Ferrari Profits Forecast to Climb About 10% in 2019 Under New CEO

January 31, 2019, 3:46 PM UTC
34th International Automobile Festival At Hotel Des Invalides in Paris
PARIS, FRANCE - JANUARY 29: A Ferrari SP38 is on display during the 34nd International Festival Automobile at 'Hotel des Invalides' on January 30, 2019 in Paris, France. This concept cars and design automobile exhibition takes place from January 31 to February 03, 2019. (Photo by Chesnot/Getty Images)
Chesnot Getty Images

Ferrari NV forecast profit this year will jump about 10%, in a show of confidence from new Chief Executive Officer Louis Camilleri, who is adding limited-edition new models to raise selling prices.

The Italian sportscar maker said it expects adjusted earnings before interest, taxes, depreciation and amortization rise to as much as 1.25 billion euros ($1.43 billion) in 2019. The shares rose as much as 3.1 percent in Milan after Ferrari has been working on an Icona project, which is set to include multi-million dollar models.

“There was concern 2019 was a transition year that could see margins fall,” Adam Jonas, an analyst at Morgan Stanley wrote in a note. Ferrari’s guidance appeared “confident enough” to address those concerns for now, he said.

Camilleri has had a bumpy start with the stock losing 19% since July, when the veteran of Philip Morris International Inc. replaced a dying Sergio Marchionne. Speculation about the CEO’s future arose after Ferrari’s Formula 1 head was replaced, prompting Chairman John Elkann to publicly back the Camilleri this month.

A key challenge for Ferrari has been improving the product mix to include more of its most-profitable models. While shipments rose 10 percent in 2018, revenue was essentially flat.

The new CEO plans to sell more limited-edition cars as Camilleri targets a near doubling of annual Ebitda to 2 billion euros annually no later than 2022. Vehicles such as the 1.6 million-euro Monza supercar will be pivotal for this quest. Ferrari last year sold 499 of the models to hand-picked customers.

Camilleri has gotten off to a slow start in China, however, delaying the Purosangue sport utility vehicle, a key to growth in the market, until 2022.

Growth in China slowed to a 6% increase in deliveries in the fourth quarter, while the gain for all of 2018 was 13%. By comparison, Ferrari’s home region of Europe — its largest selling market — accelerated later in the year. Deliveries rose by 31% in the fourth quarter.

Ferrari is also seeking to narrow a gap in trading multiples with higher-rated luxury goods companies such as Hermes International. The luxury retailer trades at 21 times expected Ebitda for 2020, compared with Ferrari at 16 times.

Shares of the Maranello, Italy-based company advanced 2.6 percent to 100.40 euros at 1:34 p.m. in Milan. The stock is up 16 percent this year.