What Factors Boosted Ferrari’s Profit Margin in Q1?



Ferrari’s Q1 2019 profitability

In the first quarter, Ferrari (RACE) reported a 14.3% YoY rise in its adjusted EBITDA to 311 million euros. The company’s adjusted EBITDA margin for the quarter was 33.1%, better than the 32.8% in the first quarter of 2018. Similarly, Ferrari’s adjusted net profit margin expanded to 19.1% in the last quarter as compared to 17.9% in the first quarter of 2018.

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Higher volume and currency tailwinds

Continued positive growth in Ferrari’s shipments negated the negative impact of lower engine sales and sponsorship revenues in the first quarter, which also helped the company improve its profit margins. Also, the net positive impact from currency translation and hedges boosted its profitability in the last quarter.

Last quarter, positive foreign exchange movement and higher volume added about 17 million euros and 60 million euros to the company’s first-quarter total EBIT (earnings before interest and taxes), which was at 232 million euros.

Negative mix and a rise in industrial costs

The slow growth of Ferrari’s V12 engine-based car model as compared to the growth in its V8 car models hurt its first-quarter profitability.

The company mentioned the discontinuation of its limited series car LaFerrari Aperta as one of the factors that affected its product mix in the quarter ended March 2019. While Ferrari reported a solid rise of 30.6% in V8 engine-based car shipments, its V12 engine-based car shipments rose by only 4.1% YoY during the quarter.

It’s noteworthy that Ferrari’s profit margins from its V12 engine cars typically tend to be higher than its V8 engine-based models.


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