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Thursday / 20 June 2024
HomeFeaturesFerrari takes a big hit

Ferrari takes a big hit

Ferrari shares fell the most in three years after the luxury-car maker reported underwhelming earnings and failed to raise its outlook.

Delivery gains in Europe and the Americas failed to offset a 20% drop in greater China, where tariffs are weighing on the profitability of Ferrari’s made-in-Italy supercars. Adjusted operating earnings were in line with estimates.

“We wonder if some investors were expecting a beat and raise,” said Tom Narayan, an analyst at RBC Capital Markets.

Ferrari fell as much as 6.7% in Milan, the steepest intraday decline since May 2021, and trading was temporarily halted. The stock is still up around 40% in the past year.

Automakers are coming under pressure from the broader economic downturn that is starting to weigh even on resilient luxury consumers.

Porsche last month warned of a slowdown in China, where buyers have put off purchases as a real estate crisis undermines confidence.

To be sure, Ferrari’s earnings were broadly in line with estimates, and the company confirmed its full-year guidance amid healthy demand for pricey models like the €2 million (R40 million) Daytona SP3 and more personalizations.

The results “may have resulted in a touch of disappointment for those new to the stock,” Bloomberg Intelligence analyst Mike Dean said in a note. Ferrari’s high visibility on sales means that an upgrade “was always unlikely.”

While Chief Executive Officer Benedetto Vigna has started a shift toward battery power, Ferrari still is relying on its profitable combustion engine vehicles to protect margins.

Adjusted earnings before interest, taxes, depreciation, and amortization climbed 13% in the period, to €605 million (R12 billion).

Competition to make the transition is intensifying. China’s BYD in February unveiled a high-performance EV priced from around $233,000 (R4.3 million).

Maranello-based Ferrari is building a factory to make hybrid and electric cars that will be ready next month, with the first fully electric model expected in late 2025.

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