Ferrari disappoints with sluggish profit growth forecast

By Agnieszka Flak

MILAN (Reuters) – Italian luxury sportscar maker Ferrari <RACE.MI> nudged up its full-year profit forecast on Thursday, but the modest increase disappointed, along with rise in third-quarter earnings that were only in line with expectations, sending the share price lower.

It now expects adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to come in at around 1 billion euros ($1.17 billion) this year, having made 778 million euros in the first nine months.

This would mark a 14 percent rise from last year and would see Chief Executive Sergio Marchionne crossing over the 1 billion-euro EBITDA line two years earlier than he promised when taking the wheel at the celebrated carmaker in 2014.

But the rise in forecast was small, up from 950 million euros previously and only in line with market forecasts, leaving analysts to ponder whether Ferrari was being conservative or pessimistic for the final quarter.

Milan-listed shares in Ferrari closed down 2.9 percent at 100.80 euros, after falling as much as 4.6 percent during the session. The shares in New York were down 2.1 percent at $117.44 at 1830 GMT.

Asked about the matter during a call with analysts, Marchionne said “it’s the minimum set of numbers we think Ferrari will deliver”, but declined to say more.

Ferrari is set to present a new five-year strategy in early 2018 which Marchionne said will show the business is capable of increasing its core profit margin in a “significant” manner.

After being spun-off from Fiat Chrysler <FCHA.MI>, where Marchionne is also CEO, Ferrari has sought to show it can boost profits without the backing of its parent. It has released several quarters of strong earnings, helped by the launch of a number of special edition models.

While the company will continue to produce high performance models to satisfy its core customer base, it needed to look beyond, the 65-year-old Marchionne has said.

The expansion of the product range is set to move into categories not traditionally covered by Ferrari – including a sport utility vehicle – although Marchionne said it would never seek to produce the large numbers of cars now sold by Volkswagen’s <VOWG_p.DE> Porsche, to protect both pricing and brand strength.

“The volumes of cars available in the marketplace will be severely restricted,” he said.

Asked about whether it would be sacrilegious to talk about ever producing a Ferrari without an internal combustion engine, Marchionne said that if it ever happened it would be at the end of the new five-year product cycle the company is currently preparing.

Earlier, Ferrari reported a 13 percent rise in third-quarter adjusted EBITDA to 266 million euros on a 7 percent growth in revenues to 836 million euros, in line with forecasts and helped by demand for its 12-cylinder cars such as the GTC4Lusso and the recently launched LaFerrari Aperta hybrid convertible.

($1 = 0.8577 euros)

(Reporting by Agnieszka Flak; Editing by Greg Mahlich)