opportunities and many more opportunities and also being able to.

For example, as I mentioned before and.

<unk> cases of fuels and <unk> and synthetic fuels of Biofuels to also use some of our existing technologies and in different ways. So we see we see the regulation as well come because it's part of an ambitious plan debt euro.

Europe wants to have which is important for the world overall, and we believe that what it will do to our organization and I say this because I've seen it is just <unk>.

And making and creating very exciting.

We will be thinking of and bringing to market.

Thank you.

And the next question comes from the line from Monica Bobby on the line is now open. Please go ahead and Monica.

Good afternoon, everyone and thanks for taking my question. The first 1 on these on the Capex guidance and the metal sector.

Second quarter Capex and.

Little bit below my expectation would it be fair to assume roughly 8 times debt maybe on Europe.

And all up Capex by year end and.

And I would really appreciate it and give us a flavor on that next PR, even debt and capital market day it would be.

Neither Joe.

And the second question and I hope and not to appear.

Maggie.

As for personalization and.

You'll notice.

Different approach.

Among younger new Commerce, and Ferrari and we men export personalization and comparison to the past Thank you and Matt.

John and Paul.

And yes with respect to the guidance for this year and Monica in respect of cap ex this remains unchanged and up to 800 million Euro.

And as you know the growth of the expenditure throughout the year.

Rather explanation and this explains why there is more weight on the last few months.

And with respect to Capex for next year.

You need to wait for 4 and the full year call and whereas we've comment on debt.

With respect to personalization and I think we have sufficiently detailed data point on the behavior of younger clients I'd, rather associate and the difference in the degree of personalization to the type of guy meaning.

On a special series, and partly and scorecards and the ones, which commands more personalization compared to the entry levels.

Okay. Thanks to remain and maybe related to the type of car and not the cap on that being there.

While.

Okay. Thank you and that the case, you're welcome Monika.

Thank you.

Go to the next question comes from the line of Henning Cosman.

Go ahead and line.

And all of them.

Hi, good afternoon, and thank you for taking the question and thanks for the comments around the order intake and all the color that you've given.

Are you prepared to also talk about the order book, a little bit I think in the past you've share comments about the lengths force the waitlist and.

Of course, and view of the order intake, mainly referring to the new models on.

I'm curious if you're able to confirm that you have now reached the inflection point, where the order book is normalizing a little bit.

And it has maybe come down and so any color on debt would be much appreciated. Please thank you.

Yeah.

I'll, let Antonio address that what I said was June was our record months in terms of order book. So we've never had such a strong order book and.

And in our history.

Yes, you answered John actually no inflection point.

We have been growing.

Okay. So it's not and it's not just and just sorry, just to completely clarify its not just in terms of order intake. It's also the order book net debt.

Debt still keeps on rising.

Correct correct.

Yeah and.

No thats it from me and thank you very much.

Okay.

And we want to leave some of those orders for Benedict.

No I understand and in fact, if I can.

And just to check on net debt that you bring up the CEO succession.

Should we expect.

Any additional detail around midterm financials or electrification plan.

Any time before the CMT that you have no set.

Or will you and be at least that.

And on until the <unk> itself is that really what we should be expecting.

Yes, that's correct, we want to we really want to make sure that Benedicto has the time to to have a comprehensive.

On comprehensive view of the company and we also want to give ourselves a longer timeline as I mentioned, so we really think debt with all the changes that are happening it's important to give.

A long range view, and and and really be able to share how we're thinking about the decade to come.

So we will we will have and trim sessions.

For the capital markets day in June of next year.

That's clear thank you very much and maybe 1 final clarification on on the order book.

And exclusively talking in terms of units here or does it also reflects the euro value of the order book being being record high.

We always refer to unit.

Yes.

So it could be lower in euro terms, given the mix of the of the more entry models.

This is not the cadence excited about as I said, we only comment on units.

Okay. Thank you very much.

So just to be clear and Vince and unit, but it will be higher in value. Okay.

Yes understood. Thank you very much.

Okay.

And next question comes from the line of Stephen Reitman from Societe.

And I'll say it again. Please go ahead. Your line is now open.

Yes. Thank you my question is about outside technology.

When you launch the use of 90 stirred all day.

Used.

Sourcing ex fuel.

Flex motors from smartphone, yes, what's most of and the U K.

And which has now been acquired by Mercedes and say, they're going to on our existing contracts.

But thus far and does this takeaway will make Ferrari thinks that it means to develop more of these kind of componentry in house.

<unk> secured book going on.

And for children Pardon me is and this field. Thank you.

That's a great question.

We actually have had good conversations with you as of course, but also with Daimler and.

And the level of customization that they're working with US is such that those technologies and not going to be applicable to others and working with a company as ours is very stimulating and terms of being able to just push boundaries.

So that is a good example of how we do think that we are going to be able to actually partner with more counterparts, and where there is probably no company is Ferrari, who really can be a partner to just push boundaries and and.

And the good thing is also because of the nature of what we do and and the volumes we have.

It's a very good laboratory to really try and and see what works and how it works. So so we're very excited about the opportunity we think for Daimler.

Good hope and we believe that within the industry and.

More importantly outside of our industry, we are going to benefit very much from partnerships and joint joint program.

Did Ferrari have consider acquiring and itself.

We could acquire and gas Russo.

No it has not.

Thank you.

Okay.

Thank you. Your next question comes from line of Thomas Besson. Please go ahead Thomas Your line is now open.

Thank you very much it's moving.

I have 2 quick questions.

Can you give us a few words rethinking strategy and the choice.

For the.

And the racing series Youre going to be part of it with a little.

And the more if 1 I think you'll see more.

But formulary and <unk>.

First on winning and just kind of reasons, but sales just supporting future technological developments.

<unk>.

Got a follow up question on from the comments you've made.

On the long term on the hydro during the control and they'll tell you they were.

And look 1, but we could see some developments.

On the principal is it thinkable imaging and the minimal room to have a Ferrari vehicle forwards.

Thank you.

Those those are very good questions.

We believe that Reis se is.

And the reason why.

We are extending our racing presence.

Is is to be present and all the different competitions. We think formula E is not as challenging as the other ones and ultimately we want to make sure it to be part of competitions, and which we can really put our capabilities to work and we have proven that.

And this weekend as I mentioned the victory and staff local show is a good example that we have the ability of being more present and racing that has 2 benefits to our business. The first 1 is we're seeing that we have.

A part of our customers, who actually are interested in that part of the business and have developed a whole line around racing and and if you think as the world is going to evolve tracks are going to enjoy enjoy no doubt growth and their years to come.

People will want to experience. These incredible cars on on tracks and we are seeing that as a growth area.

We also secondly believes that.

<unk> can be.

More can be done in terms of technology transfer from the track to the road.

And finally.

And the racing activity has fueled a very large audience.

Ferrari before these tariffs and for which it's important for us to win and we can also work with with our very large audiences and being able to have a much clearer entertainment strategy and what we've had.

Up to now and that can very well developed and what today is broadly defined and gaming and entertainment and.

And that part of our company and our growth is very much dependent on our ability and and making sure that we occupy the right place for society and the racing space and no doubt that our formula 1.

Activities, which clearly has been very disappointing for too long.

Ken.

Especially as it's now going to go from changes with budget caps through minor disciplined. So we also believe that for raws being stronger and multi discipline will also be a way of strengthening where today as our largest weakness.

But again as I said.

We are lucky with 2 pilots that are young ambitious and want to win on our definitely stimulating the overall organization.

In terms of how do we think about fuel cells and other technologies as I said I think it's going to be.

Our next chapter.

After we go for this electrification wave, which reduces and mission on the car we need to address upstream how we day carbonate and how we make sure that we.

We actually are finding solutions for our environment, which work and those will lead to new forms of energy and and we again think and Thats. The segue that the racing arena is a good 1 and which you can experiment. Some of this technology. So it was a long answer but.

And I hope it captured.

Interest.

Okay.

Yes.

Thank you very much.

Yes, and that type of guidance.

This concludes today's conference call.

The investor relation team and will be soon available to answer any follow up you may have and we thank you all for attending today's conference call.

Bye bye.

And thank you on thank you for your support.

Thank you very much.