Q4 2023 Ferrari NV Earnings Call

February 1, 2024

Benedetto Vigna: The visibility granted by the Order of Moogs gives us the confidence to look to the future, but at the same time, we need to keep always four wheels on the ground. Confidence, Humility, and Will to Progress have been, are, and will be our North Star during the execution of our business plan. Following an initial phase of our business plan characterized by revenues and profitability expansion, in 2024, we continue to grow our top line while consolidating percentage margins, which we expect to further expand toward the end of the current business plan. The record result of 2023, the exceptional visibility in our order book, and the extraordinary performance of our business allow us to look at the high end of the 2026 target with the strongest confidence.

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Ferrari 2023 full-year results conference call and webcast. At this time, all participants are in listen-only mode.

Speaker Change: Good day, and thank you for standing by welcome to the salary 'twenty 'twenty four and full year results conference call and webcast.

Speaker Change: This time all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session to.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Speaker Change: To ask a question during the session you will need to press star one and one on your telephone you will then hear render tomatoes message advising you hadn't is raised.

Speaker Change: To withdraw your question. Please press star one and one again.

Speaker Change: Please note that today's conference is being recorded.

Speaker Change: I would now like turn the conference over to your Speaker Nicoletta Russo head of Investor Relations. Please go ahead.

Nicoletta Russo: Thank you, and welcome to everyone who is joining us today. Today, we plan to cover the group's full year 2023 operating results and 2024 guidance, and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the group CEO, Mr. Benedetto Vigna, and the group CFO, Mr. Antonio Picca-Piccon. All relevant materials are available in the investor 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 statements included on page 2 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 Benedetto.

Nicoletta Russo: Thank you and welcome to everyone who is joining us.

Nicoletta Russo: They would plan to call or the idiot.

Slide 23 operating results and trying to judge it for guidance.

Nicoletta Russo: And the duration of the call is expected to be around 60 minutes. So let's call. It will be offset by the Greek yogurts that I've been in this arena.

Benedetto Vigna: [inaudible] In race power DNA, we will compete at the top in Formula 1 and endurance. We have recently confirmed the World Endurance Championship team. And in Formula 1, we have reinforced the technical team and expanded the manufacturing area, which is already up and running. And during the last weekend, we won the 24 hours of Daytona in the GPD Pro Class with our 296 GT3 cars. Definitely a great start to the 296 GT3 career

Nicoletta Russo: Is that a.

Nicoletta Russo: All relevant materials are available in the investors section.

Nicoletta Russo: Website.

Nicoletta Russo: Presentation available.

Speaker Change: 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.

Benedetto Vigna: Grazie Nicoletta and thank you everyone for joining us today. 2023 will be remembered as the year in which we accomplished many achievements and strengthened our brand across each of its three souls, racing, sports cars, and lifestyle. For this, I would like to thank all the women and men of Ferrari for their outstanding work, all our clients for their continuous trust in our brand, and all our partners, suppliers, dealers, and sponsors with whom we have continued to strengthen our relations. Among the many achievements realized in 2023, I'd like to mention three. The first historic victory at Le Mans.

Speaker Change: That's the way that they do.

Speaker Change: We're actually Melissa and thank you everyone for joining yesterday.

Speaker Change: 2023 will be remembered as a yes in which we accomplished at the many achievements.

Melissa: And we are strengthening our brand across each street salts racing sport casual and lifestyle.

Benedetto Vigna: On top of that, we have just announced that we are expanding our presence in the racing world with the intention of setting records also by racing on the seas of the entire world. In sports cars, we will inaugurate the e-building in June, exactly two years later than the last Capital Market Day. We will further enrich the product offering with three new model launches, and we will continue to enhance our client experiences, both on track and on road, not only branding new cars but also taking care of Ferrari's pre-owned models with tailored events. In our history, we have created about 250 different models of Ferrari, and for us, they are all equally important. They are all our kids.

Melissa: For this I would like to thank all the women and men of Ferrari for their outstanding work all our clients for their continued trust in our brand and all our partners suppliers dealers and sponsor.

Melissa: We have continued to strengthen our relationships.

Melissa: Among the many achievements realized in 2023 I'd like to mention three.

Melissa: Our first historic victory, Italy manner.

Melissa: The second is the fact of new model launches further enriching our beautiful product offering together with a variety of new clients engagement experiences.

Melissa: And last but not least the new iconic bank.

Melissa: Naval clash extends out of cooperation between colleagues in Maranello belongs to sports caffeine and those in Milan of our lifestyle departments.

Melissa: These achievements are reflected in our record.

Melissa: Full year financial results across all metrics.

Benedetto Vigna: In real terms, 2024 will be the year of progress, with an array of activities designed to build scale while elevating and expanding visibility. Among our priorities, we continue to focus on our carbon neutrality journey, which is further boosted by the ultimate goal to shut down the three generators within the next 18 months. We look ahead to 2024 with energy, agility, and confident humility, but above all, with enthusiasm for the new exciting challenges in front of us. And now I hand over to Antonio to review the 2023 results and the 2024 guidelines. Thank you, Benedetto, and good morning or afternoon to everyone joining us today.

Melissa: Let's start by reviewing together <unk> numbers for 2023.

Melissa: Revenues were at approximately 6 billion euro.

Melissa: EBITDA at $2 28 billion Euro we've record yearly EBITDA margin of 38, 2%.

Benedetto Vigna: Net profit, the first in our history, well over the 1 billion euro threshold, with a remarkable net profit margin of 21% and industrial free cash flow generation of approximately 930 million euros, of which about 800 million euros distributed to shareholders between dividends and share by debt. And now, after the numbers, let's deep dive into our racing activities; winning the 24-hour early month was an unforgettable day for our history. I was there, and I will never forget June 11 afternoon because it saw our victorious return to the top class of the World Endurance Championship at the centenary of this legendary 24-hour race.

Melissa: Net profit.

Firstly in our history went over one 1 billion Europe pre show, we've had remarkable net profit margin of <unk>.

91%.

And in that is a free cash flow generation of approximately 930 million euro.

Melissa: About 800 million distributed to shareholders between dividends and share buybacks.

Melissa: And now after.

Melissa: After the numbers, let's deep dive into our racing activities.

Melissa: We need a 24 hour roughly matters was announced forgettable day for our guests.

Melissa: I wanted to ask but I will never forget the June 11, our spending around it because it's so our I'm just curious to the ton.

Melissa: Top class of the Warden Euro exchange yesterday on the centenary.

Melissa: Again, the 24 hour race.

Benedetto Vigna: The Ferrari 499P's win was a true team effort. Every department, every area of our company worked together to contribute to our hypercar success, and I'm really proud of everyone.

Melissa: <unk> added four nine Ninety's when was it through gene Excellence every item every avenue of our company working together to contribute to our anchor cash success and I'm really proud of everyone. As we say we are and we act as one.

Antonio Piccon: Starting on page 7, we present the highlights of the results for the entire 2020. As Benedetto just mentioned, 2023 was another record year for our company, with all financial metrics once again growing double digits and with a significant margin expansion of three percentage points at the EBIT level and even more at the EBITDA level. Even if our four-year plan from the last capital market day is rather front-loaded by design, such results went beyond our expectations, considering the modest shipment increase and inflation headwinds affecting our input costs, a visible, real-life application of the obsession to privilege value upon volume and to control allocations to promote exclusivity. Let's dive into the details to try and shed some light on our path forward. Our strong business performance in 2023 was sustained by three main factors. A rich product mix per se, further emphasized by a surprisingly strong personalization approach, coupled with a favorable country mix.

Benedetto Vigna: As we say, we are, and we act as one Ferrari. In Formula One, we fought till the very last race, even though the last season has been a difficult one, often short of satisfaction. We know we must continue to work tirelessly to return to the level that our tifosi rightly expects of us, and we look forward to it. The continuous will to progress in striving for excellence in racing, and everything we do, testifies to our effort and our willingness to always push the boundaries of technology and innovation audaciously. And this leads me to the achievements we have reached in our sports cars. In 2023, we unveiled five new models. Out of the 15 models announced at 2022 Capital Market Day, three models are for the road, the Roma Spyder, the SF90XX Stradale, and the SF90XX Spyder.

Melissa: And fundamentally what we photos.

Melissa: Very last days, even though the last season has been a difficult one often short on satisfaction. We know we must continue to work tirelessly to return to the level that our policy rightly expect of us and we look forward.

Melissa: The continues to progress and striving for excellence in leasing and everything we do.

Melissa: <unk>.

Melissa: And our willingness to always push the boundaries of technology and innovation have accurately.

Melissa: And this leads me to the achievements, we returned an hour sportscast in 'twenty to 'twenty three we unveiled five new markets out of the 15 modest announced that 2022 capital market days.

Melissa: Three model further but on the spot.

Melissa: 90, <unk> traditionally and SF 90 X X by this date.

Benedetto Vigna: They all raise the bar of technology and design still far to meet and exceed the desires of our clients, and we have two models for the track. During the Finale Mondiale at the Mugello Circuit last quarter, we unveiled the 296 Challenge and the 499P Modificata, both of which will set new benchmarks in track driving thrills for our most passionate racing clients. Consistently and coherently, we follow our strategy of different Ferraris for different moments, different Ferraris for different purposes. This year, we continue to engage with our clients through many experiences on the road and on the track. I refer to unique and truly engaging occasions, such as the Finale Mondiale, our cavalcades, our legacy tours, to mention just a few of them. These are all experiences that continue to bind our community even further and evoke a true sense of belonging.

Melissa: <unk> raised the bar of technology and design.

Melissa: To meet and exceed the status of our clients.

Melissa: Two more or less for the truck during the finale modality.

Melissa: Last quarter, we unveiled at the 296 challenge in the 49 nine mortgages.

Antonio Piccon: These led to revenues up 17%, and adjusted EVDA growing roughly 28.5%, that is, €500 million, with a very solid margin standing at 38.2%, and adjusted EBIT up approximately 32% with an annual record 27.1% mark. Net profit of €1,260,000,000, leading to an adjusted diluted earnings per share of €6.9 from less than 5.1 last year in a particular node of the industrial pre-technological generation, which reached 932 million euros. Moving to page 8, you can see the details of the full year shipment. In the year, deliveries increased less than 450 units after two post-pandemic years of strong double-digit increases.

Melissa: Both of which will set new benchmarks in trucks driving sales of our most passionate safety clients.

Melissa: Consistently coherently, we follow our strategy of different sort of different markets different Ferrari for different February St.

Melissa: This year, we continue to engage with our clients.

Melissa: My experience on the road and on the track I refer to unique and truly engaged in location such as if you're not in one hour.

Melissa: Our cavalcade the legacy tour.

Melissa: Legacy tools to mention just a few of their needs.

Melissa: These are all experiences, which continue to run our community event and they won't get through sense of belonging.

Benedetto Vigna: These exclusive events enable our clients, our Tifosi, and enthusiasts to interact with the brand and live experiences together. 2023 has been a year of learning for our lifestyle activities, which have shown positive indicators, among which improved retail performance, successful activations in conjunction, and this is really key, in conjunction with racing and brand events and record numbers of museum visitors. In fact, 740,000 brand lovers visited our museums in Maranello and Modena over the years.

Melissa: These exclusive events enable our clients our policy and introduce guests to interact with the brand.

Melissa: And Lee experiences together.

Melissa: 2023 has been a year of learning for our lifestyle of theaters, which have shown positive indicators among reaching prepay.

Antonio Piccon: As usual, geographies reflect our choices of volume and product allocation in the different markets. EMEA and the Americas were up versus the prior year, representing more than 70% of our total shipments. The price of Airpaks was almost flat at 17%, and mainland China, Hong Kong, and Taiwan reduced their share by a few tens of units to 11%, in line with our long-term targets for this area considering its relative use and evident dilution impact on our percentage margin. Shifting to the product, the most significant change in the year was the doubling of the idle share to 44% of the total volumes underpinned by the growth of The highly anticipated Puro Sangue ramped up during the second half of the year to finally reach its cruising altitude in 2024.

Melissa: Retail performance successful Activations in conjunction and this is really key in conjunction with <unk> and brand events and record them as Ceos musicals in fact, seven under 40000 brand allowed us visited our museums in parallel.

Melissa: In Montana in DFS, and almost 20% more people than one year ago, confirming the strength of the brand and the passion of our community.

Benedetto Vigna: Almost 20% more people than one year ago, confirming the strength of the brand and the passion of our community. Throughout all the years, throughout 2023, we have also made relevant progress on our carbon neutrality journey. Indeed, we reduced our Scope 1 and Scope 2 emissions by 7% in 2023 and by 16% versus 2021. We built our first prototype engine from recycled aluminum.

Throughout all the years throughout 2023, we are also down available progresses, we know what catapult nephrotic, Germany, Indeed, we reduced our scope one scope two emissions by 7% in 'twenty, two 'twenty, three and by 16% versus <unk> <unk>.

Melissa: We built our first prototype LNG from.

Melissa: From recycled aluminum, we also saw a solid solar finance, providing an extra $2 four per megawatt hour compared to last year.

Benedetto Vigna: We also installed solar panels, providing an extra 2.4 megawatts of peak power compared to last year. An additional 1 megawatt of peak power will become available in the coming months from the renewable energy community, the first ever energy community in Italy to be backed by an industrial company for the benefit of its local area. And this is only one demonstration of the moral obligation we feel to give back to local communities.

Antonio Piccon: The Roma Spider, which was unveiled in the first quarter, already commenced delivery in the last quarter of 2020. Special series, represented by the A12 Competizione 20, increased compared to one year ago thanks to the deliveries of the Acerta version, while the Daytona SP3 shipment continued according to our plans, between 30 and 40 units per port. Lastly, in the year, the F8 family concluded its life cycle with the Portofino M, which was also approaching its end. On page 9, you can see the Net Revenues Breach, costing a robust 17% growth versus prior year, also at custom current. The increase in cars and spare parts was evidently the main contributor, driven by the richer mix, personalizations, pricing, and slightly higher volume. However, price increases during the year were differentiated by product and geography in accordance with decisions taken in the second half of 2022 to protect our margin from the surge of inflation. Personalization continues to strengthen, and in the last quarter, we witnessed a consolidation of the trends registered in the first nine months.

Melissa: Additionally, one megawatt peak power will become available in the coming months some of the renewable energy community.

Melissa: First David NMC community in Italy to be made by an industrial company for the benefit of.

Melissa: Local area and this is only.

Melissa: This is only one demonstration of the moral obligation we feel so give them back so locker community.

Benedetto Vigna: All of these developments, as well as the record result, have been possible thanks to the passion and dedication of all my colleagues. And to reward their achievement, in line with the company's strong performance indicators, I am pleased to announce the yearly competitive award of up to nearly €13,500 for all our employees. We are also proud to mention the additional four welfare initiatives that we announced on last November 13th.

Melissa: All of these developments as well as the record Lasalle has been possible. Thanks to the passion and dedication of all of my colleagues here and towards the mid <unk> and in line with the company's strong performance indicators and please join US the yearly competitive award of up to nearly 13000.

Melissa: 500 Euro.

Melissa: Our employees.

Melissa: We are also proud to mention.

Melissa: The additional phone welfare initiatives that we have announced that the last November 14.

Benedetto Vigna: A broad-based shared ownership plan for our 5,000-plus employees, the extension of health check-ups, parenting support, as well as the 250 new hires. On top of that, we have also received the Equal Salary Certification on a global level for the first time, a result we can all be proud of. 2023 was characterized by global tensions, geopolitical conflicts, supply chain disruption, and cost inflation, all challenges we have learned a lot from. Our flexibility, our agility, together with the constant support of our clients and partners, allow us to look at 2024 with confidence. Such confidence also derives from the positive momentum that we continue to experience. Notwithstanding the current challenging macroeconomic environment, the vitality of our business is once again confirmed by the order book on current models, which remains strong across all geographies and covers the entire 2025. During the last month, I've been visiting several dealerships in Europe, the USA, and different countries in Asia, and I can tell you that the traction of our brand is really strong. You can really feel it.

Melissa: Broad based assays ownership plan for our 5000 plus employees next.

Melissa: The extension all else checkups.

Melissa: Parenting support as well as the two and receive speeds.

Melissa: On top we have also received equal Saturn simplification on a global level for the first time ever that we can all be proud of.

Melissa: <unk> three was characterized by global stations geopolitical conflicts supply chain disruption and cost deflation all challenges we have learned a lot from our.

Antonio Piccon: In 2023, personalization stood at approximately 19% in proportion to revenues from cars in their path, mainly driven by paying, liveries, and the use of cars. Commercial and brand reflected higher sponsorships, including Formula One and World Endurance Championship racing activities, higher Formula One commercial revenues and a better ranking achieved in 2022 compared to 2021, as well as the growing contribution from lifestyle activities. Engine's revenues declined in line with the reduction of supplies to Maserati, whose contract expired at the end of 2023.

Melissa: Our flexibility.

Melissa: Together with the constant support of our clients and partners allow us to look at 2020 with confidence.

Melissa: Such confidence.

Melissa: So that as from the positive momentum that we continue to experience.

Melissa: Notwithstanding the current challenging microeconomic macroeconomic environment.

Melissa: Vitality of our business is once again confirmed by the order book on current models, which remain strong across all geographies and coldest main side 2025.

Melissa: During last months I've been visiting several dealerships in Europe USA in different countries in Asia and I can tell you that the traction of our brand is really strong you can't really break.

Benedetto Vigna: When you meet our clients in the dealership and you see how they interact with our dealers, you can easily understand their strong attachment to our brand. Our leadership is a great point of aggregation for our clients, and events organized by our leaders help to give a boost to the spontaneous gathering of our loyal clients. The residual values remain sound, with different dynamics in the region and normalizing from the peaks registered in the post-pandemic period when a lack of new products boosted them.

Melissa: When you meet our clients into the literacy and you'll see on the Iraq. We've our BS you can easily understand the strong attachment to our brands our dealerships are in.

Antonio Piccon: Therefore, from the first quarter of 2024 onward, any residual contribution from the sales of engines to third parties, whether for sports cars or racing, will be reported in the bar named as, Currency has a small negative net impact, mainly reflecting the opposite dynamics of the US dollar, Japanese yen, and Chinese yuan. Moving to page 10, the change in adjusted EBIT is explained by the following variant, volume positive and reflecting the limited increase in shipment mix and price also positive and very strong at 461 million euros thanks to a very favorable product mix sustained by the Daytona SP3, the A1250 and DSL Classic families, country mix driven by the Americas and mainland China, Hong Kong, and Taiwan, despite the small decrease in deliveries in the year and today's increased contribution from personal Industrial and R&D expenses grew by €166 million, mainly due to higher depreciation and amortization, cost inflation, and higher Formula 1 expenses. The GNA was negative for 43 million euros, mainly reflecting the continuous development of the company's digital infrastructure and organization.

Melissa: Great point of aggregation for our clients and events organized by our beers.

Melissa: Given a boost to the spontaneous aggregation of our loyal clients.

Melissa: Legal values remain sound with different dynamics in the region and normalizing from the Pes registered in the past and then asterias when a lack of new product most of the debt.

Benedetto Vigna: The visibility granted by the order move gives us the confidence to look at the future, but at the same time, we need to keep always four wheels on the ground. Confidence, Humility, and Will to Progress have been, are, and will be our North Star during the execution of our business plan. Following an initial phase of our business plan characterized by revenues and profitability expansion, in 2024, we continue to grow our top line while consolidating percentage margins, which we expect to further expand towards the end of the current business plan. The record result of 2023, the exceptional visibility on our order book, and the extraordinary performance of our business allow us to look at the high end of the 2026 target with stronger confidence.

Melissa: We have it immediately branded debate a little bit more you've asked us the confidence to look at the future, but at the same time, we need to keep always all the wheels on the ground.

Melissa: Confidence humility and with the progress <unk> been asked and will be our north star during the execution of our business plan.

Melissa: Following an initial phase <unk>.

Melissa: Our business plan characterized by revenues and profitability expansion in 2024, we continue to grow our top line, while the consolidated best LPG markets, which we expect to further expand towards the end of the current business plan.

Melissa: Banco Elisa.

Melissa: 2023.

Melissa: First on disability.

Melissa: Good move index at all.

Melissa: Most of our business and allow us to look at value and for the 2026 tablet with strongest confidence.

Benedetto Vigna: But beyond the cold numbers, what should we expect in 2024 from us? In race power DNA, we will compete at the top in Formula 1 and endurance. We have recently confirmed the World Endurance Championship team, and in Formula 1, we have reinforced the technical team and expanded the manufacturing area, which is already up and running. And during the last weekend, we won the 24 hours of Daytona in the GPD Pro class with our 296 GT3 cars. Definitely a great start to the 296 GT3 career.

Melissa: But beyond that because the numbers what to expect in 2010 before from us.

Melissa: Right.

Melissa: It may we will compete with the top two formula one in euros, we have recently confirmed.

Melissa: Northern Europe Central 16.

Melissa: And the other one we are enforcing better testing and expanded the manufacturing which is a really good run.

Antonio Piccon: In addition, we kept on adding resources to enhance our brand investment, which encompassed all our marketing lifestyles and other initiatives designed to enhance brand recognition among clients. Harder was positive about 81 million euros combining higher Formula 1 commercial revenues as well as a better ranking in 2022 versus 2021, new sponsorships, higher contribution from lifestyle activities, and certain releases of provisions already discussed during the year. The total net impact of currency was positive for 15 million euros.

During the last weekend, we wanted to 24 hours.

Melissa: Daytona Pro class with our 96 GTP has definitely a great start for the 250 study yes.

Benedetto Vigna: On top of that, we have just announced that we are expanding our presence in the racing world with the intention of setting records also by racing on the stage of the entire world. For sports cars, we will inaugurate the e-building in June, exactly two years later than the last capital market day. We will further enrich the product offering with three new model launches. And we will continue to enhance our client experiences, both on track and on road, not only with brand new cars but also taking care of Ferrari's pre-owned models with tailored events. In our history, we have created about 250 different models of Ferrari. And for us, they are all equally important. They are all our kids.

Melissa: We have just announced that that's led expanding our presence in the racing world. We the intention of setting records also by raising overseas.

Melissa: Sidewalks.

Melissa: The sports Scott, we really number right.

Melissa: They are engaged.

Melissa: Actually two years later than the last capital market day, we will further enrich the product offering with the three new model launches and we will continue to enhance our client experiences both on track and or not.

Antonio Piccon: With the positive net support of these variances, we reach the yearly records of EVDA and EBIT margins that we command. Turning to page 11, our industrial free cash flow generation was remarkable in the year, reaching 932 million euros, reflecting increased profitability, partially offset by financial charges and taxes, and most of all, capital expenditure of 869 million euros, increased in line with the pace of development of our products and infrastructure. The already flagged significant increase in working capital, which reflects both the inventory expansion built to protect our delivery plans and the enriched product market. Net industrial debt at the end of December improved below the €100 million mark, reflecting the robust industrial precursor generation partially offset by our initiative to reward shareholders.

Melissa: Not totally not only in brand new cars, but also taking care of.

Melissa: Owning three owned the modest we've tailored events in our history, we crafted about 150 different models of the body and for US They are all equally important.

Melissa: All our case.

Antonio Piccon: In real life, 2024 will be the year of progress, with an array of activities designed to build the scale while enhancing and expanding usability. Among our priorities, we continue to focus on our carbon neutrality journey, which is further boosted by the ultimate goal to shut down the three generators within the next 18 months. We look ahead to 2024 with energy, agility, and confident humility, but above all, with enthusiasm for the new exciting challenges in front of us. And now, I hand over to Antonio to review the 2023 results and the 2024 guide. Thank you, Benedetto, and good morning or afternoon to everyone joining us today.

Melissa: In lifestyle.

Melissa: Thank you for the fourth will be the year of progress we have an array of activities designed to build the scale, while elevating and expanding easily beat it.

Melissa: Among our priorities, we continue to focus on our carbon neutrality, Germany, which is paramount boosted by the ultimate goal to shutdown the three generators within the next 18 months.

Melissa: Look ahead at 2020 photo of energy agility, and confident humility, but above all within Q4.

Melissa: For the new exciting challenges in front of us.

Speaker Change: And now I hand over control.

Speaker Change: To review the 2023 results and 2020 for guidance.

Antonio Piccon: Dividends and buybacks were worth approximately €800 million altogether, implying a distribution of roughly 85% of the industrial free cash flow generation. Finally, let's move to page 12. Building upon the visibility we enjoy, we outline the guidance for 2024 as a further solid step towards our target for the years to come. Let me explain the drivers sustaining 2024 along the growth trajectory that we have designed, on sports cars, products, and country mix will be positive and much more relevant volume once again with an increased contribution from the Daytona SP3 and a constant personalization rate. Commercial ratings from racing in Formula 1 will be affected by the lower ranking achieved in 2003 compared to 2022, despite a higher number of races in the 2024 calendar.

Speaker Change: Thank you Vanessa and good morning, or afternoon to everyone joining us today.

Speaker Change: Starting on page seven we present the highlights of the results for the entire complex.

As Ben just mentioned 25, it was another record year for our company with all our financial metrics once again growing double digits and with a significant margin expansion of three percentage points on the EBIT level and even more.

Speaker Change: EBITDA level.

Speaker Change: Even if our four year plan from the last capital market day is rather modest by design such results went beyond.

Speaker Change: Our expectations, considering the module shipments increase and in place on headwind affecting our input costs.

Speaker Change: A visible real life application of the obsession to privilege value upon volume and to control our locations to promote exclusively.

Speaker Change: Let's dive into the deep area to try and set some light on our path forward.

Antonio Piccon: Our strong business performance in 2023 was sustained by three main factors. A rich product mix, per se, further highlighted by a surprisingly strong personalization approach, coupled with a favorable country mix. These led to revenues up 17%, adjusted EVDA growing roughly 28.5%, that is 500 million euros, with a very solid margin standing at 38.2%, and adjusted EBIT up approximately 32% with an annual record 27.1% mark. Net profit of €1,260,000,000, leading to an adjusted diluted earnings per share of €6.9 from less than €5.1 last year for a particular node of the industrial fleet explosion generation, which reached 932 million euros. Moving to page 8, you can see the details of the full year shipment. In the year, deliveries increased less than 450 units after two post-pandemic years of strong double-digit increases.

Speaker Change: Our strong business performance in 2023 was sustained by three main factors.

Speaker Change: Our rich product mix.

Speaker Change: Further emphasized by a surprisingly strong personalization uptick.

Speaker Change: Coupled with a favorable country mix.

Speaker Change: These led to revenues up 17%.

Speaker Change: Adjusted EBITDA growing at roughly 28, 5% that is 500 million Europe with a very solid margin standing at 38, 2%.

Speaker Change: Adjusted EBIT is up approximately 32% with a yearly or ifr 27, 1% Michael.

Speaker Change: Net profit of 1 billion and 260 million leading to an adjusted diluted earnings per share of $6 nine Europe from less than 501 last year.

Operator: Good day, and thank you for standing by. Welcome to the Ferrari 2023 full year results conference call and webcast. At this time, all participants are in listen-only mode.

Speaker Change: All of our categories.

Speaker Change: Lastly, our free cash flow generation, which reached 932 million Europe.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Speaker Change: Moving to page eight you can see the details of the full year shipments.

Antonio Piccon: I see a negative change in working capital, in its broader meaning, mainly due to lower net advances collected from clients and increased tax payments proportional to the growth of our income in 2020. The underlying assumption on the US dollar exchange rate is that it will fluctuate around 1.1, implying a negative impact on the company's financial performance compared to 2023, including equity. That said, we are obviously conscious of the stronger business performance recorded so far despite the higher cost inflation. Our performance has been driven by the product mix, which will remain rich over the business plan, and this has been further enhanced by both the actions on pricing and the exceptional demand for personalization. For sure, we continue to stay focused on pricing and product enrichment, and reassured by the visibility granted by our order book, we affirm our confidence in the high end of our 2026 target, as Benedetto just said. I thank you for your attention, and I now turn the call over to Nicoletta. Thank you, Antonio.

Speaker Change: In the ear deliveries increased less than 450 units after two post pandemic.

Speaker Change: Strong double digit increase.

Antonio Piccon: As usual, geographies reflect our choices of volume and product allocation in the different markets. EMEA and the Americas were up versus the prior year, representing more than 70% of our total shipments. The price of Apex was almost flat at 17%, and mainland China, Hong Kong, and Taiwan reduced their share by a few tens of units to 11% in line with our long-term target for this area, considering its relative use and evident daily income impact on our percentage margin. Shifting to the product, the most significant change in the year was the doubling of the idle share to 44% of the total volumes, underpinned by the growth of the The highly anticipated Puro Sangue ramped up during the second half of the year to finally reach its cruising altitude in 2024.

Speaker Change: As new geographies that reflects our choices of volume and product allocation.

Speaker Change: Sure.

EMEA and the Americas were up versus prior year, representing more than 70% of our total shipments.

Nicoletta Russo: Thank you and welcome to everyone who is joining us today. Today, we plan to cover the group's full year 2023 operating results and 2024 guidance, and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the group CEO, Mr. Benedetto Vigna, and the group CFO, Mr. Antonio Picca-Picconi.

Speaker Change: First of all Airbus was almost flat at 17%.

Speaker Change: In mainland, China, Hong Kong, and Taiwan reduced their say added by few tens of units to 11% in line with our long term targets for this area, considering if revenues and evidenced by having some impact on our percentage margins.

Nicoletta Russo: All relevant materials are available in the investor 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 statements included on page 2 of today's presentation, and the call will be governed by that language. With that said, I'd like to turn the call over to Benedetto.

Shifting to the product the most significant savings in the year was a doubling of the IBM share to 44% of the total volumes underpinned by the growth of the <unk> financing side.

Speaker Change: The highly anticipated <unk> ramped up during the second half of the year to finally reach a cruising altitude in 2024.

Antonio Piccon: The Roma Spider, which was unveiled in the first quarter, already commenced delivery in the last quarter of 2023. Special series, represented by the A12 Competizione FME, increased compared to one year ago thanks to the deliveries of the Acerta version, while the Daytona SP3 shipments continued according to our plans, between 30 and 40 units per port. Lastly, during the year, the F8 family concluded its life cycle, and the Portofino M was also approaching its end. On page 9, you can see the net revenues bridge, demonstrating a robust 17% growth versus the prior year, also at cost and current. The increase in cars and spare parts was evidently the main contributor, driven by the richer mix, personalizations, pricing, and slightly higher volume. However, price increases during the year were differentiated by product and geography in accordance with decisions taken in the second half of 2022 to protect our margin from the surge of inflation. Personalization continues to strengthen, and in the last quarter, we witnessed a consolidation of the trends registered in the first nine months.

Speaker Change: They're on a spider, which was unveiled in the first quarter already commenced veeva in the last quarter, our clinical plans.

Speaker Change: Specialty is represented by the <unk> 12, compared to <unk> increase compared to one year ago. Thanks to the deliveries of the effect of Ericsson why they thought <unk> III shipments continued according to our plan between 30 and 40 units per quarter.

Speaker Change: Lastly in the year the FAA.

Speaker Change: Finally concluded its lifecycle with the purpose behind was also approximately fan.

Speaker Change: On page nine you can see the net revenues breeds Boston at a robust 17% growth versus prior year also at constant currency.

Benedetto Vigna: The second is the five new model launches, further enriching our beautiful product offering, together with a variety of new client engagement experiences. And last but not least, the new iconic bag, a Maranello clutch, that stands out for the cooperation between colleagues in Maranello, who belong to the sports car team, and those in Milan of our lifestyle department. These achievements are reflected in our record full-year financial results across all metrics. So let's start reviewing together a few key numbers for the year 2023. Revenues were at approximately 6 billion euros. EBDA at 2.28 billion euros with a record yearly EBDA margin of 38.2 percent. Net profit, the first in our history, well over the 1 billion euro threshold with a remarkable net profit margin of 21%, and industrial free cash flow generation of approximately 930 million euros, of which about 800 million euros distributed to shareholders between dividends and share by debt. And now, after the members, let's deep dive into our racing activities; winning the 24-hour early month was an unforgettable day for our history. I was there, and I will never forget June 11 afternoon because it saw our victorious return to the top class of the World Endurance Championship on the centenary of this legendary 24-hour race.

Nicoletta Russo: We are now ready to open the Q&A session. Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Speaker Change: The increase in cars and spare parts was evidently the main contributor.

Speaker Change: Driven by the richer mix, plus amortization pricing and slightly higher volumes.

Speaker Change: Price increases during the year, we are differentiated by product and geography in accordance with the decisions taken in the second half 'twenty to 'twenty two to protect our margin from the third of inflation.

Operator: Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. Thank you. We are now going to proceed with our first question. And the questions come from the land of John Murphy from Bank of America Securities. Please ask your question; your line is open. Hey, good morning. This is John Babcock, actually on the line for John Murphy.

Speaker Change: Personalization continues to strengthen and in the last quarter, we witnessed a consolidations of the trends that have been the first name.

Antonio Piccon: In 2023, personalization stood at approximately 19% in proportion to revenues from cars in their part, mainly driven by paint, liveries, and the use of cars. Commercial and brand reflected higher sponsorships, including Formula One and World Endurance Championship racing activities, higher Formula One commercial revenues, and a better ranking achieved in 2022 compared to 2021, as well as the growing contribution from life-size activities. The company's revenues declined in line with the reduction of supplies to Maserati, whose contract expired at the end of 2023. Therefore, from the first quarter of 2024 onward, any residual contributions from the sales of engines to third parties, whether for sports cars or racing, will be reported in a bar named Adder. Currency has a small negative net impact, mainly reflecting the opposite dynamics of the US dollar, the Japanese yen, and the Chinese yuan.

In 2023 person organization stood at approximately 19% in propulsion revenues from cars and spare parts, mainly driven by pain deliveries and the use of Scotland.

Speaker Change: Sponsorship commercial and brand are reflected higher sponsorships, including Formula One and ward and Euro Championship racing activities.

John Babcock: Just quickly, you talked about doubling the hybrid share from 2022 to 2023, you know, from 22% of shipments to 44%. Out of curiosity, do hybrids tend to be favorable for mix? And also, can you talk about how the customer reception has been for hybrid engines and if this is something they're asking for? Okay, I will comment on that. Yes, it's true. We doubled our share of hybrids. This testifies that we are able at Ferrari to use technology in a way that is unique. Coming back to the specific question, I would say that I would pay two points. Number one, the profile of the customer using this technology is not so much different from that of the one using traditional thermal cars.

Speaker Change: <unk> for my one commercial revenues and the better ranking achieving plenty plenty to compare to 2021 as well as the growing contribution from lifestyle.

Speaker Change: Engines revenues declined in line with the reduction of supply Maserati, whose contract expired at the end of plenty of 'twenty three.

Speaker Change: Therefore from the first quarter of 2024 on work any receipt of our contribution from the sales of languages.

Speaker Change: Whether for Star gas operation will be reported in Dubai named either.

Speaker Change: Okay.

Speaker Change: Currency had a small negative net impact mainly reflecting the opposite dynamics of the U S dollar Japanese yen and Chinese Yuan.

Antonio Piccon: Moving to page 10, the change in adjusted EBIT is explained by the following variance: volume, positive and reflecting the limited increase in shipments, mix, and price, also positive and very strong for 461 million euros thanks to a very favorable product mix sustained by the Daytona SP3, the A1250, and the DS-290 families. Country mix, driven by the Americas and mainland China, Hong Kong, and Taiwan, despite the small decrease in deliveries in the year and today's increased contribution from personalization and price. Industrial and R&D expenses grew by €166 million, mainly due to higher depreciation and amortization, cost inflation, and higher Formula 1 expenses. His DNA was negative for 43 million euros, mainly reflecting the continuous development of the company's digital infrastructure and organization.

Speaker Change: Yeah.

Speaker Change: Moving to page 10, the change in adjusted EBIT is explained by the following values.

Speaker Change: Volume positive and reflecting the limited increase in shipments.

Speaker Change: Mix and price also positive and very strong 461 million Europe, thanks to very favorable product mixture sustained by the Arizona SB three therefore.

Benedetto Vigna: And number two, profit-wise, we are missing the same ballpark as all the other cars. For us, each car is a business initiative, and all of them have to deliver according to our standards. Okay, appreciate that. And then also, given what's going on in the Red Sea, could you just quickly discuss if this is creating any challenges for Ferrari? The challenge with the Red Sea is that we don't see it at all; we double check with our suppliers, and there is nothing that is impacting us, so there is no impact on our production or delivery of cars.

Speaker Change: And yet our client families.

Speaker Change: Channel mix driven by generic <unk>.

Speaker Change: In mainland, China, Hong Kong and Taiwan, Despite the small decrease in deliveries in the year.

Speaker Change: And to the increased contribution from personalization and pricing.

Speaker Change: Invest in R&D expenses grew $166 million, mainly due to higher depreciation and amortization cost inflation and higher <unk> expenses.

Speaker Change: SG&A was negative for 43 million euros, mainly reflecting the continuous development of the company's digital infrastructure and organization.

Antonio Piccon: In addition, we kept on adding resources to enhance our brand investment, which encompassed all our marketing lifestyles and other initiatives designed to enhance brand recognition among clients. Harder was positive for 81 million euros, combining higher Formula 1 commercial revenues, as well as a better ranking in 2022 versus 2021, new sponsorships, higher contribution from lifestyle activities, and certain releases of provisions already discussed during the year. The total net impact of currency was positive for 15 million euros.

Speaker Change: In addition, we kept on adding resources to enhance our brand investment, which encompasses all of our marketing lifestyle and other initiatives designed to enhance the brand recognition among clients.

Benedetto Vigna: They all raise the bar of technology and design still further to meet and exceed the desires of our clients, and we have two models for the track. During the Finale Mondiale at the Mugello Circuit last quarter, we unveiled the 296 Challenge and the 499P Modificata, both of which will set new benchmarks in track driving thrills for our most passionate racing clients. Consistently and coherently, we follow our strategy of a different Ferrari for different moments, a different Ferrari for different drivers. This year, we continue to engage with our clients through many experiences on the road and on the track. I refer to unique and truly engaging occasions such as the Finale Mondiale, our cavalcades, the Legacy Tours, our Legacy Tours, to mention just a few of them. These are all experiences which continue to bond our community even further and evoke a true sense of belonging.

Speaker Change: <unk> was positive for 81 million and were combining higher apartment, one commercial revenues as well as better ranking in <unk> versus 'twenty, one sponsorships higher contribution from lifestyle activities and certain releases of provisions already discussed during the year.

Benedetto Vigna: Okay, that's great to hear. All right, that's all I have for now. Thank you. Thank you. We are now going to proceed with our next question. And the questions come from the line of Michael Binetti from Evocor ISI. Please ask a question, your line is open. Hey guys, congrats on finishing up a terrific year.

Speaker Change: The total net impact of currency was positive 415 million Europe.

Antonio Piccon: With the positive net support of these variances, we achieve the yearly records of EBITDA and EBIT margins that we have managed. Turning to page 11, our industrial free cash flow generation was remarkable in the year, reaching 932 million euros, reflecting increased profitability, partially offset by financial charges and taxes, and most of all, capital expenditure of 869 million euros, increasing in line with the pace of development of our products and infrastructure. The already flagged significant increase in working capital, which reflects both the inventory expansion built to protect our delivery plans and the enriched product market. Net industrial debt at the end of December improved below the 100 million euro mark, reflecting the robust industrial precursor generation, partially offset by our initiative to reward shareholders.

Speaker Change: With the positive and that support of these variances we reached the yearly records of EBITDA and EBIT margins Matt.

Speaker Change: Turning to page 11, our industrial free cash flow generation was remarkable in reaching $932 million, reflecting the increased profitability, partially offset by financial charges and taxes and most of all capital expenditure for 869 million.

Operator: Thanks for taking our questions here. I guess first off, could you could you, Antonio, could you give a little context around the guidance for free cash flow being lower this year? Is there?

Operator: I'm wondering if there's an acceleration in some of the development spend and, maybe, any delta in the deposits for supercars included in the free cash flow outlook or excluded. And then, on personalization, maybe just a little bit on the strategy there going forward after a really good year on personalization last year, is there an opportunity to take some pricing to help offset some of the cost increases that you're seeing across the board? Hi Michael, I think the second one of the FCS-related questions is from Antonio. So yes, personalization. I mean, we are a luxury company. Of course, we have to bet.

Speaker Change: Europe increased in line with the pace of development of our product.

Speaker Change: Yes.

Speaker Change: They already flattened significantly inclusion working capita which reflect of the inventor expansion mirror to protect our delivery plans Andy.

Speaker Change: Product mix.

Speaker Change: Yeah.

Net industrial debt at the end of December improved it below the 100 million Euro, Matt, reflecting the robust industrial free cash flow generation, partially offset by our initiatives to reward shareholders.

Antonio Piccon: Dividends and buybacks were worth approximately €800 million altogether, implying a distribution of roughly 85% of the industrial free cash flow generation. Finally, let's move to page 12. Building upon the visibility we enjoy, we outline the guidance for 2024 as a further solid step towards our target for the years to come. Let me explain the drivers of Sustain24 along the growth trajectory that we have designed. [inaudible] will be positive and a much more relevant volume once again, with an increased contribution from the Daytona SP3 and a constant personalization rate. Commercial ratings from racing in Formula 1 will be affected by the lower ranking achieved in 2013 compared to 2022, despite a higher number of races in the 2024 calendar.

Speaker Change: Dividends and buybacks were worth approximately 800 million euro altogether, implying a distribution of roughly 85% are the industrial free cash flow generation.

Speaker Change: Finally, let's move to page 12.

Speaker Change: Building upon the visibility we enjoy we outlined the guidance for 'twenty 'twenty four is a further solid step towards our targets for the years to come.

Benedetto Vigna: Personalization is an important vector of growth for us, and it offers an opportunity for pricing up, to review the price up in the mid-digitaria. So percentage is important, yes, too; we are going to touch the price for this important dimension. The free cash flow. Yeah, I try and explain three reasons. The first is clerical; we're just paying more taxes.

Speaker Change: Let me explain the driver of sustained 24, along the growth trajectory that we have Dubai.

Benedetto Vigna: Almost 20% more people than one year ago, confirming the strength of the brand and the passion of our community. Throughout all the years, throughout 2023, we have also made relevant progress on our carbon neutrality journey. Indeed, we reduced our scope one and scope two emissions by 7% in 2023 and by 16% versus 2021. We built our first prototype engine from recycled aluminum.

Speaker Change: <unk> powder product and country mix will.

Speaker Change: We will be positive and much of our island volume once again with an increased contribution from the Daytona Speedway and a constant personalization rate.

Speaker Change: Commercial revenues from pricing Formula one will be affected by the lower entering that season.

Antonio Piccon: The second one is we're spending more on capex; 950 is what we have in mind for the year. And this is just because we have products that are now very close to launch and a number of products. And the third is the deposit cycle. This is just signing, basically, there are, I mean, we collected over. While the best in 2022 and 2033, we have kind of a net reversal and, in addition, some new advances collected in 2024, but the negative, the impact overall is modestly negative. And I guess if I could squeeze one more in, you know, with the e-building still on track for mid-year, Benedetto, can you tell us what we'll see early on as far as as you guys start to This morning, me and Antonio were in the building, so we are on track.

Speaker Change: <unk> is when you're going to do despite a higher number of races in the 2024.

Antonio Piccon: Lifestyle activities will continue to increase their support, the top line, while investing a larger share of resources to speed up the pace of development. However, cost inflation is expected to persist through the supply chain. And that DNA will increase in line with revenues due to continuing brand investment and digital development. The above will contribute to further profitability expansion, while we expect inflation, brand, and infrastructural expenses, as well as increased Formula 1 spending due to the higher budget caps, to flatten our percentage margin in line with 2023. The industrial free cash flow generation will be sustained by our profitability, partially offset by capital expenditure of approximately 950 million euros, as many projects will enter their advanced stage of development. I see a negative change in working capital, in its broader meaning, mainly due to lower net advances collected from clients and increased tax payments proportional to the growth of our income in 2020. The underlying assumption for the US dollar exchange rate is that it will fluctuate around 1.1, implying a negative impact compared to 2023, including equity.

Speaker Change: Lifestyle activity will continue to increase the support the top line, while investing a larger set of resources to speed up the pace of development.

Speaker Change: Cost inflation is expected to proceed through the supply chain.

Speaker Change: And SG&A will increase in line with revenues due to continued brand investment and digital development.

The above will contribute to the further profitability expansion, while we expect some inflation Bryan and infrastructure our expense as well as in premium formula one spanning missiles, the higher budget caps to flatten our percentage margin in line with 2023.

Benedetto Vigna: All of these developments, as well as the record results, have been possible thanks to the passion and dedication of all my colleagues. And to reward their achievements, in line with the company's strong performance indicators, I am pleased to announce the yearly competitive award of up to nearly €13,500 for all our employees. We are also proud to mention the additional four welfare initiatives that we announced on last November 13th.

Speaker Change: The industrial free cash flow generation will be sustained by our profitability, partially offset by capital expenditure of approximately 950 million in Europe as many projects will enter in the advanced stage of development.

Speaker Change: Our C&I happy to changing working capital draw there, meaning mainly due to lower net advances collected from clients.

Benedetto Vigna: A broad-based shared ownership plan for our 5,000-plus employees, the extension of health checkups, parenting support, as well as the 250 new hires. On top of that, we have also received the Equal Salary Certification on a global level for the first time, a result we can all be proud of. 2023 was characterized by global tensions, geopolitical conflicts, supply chain disruption, and cost inflation, all challenges we have learned a lot from. Our flexibility, our agility, together with the constant support of our clients and partners, allow us to look at 2024 with confidence. Such confidence also derives from the positive momentum that we continue to experience. Notwithstanding the current challenging macroeconomic environment, the vitality of our business is once again confirmed by the order book on current models, which remains strong across all geographies and covers the entire 2025. During the last month, I've been visiting several dealerships in Europe, the USA, and different countries in Asia, and I can tell you that the traction of our brand is really strong. You can really feel it.

Speaker Change: The increased tax payments proportionate to the growth of our income in 2023.

Speaker Change: The underlying assumption on the U S. Dollar exchange rate is that it will fluctuate around one one implying a negative FX impact compared to 2023, including hedges.

Benedetto Vigna: It will be up and running starting this June, and this will be the place where we will assemble not only electric cars. Electric cars, as you know, will be ready if we are on track for Q4 2025. So, of course, on the electrification journey, we are fully on track with our plans.

Nicoletta Russo: That said, we are obviously conscious of the stronger business performance reported to SAR despite the higher cost of inflation. [inaudible] Our performance has been driven by the product mix, which will remain rich over the business plan, and this has been further enhanced by both the actions on pricing and the exceptional demand for personalization. For sure, we continue to stay focused on pricing and product enrichment, and reassured by the visibility granted by our order book, we affirm our confidence in the high end of our 2026 target, as Benedetto just said. I thank you for your attention, and I now turn the call over to Nicoletta. Thank you, Antonio.

Speaker Change: That said, we're obviously conscious of the stronger business performance in the quarter, despite the higher cost inflation.

Speaker Change: Cash performance has been driven by the product mix, which will remain the reach of our business plan and that this has been further enhanced by both the actions on pricing and the exceptional demand for our personalization.

Operator: Thank you and enjoy the year, guys. Thank you, Michael. Thank you. We are now going to proceed with our next question. And the questions come from the line of Susy Tibaldi from UBS. Please ask your question. Hello, good afternoon. I have three. I'll ask one at a time.

Speaker Change: For sure we continue to stay focused on pricing and thrombus enrichment and reassured by the visibility granted by our order book, we affirmed the confidence into the high end of our <unk> targets as many that suggests that.

Hi, Thank you for your attention and I'll now turn the call over 24.

Thank you Latanya.

Operator: We are now ready to open the Q&A session. Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 on your telephone and wait for your name to be announced.

24: Now we're ready to open the Q&A session.

Susy Tibaldi: So, first one, on demand: within the luxury sector, we are seeing some softening of demand, but it appears that the higher end exposed to the wealthier cohort is still doing extremely well. And it seems also from your opening remarks that based on residual values, on feedback from dealers, you're not really seeing anything. But just to double check, is the economic picture at the moment having any impact at all on the Ferrari customer? Is there any comment, any additional color you can provide? Look, as we said in the call myself, and also what I'm telling you, the demand for the book is pretty strong. It goes well into 2025, till the end of 2025, in some cases even more.

Speaker Change: Thank you as a reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced until we've until your question. Please press star one and one again once again, please press star one and one on your telephone and wait for your name to be announced thank you.

Operator: Thank you. We are now going to proceed with our first question. And the questions come from the land of John Murphy from Bank of America Securities. Please ask your question; your line is open. Hey, good morning. This is John Babcock, actually on the line for John Murphy.

Speaker Change: Now going to proceed with our first question.

Speaker Change: Okay.

Speaker Change: And the question is come from the line of John Murphy from Bank of America Securities. Please ask your question. Your line is open.

Speaker Change: Hi, Good morning. This is John Burkart Akshay on the one for John Murphy.

John Babcock: Just quickly, you talked about doubling the hybrid share from 2022 to 2023, you know, from 22% of shipments to 44%. Out of curiosity, do hybrids tend to be favorable for mix? And also, can you talk about how the customer reception has been for hybrid engines and if this is something they're asking for? Okay, I will comment on that. Yes, it's true. We doubled our share of hybrids. This testifies that we are able, at Ferrari, to use the technology in a way that is unique. Coming back to the specific question, I would say that I should pay two points. Number one, the profile of the customer using this technology. It's not so much different from the one using traditional thermal traditional cars.

John Murphy: Just quickly you talked about doubling the hybrid share from 22 to 2023 from 22% of shipments out of <unk> 44 per cent out of curiosity do hybrid tend to be favorable for mix and then also can you talk about what the customer reception has been hybrid engines and if this is something they are asking for.

Benedetto Vigna: The visibility granted by the Order of Moors gives us the confidence to look to the future, but at the same time, we need to keep always four wheels on the ground. Confidence, Humility, and Will to Progress have been, are, and will be our North Star during the execution of our business plan. Following the initial phase of our business plan characterized by revenues and profitability expansion, in 2024, we continue to grow our top line while consolidating percentage margins, which we expect to further expand towards the end of the current business plan. The record result of 2023, the exceptional visibility on our order book, and the extraordinary performance of our business allow us to look at the high end of the 2026 target with stronger confidence.

Speaker Change: Okay I will comment about this yes, it's true we doubled our <unk> library this justifies that.

Benedetto Vigna: We do not see any negative signal, particular negative signal, on this topic. We keep doing as the plan. Clearly, in our client base, there is not an impact in any kind of, in any kind of, in any respect. So.

Speaker Change: We are able and variety to use it.

Speaker Change: In origin and waited is unique.

Speaker Change: Coming back to the specific question I would receive that.

Speaker Change: Two points number one the profile of the customer using this technology.

Speaker Change: Not so much different how would one using about Panama additional assets and number two profit wise to be out in the same ballpark has all gone now.

Benedetto Vigna: And number two, profit-wise, they are, let me say, in the same ballpark as all the other cars. For us, each car is a business initiative, and all of them have to deliver according to our standards. Okay, I appreciate that.

Operator: If you want, we can submit more callers. We have been, we had the dealer annual meeting at the end of November. We also had, we have been visiting several dealerships in the USA, in Asia, different countries, in Europe, and there is really a strong attraction toward our brand. Thanks.

Speaker Change: Other cash for us each county.

Speaker Change: As a business initiative and none of them have to deliver according to our standards.

Speaker Change: Yes.

John Babcock: And then also, just given what's going on in the Red Sea, could you just quickly discuss if this is creating any challenges for Ferrari? The challenge that I see is basically, we don't see it at all. We double check with our suppliers, there is nothing that is impacting us, so there is no impact on our production or delivery of cars. [inaudible] Thank you.

Speaker Change: Okay I appreciate that.

Speaker Change: And then also just given what's going on in the Red Sea could you just quickly discuss that this is creating any challenges for Ferrari.

A challenge.

Good have received.

We don't see it at all.

Speaker Change: We've double checked with.

Susy Tibaldi: On the margin guidance for 2024, which basically implies flattish margins, I wanted to understand if your core cars and spare parts business is also seeing flattish margins, or perhaps that core business is seeing some underlying improvement but then is upset by the dilution of some of the other segments where you are choosing to invest a little bit more. So it will be quite interesting to understand the dynamics in your various segments. That's in fact the explanation, Susy.

Speaker Change: Our suppliers there is nothing that is impacting us.

Speaker Change: No impact on our production, albeit a little cash.

Speaker Change: Okay, that's great to hear Alright, that's all I have for now thank you.

Speaker Change: Yes.

Benedetto Vigna: We are now going to proceed with our next question, and the questions come from the line of Michael Binetti from Evocor ISI. Please ask a question; your line is open. Hey, guys, congrats on finishing up a terrific year.

Speaker Change: Thank you we are not going to proceed with our next question.

Speaker Change: And the question is come from the line of Michael Binetti from Evercore ISI. Please ask your question. Your line is open.

Michael Binetti: Hey, guys congrats on finishing up a terrific year. Thanks for taking my questions here.

Michael Binetti: Thanks for taking our questions here. I guess first off, could you could you, Antonio, could you give a little context around the guidance for free cash flow being lower this year? Is there?

Michael Binetti: I guess first off could you could you Antonio could you give a little context around the guidance for free cash flow lower this year or is there I'm wondering if there was an acceleration in some of the development spend and any maybe any delta in AR and the deposits for Supercars and included in the free cash flow outlook are excluded.

Michael Binetti: I'm wondering if there's an acceleration in some of the development spend and any, maybe any, delta in the deposits for supercars included in the free cash flow outlook or excluded. And then, on personalization, maybe just a little bit on the strategy there going forward after a really good year on personalization last year, is there an opportunity to take some pricing to help offset some of the cost increases that you're seeing across the board? Hi Michael, I think the second one, the FCS-related question, Antonio will elaborate. So yes, personalization. I mean, we are a luxury company. We have to bet that personalization is an important vector of growth for us, and it also offers an opportunity for pricing. And we started these years to review the price up in the mid-digit area. So the percentage is important, yes, too; we are going to touch on price for this important dimension. The free cash flow. Yeah, I'll try and explain three reasons. The first is clerical; we're just paying more taxes.

Antonio Piccon: I'll try and explain it. So project mix and personalization, but we expect the cost base below that to impact us and to flatten the margin. If we wish, within the cost of goods sold, it's just the budget gap which is growing for the F1 racing activities that is growing year after year and is biting at the upper side of the pier. Okay, and last question.

Michael Binetti: And then on.

Michael Binetti: Personalization, maybe just a little bit on the strategy there going forward. After a really good year and personalization last year is there is there an opportunity to take some pricing to help offset some of the cost increases that you're seeing across the across the business there.

Speaker Change: Hi, Michael and I think there is even one of the FCS related question opponent will not.

Michael Binetti: So yes the personalization.

Michael Binetti: I mean, we had a luxury company, which we have to match presented recently as an important next pullover grow for us and it offers but also an opportunity for pricing.

Operator: For 2024, when we think about the phasing, is it fair to assume that the year is going to be a little bit more front-end loaded given the mixed evolution, or is it going to be quite similar quarter-on-quarter? I don't see a significant difference yet, but there might be. Nuances, but no significant changes; no significant changes. Usually, Q4 remains slightly softer, particularly in terms of volume allocations. But as of now, there is nothing to flag.

Benedetto Vigna: In real life, 2024 will be the year of progress, with an array of activities designed to build the scale while enhancing and expanding usability. Among our priorities, we continue to focus on our carbon neutrality journey, which is further boosted by the ultimate goal to shut down the three generators within the next 18 months. We look ahead to 2024 with energy, agility, and confident humility, but above all, with enthusiasm for the new exciting challenges in front of us. And now, I hand over to Antonio to review the 2023 results and the 2024 guidelines. Thank you, Benedetto, and good morning or afternoon to everyone joining us today.

Michael Binetti: And we started this business.

Speaker Change: To review.

Speaker Change: The price up in the mid.

Speaker Change: In the immediate need to digitalize.

Speaker Change: So presumably is important.

Speaker Change: We are going to cut the price for these important financial the free cash flow.

Speaker Change: Ryan explained three reasons. The first is clerical we're just paying more taxes and the second one is we are spending more on Capex 950, <unk>, what we have in mind for the year and it was just because we have brought up there now we're very close to the launch.

Speaker Change: And number of products and the <unk> is an ablative cycle due to just timing basically there are I mean, we collected over.

Antonio Piccon: This is just signing, basically, there are, I mean, we collected over, quite a bit in 2022 and 2033, we have kind of net reversal and in addition some new advances collected in 2024, but the negative, the impact overall is... [inaudible] OK. And I guess if I could squeeze one more in, you know, with the, I guess with the buildings still on track for mid-year, Benedetto, can you tell us how, what we'll see early on, as far as, as you guys start to commercialize that, and what are some of the first things we'll see from outside of the company as you guys start to look to commercialize that? This morning me and Antonio were in the building, so we are on track, it will be up and running starting this June and this will be the place where we will assemble not only electric cars, electric cars as you know will be ready if we are on track for Q4 2025. So, awesome electrification journey, we are fully on track with our plans. Thank you, and enjoy the year, guys. Thank you, Michael.

Operator: Okay, thank you. That's it. I said the fourth floor, not the fourth and first.

Speaker Change: Quite a bit in 2020 during 2000 at the rates, we are kind of in that the reversal.

Speaker Change: In addition, some new advances collecting into entry into Florida, but the negative impact on that already.

Antonio Picca-Picconi: Starting on page 7, we present the highlights of the results for the entire 2020. As Benedetto just mentioned, 2023 was another record year for our company, with all financial metrics once again growing double digits and with a significant margin expansion of three percentage points at the EBIT level and even more at the EBITDA level. Even if our four-year plan from the last capital market day is rather front-loaded by design, such results went beyond our expectations, considering the modest shipment increase and inflation headwinds affecting our input costs, a visible, real-life application of the obsession to privilege value upon volume and to control allocations to promote exclusivity. Let's dive into the details to try and shed some light on our path forward. Our strong business performance in 2023 was sustained by three main factors. A rich product mix per se, further emphasized by a surprisingly strong personalization approach, coupled with a favorable country mix.

Speaker Change: Yes.

Operator: Sorry. Thank you. We are now going to proceed with our next question. And the questions come from the line of Stephen Reitman from Societe Generale. Please ask your question.

Speaker Change: Modestly negative okay.

Okay.

Speaker Change: I guess, if I could squeeze one more in you know with the I guess it would be a building's still on track for midyear.

Speaker Change: Can you tell us what we will see early on as far as you guys start to commercialize that and what are some of the first things we will see from outside the company as you guys start to look to commercialize that.

Stephen Reitman: Again, congratulations on the very strong result. Also, congratulations on the quality of the result. And we certainly noticed that the positive impact from R&D capitalization was considerably lower in 2023 than in 2022 or 21.

Speaker Change: Good morning to me into endpoint or whether it be building.

Speaker Change: So we are on track it will be up and running starting with this June.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: These would be the place where we will.

Speaker Change: A simple not only electric electric gas as you know, we'll be ready and we are on track for Q4 2025.

Speaker Change: So also in Delek litigation in Germany, we are fully on track we've outlined our plans.

Operator: So, that points to the higher quality there as well, I think. Question: you mentioned that Pura Sangue has now gotten to cruising speed in terms of production. Does that suggest that we are on track to see that reach 20% of annual sales? Because it looks like in 2023, it was only in the hundreds.

Speaker Change: Thank you. Thank you. Thank you guys.

Speaker Change: Thank you Michael.

Michael Binetti: Thank you. We are now going to proceed with our next question. And the questions come from the line of Susy Tibaldi from UBS. Please ask your question. Hello, good afternoon. I have three. I'll ask one at a time.

Speaker Change: Yeah.

Speaker Change: Thank you we are not going to proceed with our next question.

Speaker Change: And the question is come from the line of Susy <unk> from UBS. Please ask your question.

Susy: Hello, Good afternoon, I have three I'll ask one at a time.

Susy Tibaldi: So, first one on demand. Within the luxury sector, we are seeing some softening of demand, but it appears that the higher end exposed to the wealthier cohort is still doing extremely well. And it seems also from your opening remarks that based on residual value and some feedback from dealers, you're not really seeing anything. But just to double check, is the economic picture at the moment having any impact at all on the Ferrari customer? Is there any comment, any additional color you can provide? I look at every technical detail myself and also, for some problems, the demand for the book is pretty strong.

Susy: So first one on the demand within the luxury sector. We are seeing some softening of demand, but it appears that the higher rents.

Antonio Picca-Picconi: These led to revenues up 17%, and adjusted EVDA growing roughly 28.5%, that is, €500 million, with a very solid margin standing at 38.2%, and adjusted EBIT up approximately 32% with an annual record 27.1% mark. Net profit of €1,260,000,000, leading to an adjusted diluted earnings per share of €6.9 from less than €5.1 last year, of particular note is the Industrial Free Capital Generation, which reached 932 million euros.

Susy: Exposed to the west here cohort is still doing extremely well and it seems also from your opening remarks that okay.

Susy: Because from a residual value some feedback from dealers.

Benedetto Vigna: So, that would be a considerable ramp-up. And if you could comment on what the personalization levels are looking like, I imagine that people are paying a lot of money in terms of personalization in order to secure bill slots as well as for these in terms of making their orders attractive. And secondly, if you could comment on China, you did mention that you are strategically looking at that market in terms of also managing the margin implication on sales in China. But I think there was an expectation that sales were going to maybe increase a little bit in the fourth quarter because they'd be deferred from the third quarter in 2023. But we actually saw quite a big drop in 2020 in the fourth quarter. So, I'm just wondering if you could say, are there any issues with demand in that market as well? Thank you Stephen, and thank you also for the congratulations that we will pass to all the team that made it possible.

Speaker Change: Youre, not really seeing anything, but just to double check.

Speaker Change: The economic picture at the moment, having any impact at all on the periodic customer is there any comments any additional color you can provide.

Speaker Change: I don't know.

Speaker Change: We said in the call myself and also most importantly, the demand of our order book is really strong it goes well into 2025.

Benedetto Vigna: It goes well into 2025, till the end of 2025, in some cases even more so. We do not see any negative signal, particular negative signal, on this topic. We keep doing as per plan. Clearly, there is not, in our client base, there is not an impact of any kind, in any kind of, in any kind of, in any way. Thank you, this is if you want if you want to read a little bit more color.

Speaker Change: Handle 20 predefined edema in some cases, even more.

Speaker Change: We do not see.

Speaker Change: Amy and negative seasonal particular things that youre seeing on this topic, we keep we keep.

Antonio Picca-Picconi: Moving to page 8, you can see the details of the full year shipment. In the year, deliveries increased less than 450 units after two post-pandemic years of strong double-digit increases. As usual, geographies reflect our choices of volume and product allocation in the different markets. EMEA and the Americas were up versus the prior year, representing more than 70% of our total shipments. The price of APAC was almost flat at 17%, and mainland China, Hong Kong, and Taiwan reduced their share by a few tens of units to 11% in line with our long-term target for this area, considering its relative use and evident daily income impact on our percentage margin. Shifting to the product, the most significant change in the year was the doubling of the idle share to 44% of the total volumes underpinned by the growth of the SF The highly anticipated Puro Sangue ramped up during the second half of the year to finally reach its cruising altitude in 2024.

Speaker Change: Let's say doing.

Speaker Change: That's the plan.

Speaker Change: Clearly there is not.

Speaker Change: In our client base there is not.

Speaker Change: And impact.

Speaker Change: In any in any kind of any kind of.

Speaker Change: Yes.

Speaker Change: So.

Speaker Change: Thanks Anthony.

Speaker Change: If you want to reach.

Susy Tibaldi: We have been, we had the dealer annual meeting at the end of November; we also had, we've been visiting several dealerships in the USA, in Asia, different countries, in Europe, and there is really a strong attraction toward our brand. I wanted to understand if your core cars and spare parts business is also seeing flattish margins, or perhaps that core business is seeing some underlying improvement but then is upset by the dilution of some of the other segments where you are choosing to invest a little bit more. So it will be quite interesting to understand the dynamics in your various segments. That, in fact, is the explanation, Susy.

Speaker Change: So Mr Mcmullen and we've been there we had the <unk> annual meeting in November we had also.

Speaker Change: <unk> been visiting.

Speaker Change: Given our leadership in USA in Asia in different countries.

Speaker Change: In Europe, and there is a strong traction toward an hour.

Antonio Piccon: Coming back to the story of the Purosangue, in 2023, we shipped a few hundred Purosangue. In 2024, we will be at a cruising speed that is 20% of the total. So basically, your assumption, and your calculation are pretty in line with our plan. The personalization, but if I may, Benedetto, just to complete on that, I wouldn't focus on 20% of each single year. We said 20% of the year we saved on average when we communicated around the capital market. I mean mathematically, even if Benedetto is a mathematician.

Speaker Change: Correct.

Mcmullen: Thanks, Adam.

Speaker Change: On the margin guidance for 2024.

Speaker Change: Basic and implies flattish margin I wanted to understand if your core cars and spare parts business is also seeing flattish margins or perhaps.

Speaker Change: Core business is seeing some underlying improvement, but that is offset by the dilution of some of the other segments, where you are choosing to invest a little bit more. So we are quite interested to understand the dynamics in your various segments.

Antonio Picca-Picconi: The Roma Spider, which was unveiled in the first quarter, already commenced delivery in the last quarter of 2023. Special series, represented by the A12 Competizione FME, increased compared to one year ago thanks to the deliveries of the Acerta version, while the Daytona SP3 shipments continued according to our plans, between 30 and 40 units per port. Lastly, during the year, the F8 family concluded its life cycle, with the Portofino M also approaching its end.

Antonio Piccon: So our project mix and personalization are all the same, but we expect the cost base below that to impact us and to flatten the margin. If we wish, within the cost of goods sold, there is just the budget gap which is growing for the F1 racing activities that are growing year after year. [inaudible] Okay, and last question. For 2024, when we think about the phasing, is it fair to assume that the year is going to be a little bit more front-end loaded, given the mixed evolution, or is it going to be quite similar quarter-on-quarter? I don't see a significant difference yet and think there might be some nuances, but not significant changes. Usually, Q4 remains slightly softer, particularly in terms of volume allocation. But as of now, nothing to flag.

Speaker Change: The net impact of India.

Speaker Change: The explanation to the training explaining.

Speaker Change: So our product mix and personalization.

Speaker Change: Yes.

Speaker Change: But we expect the cost base below that.

Speaker Change: Two.

Speaker Change: <unk> bypass and to flatten the margin equal weight within the cost of goods sold and adjust the budget cap on on which is growing on the F. One racing activities that is growing year after year.

Benedetto Vigna: Yes, we are not that much. No, look, the story of Purosangue, the personalization, Stephen. Clearly, Purosangue offers a lot of degrees of personalization. We see clients that are looking at the rims, the liveries, the painting, the roof. So there are some opportunities over there. And last year we have been working a lot to strengthen our supply chain for all the personalization that the car is offering to the client. The second question was about China. Well, China for us, I would like to say that there are three words about China.

Speaker Change: And then on the indie.

Speaker Change: Upper side of the P&L.

Antonio Picca-Picconi: On page 9, you can see the net revenues bridge, showing a robust 17% growth versus prior year, also at cost and current. The increase in cars and spare parts was evidently the main contributor, driven by the richer mix, personalizations, pricing, and slightly higher volume. Price increases during the year were differentiated by product and geography in accordance with decisions taken in the second half of 2022 to protect our margin from the surge of inflation. Personalizations continued to strengthen, and in the last quarter, we witnessed a consolidation of the trends registered in the first nine months.

Speaker Change: Alright.

Speaker Change: Okay and then last question for 2024, when we think about the phasing.

Speaker Change: Is it fair to assume that the euro is going to be a little bit more front end loaded given the mix evolution or is it going to be quiet.

Speaker Change: Similar quarter on quarter.

Speaker Change: I don't see a significant difference yeah, then there might be.

Speaker Change: Nuances, but.

Benedetto Vigna: The number one for us is a young market. A young market means that the number of cars that we ship to this market is not so many. It means the market is very young. We have to let it grow at the right speed to avoid, let me say, indigestion.

Speaker Change: Not significant change no significant changes usually Q4.

Speaker Change: A slightly softer.

Speaker Change: In terms of volume and locations.

Speaker Change: But as of now nothing to flag.

Susy Tibaldi: Okay, thank you. I said the force flowed, not what and the search. Suck.

Speaker Change: Okay. Thank you.

Speaker Change: I said the fourth quarter.

Antonio Picca-Picconi: In 2023, personalization stood at approximately 19% in proportion to revenues from cars in their part, mainly driven by paying, liveries, and the use of cars. Sponsorship, commercial, and brand reflected higher sponsorships, including Formula One and World Endurance Championship racing activities, higher Formula One commercial revenues and a better ranking achieved in 2022 compared to 2021, as well as the growing contribution from life-size activities. Engine's revenues declined in line with the reduction of supplies to Maserati, whose contract expired at the end of 2023.

Stephen Reitman: Thank you. We are now going to proceed with our next question. And the questions come from the line of Stephen Reitman from Societe Generale. Please ask your question.

Speaker Change: Quarter end of story.

Speaker Change: Thank you we are now going to proceed with our next question.

And the question is come from the line of Stephen Reitman from Societe Generale. Please ask your question.

Benedetto Vigna: The second, it's a niche market still, because if you make the map, you're talking about, you know, 1,200 cars written on the chart. We had a likely decrease this year, but we are talking about a decrease in the range of a few tenths of a unit. That since the market is smaller, it may look a few percent over there. And then the number three, we said from the beginning that we would keep China, let's say, around 10 percent because we believe, because it is not an attractive margin. But again, it's important that in each country, as our history testifies, we allow the attachment to the brand to grow at the right speed. Because if you grow too fast, the clients don't get used to what Ferrari is. This is what we have done in other countries, and this is what we intend to do also in China.

Benedetto Vigna: Again, congratulations on the very strong result. Also, I congratulate you also on the quality of the result. We certainly noticed that the positive impact from R&D capitalization was considerably lower in 2023 than in 2022 or 21, which points to the higher quality there as well, I think. The question you mentioned about the Pura Sangue has now gotten to cruising speed in terms of production. Does that suggest that we are on track to see that reach 20% of annual sales? Because it looks like in 2023, it was only in the hundreds, so that would be a considerable ramp up. And if you could comment on what the personalisation level is looking like, I imagine that people are paying a lot of money in terms of personalisation in order to secure bill slots as well as for these in terms of making their orders attractive.

Stephen Reitman: Yes, good afternoon, and again congratulations for the very strong result, also congratulate you also the quality of the result, we studied doses.

Stephen Reitman: The positive impact from R&D capitalization was a bit lower in 2023, then in 2022 or three months closer to the high quality that was what I think.

Speaker Change: Question, you mentioned about the purest long ways now gotten to a cruising speed in terms of production.

Speaker Change: Does that suggest that we are on track to see that reached the 20% of.

Antonio Picca-Picconi: Therefore, from the first quarter of 2024 onward, any residual contributions from the sales of engines to third parties, whether for sports cars or racing, will be reported in the bar named others. Currency has a small negative net impact, mainly reflecting the opposite dynamics of the US dollar, Japanese yen, and Chinese yuan. Moving to page 10, the change in adjusted EBIT is explained by the following variance, volume positive and reflecting the limited increase in shipments, mix and price also positive and very strong for 461 million euros thanks to a very favorable product mix sustained by the Daytona SP3, the A1250 and DS-290 families, and country mix driven by the Americas and mainland China, Hong Kong, and Taiwan, despite the small decrease in deliveries in the year, and to the His DNA was negative for 43 million euros, mainly reflecting the continuous development of the company's digital infrastructure and organization.

Speaker Change: Annual sales because it looks like in 2023, it was already in the hundreds so that would be sensible ramp up and if you could comment on what the personalization levels looking like I mentioned the people paying a lot of money and some of the best.

Speaker Change: Realizations in order to secure build slots as well for these in terms of to make the road is attractive and secondly, you could comment on China.

Benedetto Vigna: And secondly, if you could comment on China, you did mention that you are strategically looking at that market in terms of also managing the margin implication on sales in China. But I think there was an expectation that sales were going to maybe increase a little bit in the fourth quarter because they'd be deferred from the third quarter in 2023. But we actually saw quite a big drop in 2020 in the fourth quarter.

Speaker Change: You did mention that you are strategically looking at that market in terms of also managing in terms of the margin implication on sales in China, but I think there was an expectation that sales were banks that maybe increase a little bit in the fourth quarter, because they'd be deferred from the third quarter in 2023, but we actually saw quite a big drop in 2020 in the fourth quarter.

Operator: Thank you. Thank you. We are now going to proceed with our next question, and the questions come from the line of Tom Narayan from RBC Capital Markets. Please ask your question. Hi, yeah, thanks for taking the question. Question on the, you know, strong plug and hybrid performance.

Benedetto Vigna: So I'm just wondering if you could say, are there any issues about the sort of like demand in that market as well? Thank you. Stephen, and thank you also for the congratulations that we will pass to all the team that made it possible.

Speaker Change: Im just wondering if you could say are there any issues about the sort of like the demand in that market as well. Thank you.

Speaker Change: And just maybe hoping.

Speaker Change: Congratulation on that we will pass all the theme that maybe it's possible it's coming back to the studio will put us in the 'twenty to 'twenty three we shifted a few quarters.

Benedetto Vigna: Coming back to the story of Burasangue, in 2023, we shipped a few hundred Burasangue. In 2024, we will be at a cruising speed that is 20% of the total. So basically, I mean, your assumption, and your calculation are pretty in line with our plan. The personalization, but if I may, Benedetto, just to complete on that, I wouldn't focus on 20% of each single year. We said 20% of the year we saved on average when we communicated around the capital market. I mean, mathematically, even if Benedetto is a mathematician.

Gautam Narayan: Just curious if you could extrapolate that for the eventual BEVs, full electrics you plan to sell. Is there really a translation there to say that, you know, consumer demand for the plug-in hybrids could potentially mean that, you know, this cohort would be interested in full electrics? Or are those buying the plug-in hybrids just, you know, just across the board similar to your existing portfolio? Look, we asked ourselves this question many times. We've been talking to our clients, directly and indirectly, including dealers. I don't think there is any extrapolation possible in this respect.

Speaker Change: Full of sand with in 2024 will be at the cruising speed that it is a 20% of the total so basically I mean, your assumption near population or could be in line with our plan.

PSA: Personalization by PSA, maybe I'd add just to complete on that I wouldn't focus on 20% of each single year, We said, 20% of the equity stake on that but it's one we communicated around the company.

Speaker Change: Thank you.

Speaker Change: Got it.

Speaker Change: I mean mathematically.

Speaker Change: That's the reason the competition.

Benedetto Vigna: Yes, we are not that much. No, look, the story of Burasangue, the personalization, Stephen. Clearly, Burasangue offers a lot of degrees of personalization. We see clients that are looking at the rims, the liveries, the painting, the roof. So there are some opportunities over there. And last year, we worked a lot to spend some hours to pay for all the personalization that the car offered to the client. The second question was about China. Well, China for us, I would like to say that there are three words about China.

Speaker Change: Yes.

Antonio Picca-Picconi: In addition, we kept on adding resources to enhance our brand investment, which encompassed all our marketing lifestyles and other initiatives designed to enhance brand recognition among clients. Harder was positive for 81 million euros, combining higher Formula 1 commercial revenues, as well as a better ranking in 2022 versus 2021, new sponsorships, higher contribution from lifestyle activities, and certain releases of provisions already discussed during the year. The total net impact of currency was positive for 15 million euros.

Speaker Change: [laughter] much visitors.

Speaker Change: Now look at the sort of wrestling with the personalization Steven clearly the Buda Sanguine offers.

Speaker Change: At the beginning of the personalization, we see client net ads.

Speaker Change: Looking at <unk>.

Benedetto Vigna: I believe that we will have clients that will only take the red car, the ICE. We'll have a client that will take IC and hybrid as today. We will have clients that we will get in our family only because we have the electric cars. So, I believe that, you know, we see very often the answer is that, you know, I need the electric cars because I need to go to places that will not be allowed by the government. So I think any combination of these three colors, red, blue, and green, is going to be possible.

Speaker Change: So the phasing of the roof.

Speaker Change: There are some opportunities over there.

Speaker Change: And lastly, we have been looking at logical strengthen our supply chain.

Speaker Change: Got it.

Speaker Change: So the two on the client.

Speaker Change: Second question was about China.

Speaker Change: China for the asset I would like to see does it.

Speaker Change: <unk> was about China, the number one for us as a young market young massive it means that the Colombian lifted the number of cars that we ship.

Antonio Picca-Picconi: With the positive net support of these variances, we achieve the yearly records of EBITDA and EBIT margins that we have managed. Turning to page 11, our industrial free cash flow generation was remarkable in the year, reaching 932 million euros, reflecting increased profitability, partially offset by financial charges and taxes, and most of all, capital expenditure of 869 million euros, increasing in line with the pace of development of our products and infrastructure. The already flagged significant increase in working capital, which reflects both the inventory expansion built to protect our delivery plans and the enriched product market. Net industrial debt at the end of December improved below the 100 million euro mark, reflecting the robust industrial precursor generation, partially offset by our initiative to reward shareholders. Dividends and buybacks were worth approximately 800 million euros altogether, implying a distribution of roughly 85% of the industrial free cash flow generation.

Speaker Change: So this market is not so many to meet the market is very young and we have to let it to grow with that I would speak to a volume.

Speaker Change: Let me say indigestion and digesting.

Benedetto Vigna: The second, it's a niche market still because if you make the map, you're talking about, you know, 1,200 cars. It is written on the chart. We had a slight decrease this year, but we are talking about a decrease in the range of a few tenths of a unit. And since the market is smaller, it may look a few percent over there. And then number three, we said from the beginning that we would keep China, let's say, around 10 percent because we believe because it is not margin accredited. But again. It's important that in each country, as our history testifies, we let the attachment to the brand grow at the right speed because if you grow too fast, the clients don't get used to what Ferrari is. This is what we have done in other countries, and this is what we intend to do in China as well.

Speaker Change: Mistaken.

Speaker Change: It's a niche market still because if you make the math youre talking about.

Benedetto Vigna: And I don't think that the hybrid car is an extrapolation. The only thing we can take as a lesson is that, or, I mean, looking at what happened in 2023, that is, there is always a way to use the technology in a unique way, in the Ferrari way, so that also clients, skeptical at the beginning of the hybrid car revolution, turn to that. This is the point. I remember once having breakfast with a client that was skeptical about the hybrid, but then he went to try it, and he bought the hybrid. This is pretty common.

Speaker Change: 100 <unk>.

Speaker Change: In the chart, we had this likely decrease this year, but we are talking about the decrease in the range of few terms to the unit.

Speaker Change: She is a method to small it may look like a few percent of invest and then number three we said since the beginning that we will keep the China let's.

Speaker Change: Let's say around 10%, but curious we believe because it is not margin.

Speaker Change: But again.

Speaker Change: It is important that in each country is our history.

Speaker Change: Suffice.

Speaker Change: Let the grow the attachment to the brand with the right speed.

Antonio Picca-Picconi: Finally, let's move to page 12. Building upon the visibility we enjoy, we outline the guidance for 2024 as a further solid step towards our targets for the years ahead. Let me explain the drivers of Sustain24 along the growth trajectory that we have designed, from Forcal Products in California, will be positive and a much more relevant volume once again, with an increased contribution from the Daytona SP3 and a constant personalization rate. Commercial ratings from racing in Formula One will be affected by the lower ranking achieved in 2013 compared to 2022, despite a higher number of races in the 2024 calendar.

Speaker Change: If you go too fast.

Speaker Change: The clients don't get used to what is driving this is what we are doing it you've done that calculation, which is what we intend to do also in China.

Benedetto Vigna: Thank you. Thank you. We are now going to proceed with our next question, and the questions come from the line of Tom Narayan from RBC Capital Markets. Please ask your question. Oh, yeah, thanks for taking the question. Question on the, you know, the strong plug and hybrid performance.

Speaker Change: Thank you.

Speaker Change: Thank you and now going to proceed with our next question.

Benedetto Vigna: So this is a confirmation that our strategy to keep alive the three colors, the red, the blue, and the green, is the right one. Thank you. And my follow-up. You know, with obviously everyone really interested in your guys' electrification journey that will happen. Just curious if we can expect capital markets events for investors for ourselves as well coming up this year potentially or next year. This year, for sure, not.

Speaker Change: And the question is come from the line of Tom Narayan from RBC capital markets. Please ask your question.

Tom Narayan: Hi, yes, thanks for taking the question.

Tom Narayan: Question on the strong plug in hybrid performance just curious if you could extrapolate that for the eventual Dev's full electrics do you plan to sell is there really a translation there to say that consumer demand for with plug in hybrids could potentially mean that.

Antonio Picca-Picconi: Lifestyle activities will continue to increase their support, the top line, while investing a larger share of resources to speed up the pace of development. However, cost inflation is expected to persist through the supply chain. And that DNA will increase in line with revenues due to continuing brand investment and digital development. The above will contribute to further profitability expansion, while we expect inflation, brand and infrastructural expenses, as well as increased Formula 1 spending due to the higher budget caps, to flatten our percentage margin in line with 2023. The industrial free cash flow generation will be sustained by our profitability, partially offset by capital expenditure of approximately 950 million euros, as many projects will enter their advanced stage of development. I see a negative change in working capital, in its broader meaning, mainly due to lower net advances collected from clients and increased tax payments proportional to the growth of our income in 2023. The underlying assumption for the US dollar exchange rate is that it will fluctuate around 1.1, implying a negative impact compared to 2023, including equity.

Tom Narayan: This cohort would be interested in infill electrics or are those buying the plug in hybrid is just you know.

Tom Narayan: Just across the board similar to Europe.

Tom Narayan: Existing portfolio of customers.

Benedetto Vigna: We are working for next year, but not for sure about this year. Only one point: the electrification journey is not really happening. It's already started to happen for a while.

Tom Narayan: Luke.

Tom Narayan: We posted our still so many times. This question, we've been talking to our clients directly or indirectly linked to the meters I don't see that as an extrapolation porcelain does effect I believe that.

Benedetto Vigna: I believe that we will have clients that will only take the red car, the ICE. We'll have a client that will take IC and hybrid as today. We will have clients that we will get in our family only because we have the electric cars. So, I believe that, you know, we see very often the answer is that, you know, I need electric cars because I need to go to places that will not be allowed by the government. So I think any combination of these three colors, red, blue, and green, is going to be possible.

Tom Narayan: We will let clients that will.

Benedetto Vigna: So this is important. This is the key message we passed on Capital Market Day two years ago. We have already been on the electrification journey for a few years.

Tom Narayan: We'll only peak.

Tom Narayan: Right.

Speaker Change: I see.

Speaker Change: We live client that will fit.

Speaker Change: And I believe as to the need.

Speaker Change: We will we will have clients that we get in our family only because we have that extra cash.

Operator: Thank you. Thank you. We are now going to proceed with our next question. And the questions come from the line of Thomas Besson from Kepler Chevro. Please ask a question.

Speaker Change: I believe that.

Speaker Change: Yeah.

Speaker Change: We see very often that the answer is that I need.

Speaker Change: Your line, if you will not be allowed.

Speaker Change: So I think any combination of these three columns.

Speaker Change: The blue and the green is going to be possible and I don't think that the.

Operator: Hello Thomas, your line is open; please ask a question. Hello Mr. Besson, your line is open. If you can hear us, your line is open.

Benedetto Vigna: And I don't think that the hybrid car is an extrapolation. The only thing we can take as a lesson is that, or I mean, looking at what happened in 2023, there is always a way to use the technology in a unique way in the Ferrari way that also clients who were skeptical at the beginning of the hybrid turn to that. This is the point. I remember once having breakfast with a client that was skeptical about the hybrid, but then he went to try it, and he bought the hybrid. This is pretty common.

Speaker Change: I believe cash using our simulation the only things we take.

Speaker Change: The lesson is dead.

Speaker Change: And then looking at what happened at the end of 2023.

Operator: We are now going to proceed with our next question. And the questions come from the line of Henning Cosman from Barclays. Please ask your question. Yeah, hi, good afternoon.

Speaker Change: There is always the ways to use the technology unique ways in the salary wage that also.

Nicoletta Russo: That said, we are obviously conscious of the stronger business performance recorded so far, despite the higher cost of inflation. This performance has been driven by the product mix, which will remain rich over the business plan. And then this has been further enhanced by both the actions on pricing and the exceptional demand for personalization. For sure, we continue to stay focused on pricing and product enrichment, and reassured by the visibility granted by our order book, we affirm our confidence in the high end of our 2026 target, as Benedetto just said. I thank you for your attention, and I now turn the call over to Nicoletta. Thank you, Antonio.

Speaker Change: <unk> skeptical at the beginning of hybrid solar to that group.

Speaker Change: This is the point I remember Wednesday, the breakfast to a client that was skeptical about the hybrid and then you went to try it and he built.

Henning Cosman: Thank you very much for taking the question. Interesting that you're emphasizing price and personalization so much. I'm not sure I understood you correctly, Benedetto. Did you say you work race price in the mid-single-digit percentage range on personalization specifically, if you could just confirm that? And if you would also... And on pricing in general, are you willing to make some comments there?

Speaker Change: The address and this is pretty common. So this is a confirmation that our strategy to keep alive the three corners.

Speaker Change: The blue and the Green is the right one.

Speaker Change: Okay. Thank you and my follow up.

Benedetto Vigna: So this is a confirmation that our strategy to keep alive the three colors, the red, the blue, and the green, is the right one. Thank you. And my follow-up. (Inaudible) This year, for sure not.

Yes, obviously, everyone really interested in.

Speaker Change: You guys electrification journey.

Speaker Change: That will happen just curious if we can expect.

Speaker Change: Capital markets events for investors and for ourselves as well.

Speaker Change: Coming up this year potentially or for next year.

Speaker Change: This year for sure not we are working progress for next year, but not for sure who visits only one point electrification journey not we left I mean is it really started the preferences and whatnot. So.

Benedetto Vigna: We are working for next year, but not for sure about this year. Only one point: the electrification journey is not really happening. It's already started to happen for a while.

Benedetto Vigna: So this is important. This is a key message we passed on Capital Market Day two years ago. We have already been on the electrification journey for a few years.

Speaker Change: This is important because it is a key message we pass it through the <unk>.

Speaker Change: Second bucket would be two years ago.

Already on the electrification joined US a few years.

Operator: Thank you. Thank you. We are now going to proceed with our next question. And the questions come from the line of Thomas Besson from Kepler Chevro. Please ask a question.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you we are now going to proceed with our next question.

John Babcock: Just quickly, you talked about doubling the hybrid share from 2022 to 2023, you know, from 22% of shipments to 44%. Out of curiosity, do hybrids tend to be favorable for mix? And also, can you talk about how the customer reception has been for hybrid engines and if this is something they're asking for? Okay, I will comment on that. Yes, it's true. We doubled our share of hybrids. This testifies that we are able, at Ferrari, to use technology in a way that is unique. Coming back to the specific question, I would say that I would pay two points. Number one, the profile of the customer using this technology is not so much different from that of the one using traditional thermal cars.

Speaker Change: And the question is come from the line of Thomas Besson from Kepler Chevron. Please ask your question.

Benedetto Vigna: If you could update us on the commercial pricing opportunities there. And then, on the second question on personalization, if I understood Antonio correctly, the exit rate in 2023 was 19%. If I'm not mistaken, you're guiding 18% for 2024. You typically have three months of visibility. So I was just wondering how it's trending into Q1, where I believe you already have some degree of visibility. Is it in line with the 18 or is it still at the level of the exit rate, if that's not too precise?

Operator: Hello Thomas, your line is open; please ask a question. Hello Mr. Besson, your line is open. If you can hear us, your line is open.

Thomas Besson: Hello, Thomas Your line is open please ask your question.

Thomas Besson: Hello, Mr. <unk>. Your line is open if you can hear Ross your line is open.

Operator: We are now going to proceed with our next question. And the questions come from the line of Henning Cosman from Barclays. Please ask your question. Yeah, hi, good afternoon.

Speaker Change: We are now going to proceed with our next question.

Speaker Change: And the question is come from the line of Henning Cosman from Barclays. Please ask your question.

Henning Cosman: Thank you very much for taking the question. Interesting that you're emphasizing price and personalization so much. I'm not sure I understood you correctly, Benedetto. Did you say you would raise prices in the mid-single-digit percentage range on personalization specifically, if you could just confirm that? And if you would also... And on pricing in general, are you willing to make some comments there?

Henning Cosman: Yeah, Hi, good afternoon. Thank you very much for taking the question.

Henning Cosman: Interesting that you.

Henning Cosman: Emphasizing pricing personalization so much.

Henning Cosman: I I'm not sure I understood you correctly did you say you would raise price in the mid single digit percentage range on personalization specifics if you could just confirm that and.

John Babcock: And then also, just given what's going on in the Red Sea, could you just quickly discuss if this is creating any challenges for Ferrari? The challenge that I see is basically that we don't see it at all; we double-check with our suppliers, and there is nothing that is impacting us. So, no impact on our production or delivery of cash. Okay. That's great to hear. All right. That's all I have for now.

Antonio Piccon: And then finally, the third question on the Daytona, Antonio confirmed again in the opening remarks 30 to 40 per quarter. I believe you've sold around 150 so far out of the 600. So that would imply you still have 12 more quarters to sell worth of Daytonas. That seems pretty long.

Henning Cosman: If you watch closely.

Henning Cosman: Constantly.

Speaker Change: Yeah, Alright and.

Speaker Change: On on pricing in general.

Henning Cosman: I think we recently talked a bit about the commercial opportunities on pricing in general, not just on personalization. I know there's always the balance, of course, not upsetting your loyal customers who've been waiting for so long. But then again, you have opportunities because the order book is so long already and you're virtually sold out.

Speaker Change: Are you are you willing to make some comments now.

Speaker Change: Recently, you talked a bit about the commercial opportunities on pricing in general not just on the personalization.

John Babcock: Thank you. Thank you. We are now going to proceed with our next question, and the questions come from the line of Michael Binetti from Avocor ISI. Please ask a question; your line is open. Hey guys, congrats on finishing up a terrific year.

Speaker Change: That's always the balance of course, not upsetting your loyal customers who've been waiting for so long, but then again you have opportunities because the order book is so long already in your virtually sold out if you could update us on the commercial pricing opportunities there and then.

Antonio Piccon: So I'm wondering if you would accelerate the Daytona volumes at some point so that it doesn't become such a long life cycle. Thank you very much. Thank you. Personalization of the toner for Antonio. I take the ASP.

Henning Cosman: If you could update us on the commercial pricing opportunities there. And then, on the second question on personalization, if I understood Antonio correctly, the exit rate in 2023 was 19%. If I'm not mistaken, you're guiding 18% for 2024. You typically have three months of visibility. So I was just wondering how it's trending into Q1, where I believe you already have some degree of visibility. Is it in line with the 18 or is it still at the level of the exit rate, if that's not too precise?

Michael Binetti: Thanks for taking our questions here. I guess first off, Antonio, could you give a little context around the guidance for free cash flow being lower this year? I'm wondering if there's an acceleration in some of the development spend and maybe any delta in the deposits for supercars included in the free cash flow outlook or excluded. On personalization, maybe just a little bit on the strategy there going forward. After a really good year on personalization last year, is there an opportunity to take some pricing to help offset some of the cost increases that you're seeing across the business? Hi Michael, I think the second one of the FCS-related questions is from Antonio.

Speaker Change: Second question on personalization, if I understood you correctly.

Speaker Change: The exit rate of 2020 for you was 19% if I'm not mistaken you're guiding 18% for 2024, you typically have three months of visibility.

Benedetto Vigna: So, as I told you, the answer to the first question: yes, it's confirmed. We increased the price of the personalization exactly as you understood. When it comes to the price of the cars, don't forget that last year, throughout the year, we've been increasing the price. And it's also important that we consider that, on the other side, there is a client that has been, let me say, looking at Ferrari, and we have to behave properly when it comes to the price increase. You're re-executed, and we have to be respectful of our clients. While for personalization in Daytona, Antonio, you can... Sure.

Speaker Change: So I was just wondering how it's trending into Q1, where I believe you have some degree of visibility already is it in line with the 18 or is it still on the level of the exit rate.

Henning Cosman: And then finally, third question on the Daytona, Antonio confirmed again in the opening remarks, 30 to 40 per quarter. I believe you've sold around 150 so far out of the 600. So that would imply you still have 12 more quarters to sell worth of Daytona. That seems pretty long.

Speaker Change: It's not too precise.

Speaker Change: And then finally sorry.

Speaker Change: On the Daytona I'm, showing you confirmed again in the opening remarks 30 to 40 per quarter. I believe you sold around 150, so far out of the 600.

Speaker Change: So that would imply you still have 12 more quarters to sell what they told us that seems pretty long. So I'm wondering if you would accelerate the daytona volumes at some point so that it doesn't become such a long lifecycle. Thank you very much.

Benedetto Vigna: So yes, the personalization, I mean, we are a luxury company; we have to bet that personalization is an important vector of growth for us, and it offers also an opportunity for pricing up. And we started these years to review the price up in the mid-digit area. So the percentage is important, yes, too, and we are going to touch on price for this important dimension. The free cash flow. Yeah, I'll try and explain three reasons. The first is clerical.

Henning Cosman: So I'm wondering if you would accelerate the Daytona volumes at some point so that it doesn't become such a long life cycle. Thank you very much. Thank you. Personalization at owner for Antonio. I take the ESP.

Speaker Change: Thank you personalization that donut for Antonio I would take a bit of ISP. So as I told you.

The answer to the first question, Yes, it's confirmed we increased the price of the personalization exactly like you understood. When it comes to the price of the cars don't forget that last year throughout the year, we have been increasing the price.

Antonio Piccon: On personalization, you got me right, meaning in 2023, we're almost at 19%, and 2024 is based on an assumption that we'll maintain more or less that rate. Binetti, as of now, is in that direction. And the last question, Daytona, yes, you're right, we expect to grow there, to move from 30-40 to approximately 60 per quarter next year. Very good. Thank you so much.

Antonio Picca-Picconi: We're just paying more taxes. The second one is we're spending more on CapEx. Nine hundred and fifty is what we have in mind for the year. And this is just because we have products that are now very close to launch and the number of products. And the third is the deposit cycle. This is just signing, basically.

Speaker Change: It's also important.

Benedetto Vigna: It's also important that we consider that, on the other side, there is a client that has been, let me say, looking at Ferrari, and we have to behave properly when it comes to the price increase. You're really executed, and we have to be respectful of our clients. While for personalization, in that tone, Antonio, you can.

Speaker Change: It's also important that we conceived this but on the other side of it is a client that is being met.

Speaker Change: Let me see looking at severity and we have to behave properly when it comes to the pricing increase you really executed and we have to be respectful of our clients.

Benedetto Vigna: There are, I mean, we collected quite a bit in 2022 and 2023. We have a kind of net reversal, and in addition, some new advances were collected in 2024. But the negative, the impact overall is modestly negative. OK. And I guess if I could squeeze one more in, you know, with the buildings still on track for mid-year, Benedetto, can you tell us how, what we'll see early on as far as, as you guys start to commercialize that, and what are some of the first things we'll see from outside of the companies you guys start to look to commercialize? This morning, me and Antonio were in the building.

Speaker Change: While for personalization in Daytona Antonio on pets.

Speaker Change: Summarization, you got me right.

Speaker Change: Meaning in 2023 at almost 19% in 'twenty 'twenty four is based on an assumption that we'll maintain motor rest of that rate.

Antonio Piccon: Sure. On personalization, you got me right. [inaudible] Binetti, as of now, is heading in that direction.

Operator: You're welcome. Thank you. We are now going to proceed with our next question. And the questions come from the land of Monica Bosio from Inteso, Sao Paulo. Please ask a question. Good afternoon.

Speaker Change: Visibility as of now is in that direction.

Antonio Piccon: And the last question, Daytona, yes, you're right; we expect to grow there, to move from 30-40 to approximately 60 per quarter next year. [inaudible] You're welcome. Thank you. We are now going to proceed with our next question. And the question comes from Zalando, Monica Bosio, from Intesa, Sao Paulo. Please ask your question. Good afternoon.

Speaker Change: And the last question in Daytona, Yes, Youre right, we expect to grow there to be moved from 34% to approximately 60 per quarter next year.

Speaker Change: Very good thank you so much.

Speaker Change: You're welcome.

Speaker Change: Yes.

Michael Binetti: So we are on track. It will be up and running starting this June, and this will be the place where we will assemble not only electric cars. Electric cars, as you know, will be ready if we are on track for Q4 2025. So, on the electrification journey, we are fully on track with our plan. Thank you and enjoy the year, guys. Thank you, Michael.

Speaker Change: Thank you we are not going to proceed with our next question.

Monica Bosio: I hope you can hear me and thanks for taking my question. The first one is on the ABDA margin that you guided Fletish on for 2024. I understand that it is due to a cost base related to the production of more complex products.

Speaker Change: And the question is come from the line Domanico, Brazil from Intesa Sanpaolo. Please ask your question.

Good afternoon that I hope you can give me and thanks for taking my question.

Domanico: The first one is on the EBITDA margin that you guided to.

Domanico: Like Asia for 2020 tour I understood is that it is due to a cost base related to the production out more complex product.

Operator: I can imagine that there is also a weight to the cost of labor. So I'm just wondering if you can give us some indication of what the weight of the cost of labor is on this Fletish guidance. Any hints could be useful for us.

Monica Bosio: I can imagine that there is also a weight to the cost of labor. So I'm just wondering if you can give us some indication of what the weight of the cost of labor is on this Fletish guidance. Any hints could be useful for us.

Domanico: I cannot imagine that that that is also.

Domanico: Of the Crystal believable right. So I'm just wondering if you can give us some.

Domanico: Indication of what is the week of the coastal belabor this flattish guidance that any it could be used for either the <unk>.

Susy Tibaldi: So, first one on demand. Within the luxury sector, we are seeing some softening of demand, but it appears that the higher end exposed to the wealthier cohort is still doing extremely well. And it seems also from your opening remarks that based on residual values, on feedback from dealers, you're not really seeing anything. But just to double check, is the economic picture at the moment having any impact at all on the Ferrari customer? Is there any comment, or any additional color you can provide?

Monica Bosio: The second question is on lifestyle. In the preliminary remarks, Benedetto anticipated that you were expecting an increase in lifestyle revenues. Can you please help us to figure out the growth rate for 2024? And the third question is about the advances from FP90XX and Spyder. I remember that on the last call you said that you were going to collect advances on the car. I'm wondering if you can give us any indication of the amount and the time frame across the year.

Monica Bosio: The second question is on lifestyle. In the preliminary remarks, Benedetto anticipated that you were expecting an increase in lifestyle revenues. Can you please help us to figure out the growth rate for 2024? And the third question is about the advances from FP90XX and the Spyder. I remember that on the last call you said that you were going to collect advances on the car. I'm wondering if you can give us any indication of the amount and the time frame across the year.

Domanico: Second question is on the lifestyle.

Domanico: <unk> cause you mean any remarks that all anticipated.

Domanico: I know you were expecting that and increasing the lifetime revenue can you. Please that had passed the two people that are out there.

Domanico: Gross profit for 2024.

Domanico: And.

Domanico: First question is on you Dan CSF from SP X X and that's fine.

Benedetto Vigna: I look at every technical myself and also what I'm following. The demand for the book is pretty strong; it goes well into 2025 till the end of 2025 in some cases even more. We do not see any particular negative signal particular negative signal on this topic. We keep doing as the plan. Clearly, there is not, in our client base, there is not an impact in any kind of, in any kind of, in any kind of, in any way. Thank you, this is if you want if you want to read a little bit more color. We have been, we had the dealer annual meeting at the end of November; we also had, we've been visiting several dealerships in the USA, in Asia, different countries, in Europe, and there is really a strong attraction toward our brand.

Dan: I remember I remember that in the last quarter, you say that you got going.

Dan: Correct.

Dan: Thanks, Steve.

Antonio Piccon: Thank you very much. Thank you, Monica. Antonio will take one and three, and then I will reply to your number two. Yeah, pardon me; I thought you switched sides. Anyway, let me re-imagine: it's not due to the higher cost base, actually, or more related..., better. It is not related to the additional complexity of the production.

Antonio Piccon: Thank you very much. Thank you, Monica. Antonio will take one and three, and then I will reply to your number two. Yeah, I apologize. I thought you switched sides. Anyway, on limited energy, it's not just the higher cost base, actually, or more related, better. It is not related to the additional complexity of the production.

Dan CSF: On the call I'm wondering if you can give up any indication on demand and on the timeframe of course, yeah. Thank you very much. Thanks.

Speaker Change: Thank you, Mike and Tony will take one and three and then I will reply to your numbers too.

Speaker Change: Yes, I apologize.

Speaker Change: Yeah.

Speaker Change: On the unlimited is not higher.

Speaker Change: Higher cost base.

Related to bad debt is not related to the additional complexity of the production I mentioned basically three elements one cost inflation because inflation is to you that it includes the cost of labor, we have an agreement in place with the trade unions branding to easier year on corporate center.

Antonio Piccon: I mentioned basically three elements. One, cost inflation. Cost inflation is still there. It includes the cost of labor.

Antonio Piccon: I mentioned basically three elements. One, cost inflation because inflation is still there. It includes the cost of labor.

Antonio Piccon: We have an agreement in place with the trade unions for an increase of 0.04%, which is embedded in these new assumptions. But even components, and generally speaking, it is a supply chain that is still embedded in current pricing, the impact of the inflation that has been going through the economy in the last 12 months. So that is an element; it's not the complexity.

Antonio Piccon: We have an agreement in place with the trade unions for an increase of 0.04%, which is embedded in these new assumptions. But even components, and generally speaking, is a supply chain that is still embedded in current pricing, the impact of the inflation that has been going through the economy in the last 12 months. So that is an element; it's not a complexity.

Speaker Change: Embedded in these new assumptions.

Speaker Change: But even component and generally speaking these are separate change.

Speaker Change: Yeah.

Speaker Change: Embedding.

Benedetto Vigna: Thanks. On the margin guidance for 2024, which basically implies flattish margins, I wanted to understand if your core cars and spare parts business is also seeing flattish margins, or perhaps that core business is seeing some underlying improvement, but then is upset by the dilution of some of the other segments where you are choosing to invest a little bit more. So it will be quite interesting to understand the dynamics in your various segments. That, in fact, is the explanation, Susy.

Speaker Change: Having pricing the impact of the inflation that has been going through their economy in the last 12 months. So that's one element is not the complexity.

Antonio Piccon: The second one is expenses for brand development, including lifestyle. Of course, we are investing in global business and also our digital infrastructure. We are growing, and we need to grow even in that respect, including a significant rejuvenation of what we currently use. And the last element, which is biting both the cost of goods sold and R&D expenses to the P&L, is the expenses for the Formula 1. Since the budget cap, which was originally meant to decrease over time, is actually growing since it has been agreed among the various teams to index spending to inflation. So, year over year, it is going to have a negative impact. Okay, okay, and in terms of your last question on the advantage of the SF90, yes, we have collectively not disclosed yet which are the targets. I just said, year over year, take into consideration that the difference will be negative.

Antonio Piccon: The second one is expenses for brand development, including lifestyle. Of course, we are investing in global business and also our digital infrastructure. We are growing, and we need to grow even in that respect, including a significant rejuvenation of what we currently use. And the last element, which is balancing both cost of goods sold and R&D expense to the P&L, is the expenses for Formula 1. The budget cap, which was originally meant to decrease over time, is actually growing since it has been agreed among the various teams to index spending to inflation. So, year over year, it's got a negative impact.

Speaker Change: Second one.

Speaker Change: <unk> expenses for brand development, including lifestyle of course, we are investing to geography.

Speaker Change: Okay.

Speaker Change: And also our digital impressions are accurately we are growing and we need to grow even in that respect, including a significant rejuvenation.

What we currently use.

Speaker Change: And the last element, which is baidu in broth.

Antonio Picca-Picconi: I will try and explain it. So product mix and personalization are obvious, but we expect the cost base below that to impact us and to flatten the margin. If we wish, within the cost of goods sold, it's just the budget gap which is growing for the F1 racing activities that is growing year after year. Okay, and the last last question for 2024: when we think about the phasing, is it fair to assume that the year is going to be a little bit more front-end loaded given the mixed evolution, or is it going to be quite similar quarter after quarter? I don't see a significant difference yet and think there might be some nuanced changes, but no significant changes. Usually, Q4 remains slightly softer, particularly in terms of volume allocation. But as of now, there is nothing to flag.

Speaker Change: Cost of goods sold them.

Speaker Change: R&D expense through the P&L.

Speaker Change: <unk> expenses for the former one he has the budget cap, which was originally meant to decrease over time is actually growing since it has been agreed among the various teams to index spend mix deflation so year over year is gone negative.

Benedetto Vigna: Okay, okay, and in terms of your last question on the advantage of the SF90, yes, we are collectively not disclosing yet which targets we have not disclosed yet. I just said year over year, take into consideration that the difference will be negative, so 2024 will be smaller than 2024. Okay. So, Monica, for the Lifestyle, let's see, 2023, three important things.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: In terms of your last question on the advances on DSS 90, Yes, we are collectively.

Speaker Change: Not disclosed yet, which hard to time to digest that year over year take into consideration that the.

Speaker Change: The difference will be negative.

Benedetto Vigna: So 2024 is smaller than 20. Okay. So, Monica, for the lifestyle, let's say 2023, three important things.

Speaker Change: 2024 smaller than 2020.

Speaker Change: Okay.

Speaker Change: So I'm wondering if on the lifestyle.

Speaker Change: Let's say 2023, three important <unk> number one we improved performances because there is more traction towards our connection.

Benedetto Vigna: Number one, we improved the retail performances because there was more traction towards our collection. Two, we saw there was a strong successful activation when you have an event in conjunction with our racing and brand event. And three, we had record numbers of museum visitors; around 750,000 is a lot.

Benedetto Vigna: Number one, we improved retail performances because there was more traction toward our collection. Two, we saw there was a strong successful activation when you have events in conjunction with our racing and brand events. And three, we had record numbers of museum visitors, around 750,000.

Speaker Change: We saw we saw there is stronger.

Speaker Change: As long as successful activation win.

Speaker Change: And in conjunction with our racing and brand demand.

And three we had a record we assume a visit us around 750000 is a lot in 2024.

Antonio Picca-Picconi: Okay, thank you. That's it. I said the fourth floor, not the fourth and first.

Monica Bosio: It's a lot. In 2024, if I have to define it, I define it as a year of progress because we have a list of activities that are aiming to build scale and also to expand the network and, let me say, our network while, if you want, we elevate the visibility of our brand. So it's a year where we are aiming to grow as well. And also in this respect, we are in line with what we declared in June 2022 with our target to double this activity, and the revenues of this activity, by 2026. Okay, thank you Benedetto. If I can add just a follow-up on the country mix, you say that the country mix will remain positive in 2024. I'm just wondering if it will be similar to the one seen in Full Year 2023? Yeah, I would say, as of now, I wouldn't consider country mix to be an additional positive influence.

Benedetto Vigna: In 2024, if I have to define it, I define it as a year of progress because we have a list of activities that are aiming to build scale and also to expand the network. And let me say our network, while if you want, we elevate the visibility of our brand. So it's an year where we are aiming to grow as well. And also in this respect, we are in line with what we declared in June 2022 with our target to double this activity, and the revenues of this activity, by 2022. Okay, thank you Benedetto. If I can add just a follow-up on the country mix, you say that the country mix will remain positive in 2024. I'm just wondering if it will be similar to the one seen in Full Year 2023.

Susy Tibaldi: Sorry. Thank you. We are now going to proceed with our next question. And the questions come from the line of Stephen Reitman from Societe Generale. Please ask your question.

Speaker Change: If I am to defining it.

Speaker Change: I defined it as a year of progress because we have the list of activities that are aiming to build the scale.

Speaker Change: And also to expand the network.

Speaker Change: Look we see our network, while Matt if you want.

Stephen Reitman: Again, congratulations on the very strong result. Also, congratulations on the quality of the result. We certainly noticed that the positive impact from R&D capitalization was considerably lower in 2023 than in 2022 or 21, so it points to higher quality there as well, I think. The question you mentioned about Pura Sangue has now gotten to cruising speed in terms of production.

Speaker Change: The the visibility globally.

So if any other wherever we are aiming to grow as well and also in this respect we are in line, we want to we declared an <unk>.

Speaker Change: June 'twenty to 'twenty two.

Speaker Change: Our.

Speaker Change: To double this activity the revenues of this activity by 2026.

Benedetto Vigna: Does that suggest that we are on track to see that reach 20% of annual sales? Because it looks like in 2023, it was only in the hundreds, so that would be a considerable ramp up. And if you could comment on what the personalisation level is looking like, I imagine that people are paying a lot of money in terms of personalisation in order to secure bill slots as well as for these in terms of making their orders attractive. And secondly, if you could comment on China, you did mention that you are strategically looking at that market in terms of also managing the margin implication on sales in China. But I think there was an expectation that sales were going to maybe increase a little bit in the fourth quarter because they'd be deferred from the third quarter in 2023. But we actually saw quite a big drop in 2020 in the fourth quarter.

Speaker Change: Okay. Thank you binnie.

Speaker Change: Thank you yes.

Speaker Change: If I can add there just the pool of outbound accounts with <unk>.

Speaker Change: You say that the economy. Please keep all the data in 2020 product I'm just wondering if it will be similar to the one <unk>.

Speaker Change: <unk> 2020.

Monica Bosio: Yeah, I would say, as of now, I wouldn't consider country mix being an additional positive influence. Okay, thank you, very much more or less like, Thank you. Thank you. Thank you. We are now going to proceed with our next question. And the questions come from the line of George Galliers from Goldman Sachs. Please ask your question.

Speaker Change: Yeah.

Speaker Change: As of now.

Speaker Change: I will then conclude our country mix being an additional closings to be plentiful.

Antonio Piccon: [inaudible] Thank you. Thank you. Thank you. We are now going to proceed with our next question, and the questions come from the line of George Galliers from Goldman Sachs. Please ask your question.

Speaker Change: Okay. Thank you very much more or less later.

Speaker Change: Thank you.

Speaker Change: Okay.

Thank you we are now going to proceed with our next question.

Benedetto Vigna: So I'm just wondering if you could say, are there any issues about the sort of like demand in that market as well? Thank you. Thank you, Steve, and thank you also for the congratulations that we will pass to all the team that made it possible.

Speaker Change: And the question is come from the line of George <unk> from Goldman Sachs. Please ask your question.

George Galliers: Yeah, good afternoon, and thank you for taking my question. Obviously, one of the standouts of 2023 was the very strong price mix, and if we look at your five-year plan, you were targeting around a 700 million improvement in EBIT from price mix by 2026. We're only two years into the plan, and you've delivered close to 65% of that target. Obviously, on this call, you've been mentioning new initiatives around personalization and pricing, and there are clearly still several important new launches to come. So is it fair to say there is a decent amount of upside to that original 700 million euros that you flagged back at the CMD?

Operator: Yeah, good afternoon, and thank you for taking my question. Obviously, one of the standouts of 2023 was the very strong price mix. And we look at your five-year plan; you were targeting around 700 million improvement in EBIT from price mix by 2026. We're only two years into the plan, and you've delivered close to 65% of that target. Obviously, on this call, you've been mentioning new initiatives around personalization and pricing, and there are clearly still several important new launches to come. So is it fair to say there is a decent amount of upside to that original 700 million euros that you flagged back at the CMD?

George: Yes, good afternoon, and thank you for taking my questions. Obviously, one of the standouts of 2023 with the very strong price mix and we look at your five year plan you were targeting around the 700 million improvement in EBIT from price mix by 2026.

Stephen Reitman: Coming back to the story of Burasangwe, in 2023, we shipped a few hundred Burasangwes. In 2024, we will be at a cruising speed that is 20% of the total. So basically, I mean, your assumption, and your calculation are pretty in line with our plan. The personalization, but if I may, Benedetto, just to complete on that, I wouldn't focus on 20% of each single year. We said 20% of the year we saved on average when we communicated around the capital market. I mean, mathematically, even if Benedetto is a mathematician.

George: We're only two years into the plan and you've delivered close to 65% of that target.

George: On this call you've been mentioning new initiatives around personnel utilization and pricing and there are clearly still several important new launches to come.

George: Sad to say there is a decent amount of upside to that original 700 million euros that you flagged back at the CMT.

George Galliers: The second question was also relating to something you talked about at the CMD, which was how you were going to leverage partnerships to co-develop best-in-class solutions with respect to electrification. I was wondering if you could give us some insights into how those partnerships have evolved. Have there been any unanticipated challenges? And, conversely, have there been any areas where your partners have really surprised you positively? And if so, would you be able to give us any small examples or snippets?

George: The second question was also relating to something you talked about at the CMT, which was how you were going to leverage partnerships to co develop best in class solutions with respect to electrification I was wondering if you could give us some insights into how those partnerships have evolved.

Benedetto Vigna: Yes, we are not that much. No, look, the story of Burasangwe, the personalization, Stephen. Clearly, Burasangwe offers a lot of degrees of personalization. We see clients that are looking at the rims, the liveries, the painting, the roof. So there are some opportunities over there. And last year we worked a lot to spend some hours to pay for all the personalization that the car offered to the client. The second question was about China. Well, China for us, I would like to say that there are three words about China.

George: Is there been any unanticipated challenges and Conversely have there been any areas, where youll partners have really surprised you positively and if yes would you be able to give us any small example, snippet. Thank you.

Benedetto Vigna: Thank you. Thank you, George. I think the second one, the first one, I will ask Antonio to reply.

Speaker Change: Thank you Jonathan I think in the second one was the first one and I wouldn't ask you then.

Speaker Change: I wanted to.

Benedetto Vigna: So, you remember very well, during Capital Market Day, we clearly said that we leveraged the partnership for electrification but also for other technologies. Because don't forget that we are making luxury cars, and there is much more than simple electrification. We are doing a lot of innovation on hybrid cars and on thermal cars. So, having said that, we are having a positive surprise at the willingness of the partners to work with us. We have partners in different places, going from new generation materials to new generation, let me say, advanced electronics to advanced displays. And we are, as I said, very positively surprised by all our partners. And we are working with partners in Asia, in the USA, and also in Europe. I can mention the one that we publicly released on the 11th of April; it was with sunshine, for the next generation cars. But there is another one I cannot mention.

Benedetto Vigna: So, you remember very well that during Capital Market Day, we clearly said we leveraged the partnership for electrification, but also for other technologies, because don't forget that we are making luxury cars, and there is much more than simple electrification. We are doing a lot of innovation on hybrid cars, on thermal cars. So, having said that, we are positively surprised by the willingness of the partners to work with us. We have partners in different places, going from new generation materials to new generation, let me say, advanced electronics, to advanced displays, and we are, as I said, very positively surprised by all our partners, and we are working with partners in Asia. [inaudible] for the next generation cars. But there is another one I cannot mention.

Speaker Change: So you remember Venezuela during the capital market day.

Speaker Change: We clearly set the leverage of the partnership.

Speaker Change: Just wondering if it's easier but also for other technologies because don't forget to mention we are making luxury cash.

Speaker Change: There is much more than it seemed connectivity issue.

Speaker Change: We are doing lots of innovation and also on the hybrid cash on on Panama attached.

Speaker Change: So having said that we have.

Benedetto Vigna: The second, it's a niche market still, because if you make the map, you're talking about, you know, 1,200 cars are written on the chart. We had a slight decrease this year, but we are talking about a decrease in the range of a few tenths of units. That since the market is smaller, it may look, you know, a few percent over there. And then the number three, we said from the beginning that we would keep China at around 10%, because we believe, because it is not margin accredited. It's important that in each country, as our history testifies, we let the attachment to the brand grow at the right speed because if you grow too fast, the clients don't get used to what Ferrari is. This is what we have done in other countries, and this is what we intend to do in China as well.

Speaker Change: The positive surprise on the willingness of the partners to work with US we have partners in different places going for new generation materials to new generation, Let me see.

Nick: Hey, Nick.

Nick: Ronnie to advanced display and we are having.

Nick: As I said, we are really positively surprising it by all our partners and we are working with partners in Asia.

Nick: In USA and also EMA in Europe.

Benedetto Vigna: I can tell you that we are also working on the way materials for the cars are realized because, as we said multiple times, sustainability for us is important. We want to be carbon neutral by the end of this decade.

Nick: I can mention the one net 11 opening one or two we publicly released and you never know Adrian was we've essentially.

Nick: The next generation of cash.

Speaker Change: Got it.

Speaker Change: The only one I cannot mention I tend to tell you that we are working also on the way material.

Speaker Change: Part of the cash are realized.

Benedetto Vigna: And we realize that to achieve our goal, to go to proceed along our way, we need to work with partners that are also involved in the material preparation. [inaudible] So Antonio, you for the mic. Sure. Your own strong price, Nick. I mean, if we compare with our assumption in the capital market today, you are right. We've been doing better. And I think we flagged a number of times this year that personalization particularly surprised us in terms of their strength. However, it's fair to say that even the cost base has been much higher than we would have expected.

Speaker Change: And as we said multiple times to come on the system. Maybe just wanted to ask is important we want to be carbon neutral by the end of this decade, and we realized that to achieve our goal to go to proceed along our way we need to work with partners that are also involved.

Stephen Reitman: Thank you. Thank you. We are now going to proceed with our next question, and the questions come from the line of Tom Narayan from RBC Capital Markets. Please ask your question. Oh, yeah, thanks for taking the question. Question on the, you know, the strong plug and hybrid performance.

Antonio Piccon: And we realize that to achieve our goal, to proceed along our way, we need to work with partners that are also involved in the material preparation. So, very positive surprises across the globe, very happy both because I have a regular meeting with them; we are happy on our side; they are also happy on their side. So Antonio, you for the mic. Sure. Your own strong price, Nick. I mean, if we compare it with our assumption in the capital market today, you are right. We've been doing better, and I think we have flagged a number of times this year that personalization has particularly surprised us in terms of its strength.

Speaker Change: Material preparation, so really positive surprise across the globe really happy move goes that you have right.

Tom Narayan: Just curious if you could extrapolate that for the eventual BEVs, full electrics you plan to sell. Is there really a translation there to say that, you know, consumer demand for the plug-in hybrids could potentially mean that, you know, this cohort would be interested in full electrics? Or are those buying the plug-in hybrids just, you know, just across the board similar to your existing portfolio? Look, we asked ourselves this question many times. We've been talking to our clients, directly and indirectly, including dealers. I don't think there is any extrapolation possible in this respect. I believe that we will have clients that will..., will only take the red card, the ICE.

We're meeting with them, we are up to an hour side that also lastly on their side.

Speaker Change: I'm Tania you further mature.

Speaker Change: In Europe strong price mix I mean, if we compare with our assumption in the capital market day.

Speaker Change: You are right, we have been doing better and I think we've flagged in a number of times. This year and then personalization I think Ali surprise us in terms of their friends.

Antonio Piccon: However, it's fair to say that even the cost base has been much higher than we would have expected. The positive, of course, is the fact that the improvement from personalized pricing has been such that it allowed us to more than offset the impact of inflation. Now, if we look forward, is there an opportunity for an upside on personalization? If the trend continues the way we have seen, potentially, yes, in terms of revenues.

However, it's fair to say that even the cost base has been much higher than we would have expected.

Speaker Change: Positive of course is the fact that the improvement from petrol monetization rising has been such that allows that allowed us to more than offset the impact.

Speaker Change: Now if we look forward is there an opportunity for an upside of personalization if the trends continue the way we have seen.

Benedetto Vigna: We'll have a client that will take IC and hybrid as today. We will have clients that we bring in our family only because we have the electric cars. So I believe that, you know, we see very often the answer is that, you know, I need electric cars because I need to go to places that will not be allowed by the government. So I think any combination of these three colors, red, blue, and green, is going to be possible.

Speaker Change: Actually yes in terms of revenues, whether this will flow through the P&L. It will very much depends on what happens to the cost base.

Antonio Piccon: Whether this will flow through the P&L will very much depend on what happens to the cost, exactly in parallel with what happened in 2020. Great, thank you. Welcome. Thank you. Due to time constraints and to keep the conference within the hour, we now end the question and answer session. I will now hand the conference back to Mr. Benedetto Vigna, CEO, for closing remarks. Thank you. Thank you. Thanks. Thank you all of you for your time today. And also for your question. The strong 2023 result is basically and is the result of our strong brand desirability, and also the confidence that we are having this year and forward is thanks to the traction that our product has with all our clients.

Speaker Change: <unk>.

Speaker Change:

Speaker Change: Part of that is with what happened in Canada.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Thank you to the time constraint and to keep the conference within DIY. We now end the question and answer session I would now hand back to Mr. Benedetto vignette CEO for closing remarks. Thank you.

Benedetto: Thank you. Thanks. Thanks, all of you for your time today and also for your for your question the stronger 2023 this out.

Basically.

Benedetto Vigna: Now I'm going to start off our strong brand visibility and also the confidence that we are adding on this year and 401 is thanks to the traction that our products have without all our clients I wish you a good afternoon and thank you again.

Benedetto Vigna: I wish you a good afternoon, and I thank you, together with all the Ferrari team here, for your attention and for your interest in our brand. Thank you so much. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you, and have a good day.

Tom Narayan: So this is a confirmation that our strategy to keep alive the three colors, the red, the blue, and the green, is the right one. Thank you. And my follow-up. You know, with obviously everyone really interested in your guy's electrification journey and that it will happen. Just curious if we can expect capital markets events for investors and for ourselves as well, coming up this year, potentially, or next year. This year, for sure, not.

Benedetto Vigna: All the celerity in here.

For your attention and for your interest in our brand. Thank you so much.

Speaker Change: Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect. Your lines. Thank you and have a good day.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Benedetto Vigna: We are working for next year, but not for sure about this year. Only one point: the electrification journey is not really happening. It's already started to happen for a while.

Speaker Change: Okay.

Speaker Change: [music].

Benedetto Vigna: So this is important. This is a key message we passed on Capital Market Day two years ago. We have already been on the electrification journey for a few years.

Tom Narayan: Thank you. Thank you. We are now going to proceed with our next question. And the questions come from the line of Thomas Besson from Kepler Chevrolet. Please ask a question. Hello Thomas, your line is open. Please ask a question. Hello Mr. Besson, your line is open. If you can hear us, your line is open.

Operator: We are now going to proceed with our next question. And the questions come from the line of Henning Cosman from Barclays. Please ask your question. Yeah, hi, good afternoon.

Henning Cosman: Thank you very much for taking the question. Interesting that you're emphasizing price and personalization so much. I'm not sure I understood you correctly, Benedetto. Did you say you would raise prices in the mid-single-digit percentage range on personalization specifically, if you could just confirm that? And if you would also... And on pricing in general, are you willing to make some comments there?

Benedetto Vigna: I think we recently talked a bit about the commercial opportunities on pricing in general, not just on personalization. I know there's always the balance, of course, not upsetting your loyal customers who've been waiting for so long, but then again, you have opportunities because the order book is so long already and you're virtually sold out. If you could update us on the commercial pricing opportunities there. And then, on the second question on personalization, if I understood Antonio correctly, the exit rate in 2023 was 19%. If I'm not mistaken, you're guiding 18% for 2024. You typically have three months of visibility. So I was just wondering how it's trending into Q1, where I believe you already have some degree of visibility. Is it in line with the 18, or is it still at the level of the exit rate, if that's not too precise?

Henning Cosman: And then finally, the third question on the Daytona, Antonio confirmed again in the opening remarks, 30 to 40 per quarter. I believe you've sold around 150 so far out of the 600. So that would imply you still have 12 more quarters to sell worth of Daytonas. That seems pretty long.

Antonio Picca-Picconi: So I'm wondering if you would accelerate the Daytona volumes at some point so that it doesn't become such a long life cycle. Thank you very much. Thank you. Personalization of the toner for Antonio. I take the ASP.

Benedetto Vigna: So, as I told you, the answer to the first question: yes, it's confirmed. We increased the price of the personalization exactly as you understood. When it comes to the price of the cars, don't forget that last year, throughout the year, we've been increasing the price. And it's also important that we consider that, on the other side, there is a client that has been, let me say, looking at Ferrari, and we have to behave properly when it comes to the price increase. You've already executed it, and we have to be respectful of our clients. While for personalization in Daytona, Antonio, you can.

Antonio Picca-Picconi: On personalization, you got me right, meaning in 2023, we're almost at 19%, and 2024 is based on an assumption that we'll maintain more or less that rate. Binetti, as of now, is in that direction. And the last question, Daytona, yes, you're right, we expect to grow there, to move from 30-40 to approximately 60 per quarter next year. Very good. Thank you so much.

Henning Cosman: You're welcome. Thank you. We are now going to proceed with our next question. And the questions come from the land of Monica Bosio from Intesa, Sao Paulo. Please ask your question. Good afternoon.

Antonio Picca-Picconi: Thank you very much. Thank you, Monica. Antonio will take one and three, and then I will reply to your number two. Yeah, pardon me. I thought you switched sides. Anyway, let me re-imagine: it's not due to the higher cost base, actually, or more related, better. It is not related to the additional complexity of the production.

Antonio Picca-Picconi: I mentioned basically three elements. One, cost inflation because inflation is still there. It includes the cost of labor.

Antonio Picca-Picconi: We have an agreement in place with the trade unions for an increase over a year of 4%, which is embedded in these new assumptions. But even components, and generally speaking, it is a supply chain that is still embedded in current pricing, the impact of the inflation that has been going through the economy in the last 12 months. So that is an element; it's not the complexity.

Antonio Picca-Picconi: The second one is expenses for brand development, including lifestyle. Of course, we are investing in the business that we need back, and also our digital infrastructure. We are growing, and we need to grow even in that respect, including a significant rejuvenation of what we currently use. And the last element, which is affecting both the cost of goods sold and R&D expense to the P&L, is the expenses for Formula 1. Since the budget cap, which was originally meant to decrease over time, is actually growing since it has been agreed among the various teams to index spending to inflation, so year over year it is going to have a negative impact. Okay, okay, and in terms of your last question on the advantage of the SF90, yes, we have collectively not disclosed yet which are the targets. I just said year over year, take into consideration that the difference will be negative.

Benedetto Vigna: So 2024 is smaller than 20. Okay. So, Monica, for the Lifestyle business, let's see, 2023, three important things. Number one, we improved the retail performances because there is more traction towards our collection. Two, we saw there is a strong successful activation when you have an event in conjunction with our racing and brand event. And three, we had record numbers of museum visitors, around 750,000 is a lot.

Monica Bosio: Okay, thank you very much. Thank you. Thank you. Thank you. We are now going to proceed with our next question. And the questions come from the line of George Galliers from Goldman Sachs. Please ask your question.

George Galliers: Yeah, good afternoon, and thank you for taking my question. Obviously, one of the standouts of 2023 was the very strong price mix, and if we look at your five-year plan, you were targeting around a $700 million improvement in EBIT from price mix by 2026. We're only two years into the plan, and you've delivered close to 65% of that target. Obviously, on this call, you've been mentioning new initiatives around personalization and pricing, and there are clearly still several important new launches to come. So is it fair to say there is a decent amount of upside to that original 700 million euros that you flagged back at the CMD?

Benedetto Vigna: Thank you. Thank you, George. I think the second one, the first one, I will ask Antonio to reply.

Benedetto Vigna: So, you remember very well, during Capital Market Day, we clearly said we leveraged the partnership for electrification but also for other technologies, because don't forget that we are making luxury cars, and there is much more than simple electrification. We are doing lots of innovation on hybrid cars, on thermal cars. So, having said that, we are positively surprised by the willingness of the partners to work with us. We have partners in different places, going from new generation materials to new generation, let me say, advanced electronics to advanced displays, and we are, as I said, very positively surprised by all our partners, and we are working with partners in Asia, in the USA, and also in Europe. I can mention the one that the 11th, the one that we publicly released on the 11th of April was with Sunshine for the next generation cars. But there is another one I cannot mention.

Benedetto Vigna: And we realize that to achieve our goal, to proceed along our way, we need to work with partners that are also involved in the material preparation. So, very positive surprises across the globe, very happy both because I have regular meetings with them; we are happy on our side, they are also happy on their side. So Antonio, you for the mic. Sure. Your own strong price, Nick. I mean, if we compare it with our assumption in the capital market today, you are right. We've been doing better, and I think we have flagged a number of times this year that personalization has particularly surprised us in terms of its strength. However, it's fair to say that even the cost base has been much higher than we would have expected.

Antonio Picca-Picconi: The positive, of course, is the fact that the improvement in personalization pricing has been such that it allowed us to more than offset the impact of inflation. Now, if we look forward, is there an opportunity for an upside on personalization? If the trend continues the way we have seen, potentially, yes, in terms of revenues.

Antonio Picca-Picconi: Whether this will flow through the P&L, it will very much depend on what happens to the cost, exactly in parallel with what happened in 2016. Great, thank you. Welcome. Thank you. Due to time constraints and to keep the conference within the hour, we now end the question and answer session. I will now hand the conference back to Mr. Benedetto Vigna, CEO, for closing remarks.

Benedetto Vigna: Thank you. Thank you. Thank you. Thanks, all of you, for your time today and also for your questions. The strong 2023 result is basically and is the result of our strong brand desirability, and also the confidence that we are having this year and forward is thanks to the traction that our product has without all our clients.

I wish you a good afternoon and I thank you together with all the Ferrari team here for your attention and for your interest in our brand. Thank you so much. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you and have a good day. Bon appetit!

Q4 2023 Ferrari NV Earnings Call

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