The Ferrari NV logo. (Photographer: David Paul Morris/Bloomberg)

Ferrari’s Push for More Exclusivity Is Helping the Bottom Line

(Bloomberg) -- Ferrari NV surged a record 12 percent after forecasting a jump in profit this year, and new Chief Executive Officer Louis Camilleri said a strong order book might prompt the sportscar maker to boost financial targets.

The Italian manufacturer said it expects adjusted earnings before interest, taxes, depreciation and amortization rise about 10 percent to as much as 1.25 billion euros ($1.43 billion) in 2019. Ferrari has been working on an Icona project, which is set to include multi-million dollar models.

“We have a stronger order book, we are very bullish on the business,” Camilleri said on a conference call with analysts, indicating the carmaker could boost its financial targets for 2020.

Ferrari will remain focused on revenue and margins, rather than volumes, he added, with a plan to unveil five new models in 2019. A fully electric supercar model could come “after 2022.”

“There was concern 2019 was a transition year that could see margins fall,” Adam Jonas, an analyst at Morgan Stanley wrote in a note. Ferrari’s guidance appeared “confident enough” to address those concerns for now, he said.

The shares rose to 108.60 euros at 5:36 p.m. in Milan trading to value the company at 20.4 billion euros.

Camilleri has had a bumpy start with the stock losing 19 percent since July, when the veteran of Philip Morris International Inc. replaced a dying Sergio Marchionne. Speculation about the CEO’s future arose after Ferrari’s Formula 1 head was replaced, prompting Chairman John Elkann to publicly back the Camilleri this month.

See here for: Ferrari Fourth Quarter Revenue Misses Lowest Estimate

A key challenge for Ferrari has been improving the product mix to include more of its most-profitable models. While shipments rose 10 percent in 2018, revenue was essentially flat.

The new CEO plans to sell more limited-edition cars as Camilleri targets a near doubling of annual Ebitda to 2 billion euros annually no later than 2022. Vehicles such as the 1.6 million-euro Monza supercar will be pivotal for this quest. Ferrari last year sold 499 of the models to hand-picked customers.

Camilleri has gotten off to a slow start in China, however, delaying the Purosangue sport utility vehicle, a key to growth in the market, until 2022.

Ferrari’s Push for More Exclusivity Is Helping the Bottom Line

Growth in China slowed to a 6 percent increase in deliveries in the fourth quarter, while the gain for all of 2018 was 13 percent. By comparison, Ferrari’s home region of Europe -- its largest selling market -- accelerated later in the year. Deliveries rose by 31 percent in the fourth quarter.

Ferrari is also seeking to narrow a gap in trading multiples with higher-rated luxury goods companies such as Hermes International. The luxury retailer trades at 21 times expected Ebitda for 2020, compared with Ferrari at 16 times.

©2019 Bloomberg L.P.