Q2 2022 Ferrari NV Earnings Call
Good day, and thank you for standing by and welcome to the Ferrari 2020, Tiki two results call and webcast.
This time, all participants are in listen only mode.
After the speaker's presentation, there will be a question and answer session to answer questions. During the session you will need to slowly press star one and then one on your telephone.
We then here we need to make the message I'd like to think that your hand is raised.
Please note that today's conference is being recorded.
I'd now like to hand over to your Speaker Nicoletta Russo. Please go ahead.
Thank you and welcome to everyone is joining us today, we plan to cover the group's Q2 2022 operating results and the duration of the call is expected to be around 60 minutes today's call would be offset by the group CEO , Mr. Benedict Davina and group CFO , Mr. Anthony pick up pick on already live onto my theory, that's out of it.
Billable in the investors section of the Ferrari corporate website and at the end of the presentation, we will be available to answer your questions.
Before we begin let me remind you that 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 page two of today's presentation and the call will be governed by this language with that said I'd like to turn the call over to Ben Thank.
Thank you Nikolas. Thank you everyone for joining us today.
It's a pleasure to meet many of you in person at last June during our capital market day here in Miami.
But before talking about Q2 record.
Results, let's recap the main points of our strategic plan for 'twenty to 'twenty six.
We talked about.
Certification in Germany.
Our product strategy the industrial strategy.
Financial targets and our path to carbon neutrality by 2030.
And I will address our commitment to preserve and protect our planet later in this speech.
Now, let's start with our electrification in Germany.
We are very well positioned to tackle the technological transition.
Electrification represents for us a great opportunity to address customer needs and to continue to realize unique ferraris.
We are continuously advancing in our electrification journey. We started in 2913 years ago, we have our experienced your formula. One then we transferred to our first hybrid model, let's say a.
Super cash.
More recently with the launch of four range I believe the models currently in our product portfolio. We extended successfully this technology to either volume cash.
Thanks to these expertise.
You can brief really in all of our laboratories.
And additionally, afforded by our passion dedication and willingness to push the boundaries forward, we will unveil our first full electric model in 2025.
Through February that will enrich our product range. It will contain several unique features and it will be a spot gas is every February .
First a true Ferrari driving experience.
We are also conferring with our product strategy based on a different variety for a differentiator is it a different variety for different moments. It is built to preserve uniqueness, while satisfying the different customer profiles for more adrenalin secret pilots to more versatile.
Sports Scott drivers we.
We are also committed to unveiling 15, 15, new models from 23% to 26% to keep our product range up to the level, where Ferrari is always been.
This will also include the Eylea weighted new Supercars, a masterpiece of innovation design and performance.
We reiterated our industrial strategy.
In doing so we will continue to progress sustained very focused and disciplined in terms of capital expenditures adopting it make versus partnership approach. Indeed, we will focus on the key differentiating factors.
We will invest on the strategic component that we deem relevant to continue to exceed our customers' expectations in terms of performance and driving thrills.
On this note we will invest in our infrastructure.
Spending our factory with a new paint shop, and any building, whereas the most advanced technologies in electrification field will be decided there are a lot of the and and crafted.
For what concerns partnership as it was through in the past we continue to.
To tailor existing solution.
Available on the market and lead to them with our own eyes in a way that our costs continue to be unique and authentic.
At the capital market day, we also shared with you our financial targets.
Built on a solid and comprehensive ground with target and 9% compounded annual growth rate for our revenues driven by strong product pipeline. We have ambitious goals also for our lifestyle activities, where we target to double the 2026 sales.
Compare that to pre pandemic levels.
Focusing on three things luxury goods experiential and collectibles.
The business plan also entails and 11% compounded annual growth rate of EBITDA and the very strong industrial free cash flow generation, we expect to double it versus what we generated over the past five years.
Such solid financial profile allows us to keep investing for our future growth, while increasing the shareholder remuneration with a combination of dividends and share buyback.
Dividend payout will be increased to 35% of adjusted net income and 2 billion Euro shaved the purchase program already started.
How will we make it.
As highlighted at the capital market day, all of these will be made possible.
Thanks to the relentless work of all the women and men in Ferrari.
The loyalty of our customers and the team work with our partners industrial academic and commercial.
Moving now to today's agenda, let me review the second quarter's another quarter of records.
This strength led us to upgrade our 2022 guidance on all metrics.
Number one record revenues at $1 3 billion up 25% versus the prior year.
Number two a record EBITDA at approximately 450 million Euro number three record EBIT at approximately 325 million Euro.
And number four in Q2, we reached a new record in terms of net order intake, which is astonishing considering that in the quarters. The books were opened only on three models of Ferraris.
<unk>.
296, GTP and 296 GTS the one we announced that last April .
This strong trend is visible all over the world not specific geographical pattern.
On top of this for our records we have another three records, we like to highlight.
Like to start with our Guinness World record title for the largest LCD illuminated the racetrack awarded for the lighting show at our Fiorano racetrack.
Listing on more than 1 million LCD points, and covering more than 110000 square meters and all of that was powered with green energy.
Secondly, the lighting Shaw concluded that the first edition of the cavalcade corner with the participation of <unk> Ferrari Monza, both SB, one and SB two coming from more than 20 Nations. This event celebrated the 75th Andy.
<unk> of our company.
And last but not least I am.
Also had the pleasure to attend to the Cavalcade Riviera in Monaco, which involved with the 144 Ferrari from over 30 nationalities a record in the Cavalcade history.
Such overwhelming.
Anders is again, a testament to the forgettable experiences that our customers are willing to shave along with the pleasure in front of driving that category. The prancing horse name around the globe.
On the racing activities.
We continue to fight at the top in the Formula One and FIA World Endurance Championship, where the team is working out of the four hour return in 2023 in the top class with our hyper cash to fresh news preliminary last weekend, we unveiled at the February 26.
Subsidiary.
Our latest V. Six that represents the future of the <unk> in GT racing.
And we just won the 24 hours.
Franco <unk> Gold Cup with a team of four women.
We also presented our journey towards carbon neutrality by 2030.
This was a few weeks ago and now we are moving from purpose two actions Es before action, we already put in place.
One we are committed to set science based targets in line with one five Celsius degree pathway.
Two we have installed the new one megawatt solid oxide fuel cell plant at our Maranello facilities. It provides 5% of the energy required for ferrous production activities in Maranello.
While reducing fuel consumption and emissions.
Compare that to combined heat and power co generation systems gas requirements are cut by around 20%, we have a significant energy savings.
Three.
We have begun the installation of a new photovoltaic system on the roofs of our Maranello factory buildings Faq.
We're expanding our independent energy production and reducing our cotwo emission.
Once fully operational the new solar installation will allow us to self produce one seven gigawatt hour per year.
And fourth we have started a partnership with climate seat and impact driven company that is helping us support high quality innovative projects focusing on positive climate and social contribution.
As a final remark and looking at what's next for sure September will be a key month for US we have a three important events.
<unk> Grand Prix, where we will fight again, it's our home the world premiere of the PURA sanguine.
And the third fashion show at the Milan fashion week.
And now I will hand over to Antonio who will review the Q2 'twenty two result.
Thank you Victor and good morning, or afternoon to everyone joining us today.
Let's start on page seven with the highlights of the second quarter.
Another very strong quarter with double digit growth and record levels for shipments revenues EBITDA and EBIT.
Percentage margins were also in line with our expectations, mainly reflecting the already flagged the development of product mix during the course of the year.
Shipments were 3455 units up 28, 7% compared the prior year.
Brokerage revenues were 1.291 billion up 24, 9%.
EBITDA reached 446 million Euro.
15, 5% year over year with an EBITDA margin of 34, 6% lower than last year. Since those extraordinary highs were supported by the strong contribution of deferral among them.
EBIT was 323 million Euro up 17, 8%.
Yeah.
Net profit came in at 251 million in Europe up 21, 6% versus prior year, resulting in a diluted EPS of 130.
36, <unk> compared to 111 Euro in Q2 2021.
The industrial free cash flow generation for the quarter was 17 9 million Euro.
I already anticipated and in line with the seasonal cadence the strong operating cash flow of the quarter was partially flattened by tax payments. They were much higher than in Q2 2021 since commensurate the significantly improve the income of 2021 compared to 2020.
Turning to page eight you can see the details of the Q2 shipments.
The product portfolio in the quarter included seven internal combustion engine models and three hybrid models, including one IC truck car, representing 83 and 17% of shipments respectively.
In the quarter, we're continuing to serve an impressive order book across all of our current range and deliver increased in the quarter were mainly driven by the portofino and the FAA family inline with programs.
Yeah.
In the quarter. We also commenced the first deliveries of the 260 <unk>, while the <unk> to have a competitor that was in ramp up phase.
As already flagged the Ferrari Monza SD Wan and <unk> reached the end of their limited series run in Q1.
All geographic regions positively contributed in the quarter, particularly in mainland China, Hong Kong, and Taiwan stood out with double deliveries compared to prior year, reflecting the strength of the demand.
On page nine you can see the walk of our group net revenues growing 21% at constant currency.
Revenues from cars and spare parts were up 21% at constant currency driven by higher volumes along with the contribution from personalization.
Revenues from personalization to or higher than the prior year sustainable volume at around 18% in proportion to revenues from cars and spare parts.
Engines revenues were down 8% given the lower shipments to Maserati was contracted is approaching the exploration in 2023.
The increase in sponsorship commercial and lifestyle up more than 23% at constant currency was mainly attributable to the better of prior year Formula one ranking and the contribution from lifestyle activities, which was partially offset by lower sponsorship.
The other revenues the increase was mainly related to other supporting activities.
Currency, including translation and transaction impact as well as foreign currency hedges had a total positive contribution of 41 million, mostly related to the U S dollar and the Chinese Yuan.
As we move to page 10, let me review the change in our EBIT Bridge explained by the following variances.
Volume was positive for $19 million, reflecting the shipment increase.
Mix price variance as expected and linked to product cabins.
Was negative 416 million, mainly due to the softer product mix related to the phase out of the Ferrari Monza <unk> and the greater contribution of the portofino and partially offset by the positive contribution from personalization.
Industrial and R&D expenses grew 27 million euro in the quarter, mainly due to higher depreciation and amortization cost inflation and other one off operating expenses net.
SG&A were negative by 18 million, mainly reflecting communication and marketing activities and corporate events as well as the support to the company's organization development.
There was negative four 9 million it reflects the improved priority or a formula one ranking and higher contribution from lifestyle activities that were more than offset by lower sponsorship.
Reduced engine shipments to Maserati higher costs related to the better formula one season ranking assumption and other miscellaneous expenses.
Net other than net impact of currency was positive for 29 million Euro.
As a result of what I just mentioned EBIT reached a record level of 323 million up approximately 18% versus the prior year with an EBIT margin of 25%.
Turning to page 11, our industrial free cash flow generation of the quarter reflect the strong profitability, which was flattened by 166 million of capital expenditure.
Progressing in line with full year guidance.
162 million of cash interest and taxes, mainly reflecting the 2021 tax balance payments linked to the strong 2021 results in the first 2022 tax installments.
And a small adverse impact of working capital and other which was mainly related to the higher inventories in line with the projected volume growth for the year, partially offset by the collection of the data on our <unk> advances.
In the quarter the capitalization ratio of our development expenses was approximately 46% slightly increased versus the prior year.
Net industrial debt as of the end of June 22 was 397 million.
The increase from the $136 million as of March 2022 is explained by the 250 million Euro dividend distribution, and approximately 80 million euro or share repurchases more than offsetting the positive industrial free cash flow generation in the quarter.
The overall strong net cash generation of the last 12 months improve then I think the third debt position by almost $160 million compared to June 2021.
On page 12, we revised upward our 2022 guidance across all metrics on the back of three main factors that other arm to our initial assumptions for the year.
First our stronger business performance with regard to personalization.
Second a tailwind from foreign exchange is net of hedges, mainly given the recent strengthening of the U S dollar versus the euro.
And third notwithstanding the rising inflation in our cost base linked to the current environment, the slightly softened our percentage margins.
Obviously remind you that our guidance still relies on the assumption that trading condition are not significantly affected by the current complex environment.
To conclude we are very pleased with this quarter of record.
The results of the unabated passion of each one each and everyone here in Colorado.
Which demonstrated the robustness of our business model and the success of our product portfolio, and which led us look with great confidence that the rest of the year and our further challenges to come.
We are now ready to open the Q&A session. Thank you.
Thank you as a reminder to ask a question you will need to certainly Presto, one and then one on your telephone and wait for your name to be announced.
Please standby, while we compile the Q&A listed this will take a few moments.
We are going to proceed with the first question.
My first question is coming from the line of Adam Jonas from Morgan Stanley . Please ask your question.
Thanks, Hello, everybody just a couple of questions first on FX, which is going to be more important over the next couple of quarters given the <unk>.
Continued weakness of the euro versus the foreign currency baskets I was surprised would be.
The conversion of the FX benefit to EBIT.
Versus how it helped revenue so it helps revenue of $49 million helped operating profit 37 for about a 75% kind of conversion I was a little surprised given your.
What we seem to know about your hedging strategy, where you would hedge.
That's pretty clear majority of 12 months out and then kind of tailing off from there. So is that is that normal is that kind of impact on topline and following through to EBIT something thats, continuing or was it unusually high conversion this quarter.
Okay.
Hi, Adam Antonio speaking nothing unusual actually.
You should take into consideration that our foreign currency exposure is on revenues and net of cost.
And when you look at the impact of foreign exchanges, you should look at the combined impact of what we have.
Foreign exchange hedges.
Beginning of our revenues, our EBIT bridge and the change in foreign exchange and FX hedges in the last quarter, which is the second before last column. So actually the impact on net revenues was 41, while the impact on the on the EBIT is $28 million to $10 million.
I'm not sure whether it is always at that size the different but there is always because of what I mentioned before I mean, we are not just hedging revenues, but revenues are net of cost nothing has changed in terms of our hedging policy, we keep on running usually on a rolling basis and obviously.
The impact that you see on our quarter is that the result of the spot rate that we observed during demand net of the hedges that have been put in place in the previous 12 months.
Basically accumulated and stratified.
Okay I appreciate it.
It does and just one follow up please.
Ahead of the Porto solid way launch confirming that your first deliveries will be in this calendar year this fiscal year.
Anything you want to call out that could get noisy.
The launches.
With the launch or other costs related to the launch any order of magnitude you wanted to.
Pointed out that you've embedded in your guide for margin of safety. Thanks.
Chart in bananas, I'm speaking so the program for us and we are proceeding as planned the deliveries will start the.
Next year as we said also at the beginning of the year.
Let's say bouffant.
From business point of view and technical point of view the program is well on track so nothing.
Out of that.
Let's see what we were planning for.
So we are very we are very happy to see this finally towards the premier as I said in there.
So sure it wont premiered in September .
Thanks.
We are going to proceed with the next question.
The next question comes from the line of Susan <unk> from UBS. Please ask your question.
Hi, good afternoon, I have three questions. Please.
My first one would be on the volume growth.
<unk> reached a new record up 29% and of course, you already explained earlier in the year that is because you have very long waiting list. So obviously you don't want people to have to wait for Es.
But then each quarter you keep telling us that is a new record new record order intake.
This base of production that we have seen so far this year is this something that may persist.
For the rest of the year. So how should we think about the volume growth. That's the first question.
And my second question was on the pricing and because last year, if I remember correctly around July .
You took a small 2% price increase to offset some of the inflation in the cost base and of course. This year. The inflation is higher and so I was wondering if you have done any similar action year to date.
And thirdly.
On the profitability at previously.
We're guiding to a year, where we were going to see a stronger H, one and then getting perfect progressively weaker due to the mix, but now if we look at the performance in each one your EBITDA margin.
75001, and your new updated guide is for over 35%, so it sort of implies that.
Perhaps Q2 was actually the low point of the year and and margins could improve in the second half and any comment on this would be very helpful. Thank you.
So I will take the first two Susie and the latter Anthony with supply. So the volume will grow in the in <unk> through the volume will be lower than <unk> and this is a regular pattern. So nothing strange in the gain in line with our our original plan.
Two yes, we put in place or some.
But I think increase and we will they will be visible in starting in Q1 of next year.
And therefore, the profitability comment Antonio you may explain the pattern that we're seeing.
Suzanne.
I think Q2, certainly what we're looking at for the second half is an improvement further improvement in terms of margin from personalization.
Which is stronger than expected.
Secondly, what I mentioned before we already got the benefit from foreign exchange rates in the in the first half of the year, but the edges that we have in place we're at.
Current 11, it was worse compared to what we are heading to for the second half.
In addition, Q2 has been impacted by smaller one off operating expenses that overall, however impacted a bit we don't have a spectrum of them and once again in the second half. So net net that's the reason why we are looking at the guidance in the direction and explain.
Okay. Thanks.
Okay.
We're going to proceed with the next question.
The next question comes from Giulio Pescatore from Exane BNP Paribas. Please ask your question.
Hi, Thanks for taking my question. The first one on China I was very impressed with the level of deliveries in the market can you maybe elaborate on what drove the increase in <unk>.
Hi, Thanks for taking my question. The first one on China I was very impressed with the level of deliveries in the market can you maybe elaborate on what drove the increase in the region. The second question on the new GT Calabaza OLED models that are very difficult to talk about anything you could share on pricing timing of launch and contribution to profit implied by the sale of <unk>.
This model would be super useful.
Then the third one on energy risk, that's clearly on everybody's mind.
Multi sector.
We have any way of quantifying the risk of potential energy rationing in Europe , given your concentration of production and are you taking any measures to potentially offset any impact and as we approach the winter. Thank you.
Okay.
This is John .
Julien This is a good question about the China.
As we told us in the previous caller.
We had a stronger net order intake in China today.
If you remember the chart of Antonio was talking about in.
In terms of shipment that 10% of our overall vessels to the previous year was 6%, yes, we had the longer.
We could grow but this growth if youll see in has been pretty much.
The same all over the places so as I said no.
Particular specific geographical pattern year, clearly youll see bigger in percentage because in the previous year was smaller than.
And then you asked about the pricing of the GT three if I understood well.
The GTE three pricing yes.
Okay. So remember that <unk> III is a cash is there for the truck is not a broadcast so it's important for sure. It helps on the topline and bottom line of the company, but these are mostly meant to enhance that experience.
<unk> reached the experience of our of our customers and this is the cash that <unk> III is.
Coming from the 296, <unk> 96, and it will replace the one that is running today on the racetrack at 488.
As I said, we have to look at these kind of more in terms of.
Rich.
Full experience, we are providing to our customers talking about the energy risk.
I'm trying to be more precise here sure Julia.
I think in the numbers that we report there is clearly an impact from energy cost energy cost inflation, we are not immune to that even if we try and be opportunistic and buy in advance.
What we are.
Spending on our needs for the future months.
Obviously it seems.
We are in the market and we believe we are sufficiently agile we are reacting to what we see in terms of cost and therefore, adjusting our offer even in terms of pricing going forward.
Okay, but I was more worried actually about the supply of LNG.
<unk> to potentially offset that I'm, sorry, I didn't I didn't get that.
So far we haven't seen any specific concern in that respect.
Yeah.
Okay.
We are going to proceed with the next question.
The next questions come from that I know, Michael Binetti from Credit Suisse. Please ask your question.
Hey, guys congrats on a great quarter, thanks for taking all of our questions here.
I guess the.
As we look at the performance.
In this quarter.
The level of cars that you're producing and it looks like you're on a run rate to produce 13 to 14000 cars here you've been very clear this year would be high unit volume and some mix headwinds and we've seen that in the numbers.
We've had in years like this and the transition from high volume years into soup.
Super car years like the apparent to in the past, but we haven't seen units go negative.
After a year like this.
It makes some sense you have capacity to build at this level, but as we look at next year, if you're producing at this rate and the mix of cars shifts positive believes rollout Daytona and even <unk>.
Do we.
Lower volumes next year, and I guess, the spirit of what I mean.
Asking is your guidance this year now at the high end is $1 73, that's just 4% below.
The $1 82 billion euro target of EBITDA that we have for next year. So when we see your operating at these levels. It's in <unk>, it's hard for us to understand how to crosswalk.
<unk> much slower EBITDA growth rate baked into some of the out year guidance that we have.
So Michael I think.
The key word I use it at the capital market day was always.
Uniqueness.
And.
<unk>.
Let's say distinctive costs, what I can tell you is that.
The increase of volume that you see 'twenty to 'twenty, one is not going to be the same increase of volume for the year to come.
This does not depend we will Lewis is just mean that the year over year growth will be lower than this year 22 over 21.
This is the answer to your question if I understood well.
It is I guess that begs the question if we take some of this capacity you have to produce 30 450 units in a quarter and.
Some of those Werent portofino footwear instead Daytona is it 10 times the price that it makes it hard for us to understand the low end of the guidance next year based on what we have this year.
It's true, but you also to consider that the cash the cash that not all the same I mean this morning I was in the line with the team and.
It's not the same.
Amount of work.
The work time that you needed to produce the same the same objects.
Rent, obviously different costs. So there is some dependent also on what the user.
The Ferrari colleagues working on.
So you cannot extrapolate and make an equation.
Let's say we were just one variable.
Okay.
Yes.
How I guess you raised the year I suspect a lot of it was on an FX you raised the year on EBIT I guess with the majority of your costs are in euros, but the revenues from a broad basket of currencies that are largely favorable.
On the guidance can you help me understand that.
Did you did you tweak anything lower on the profitability for the underlying business excluding currency for the year and I know you have a very disciplined financial process. When you have good visibility into your targets for the current year have you taken any actions to push any profitability out to next year to add margin and safety at this point given how favorable FX is.
I'm sorry, yes, sure no I mean, we're obviously we are based our we are basing our activity on planning and planning depends on one end on our book and secondly of course, our and our production capacity and we planned and carefully since we know at this time and order book two that cover them.
More than a year.
Longer than that so that's what we are basically.
Giving us a guidance is based on what we plan and the quality of the mix that we aimed at producing.
Okay. Thanks again.
The other element of uncertainty that we do not usually no.
In advance is the level of the ancillary profitability, let me call. It like this meaning our.
How much of personalization each car we carry on.
As you see is part of our revised guidance.
Yeah.
Okay. Okay.
Okay. Thanks, a lot guys I appreciate it.
We are going to proceed with the next question.
The next question comes from the line of Monika <unk> from Intesa Sanpaolo. Please ask your question.
Good afternoon actually most of my questions have been already answered, but just one left.
Two months from.
From the capital market day, and we had the chance to have a glimpse of the Buda sandwich.
I was wondering I'm not sure if you can tell us that.
You can tell us if.
Any contrary.
<unk> put a sandwich is receiving.
Average interest so any flavor on this would be appreciated. Thank you.
Thanks for your question Monica.
We see.
Awareness, Brad let me say strong interest in PURA sanguine from owners of different countries. So as I said before for the net order intake.
<unk> is that we are not able to see any any particular geographical pattern.
Okay. The Bureau, sanguine, it seems to be equally attractive 400 different owners family members all over the globe.
Okay and there is no law any defense is there any difference in terms of gender age or whatever.
I can tell you we look at that.
The age distribution and it's a pretty cool versus the same agent distribution that we have an average for all four of the product.
For the car that we sell.
Thanks, Michael we don't we don't see any Amy sign.
That is any signal, let me say that brink's has to make a special conclusion for the time being maybe maybe for the next call or two calls from now we see some signal and we will be glad to more than glad to share with you a moniker.
Thank you very much.
We are going to proceed with the next question.
The next question comes from the line of George <unk> from Goldman Sachs. Please ask your question.
Hi, Thank you every one.
And for taking my question. The first question I had was just on the data and the production ramp it seems that the.
At least two cause maybe a few more presently being used by the press and appearing in social media can you confirm are these preproduction cars or they are a big part of the 599 total and can you remind us when the first customer shipment is expected to begin.
Secondly, just following on from <unk> questions around gas.
Can you remind us what percentage of the energy supply in Maranello comes from gas and all of that any activities such as paint shelf, but how about 100% dependability on gas.
Finally, just with respect to Formula one I understand championship points do you still have implications to revenues.
Your own press release post Hungary, you did describe in that press release, something Gary performance is disappointing.
There have now been a few races, where you havent comforted qualifying performance into rates results are there any steps you can take at a management level to address this thank you.
So let's start from Daytona Okay. So daytona the shipments will start in Q1, the one that you see on social media. This is the pre production some of them some of those costs will.
May be sold at a later stage. This is usual process, but let me say the Daytona shipment will start we'll start the next years.
The second was about the percentage of energy that depends on gas.
I would just say that the biggest.
Let's say most of the energy is coming from gas because they're known.
Don't forget we have the three generators. So we are feeling gas in it to create also the electricity that we need and what I can tell you that the Dcs, we reduced a little bit that the usage. This year 'twenty two we reduce it.
Usage of gas in favor of electricity and I can also tell you proudly that things to the innovation of the team all over the industrial operation, we have been able to reduce the energy.
Necessity energy per cash by 3% and we aim to continue to reduce these app two year ended by 5%.
And then the last question about Formula one and the performance is.
Over the last weekend as I said also to the capital market day put them. One on one is it's in our DNA formula one means for us that we have to pay attention to all the details. It's also a way that when.
And there is as I say.
It continues occasion to learn and we keep fighting for the winning of the Formula One championship.
Great Good luck with it.
We are going to proceed with the next question.
The next question comes from the line of Stephen Lieberman from SG CIB. Please ask your question.
Yes Hello.
Steve Martin Associate Generale.
That's three questions first of all you mentioned the record order books, so congratulations on that.
Could you comment on whether youre seeing any cancellations.
Do you think might be geographically.
Regarding sort of like the competence of customers.
Secondly, I know that obviously residual values that we still have the causes responsibility that youll see this but obviously you talked about very closely could you give us some insight into what's happening.
By region on with your values both Ferraris.
And thirdly on sponsorship could you update us on how things are looking in terms of getting the main sponsor for the formula one team absent.
Thank you.
Or do you just passes once you. Thank you very much.
Okay Stephen so.
Yes, a record orders and net order intake and also the cancellation at very very low and nothing that we see out of the regular pattern and we do not see also here sorry, if I repeat myself, we don't see any geographical pattern, we keep watching with a lot of attention is.
You can imagine all this data we keep analyzing but we don't see any geographical pattern that we can that we can share with you.
Clearly if there is any.
Any any pattern, we would it be more than glad to share in the in the next calls but today, we don't see anything strange under the Sun.
The second one was about the residual values and also a year for the residual values.
Consider that if you want to buy a variety and youre going to dealer you just came by three of them in the Ferrari. The 296, <unk> hundred 96, GTS and this helps a lot to keep the residual values.
Some cases, we see also a positive trend in the residual values. So this is.
Let me see also here, we see this as a constant all over the places for the four different for different model of our salary number three was the sponsorship I would define this year.
As the year, where we have been diversifying a lot our sponsorship base.
If you see also in our Formula one cash youll see a lot of different.
Companies different brands and these.
It's been possible to new.
The sponsor for example in the logistic like CEVA.
In the technology like Vale us so the sponsorship trend.
Refer to the chart that was showing.
Before it was a chart number nine where basically you have seen also.
The positive the positive trend, so I would say that we.
We see a strong interest from several partners to partner with US both on the commercial and technical side.
Thank you very clear.
We are going to proceed with the next question.
The next question comes from the line of Charles <unk> from Redburn. Please ask your question.
Hi, Thanks for taking my questions.
First on the stronger impact from personalization are there any particular model is driving that.
You're doing anything new to encourage people to spec out their vehicles at all and maybe could you give us the percentage of revenues.
Slide personalization makes up I think it was 17% in Q1, if I remember correctly.
Secondly on the order intake as you mentioned the record despite only having the books three models. So I guess I was wondering in a typical year if you're if you have seven rates.
<unk> sports vehicles and the range how many would you have the books open for in terms of order intake.
And then thirdly.
You mentioned the BBB and.
In 2025.
I know you guys don't want to talk about about it too much too many details away at this stage, but should we expect that to be a limited edition sort of HIFU call or is that going to be part of the core sports car range. Thank you.
I start from the last one and then I'll leave the first I'm going into your the personalization so.
I think it's hard to say I fully understand your curiosity and they would like to share.
To share and to satisfy it.
It's a little bit too early we are three years ahead.
Im trying with the team some.
Unique authentic features we want to put into cash so allow me to not be very specific in these in these answers.
I am asking I'm, telling you that really we want to make something unique and authentic like I said during the capital market day looking at all the dimension from the uniqueness of the way the people will drive the cost to the way that people will feel the cash. So this is about.
The electric and we will unveil in 2025.
And then it was the second question about the <unk>.
Net net order intake now.
And it wasn't specifically about.
Alright.
The three models only I think of that.
<unk>.
Let me say, we started with Taylor this evolution of net order intake over the past years.
And I have to say really that this.
Quarter record I think it may depend from different things I think.
One key factor is.
Yeah.
Over the year, so we enrich the.
The experience, we're largely experience that we are able to provide to our.
One is to our customers.
Base Ferrari owners.
I've been attending these took al-qaeda communicated kona in several key the Riviera and really you see the.
The way and how much they like the experience we are bringing to them. So.
Apart from let me say that.
Other external factors, if I had to pick one factor that is explaining these good NOI net order intake is let to the experience that we are able to provide in this marriage that goes towards the colleague that made this possible.
Something that explain is the stronger NOI in a record NOI in Q2.
Personalization Antonio you May yes, Charles.
Mentioned personalization in the quarter was approximately 18% of total revenues on cars.
<unk>.
With respect to your question whether this is due to any specific model the answer is no.
As you have less in this quarter is mainly a quarter of range cars in particular is strong on VA models.
And even on that the personalization.
Higher.
So when looking forward we are extrapolating on this basis based on what we see in our current order portfolio.
Yeah.
Okay. Thank you.
We're going to proceed with the next question.
The next question comes from the line of Tom Narayan from RBC. Please ask your question.
Hi, Yes, Tom Narayan RBC, Thanks for taking the question.
Three a follow up on the Nat gas rationing topic could you talk about supply chain vulnerability. So in the event. There is less availability of plastics for instance, do you keep an inventory of components that might absorb this event or maybe are you buying ahead of this.
Next.
There appears to be an increasing interest in formula one in the U S.
Partly thanks to a Netflix show you.
The U S are already a big market for you guys, but could you discuss any knock on benefits just could have on your business, perhaps beyond just car sales.
And then you did make some comments on the prepared.
And Terry about preferring preferring build versus buy and regarding software. We have seen how this has been somewhat problematic with.
Some big auto companies of late trying to do software in house could you comment on your willingness to partner with software providers as opposed to perhaps trying to growing it by yourself.
Thank you Tom I start from the last one build vessels by what they say build the vessels.
Chip.
I would like to say in this way.
As I said as I said those capital market day, we do not intend to do for example, the FRS the Ferrari operating system, we do not intend.
To put a lot of money a lot of people on our software, whereas there are partners that we can work with to make something unique and authentic clearly we have the.
The competencies to make it.
Let me say unique and also here there are different kind of software I would like to make a difference. There is the performance software, where we had a very strong and if we are able to make the caveat that we make is because a lot of engineers here and understand how to use <unk>.
<unk> on the market with unique software that announced the performances over the cash now.
Now when it comes to just add two other softwares, where there are two big classes. If you want the software for autonomous drive and this is something where the let me say it this way.
<unk> M.
They have to put a lot of resources and this is an advantage for us because we do not want.
<unk> Ferrari.
We don't want the PC or the micro chip, let me say to be pleased with about right.
Driving a ferrari.
The second you said is more about the user interface well over that we will leverage the best also.
<unk> thinks the softest and we will customize in a way that is always unique and authentic. This is about let me say the softest.
And what.
What we do internally and what we partnered with the.
Companies many of those second question, Yes Formula one is growing the interest of Formula one in U S is growing a lot.
We are doing pretty well in America, so youll see that the shipments were more than 30% in Q2.
There is we don't know if the signal is more correlation a calculation between the two but I can tell you that to the two signal.
Pointing in the right direction stronger interest in F. One strong.
Interest from new customers in the U S.
First one the more operational one on the supply chain.
Right.
We experienced some minor readjustment of production but.
We are proceeding as we planned at the beginning of the year, we factored in some.
Let me see potential bottlenecks, but thanks.
Thanks to the support of the partners. Thanks also to the greater job done by the supply chain and the manufacturing of the collegial, we have been able to stick to the plan and to absorb in an agile way. The problems that you may have in the daily operations.
Okay. Thank you.
We are going to proceed to the next question.
The next question comes from the line of John Murphy from Bank of America. Please ask your question.
Good afternoon, I have two follow up questions at this point.
First on the record order book I'm, just curious if you can give.
Give us sort of a length of time that you expect that or are you predict that added I mean traditionally you've bought around 18 months plus or minus but it sounds like a significantly longer than that so are we at 24 months plus.
Plus.
I'm just curious to know how youre managing that order book I mean, there's always a lot of demand for Ferrari.
Obviously, you make it.
Traditionally very difficult to get on that that order book, So what is loosening up here and.
And how is that being managed and then just the second question is on foreign exchange I mean, obviously youre hedging.
In the capital markets and with banks, but is there an opportunity given the sophistication level of your customers potentially pass through some of these swings in foreign exchange with them directly as they enter the order book, So that you might not be able to you might have to be charged so much by banks or or havent fluctuation in.
A lot more fluid.
So John I think the first one I can tell you that the order book what I can tell you is.
Also what I said in the previous call as well beyond 2023.
For the first question and the hedging and FX Antonio you can comment yes, John .
Our partner in there once we invoice to the dealers.
We already explored in the past the opportunity you're using different models and pass on the foreign exchange risk to partners or even beyond that but ultimately we think we concluded the way we are proceeding and currently is the most efficient one and certainly even the cleanest from all perspectives.
Anthony maybe just can you tell us what the cost of hedging is for you.
The cost of hedging activity.
Yes.
Yes, you can read in the financial charges line.
I mean, you can see the difference between interest rate and cost of hedging.
Okay, Alright, thank you for it and it is made on a rolling basis and of course it depends on the interest rate differentials from time to time.
Okay. Thank you welcome.
Welcome.
Thank you for your time constraint, we will now end the question and answer session I would now like to hand back the call to Mr. Benedetto Vigna. Please go ahead for final remarks.
Thank you. Thank you all of you for your time today and also for for all your interesting questions. The.
In the second quarter of 2022, clearly marks another set of strong result, with double digit growth and record levels for revenues and profitability.
Such stronger financial profile and allow us to look at 2022 and beyond with great confidence.
Good afternoon, everyone. Good morning, and thanks again for your attention and one if I can say.
Thanks for today. Thank you for participating you may now our conference for today. Thank you for participating you may now disconnect your lines.
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