What Was behind Ferrari’s Solid 3Q16 Margins?



Ferrari’s 3Q16 margins

In 3Q16, Ferrari (RACE) reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of 234 million euros, with an EBITDA margin of 30.0%. This EBITDA margin reflects an expansion from 29.5% in 3Q15 and from 26.9% in 2Q16.

Likewise, RACE’s EBIT margin rose to 22.0% in 3Q16, compared to 19.4% in 3Q15 and 19.3% in 2Q16.

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Boost from higher shipments

In 3Q16, Ferrari’s global vehicle shipments rose marginally by 29 cars YoY (year-over-year) to 1,978 units. Among these cars, higher shipments of the F12tdf and the 488 positively impacted the company’s margins.

The company has suggested that the waiting list for its 488 GTB and 488 Spider car models is growing. The F12Berlinetta is still in demand, despite being in its fifth year of commercialization. Similarly, the shipments of the F12tdf, another car from the F12 family, surged in 3Q16.

Positive impact of new launches

As noted earlier in this series, the margins of Ferrari’s V12 engine cars are higher than those of its V8 engine cars. In 3Q16, the shipments of the company’s two newly launched V12 engine cars, the GTC4Lusso and the LaFerrari Aperta, began. Also, strong demand for other V12 engine cars such as the F12tdf and the F12Berlinetta boosted the company’s margins in 3Q16.

Note that Ferrari targets consumers with higher levels of disposable income. By doing so, even in tough times, Ferrari manages to maintain industry-leading margins. Its margins are much higher than those of other mainstream automakers (XLY), including General Motors (GM), Ford Motor Company (F), and Fiat Chrysler Automobiles (FCAU).

Read on to the next article, where we’ll look at some important factors that could affect Ferrari’s valuation multiples in the coming quarters.


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