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Did Lower China Shipments Hurt Ferrari’s Revenues?

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Dec. 4 2020, Updated 10:52 a.m. ET

Ferrari’s 4Q16 revenues

For 4Q16, Ferrari (RACE) reported net revenues of 836 million euros or $901 million. Revenues rose ~12% from about 744 million euros in the same quarter last year. Despite lower shipments to Greater China (China, Hong Kong, and Taiwan) in 4Q16, strengthening shipments from the Americas and a positive product mix helped the company achieve positive revenue growth. Note that Ferrari reports its earnings in euros.

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Shipments to Greater China fell

In 4Q16, Ferrari’s shipments to Greater China fell 36% compared to the same period last year—unlike the previous two consecutive quarters when Ferrari’s shipments to Greater China rose 15% and 25%, respectively, in 2Q and 3Q. Ferrari said that the lower shipments were a result of the recent termination of Ferrari’s Hong Kong-based distributor in 4Q last year.

Note that China is the largest auto market in the world. In recent years, mainstream automakers (IYK) including General Motors (GM), Ford (F), and Toyota (TM) also shifted their focus to growth in the Chinese market.

Fiscal 2016 revenues

In fiscal 2016, Ferrari’s revenues rose 8.8% YoY (year-over-year) to 3.1 billion euros or $3.3 billion. A solid performance for V8 and V12 engine supercars helped the company’s revenues to grow positively last year. In the last three quarters, positive sales growth for V12 engine cars was an important factor. Positive sales growth helped Ferrari’s margins to expand.

Due to higher engine power than V8 engines, cars equipped with V12 engines are typically sold with a higher price tag. Therefore, Ferrari’s profitability from V12 engine car sales tends to be higher compared to V8 car sales.

In the next part, we’ll discuss how Ferrari performed in the US in 4Q16—its largest single market.

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