Ferrari(RACE) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2020, Ferrari's net revenues were EUR 3,460 million, down 8.1% compared to the prior year, driven by lower deliveries and brand revenue [14] - EBITDA for 2020 was EUR 1,143 million, down 10% with a margin of 33% [14] - Adjusted net profit was EUR 534 million, down 23.5% versus 2019, resulting in an adjusted diluted EPS of EUR 2.88 compared to EUR 3.71 in the prior year [15] - Industrial free cash flow for the year was EUR 172 million, with net industrial debt at the end of the year at EUR 543 million compared to EUR 337 million the previous year [27][28] - The order book was at a record level, up 22% versus last year, covering the entire 2021 and beyond [16] Business Line Data and Key Metrics Changes - Shipments in 2020 were 9,119 units, approximately 10% less than the prior year [14] - Sales of V8 and V12 models were down 10.3% and 9% respectively [19] - Engine revenues were down 24%, mainly reflecting lower shipments to Maserati [22] - Revenues from sponsorship, commercial, and brand activities were down EUR 150 million due to the COVID-19 pandemic [22] Market Data and Key Metrics Changes - The Americas market saw a decline of 19.8% in deliveries for the year but showed a 14% recovery in Q4 [20] - Mainland China, Hong Kong, and Taiwan posted a decrease of 45.5% for the year but grew triple digits in Q4 [21] - EMEA and the rest of APAC were almost in line with the prior year [20] Company Strategy and Development Direction - Ferrari is focused on a journey to carbon neutrality, with plans to achieve carbon neutrality within the decade [11] - The company is adapting its product plan to a fast-evolving environment, with new model unveilings planned for 2021 [10][21] - The CEO succession process is underway, with a search committee established to find the right candidate [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities despite the challenges posed by COVID-19 [11][32] - The guidance for 2021 targets a strong rebound with net revenues around EUR 4.3 billion, adjusted EBITDA between EUR 1,450 million and EUR 1,500 million, and adjusted EBIT between EUR 970 million and EUR 1,020 million [29][30] - The company acknowledges significant uncertainty in 2021 due to the ongoing pandemic [40] Other Important Information - The company did not use any state aid during the factory closure and continued to pay full salaries to employees [10] - The guidance for 2021 assumes that exchange rates will remain in line with the last part of 2020 [31] Q&A Session Summary Question: Guidance for 2021 and incremental margins - Management indicated that 2021 is still affected by significant uncertainty, impacting the trajectory for 2022 [38][40] Question: Personalization and its impact on results - Personalization rates were lower in 2020, but management does not expect significant fluctuations in the future [46] Question: Concorde Agreement impact - The net impact of the new Concorde Agreement and budget cap is expected to be neutral for Ferrari [48] Question: Free cash flow guidance for 2021 - Free cash flow guidance of EUR 350 million considers working capital dynamics and tax payments [50] Question: Shipments from China and new model timing - Management noted a significant growth of orders from China and did not provide specific timing for new model announcements [64] Question: Raw materials and FX assumptions - Management has hedged a significant portion of 2021's FX exposure and has a similar policy for raw materials [68] Question: Order book robustness - The order book is described as robust across product lines and geographies [69] Question: EBIT bridge and recovery in 2021 - Management indicated that some negative impacts from 2020 may reverse positively in 2021, depending on the pandemic's evolution [73] Question: Maserati engine delivery implications - The agreement with Maserati is expected to end in 2023, with limited financial impact anticipated [74] Question: CapEx plan and Purosangue launch timeline - Management preferred not to disclose specific details regarding the CapEx plan and timeline for the Purosangue launch [76] Question: Investment projects for EUR 800 million CapEx - The majority of the CapEx is focused on product development, including hybrid technologies and factory infrastructure [77]