Ferrari ‘growth momentum’ slows down

Bloomberg

Supercar manufacturers typically operate in the rarefied sphere of recession-proof consumption, where wealthy customers possess enough money to drop $300,000 or more on their purchases.
Ferrari NV experienced the limits of that behaviour, reporting growth in the second quarter far behind the first three months of the year, sending its stock tumbling.
Both profit and shipments slowed from more buoyant demand at the start of the year.
The shares fell as much as 6.9 percent, before closing 4.4 percent lower in Milan trading.
Ferrari fell the most in almost ten months after climbing 70 percent this year before the recent setback. Some investors had hoped to see a raised outlook, which didn’t materialise.
It shows even a supercar maker isn’t immune to a car market that has rapidly deteriorated in recent months, with companies from Daimler to BMW to Toyota cutting their goals as customers have second thoughts about purchases.
The company’s deliveries rose 8 percent during the second quarter compared with last year, less than a 23 percent gain during the first three months of the year, Ferrari said.
Sequentially, shipments and profits were flat. The slowdown followed rival Aston Martin Lagonda reporting lower vehicle prices, an ominous development for an elite brand.
Still, Chief Executive Officer Louis Camilleri pointed to an acceleration in demand in coming months.
“Ferrari’s order book has reached record-levels,” Camilleri told analysts on a call, with the pace of orders set to quicken during the remainder of the year.
The carmaker plans to unveil a record five new models in the coming months with a goal of delivering about 10,000 vehicles in 2019, he said. That’s up from total shipments of 9,251 cars last year.
Operating return on sales was “a touch” worse than expectations, Mediobanca analyst Andrea Balloni said in a note. Ferrari’s own forecast range on annual operating profit is below market expectations, he said.
While rising sales of the entry-level Portofino model continue to drive volumes, this was partially offset by lower deliveries of high-end vehicles like the 488 GTB, Ferrari said. Adjusted earnings before interest and amortisation rose to $349 million. Analysts’ estimates averaged 315.1 million euros.
Ferrari’s results remain more encouraging than the profit warnings and sharp declines in profit across other manufacturers. The industry faces an economic slowdown and trade tensions against a backdrop of the need for unprecedented spending on electric cars.