Ferrari investors experienced a surprise when the company’s latest earnings report showed a 13% increase in first-quarter earnings compared to the same period last year. However, sales remained flat due to a 20% decline in China, leading to a 6-1/2% drop in the share price. Despite this, Ferrari’s share price has been strong throughout the year, rising from €305 to near €406 before the financial report was published. The stock has since recovered about half of the drop and is currently trading at around €388.
Ferrari reported that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to €605 million in line with analyst expectations. The EBITDA guidance for the year remained unchanged. Last year, Ferrari’s EBITDA reached €2.28 billion, and the company expects it to rise to €2.45 billion this year. Ferrari also anticipates sales worth over €6.4 billion this year with adjusted EBITDA margins above 38%.
According to Bernstein Research, Ferrari’s order book is strong and extends well into 2026, but some investors may have been disappointed by the lack of improved profit expectations. However, analysts believe that Ferrari’s order book allows the company to easily switch deliveries between lower and higher-priced vehicles to maintain earnings stability. HSBC Global Research also noted that Ferrari’s extended order book contributes to its earnings stability, making it an attractive investment option compared to other luxury automakers like Aston Martin and Porsche.
The report highlighted that Ferrari’s fiscal 2024 looks secure, but the scope for surprises is limited. One potential area for volatility is the China market, as reports suggest that the country may respond to increased tariffs on electric cars by the European Union with tariffs on luxury car imports with large ICE engines. Despite this, Ferrari has the lowest regional exposure to China among luxury carmakers, with only 9% of sales attributed to the region in the first quarter of 2024.
In 2023, Ferrari saw an increase in global sales to 13,663, driven by the introduction of the four-door Purosangue SUV. The model momentum in 2024 is expected to be led by the Purosangue, which is projected to account for 18% of sales, as well as the 296 GTS, Roma Spider, and Daytona. Ferrari is cautious about becoming overdependent on SUVs and has set a 20% peak for sales of the Purosangue. The company also announced the replacement of the 812 Superfast with the new coupe, the 12Cilindri, which features a 6.5-liter V-12 gasoline engine producing 818hp.
In conclusion, Ferrari’s financial results for the first quarter of 2024 reflect a mixed performance, with strong earnings growth but flat sales due to a decline in China. Despite this, the company’s extended order book and product lineup position it well for future growth and earnings stability. While potential volatility in the China market remains a concern, Ferrari’s low exposure to the region mitigates the risk compared to other luxury automakers. Overall, analysts view Ferrari as a key defensive play in an uncertain world, offering investors a stable investment option in the luxury auto sector.
