Ferrari Earnings: Solid Revenue Growth and Margin Despite Slight Shipment Reduction

Wide-moat-rated Ferrari RACE posted second-quarter diluted earnings per share of EUR 1.83, beating the EUR 1.73 FactSet consensus by EUR 0.10 and up EUR 0.47 from the prior year. Consolidated revenue of EUR 1.474 billion (flat with consensus) increased 14%, driven mostly by a 26% increase in sponsorship and a 15% increase in cars and spare-parts revenue, partially offset by a 34% decline in engine revenue on reduced shipments to Maserati as the contract expiration is this year. The sales increase was supported by a richer mix and increased personalization, despite a 2% dip in shipments on quarterly regional and mix volume allocation. Excluding foreign-currency translation, revenue improved 13% over the prior year.

Unit volume was 3,392, down 2% from 3,455 last year as volume allocation was partially offset by higher volumes of the 296 GTB, Roma, and Portofino M with the 296 GTS, 812 Competizione A, and Purosangue in ramp-up. Ferrari delivered 17% volume growth in Europe, the Middle East, and Africa, with unit sales to China off 5%, the rest of Asia declining 16%, and the Americas dropping 18%. Despite inflationary cost pressures and slightly lower volume, pricing and mix supported healthy expansion in adjusted EBITDA margin to 40.0%, 540 basis points higher than the 34.6% reported last year.

Management raised its full-year sales guidance to EUR 5.8 billion from EUR 5.7 billion. Sales visibility remains strong, with orders extending into 2025. Management also expects more than 300 basis points of adjusted EBITDA margin expansion to 38% for the full year, unchanged from prior guidance. We had already forecast slightly above management’s prior revenue guidance, but the minor adjustments we made to 2023 (revenue to EUR 5.80 billion from EUR 5.76 billion prior) added EUR 1 to our fair value estimate. While we don’t mind paying up for a wide-moat name like Ferrari, the shares trade in 2-star territory and a 13% premium to our EUR 257 fair value estimate.