Ferrari races to new high after earnings top forecast

Friday, Feb 03, 2017

Ferrari (RACE.MI) shares raced to a new high on Thursday after the Italian sports car maker beat quarterly sales and earnings estimates, and gave stronger than expected forecasts for 2017.

Its Milan-listed shares rose more than 4 percent to 60.75 euros, the highest since their debut in January 2016.

Spun off from Fiat Chrysler (FCHA.MI), Ferrari has been under pressure to show it can increase profits without the backing of a large parent and lift sales without sacrificing the brand's exclusive status.

"The healthy beat at Q4 and guidance above consensus points to confidence that they can expand the range and still keep pricing power intact," a Milan-based trader said.

Ferrari (RACE.N) said adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in October-December rose 38 percent to 251 million euros ($271 million), above a Thomson Reuters I/B/E/S poll consensus of 225 million euros.

Quarterly sales were up 12 percent, also above expectations, helped by sales of its 12 cylinder models such as the GTC4Lusso and the newly-launched LaFerrari Aperta hybrid convertible. It proposed a cash dividend of 0.635 euros per share.

Ferrari will celebrate its 70th anniversary this year with a series of tailor-made cars, all inspired by iconic models from its past. Overall, the group plans to ship around 8,400 vehicles in 2017, getting closer to the 9,000 goal it has set for 2019.

Beyond special editions, Ferrari has been trying to expand its appeal with cars that have characteristics other than the technological prowess of its recent 8-cylinder and 12-cylinder models. It bills the GTC4Lusso T, a four-seater with a smaller V8 turbo engine, as "designed to be driven every day."

Ferrari forecast a 2017 adjusted EBITDA of more than 950 million euros and sales above 3.3 billion euros. A big contributor will be deliveries of the 1.86 million-euro hybrid convertible and the anniversary models.

"Investors will assume that Ferrari will have left some upside to their 2017 guidance and attempt to follow a similar pattern to 2016 of 'Beat and Raise'," said George Galliers, an analyst at Evercore ISI.

While at the time of the IPO Chief Executive Sergio Marchionne promised to expand the luxury brand beyond cars, he recently said Ferrari's focus would be on vehicles first.

He added that from 2019 all vehicles sold would have some hybrid elements, potentially opening the way for shipments to grow substantially in future. At the moment, Ferrari is exempt from certain fuel economy and emissions requirements provided it sells fewer than 10,000 vehicles a year.

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