Q3 2022 Ferrari NV Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Good day, and thank you for standing by and welcome to the Ferrari 'twenty 'twenty to Q3 results conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one.
And one on your telephone you will then hear an automated message advising Johan raised please be advised that today's conference is being recorded I would now like to turn the conference that virtual speaker today, because I thought it was a head of Investor Relations. Please go ahead.
Thank you Sharon and welcome to everyone Who's joining us today, we plan to cover the group's Q3, 2022 operating results and the duration of the call is expected to be around 60 minutes of today's call would be offset by the group CEO Mr. Ben It it'll be another group CFO, Mr. Antonio pickup is gone or relevant to my T.
Are available in the Investor section of the periodic 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 they go the call will be governed by this language with that said I'd like to turn the call over to Bill.
Thank you Nicole and thank you everyone for joining us today.
On behalf of everyone at Ferrari.
I would like to begin this call by remembering we have gratitude.
For the year.
We are especially the way he is such an important impact on Ferraris history, and a motor racing, we will always remember his passion and determination that drove the evolution of our company over the years, we model, we want no fewer than 11.
Drivers and Constructors championship titles and five endurance titles.
Our thoughts and our prayers are with his family at this time.
Time.
And now.
Go to the third quarter.
The third quarter has been very very strong with all the key P&L metrics up double digit versus last year.
Revenues increased to 19%, we have a shipment up 16%.
EBITDA and debit were up 17% and 11% respectively.
And industrial free cash flow generation was very sound.
The very robust financial results, we present today.
Further proof of the strength of our business and that's why we revised upward our 2022 guidance on all metrics.
The current macroeconomic scenario brings new challenge on a global scale.
Through for US and this is true for our partners. Indeed to Garanti is a move production we are supporting our supply chain with tangible measures.
Moreover, as we said in the last call we have taken action on pricing to adequately react to cost inflation focusing on the following three areas one price definition of new models to personalization offering and three.
Mid single digit price increase on selected models and markets.
Having said that we continue.
To enjoy a very strong momentum with remarkable order intake in the quarters, considering that our clients could orders only a few models.
Such a positive trend is visible all over the world.
Since the last time, we spoke a quarter ago.
For important events took place.
<unk> large enthusiasm from our clients first.
Firstly, the Bordeaux Sanguine world premieres.
Secondly, the cavalcade the classic thirdly experienced a Ferrari and lastly, several lifestyle initiatives.
Let's start with the world premiere of the PURA sandwich in Tuscany.
We also added 2400 of our most loyal clients from all over the world <unk> in La Yaqui call.
We promise it we promised our clients something new like any others through.
True spot gas able to deliver the same driving <unk> is our most extreme models.
And we delivered exactly on that promise the signing and the engineering report sanguine as an authentic four doors foresee this February sportscast.
There was no better reward.
For the entire team then to see clients wandered in front of the PURA somewhere.
Reception was hugely enthusiastic and they praised its performance the design and driving trails.
Performance first.
I'll comment our most iconic and powerful V 12 engine, we have a brand new configuration, which delivered 725 horsepower.
Moving to the sign.
We're surprised to see the Roominess on board given the compact size.
The driving position typical of a sports cards close to the floor and Recliners.
Youre welcome dual solution.
Which enables easy ingress and egress.
And the electrochromic glass roof that can be added during personalization of their vehicle.
Finally, yet importantly, the promise of impressive driving sales.
Further and answered by the active suspension technology.
Which makes its debut on this model.
We talked about this technology, the fast and the capital market day.
With all that said.
I know you all are curious about how many orders we already have and how long the order book is.
But you also know that we do not provide this kind of detail.
To me it is unlike any other it is way above our most promising expectations.
And now after <unk> well, let's talk about the second important event of the quarters.
Al-qaeda classic in the dolomite, featuring 65 vintage variety and their owners from all over the world.
The cost per aided through the town of <unk> and voltage at key moments in Ferraris 75 year history.
These unique events is decided on one side to bring owners together to share authentic and memorable experiences on the others to create a single community unite the debates passion for Ferrari.
And now the third event experience of Ferrari base.
Based at the heart of the fewer annual racetrack, where we created a unique and elegant space for our clients.
Over five months, we're still at 1250 clients, which more than 40%, 40% were new to Ferrari and organize the 2500 test drives to let them fail the driving thrills unleashed by the 290 <unk>.
<unk>.
GCB.
As I told some of you during our latest throw the show. These memorable experience is also open to our February people.
And in fact more than as of today more than 500 employee so.
So fast enjoyed it feeling even more connected to Ferrari.
And to conclude on the event held in Q3 after a poorer sanguine after cavalcade classic and experienced a variety let's focus on the lifestyle pillars.
We launched the first product of our partnership with Richard Miller.
As a flat watch limited to 250 units, which embodies the share the values between both brands combining deep engineering knowhow with cutting edge state of the hot innovation.
At the Monza Grand Prix last September Especial, Zelda modern apparel and accessories collection was launched to celebrate our 75th anniversary.
And this series of limited edition items in yellow sold out in the online stores in a few hours.
Lastly, during the last fashion week in Milan, our lifestyle team.
On the theatrical Leary cost stage, the spring summer 'twenty, three fashion collection, receiving international place.
This new collection centered around the theme of dreams and was inspired by the timeless values that have Turner, the Ferrari dream into reality.
And talking about dreams, let's remember that the Ferrari Dream has its roots in racing and so lets recap together, where do we stand in the various categories in which we compete.
The achievement, we have delivered.
And the new opportunities ahead of us.
Let's start with the Formula one last time when.
I was talking year I said, we were fighting for the championship.
While we have returned to be competitive in this year, we cannot be satisfied with this year's result.
Now we focus on the last races of the season and in preparing ourselves in the best way possible for the next one.
In <unk> we.
We celebrated the 500 victory of the February 488, GT, three which makes this model. The most successful February raising cash errors and extraordinary record and the previous legacy that will pass to the new Ferrari, 296% <unk> three due to make it.
Trac debuted at the 24 hours of Daytona next January .
Such success and competitively GT east coupled with the victory of Ferrari in the MSR serious with both the drivers and team wins.
Lastly, we also had our finale Monday Ali the Molla Racetrack. This was just a few days ago the <unk>.
<unk> high performance racing celebrated the final event of our activities for <unk> together with our clients fans and employees.
38000 Motorsports enthusiast gathered to share their passion, which made this moment the perfect stage for the unveiling of the Ferrari Limon hyper cash 499, Pete is the name of this fantastic cash.
These new cards, Mark's Ferraris return to the FIA World Endurance Championships top class from next season exactly 50 years. After we last vote for outright victory in that championship.
And now it's time to update you on our ESG action that are very important in our in our plant in our journey to reach carbon neutrality by 2030, we have already implemented the one megawatt fuel cell installation in the partnership with climate seed announced at the capital market day.
<unk>.
But in addition to this.
The team has been deploying three further initiatives during these months firstly.
In line with our plans we are installing additional new photovoltaic panels on the roof of the Maranello buildings delivering a total power of approximately one five megawatt by year end.
This will be operational by the end of next quarter and then we'll update you in the next call.
Secondly, we planted the first the trees within our Forestation initiative Bhaskar variety Maranello. The first area of woodland Spanish six actors out overall at 30 actors to re create an ecosystem with significant environmental benefits and we.
We are seeing increasing interest from many Italian municipalities to join this initiative and this interest makes us very very proud.
Thirdly in addition to our planned shared with the capital market day, we are continuing to streamline our production processes and treat amplify actions to reduce the energy consumption and tier two emissions.
These efficiencies are possible thanks to the ideas everywhere.
This and the action of the February people, India, I would like to give you a couple of examples.
Thanks to the adoption of new filters in our foundry, we are reducing our scope three upstream carbon footprint by 1% and saving more than 250 ton of aluminum of barriers.
Capex required only brain power.
Two by recovering the hit this person in our engine testing process, we reduced natural gas usage by approximately 2% of our yearly consumption.
Finally, let me highlight two important achievements related to our people and the next generation.
On one end we.
We received the confirmation of the equal salary certificate in Italy, and North America.
This is a testament to our commitment to an inclusive work environment, where the importance of merit is guaranteed to attract retain and develop the talents that will accelerate ferraris innovation in the futures.
On the other end.
<unk> inaugurated the eat do learning centers at the Fairmont corners.
Education Institute in Montana.
As you know promoting education is a core part of our radius ethos and this relationship with the local community.
The new laboratory, which aims to help students enter the world of science the technology is in investment in their futures.
And now I will hand over to Antonio to review in detail. The Q3 2022 result.
Yes.
Yes.
Many thanks, and good morning, or afternoon to everyone joining us today.
Let's start on page seven with the highlights of the third quarter.
Another very strong quarter, indeed, with double digit growth on key metrics.
Shipments were 3188 units up 16% versus prior year.
Group net revenues were $1.250 billion up 19%.
EBITDA reached $435 million up 17% year over year with an EBITDA margin of 34, 8% lower than last year, given the absence of the Ferrari Monza.
EBIT was 299 million euros up.
11% with an EBIT margin of 23, 9%.
Our center margins were in line with our expectations, mainly reflecting the perfect mix and DNA evolution.
Net profit came in at 200.
$228 million up 10% versus prior year, resulting in a diluted EPS of one euro in 'twenty three comp.
Compared to one euro and 11 in Q3 2021.
The industrial free cash flow generation in the quarter was $119 million, which implies a cash inflow for the nine months close to 600 million almost $100 million higher than last year.
Turning to page eight you can see the details of the Q3 shipments.
The product portfolio in the quarter included seven internal combustion engine models and three hybrid models, representing 81 and 19% of shipments respectively.
Okay.
As mentioned by <unk> in the quarter, we were continuing to serve an impressive order book across all models.
Deliveries increase were mainly driven by the 296, <unk>, which was in the ramp up phase along with the <unk> competitor on them.
The Ferrari Portofino am in USA family continue to sustain deliveries growth.
Partially offset by lower contribution from years of 90 family.
There were no icon deliveries in the quarter as the Ferrari Monza phase out in Q1 this year.
Geographic allocations were driven by product guidance.
Mainland, China, Hong Kong, and Taiwan continue to post double digit growth versus the prior year, reflecting the strength of the demand and representing approximately 14% of our total shipments in the quarter 11 in the nine months.
As a reminder, such a strong performance in the region represents for US a positive in terms of absolute profitability, but it also implies a margin dilution linked to do this and consumption tax.
On page nine you can see the walk of our group net revenues growing 13% at constant currency.
In Q3, we consolidated the trends already explained in the previous quarters.
Cars and spare parts driven by higher volumes and personalization.
Personalization, we're at around 18% in proportion to revenues from cars and spare parts.
And James decrease due to Maserati such supply agreement is approaching its expiration in 2023.
Sponsorship commercial and brand that reflected the better priority or a formula one ranking and the contribution from lifestyle activities led by retail sales and New Zealand video visitors despite the lower sponsorship.
Currency had a positive impact mostly related to the U S dollar and the Chinese Yuan.
Yes.
As we move to page 10, let me review the change in our EBIT year over year explained by the following guidance is.
Volume positive for $62 million, reflecting.
Reflecting the shipments increase.
Mixed price variance negative for 2000, 6 million euro and mainly impacted by the lack of a corner and the softer range model mix, partially offset by the increased contribution from personalization and country mix.
As previously mentioned the strong performance in China was supportive in absolute terms, even though it contributed to soften our percentage margins.
Industrial and R&D expenses grew at 34 million in the quarter, mainly due to higher depreciation and amortization and obviously cost inflation.
SG&A were negative by 17 million, mainly reflecting communication marketing and lifestyle activities.
Other finally was slightly positive for $3 million, reflecting the improved prior year formula one ranking and higher contribution from my cell activities, partially offset by lower sponsorships.
<unk> contribution from Maserati and other miscellaneous expenses.
Net other net impact of currency was positive 41 million Europe .
Turning to page 11, our industrial free cash flow generation for the quarter reflected a strong profitability and a positive contribution from working capital and other mainly related to the collection of the data on our SB three advances.
This was partially offset by 198 million euros of capital expenditure that are progressing in line with our full year program of about 800 million Euro.
In the quarter the capitalization ratio of our development expenses was approximately 45% increase versus the prior year also as a result of the cap research spending in Formula one.
Net industrial debt as of the end of September 2022 was $256 million decreased by $130 million compared to June 2022, reflecting the solid industrial free cash flow generation net of the 85 million euro or share repurchases.
On page 12, as already mentioned by <unk>, we have revised upward our 2022 guidance across all metrics sustained by a continued strong business performance of personalization and a tailwind from foreign exchange rates.
Such improved targets encompassed the assumptions of continuing cost inflation through our supply chain and this is mostly visible in the EBITDA margin guidance, which for the short term is either flattened by such increased costs.
To conclude the results we have presented today, the robustness of our business model and the success of our product portfolio in the current trading conditions continued to fuel our confidence for the remaining part of 2022 setting the ground of another great here and more to come.
Thank you Antonio Sharon we are now ready to open the Q&A session. Thank you.
Thanks.
To ask a question you would need to press star one on one on your telephone and wait for your name to be announced once again star one and one to ask a question.
We will now take our fast question.
Please standby.
First question comes from Michael Binetti from Credit Suisse. Please go ahead. Your line is open.
Hey, guys.
Congrats on a nice quarter I know the macro is very tough.
Let me ask you I won't ask you today, how you feel about that.
2022 guidance for one to $1 82 billion of EBITDA, even though you are raising today I want to ask you whether you think its conservative next year at this time, but I am curious.
How you see revenues and profitability building next year across the business lines, maybe the cars business, how you see that contributing how the P&L for the lifestyle businesses in the sport business will change as you bring back some of the correspond serves and expand into Lamont.
Our lifestyle categories that you mentioned and maybe some of the biggest incremental changes and then I guess longer term I'm curious what are the bigger challenges you see today and getting the first electric Ferrari in 2025 up to the margin levels.
That are in line with the averages you enjoy across the rest of the fleet.
Thank you. Thank you for the question.
Mike.
So let's start from the first one is on <unk>.
You said that there is a number of showing we feel very much confident and thats. The reason why we are increasing our number one the confidence that the guidance for this year and we are also very positive for the next year. This is thanks to the order book that we have that is.
Mr spanning all of the product.
We have as well as <unk> as.
As well as all the region.
So this is very <unk>.
First important message now if you're talking about.
The bigger challenge for electric car, but I think.
I would say we will split the answer in two parts.
Talking about the product development, where we are we are fully in line with our.
Let's say project development. So we are proceeding.
As per plan.
And this is true as I said on the technical side, but if I go to see on that.
<unk>.
On the profitability side. This is fully in line with our long term view mid term view that we shared with you a capital market day.
This year, we made a lot of progress in optimizing on one side that the architecture of the cash on the other side also optimizing and strengthening our relation with some strategic.
Suppliers.
Yeah.
Yes.
Thank you.
Okay.
Are you finished Michael.
Thank you.
Thank you.
I will now go to the next question.
Please standby.
And your next question comes from the line of Giulio Pescatore from BNP. Please go ahead. Your line is open.
Okay.
Hi, everyone. Thanks for taking my question. The first one on the on the fluids longer order book.
You're not going to comment.
More details on what the order book stand, but can you maybe share any color on the composition of the order intake.
Achieving the.
So you had in mind for this model anything you can share on that would be very interesting.
Second one on the order book I noticed that Mel defining it is the remarkable vessels record in pretty much any other presentation in the last few quarters.
I don't want to read too much into this but is that a function of the availability of models is there anything else that you're seeing a softening in order.
On that would be also helpful. And then the last one on the 290 <unk>.
If you look at the number of hybrid you sold in the quarter was pretty much flat sequentially versus Q2.
I was expecting maybe an increase because of the ramp up of 96, you're just giving priority to other older model given the demand or is there any delay on the ramp up of that.
That particular model. Thank you.
Okay I'll start from the last one Julia the 296 of the hybrid and the split between IC and hybrid.
I would just say that so.
So far it has been always in the ratio 80, 20, and we expect this ratio to change consider that.
We will level so.
We have already.
A stronger order book when it comes to the GP. Despite their little 9600 spiders. Okay. This is important so.
If you want to.
Your your deduction is correct, we will have an increase of the hybrid the shares in our in our models. So this is question number three.
The question number one I got to do put a sanguine.
To provide you a little bit more color as I told you we added almost 2500 clients visiting us and looking at the world premieres in Tuscany. It has been very well received because of performance because of the design because also some of them at the pleasure and the opportunity to.
Try to cash.
But.
Are you able to say that too.
Two things we told you at the capital market day keep.
Let me say, we stick to that number one.
You do not want to pass a 20% of annual volume of this cash.
And two we are.
Let's say.
If you want we are of the order backlog is such that it is fully satisfied.
So you cannot come in our factory, but if you're kind of in our factory Youll see that we made the enough space to to accomplish into realize our our industrial plan for these are natural respirator. The V 12 engine.
So.
Maybe what I can tell you is that the order.
Got some photos and we're really unlike any others.
If you want a volume curve in the sense that the order book is more seamless to the special cash to the limited edition cash then to the to the bigger volume cash.
And then there was the last the other question was the net order intake the book.
Clearly by year to date.
Keep.
Increasing.
Our order book, we expect.
A decrease in the speed that also because we are sold out on a lot of model.
We are focusing I mean today, if you go into dealers you can buy it for model more or less the Romeo the percent, where you have to add the two term IC and two hybrid 2006. Despite a 2016 ETB and then you bought a sanger aroma clearly we expect a slowdown in the buildup of the order book, but this is planted obsolete.
The other point that we are asking our dealers to push more on the motion to enrich the customer experience through all other dimension that we can offer to our customers.
These are the.
A little bit more color on the three question you're addressing me Julian.
Very clear thank you very much.
Thank you.
We will now go to our next question.
One moment please.
And your next question comes from the line of George <unk> from Goldman Sachs. Please go ahead. Your line is open.
Yes. Thank you very much for taking my question I'm actually the first question was just following on a little bit from Julians question. It sounds like you don't have any capacity constraints on the hybrid cars. So I just wanted to ask about the lower shipments of the <unk> 96.
You saw a positive contribution from older models like the FAA, particularly as first deliveries of the <unk> only commenced in <unk> last year.
Deliveries of that vehicle.
Progressive for less than 12 months is this a temporary effect should we expect growth in S. F 90 at some points in coming quarters.
Or are you actually seeing a bit of a wind down in terms of the ASF 90.
The second question I had was just on the 49 nine P, which I think has got everyone with a keen interest in the auto industry on mitral <unk> extremely excited is.
Is it reasonable to expect at some point a route call right from this product and just to revisit I think the introduction of the Iconix theories I believe originally it was flagged bridging the gap between the hyper cars, which you typically only introduced at least once every 10 years.
You see a heightened.
Having a model in production in tandem.
With the intention still be that kind of bridges the gap between the hypocaust. Thank you.
Okay. So we start from the first one George.
One is the capacity constrain you were saying so I would like to.
See what I think one of the key strengths of Ferrari is the ability to manage a different model in production also because the line that we have or not.
Fully automated.
But there are people human beings that are able to give us flexibility and the agility of the production line.
If you can hear you clearly see that the same manufacturing line can manage IC or hybrid or hybrid cars. So what I can tell you is that number one we are.
Producing as planned there is no deviation.
India complements go first of all to the team that is able to manage a complicated supply chain and to also to our partners that are very much supportive.
And that's the important message is that the agility.
This line is thanks to the.
The presence of people that with their passion and dedication are able to to make these aligned very very agile and accommodate what are the clients needs. So this is very important when it comes to 499 P. M are glad that you you also like the cash.
Can't tell you that I was with a colleague a Saturday evening. It is really nice cash.
Step forward for us.
We I don't want to comment about your your question Joseph.
And as you can imagine our product strategy and what we intend to do is also part of our secret sauce.
And I'm really sorry, I cannot disclose more detail, but I can tell you that as you have seen in the past.
That is very good.
Using.
All the all the things that are at a.
There are a lot of the.
By the team.
Thank you.
Thank you.
Yeah.
We will now go to our next question.
One moment please.
And your next question comes from the line of Evan Silva Bad from Morgan Stanley . Please go ahead. Your line is open.
Hi, It's Adam Jonas everybody can you hear me.
Clear yes.
So I just wanted to kind of reconcile you said that the order book for <unk>.
<unk> is fully satisfied but you can still order it.
At a dealer so I just wanted to confirm it's not quite sold out.
Officially correct.
Adam it's a good deduction.
Thank you.
Also China, 14% of total sales.
Versus nine last year.
Dilutive to margin accretive to dollars euros, a profit is that normal that what are your thoughts on what a normal level.
Steady state level of China as a percentage once you kind of get some of your other launches flowing through.
Western markets.
Adam as we said.
In the capital market day, we believe the right number for us, especially in China. If you want is between 11, 11%.
Then 11%.
10, 11% great. Thanks, so much and just and just finally, if I can squeeze one more in.
Then I'll shut up.
You talked about strategic partnerships as you kind of get closer to production.
Production of your first <unk> pure EV in 2025.
I know this call too early for major milestones there but.
I would next year by end of next year be be too soon for you to disclose your battery cell partner or.
Should we wait until.
Beyond 'twenty three for that type of announcements thanks, everybody.
You know that the battery we are the suppliers the seller, we do not even disclose the sale of suppliers he'll make it also for 2006 and this F 90, I believe that.
This is an important part that we want to keep.
For us.
So what I can tell you in the colleague on the phone is that the development of the cash is proceeding as planned we did a big big step forward in Q3.
But unfortunately, we cannot tell you he is going to be the cell suppliers.
Thanks Pat.
Thank you Adam.
Thank you.
We will now take our next question.
Well maintenance please.
And your next question comes from the line of Stephen Reitman from Societe Generale. Please go ahead. Your line is open.
Thank you and good afternoon, I'll ask two questions.
First of all I think it's been said that.
It was a kind of a set of unique circumstances that have led to the situation where you have very few vehicles that are available to sell because of delays with certain launches and other impacts from COVID-19 and other delays so yes.
<unk> got a limited number of part of the vehicles to sell when in your mind do you think we'll be in a situation where dealers will have a much wider range of vehicles to sell.
And secondly could you comment on the trends in Brazil bond yields obviously, I know that Steve was supposed to be your dealers to do that with obviously your view most of those that situation quite closely as well. Thank you.
I start from the second seven.
Trends on the residual value, we don't see any change so we see some model appreciating, but we don't see any change over there and actually.
We believe that the factor that.
The fact that the a lot of models are sold out this will give it will be an opportunity for our leaders to focus also on the pre owned at the on the pre owned.
Business.
And then there was the first question was about the.
The windows.
Okay.
Yes, I think.
Luca.
Is what we said in the capital market day, we are planning to launch.
15 models in these four years beyond the put us and we are sticking to that.
We may have some more that are more successful than others, but I think what I can tell you that we speak to our our campus that is 15, new models with a split I told you on.
On the capital market day.
He did.
It means that in 2026.
We will have the offering split.
Between that we were levered at three offering the IC the hybrid and electric as.
What we told you in the capital market day. So there is no change and we had actually I can also give more color Stefan last week, we added the distribution.
The dealers annual meeting here in the modern era, where we add the 500 people visiting us.
<unk>.
Let me say this.
They are very supportive very much engaged.
They fully agree on our on our plan for the future in terms of.
New car launches. So there is very very.
Tight relation and we are.
We are working very very well with them and they with us.
Thank you.
Yes.
Thank you.
We will go to our next question.
And then please.
And your next question comes from the line of Monika <unk> from Intesa Sanpaolo. Please go ahead. Your line is open.
Good afternoon, everyone I Hope you can hear me.
Firstly is on Sunday.
The personalization rate on average.
Is 18%.
I'm wondering if we can assume much higher.
Utilization rates are potent sang Glenn maybe in the range of a 'twenty three 'twenty four.
Well Stephen this side.
The second question.
Well the strategic.
Looking forward to that.
When you see is reasonable.
Electric models with the same mission of the put it that way Jeff.
Yes.
Thank you.
And if ever lost that is.
<unk>.
Maybe it's too early to ask about do you have a breakdown.
Black down of the customer profile might change.
For the full assembly. Thank you very much.
Thank you Monica So I started from the Bureau sandwich.
Okay.
Let me tell you what I'm, saying that.
<unk> is a lot of.
Accessories, a lot of optional a lot of opportunities for consolidation.
Because we have been reaching the offers.
I mean, we.
I mentioned, just one that is very interesting Gisela electrochromic.
Glass roof, it's very very interesting and very good I appreciate it.
E I believe.
That.
There could be opportunities to have angered personalization, but at the end of the soda it depends also water.
Clients and how much they want to personalize.
So I wouldn't I would.
Allow me to say it would be arrogant.
If I would guess what piece of the personalization rate of the of the clients.
Produce that offer is pretty wide and usually as you have seen also in Q3 and does the guidance in Q4 is also driven by.
Positive tailwind on the personalization.
Then when it comes to the let me say electric Borda sanguine.
Allow me to say it this way and the second question something similar yes.
Yeah.
As I said before to to another colleague.
The plan for the future is something that we are very.
Secret of it.
We believe it constitutes a competitive advantage for us So let me say it this way we will use.
The technologies in a way keeping always mined and putting golar as the client at the centers and the driving trailers that we want to generate so.
We have a plan, but I cannot disclose here.
Okay, sorry Monika.
Good point.
<unk>.
The customer a picture, yes for sure we have a customer.
We know the customer will put us hang with what I can tell you without.
Disclosing any anything confidential, but I can tell you is that we have a strong acceptance either by yet.
Let me say the collectors what was call it in the previous call I think top of VIP.
And also by the new prospect.
The reception of this model across different age.
Different region.
Different genders.
Is very very strong so there is not a clear.
Sign a clear pattern I can tell you that.
Men and women.
<unk> European and American.
They all of them.
A little bit talk a little bit younger they will likely is this cash that put us on with.
Thank you very much very clear thank you.
Thank you.
Thank you.
We will now take your next question.
One man.
And your next question comes from the line of John Murphy Bank of America. Please go ahead.
Good afternoon, just one.
Additional question on the parcel language, you've mentioned that it could be as much as 20% of your volume and you would limit. It there. If you look at the volumes that you put up this year in 2022 that would imply that you might be able to do three to $3 5000 of the poorest language go forward I'm.
I'm just curious.
Based on your order book, right now and what Youre thinking.
That is a number you think is achievable and if we were to think about something like that would equate to about four to five years of the volume growth that most people are expecting so it seems like.
That would be sort of a high number I'm just curious as you dimension, where that segment actually could be for you I know youre governing and at 20%, but is that something you think can happen more quickly or based on your order book, maybe it might take longer.
Thank you Johnny maybe I misunderstood you said the 3500 per year.
So assuming that we're going to do it.
Yes, assuming you are going to do about 13000 units. This year I mean, just grossing it up and just seeing if youre going to do if you're limiting the porcine go to 20% you would add specifically 3250.
Units to that base of 13000 that would be porcine was to get to 20% mix as far as sanguine I mean, basically how fast do you think you could get there or how slow you think you'd get there.
And how do you manage this based on the order books that Youre seeing right now.
I was asking is that for me, 20%. After 13000 in 2600 that the reason why I wanted to check so what they can but I would imagine it'd be incremental right I mean, it wouldn't be any maybe.
<unk>.
I'm, not saying the incremental im saying that.
Out of the total numbers.
After 20% of yearly volumes will be put us hardware. So let's say if it is 13000 that is around the $2 6000.
What I can tell you is that we are pretty close to our target.
And.
Let's say I think this is the most.
Let's say the most detailed information I can I can provide you together with the fact that the carrier really received a strong strong acceptance as I said before but or people that attended because we had the customer traveling from all over the world.
<unk>.
Let's say the acceptance has been very very strong lots of enthusiasm.
I appreciate the performance is they appreciate the design. They appreciate there is also the driving emotion because.
During those days.
There was a very good idea of the marketing team of the commercial team. They offered the possibility to some customers that were selected.
Through a lottery to driver to drive the cash for around 40 kilometers and they cannot should we view, but there are the video of the people that are really.
Crying for the emotions that they can experience so.
Very strong acceptance because of the performance of the sign in driving trends.
And we are very close to our target and as I said, we stick to our plan to not pass the 20% threshold of our envelope volumes whatever they will be.
We look forward to driving it just there's just a second question real quick if we think about 2023 mix is going to be a major positive with the Daytona and the <unk>. It sounds like pricing is a small positive for you right now and that's likely to continue volume, presumably will be up raws are easing other cost inflation might not be too bad.
It sounds like your earnings make GAAP open next year I think consensus is for better than a 20% increase in it.
In EBIT is there any sort of major sort of headwinds that I might be missing or we should be thinking about.
Or even positive factors, we should think about break besides those major ones for 2023.
Yeah.
I mean, the capital market day was clear about the target also for next year.
Clearly, we are paying close attention to the story of the inflation.
And this is also the reason why.
We said also in the previous call we are increasing prices for the next year, but for the rest I mean, we are proceeding alere as planet and as in the past we delivered on on premise on our promises we want also to continue to deliver.
On our.
On our promises. So this is our I would say daily commitment to the people here and obviously to do all the shareholders.
Great. Thank you very much thank.
Thank you.
Key.
We will now go to our next question.
One moment please.
And your next question comes from the line of Thomas Besson from Kepler. Please go ahead. Your line is open.
Thank you very much.
I'd like to first follow up on Jordan's question.
Okay.
I know you never want to give me exact.
Exactly.
When you said 20% of.
Yes, you bet.
I think we probably need to think about a few years old.
So does that does it take us on the grounds capacities with two shifts.
<unk> production lines or does that include as well potentially incremental capacities from BD. So should we think about it.
500, or more before solvents units per annum for Costar group.
That's the first question. Thank you.
No no.
As we said I mean, we.
We will not that will not be a big change in our capacity.
We want to keep it to guarantee the exclusivity overall, because we sell put us and way as I said also in June when we met theory marinate alone.
It's not the cash that is meant to double the volume for us like it is in the strategic plan, Nevada play.
Players in this in this field.
For us it's a unique carries his podcast is a cat unlike any others for which we aim to have.
Maximum 20% of the yearly volumes because I believe we believe that the exclusivity and uniqueness.
Of our Cara goes also through this this avenue.
We don't want to end up doubling the volume.
Let's say, putting a lot of our capex and also because as I said exclusivity and.
The uniqueness of the key drivers of our.
Product strategy and our if you want our daily Compass and Thats, what we want to stick to.
Thank you very clear.
Second question on Forex, but when we look at 2023.
Reasonable to expect another decent boost from Forex, given your hedging positioning or how wisdom.
Reasonable growth.
Benefits from that.
Okay.
Okay. That's a good question for Antonio because otherwise it was silent.
Good.
As part of keeping my attention alive.
Yes.
It depends of course, I mean, we as you know we hedge foreign exchange on a rolling basis that means that we basically project on 2023.
The trend of 2020 to whether this will be a positive or negatively pretty much depends on how the foreign exchange rates behave.
On a spot basis.
All in all we try and have approximately 70% of our total exposure adds in advance.
Declining over time, so we're basically projecting into 2023 and as I said before the trend that we are witnessing in previous months.
Then if the dollar goes to one then obviously we have a huge positive if it goes to 182, sorry, two OLED is going to be a negative that there is a sense of my answer.
It adds.
Yes.
So just to be.
A quick follow up can you confirm the dates of deliveries.
Joseph.
This quarter you will have the first deliveries.
Yes, it's Q2.
You too.
Very much.
Welcome.
Thank you.
We will now go to our next question.
One moment please.
And your next question comes from the line of Philip <unk> from Jefferies. Please go ahead. Your line is open.
Yes, Thank you and good afternoon I've got two questions. One is I'm just following up on the question on the used values.
If I understand right you saw your comments, saying you've got remarkable order intake.
<unk> models.
And that will probably more likely translate into better residual values, rather than maybe use marketing more economically sensitive and people will be kind of more.
More shy about buying those cars.
So my question is is there any way that Ferrari is directly leveraged to implement and use values, what I mean by any agreements with dealers, where there is a bit of profit sharing you'd say theyre going to benefit. The most I guess that this improving to use values and I'm. Just wondering you've seen anywhere you are geared to that.
To that gain.
Profit sharing we dealers.
And my other question is a lot of questions about.
Sure Sangria, and 20% cap et cetera.
If I hear you right again is this car drives every bit as well as any Ferrari. So we're very proud of it. So it is 20% cap is just arbitrary too.
But there's no cause for years it was concerned about Suvs might.
The brand et cetera, but this is not at all the case, you're just trying to.
To keep the diversification of your product portfolio.
Rather than let loose a car that might eventually dominate some of your volume is that correct.
Okay, Philip I will start from the first one.
When it comes to the pre owned business, we have no profit sharing okay. So there is no profit sharing with our diverse it's their business the manager and.
And the way they want.
Let me say a unique center.
What we have to do to help them is always to think about uniqueness exclusivity of the model. So this is what we do when it comes to put a sandwich.
I think we.
I would like to take this opportunity to remember that there are two water that the infrared do not fit well there.
Variety in utility.
I mean, the SUV and as I said, there is not an SUV or a few re because putting together the utility water waiver Faradic IRA I think we all agree is in no sense.
Now the story of our put us hang with it is a new category is unlike any others. It is pushing.
And is very well appreciated where we said the 20% because we believe that this is a cash like the other carrier we have in our in our range, we will ever if you make the math, we will leverage <unk> for around the forecast.
Yes, four to five Carrizo is around the 20% the split of the cash that you put on.
On the market. So that is not I would just say arbitrary there is a rationale behind.
That is always meant to preserve the uniqueness and the exclusivity because we can see that for us and with it.
Like others, we have in terms of volume split and the like any adverse cash in debt.
<unk> category, if you want.
Some other other.
There are other competitors, it's a unit cash and we want to preserve uniqueness and exclusivity.
Maybe you can be you can be not utility can be uniqueness.
Yes.
Well, thank you Mike.
Thank you very much.
Sure.
Thank you.
We will now go to our next question.
One moment please.
Okay.
And your next question comes from the line of Tom Narayan from RBC. Please go ahead. Your line is open.
Hi, Yes, Tom Narayan RBC, thanks for taking the questions.
The first one is.
On the on the guidance you guys have out there for for 2023, I know thats. It does feel I think somewhat scale.
Think some investors may be.
Just wondering if I mean, why maybe you haven't withdrawn it or commented on it I know usually you only comment on the annual guidance in the full year call, but I was just curious if there was any commentary on the current 23 guidance that you have out there and then the second question on pure song way a number of US on this call attended.
Rolls Royce event, and we were I found it surprising to hear that a lot of customers for that brand really didn't care as much for software or assisted driving and those sorts of features and cared more about.
Luxury aspects of the car and stuff like that just curious if this is what you are hearing from your latest event from consumers looking at the pure song way as well. Thank you.
I just have one on the second one.
If I understand well.
Tom.
How much is valid to the software in this kind of cash.
I'd like to say that when you're talking about the luxury cash in these through I have seen in our <unk>.
In this role since 14 14 months.
It's true that there are features that.
May be important in mass market cash, but not at all important in luxury cash.
You have had the pleasure to talk with many customer during this year.
So what I can tell you that.
The software the digital electronic Kinder cast must be placing the right value because if you're et cetera right.
Nobody will appreciate that value. So I cannot comment specifically about the put us angry, but I cannot tell you that when you're talking about the luxury cash well.
It is.
Place, where typical dimension that are important for the mass market players do not find this partner, meaning in this world.
When it comes to 2023 guidance I think you understood well, we provide the guidance for 2022.
I can repeat what Tony and myself said before that.
The business model is very robust.
The portfolio is very strong.
He is very robust and then we feel confident about this year and next year, but we do not provide any specific any specific guidance.
Tom.
Okay no problem. Thank you.
In addition to what we said in the capital market day of course.
Understood.
Thank you.
We will now go to our next question.
While mainland please.
And your next question comes from the line of Anthony <unk> from <unk>. Please go ahead. Your line is open.
Yes, hi, thanks for taking my questions.
First one on the 2023 margin guidance. It seems in Q4, you're going to have probably some positive product mix for the assess 90 some positive mix.
The FX tailwind and also maybe a few expenses with fewer events.
Your Q4 EBITDA margin guidance is for a very moderate increase in terms of margin. So I was just wondering.
If there are any particular headwinds to expect on the margins in Q4.
And then some.
Quick question on the topic of energy and energy supply.
I understand that you used gas.
Your production your factories in Italy is reliant.
Quite heavily on Russian gas. So I was just wondering if you can.
Put in place any measures to significantly reduce your gas consumption or any contingency plans you have in case the country faced a gas shortage. This wins over the next thank you.
Okay. So I think Anthony I took the one on energy and I'll, let Tony.
<unk> commented the first one so I would like to clarify a few things number one we do not rely on our Russian gas.
Number two we produced 80% almost 80% of our energy is coming.
Through the three generator that we are in our factory number three as I assure you. We are working we are increasing the share of electricity that we are generating announced and we are also reducing the energy waster.
Through better efficiencies or.
Let me say a leveraging the ideas that the Tms if you remember I was talking about reducing.
The gas consumption by 2% that is.
The numbers that has been done about year, let me say, putting the people around the table. So we are.
Putting also some contingency plan in place because in case there are some national.
Let me say national direction, whether we will.
We are here in Italy, we will stick to them, but we're putting it.
Contingency plan in place and clearly the stock that we have is also a way to manage this situation for the first one I would like to.
To your question on the implied margin for Q4, Anthony I think these are in line with the nine months in terms of EBITDA, So 35% expected to be confirmed in the last quarter.
<unk>.
In terms of the rationale I think the that actually you may think of the business being particularly strong in terms of personalization. In addition to what the range of models that we sell may provide.
We have a positive from foreign exchange rates compared to the initial expectations for the year and in terms of the negative cost inflation is the only one I can think of so all in all I think we are in line with what we had.
Aspect and since overall throughout the year.
Okay. Thanks very much.
Thank you.
Thank you I will now hand, the call back to Ben a detail Linea. Please go ahead.
Thank you thanks to all of you for your time today and also for all your useful question.
As you have added.
In a few minutes ago from myself and Antonio we did what we said we delivered on all our what we promise it and we look with great confidence to Q4 and beyond.
Closing I also take the occasion to.
Thank the men and women no Ferrari you Marinate law and all over the world that contribute daily to the success of our company.
For the time being hey, good afternoon, everyone. Thanks again for your attention and talk to you in a quarter bye bye.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
The conference will begin shortly.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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