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Operator
Good day and thank you for standing by. Welcome to the Ferrari 2023 Full Year Results Conference Call and Webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Nicoletta Russo, Head of Investor Relations. Please go ahead.
Nicoletta Russo
Thank you, and welcome to everyone who is joining us. Today, we plan to cover the Group's full year 2023 operating results and 2024 guidance, and the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the Group CEO, Mr. Benedetto Vigna, and Group CFO, Mr. Antonio Piccapiccon. All relevant materials are available in the investor section of the Ferrari corporate website, and at the end of the presentation, we will be available to answer your questions. Before we begin, let me remind you that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included on page two of today's presentation. And the call will be governed by this language. With that said, I'd like to turn the call over to Benedetto.
Benedetto Vigna
Thank you, Nicoletta, and thank you, everyone, for joining us today. 2023 will be remembered as a year in which we accomplished many achievements and we strengthened our brand across each of its three souls, racing, sport cars, and lifestyle. For this, I would like to thank all the women and men of Ferrari for their outstanding work, all our clients for their continuous trust in our brand, and all our partners, suppliers, dealers, and sponsors with whom we have continued to strengthen our relations. Among the many achievements realized in 2023, I'd like to mention three. The first, the historic victory at Le Mans. The second is the five new model launches, further enriching our beautiful product offering, together with a variety of new clients' engagement experiences. And last but not least, the new iconic bag, a Maranello clutch, that stands out to the cooperation between colleagues in Maranello, belongs to Sport Car Team, and those in Milan of our lifestyle department. These achievements are reflected in our record full-year financial results across all metrics. So let's start reviewing together a few key numbers of year 2023. Revenues were at approximately 6 billion euro. EBITDA at 2.28 billion euro with record yearly EBITDA margin of 38.2%. Net profit, first in our history, well over one billion euro threshold with a remarkable net profit margin of 21%. And industrial free cash flow generation of approximately 930 million euro, of which about 800 million euro distributed to shareholders between dividends and share by debt. And now, after the numbers, let's deep dive into our racing activities. Winning the 24-hour early months was an unforgettable day for our history. I was there. I will never forget June 11 afternoon because it saw our victorious return to the top class of the World Endurance Championship on the centenary of this legendary 24-hour race. The Ferrari 499 piece win was a true team effort. Every area, every area of our company worked together to contribute to our hypercar success. And I'm really proud of everyone. As we say, we are and we act as one Ferrari. In Formula One, we fought till the very last race, even though the last season has been a difficult one, often short on satisfaction. We know we must continue to work tirelessly to return to the level that our T4C rightly expect of us and we look forward to it. The continuous will to progress and strive for excellence in racing and everything we do, testify our effort and our willingness to always push the boundaries of technology and innovation audaciously. This leads me to the achievements we reached in our sports cars. In 2023, we unveiled five new models out of the 15 models announced at 2022 Capital Market Day. Three models for the road, the Roma Spider, the SF90XX Stradale, and the SF90XX Spider. They all raised the bar of technology and design still far to meet and exceed the desires of our clients. And two models for the track, During the Finale Mondiale at the Mugello Circuit last quarter, we unveiled the 296 Challenge and the 499P Modificata, both of which will set new benchmarks in tracks driving trails for our most passionate racing clients. Consistently and coherently, we follow our strategy of different Ferrari for different moments, different Ferrari for different Ferrari states. These years, we continued to engage with our clients with many experiences on the road and on the track. I refer to unique and truly engaging locations, such as the Finale Mondiale, our cavalcades, the legacy tours, our legacy tours, to mention just a few of them. These are all experiences which continue to bond our community even further and evoke a true sense of belonging. These exclusive events enable our clients, our tifosi, and enthusiasts to interact with the brand and live experiences together. 2023 has been a year of learning for our lifestyle activities, which have shown positive indicators, among which improved retail performances, successful activation in conjunction And this is really key in conjunction with racing and brand events and record museums visitors. In fact, 740,000 brand lovers visited our museums in Maranello and Modena in the years. Almost 20% more people than one year ago, confirming the strength of the brand and the passion of our community. Throughout all the years, Throughout 2023, we have also done relevant progress in our carbon neutrality journey. Indeed, we reduced our scope one and scope two emission by 7% in 2023 and by 16% versus 2021. We built our first prototype engine from recycled aluminum. We also installed solar panels providing an extra 2.4 megawatt peak power compared to last year an additional one megawatt peak power will become available in the coming months from the renewable energy community the first ever energy community in italy to be baked by an industrial company for the benefit of its local area and this is only this is only one demonstration of the moral obligation we feel to give back to local community. All of these developments, as well as the record result, have been possible thanks to the passion and dedication of all my colleagues. And to reward their achievement in line with the company's strong performance indicators, I am pleased to announce the yearly competitive award of up to nearly €13,500 for all our employees. We are also proud to mention the additional four welfare initiatives that we have announced at the last November 13th. A broad-based shared ownership plan for our 5,000 plus employees, the extension of health checkups, the parenting support, as well as the 250 new eyes. On top, we have also received the Equal Salary Certification on a global level for the first time. A result we can all be proud of. 2023 was characterized by global tensions, geopolitical conflicts, supply chain disruption, and cost inflation, all challenges we have learned a lot from. Our flexibility, our agility, together with the constant support of our clients and partners, allow us to look at 2024 with confidence. Such confidence also derives from the positive momentum that we continue to experience. Notwithstanding the current challenging macroeconomic environment, the vitality of our business is once again confirmed by the order book on current models, which remain strong across all geographies and covers the entire 2025. During last month, I've been visiting several dealerships. in Europe, USA, and different countries in Asia. And I can tell you that the traction of our brand is really strong. You can really breath it. When you meet our clients into the dealership and you see how they interact with our dealers, you can easily understand their strong attachment to our brand. Our dealerships are a great point of aggregation for our clients and events organized by our dealers help to give a boost to the spontaneous aggregation of our loyal clients. The residual values remain sound, with different dynamics in the region and normalizing from the peaks registered in the post-pandemic period when a lack of new product boosted them. The visibility granted by the order book gives us the confidence to look at the future, but at the same time, we need to keep always four wheels on the ground. Confident humility and will to progress have been, are, and will be our North Star during the execution of our business plan. Following an initial phase of our business plan characterized by revenues and profitability expansion, in 2024, we continue to grow our top line while consolidating percentage margins, which we expect to further expand toward the end of the current business plan. The record result of 2023, the exceptional visibility on our order book and the extraordinary performance of our business allow us to look at the high end of the 2026 target with strongest confidence. But beyond the cold numbers, what to expect in 2024 from us? In race day, Power D&A, we will compete at the top in Formula 1 and Endurance. We have recently confirmed the World Endurance Championship team, and in Formula 1, we have reinforced the technical team and expanded the manufacturing area, which is already up and running. And during the last weekend, we won 24 hours of Daytona in GTD Pro Class with our 296 GT3 cars. Definitely a great start to the 2.96 career. On top, we've just announced that we are expanding our presence in the racing world with the intention of setting records also by racing on the seas of the entire world. In sports cars, we will inaugurate the eBuilding in June, exactly two years later than the last Capital Market Day. We will further enrich the product offering with three new model launches, and we will continue to enhance our client experiences, both on track and on road, not only on brand new cars, but also taking care of Ferrari's pre-owned models with tailored events. In our history, we crafted about 250 different models of Ferrari, and for us, they are all equally important. They are all our kids. Lifesize in 2024 will be the year of progress with an array of activities designed to build the scale while elevating and expanding its ability. Among our priorities, we continue to focus on our carbon neutrality journey, which is further boosted by the ultimate goal to shut down the three generators within the next 18 months. We look ahead at 2024 with energy, agility, and confident humility, but above all, with enthusiasm for the new exciting challenges in front of us. And now I hand over to Antonio to review the 2023 results and 2024 guidance.
Nicoletta
Thank you, Benedetto, and good morning or afternoon to everyone joining us today. Starting on page 7, we present the highlights of the results for the entire 2020. As Benedetto just mentioned, 2023 was another record year for our company, with all financial metrics once again growing double-digit and with a significant margin expansion of 3 percentage points at the EBIT level and even more at the EBITDA level. Even if our four-year plan from the last capital market day is rather front-loaded by design, such results went beyond expectations, considering the modest shipments increase and the inflation headwind affecting our input costs. A visible real-life application of the obsession to privilege value upon volume and to control allocations to promote exclusivity. Let's dive into the details to try and shed some light on our path forward. Our strong business performance in 2023 was sustained by three main factors. A rich product mix per se, further emphasized by a surprisingly strong personalization uptick, coupled with a favorable country mix. These led to revenues up 17%, Adjusted EBITDA growing roughly 28.5%, that is 500 million euro, with a very solid margin, standing at 38.2%. Adjusted EBIT up approximately 32%, with a yearly record 27.1% margin. Net profit of 1 billion and 260 million euro, leading to an adjusted diluted earnings per share of 6.9 euro from less than 5.1 last year of a particular note of the industrial previous low generation which reached 932 million euro moving to page 8 you can see the details of the full year shipment in the year Deliveries increased less than 450 units after two post-pandemic years of strong double-digit increase. As usual, geographies reflect our choices of volume and product allocation in the different markets. EMEA and the Americas were up versus prior year, representing more than 70% of our total shipments. Press of APAC was almost flat at 17%. and mainland China, Hong Kong, and Taiwan reduced their share by few tenths of units to 11% in line with our long-term target for this area, considering its relative use and evident dilution impact on our percentage margins. Shifting to the product, the most significant change in the year was the doubling of the idle share to 44% of the total volumes underpinned by the growth of the SF90 and 296 families. The highly anticipated Puro Sangue ramped up during the second half of the year to finally reach its cruising altitude in 2024. The Roma Spider, which was unveiled in the first quarter, already commenced delivery in the last quarter of 2023. Special series represented by the H-12 Competizione FNE increased compared to one year ago thanks to the deliveries of the Asserta version, while Daytona SP3 shipments continued according to our plans between 30 and 40 units per quarter. Lastly, in the year, the F8 family concluded its life cycle with the Portofino M, which was also approaching its end. on page nine you can see the net revenues bridge costing a robust 17 percent growth versus priority also at cost and currency the increasing cars and spare parts was evidently the main contributor driven by the richer mix personalizations pricing and slightly higher volumes Price increases during the year were differentiated by product and geography in accordance with decisions taken in the second half of 2022 to protect our margins from the surge of inflation. Personalizations continued to strengthen, and in the last quarter, we witnessed a consolidation of the trend registered in the first nine months. In 2023, personalization stood at approximately 19% in proportion to revenues from cars and spare parts, mainly driven by paint, liveries, and the use of carbon. Sponsorship, commercial, and brand reflected higher sponsorships, including Formula One and World Endurance Championship racing activities, higher Formula One commercial revenues, and a better ranking achieved in 2022 compared to 2021, as well as the growing contribution from lifestyle activities. Engines revenues declined in line with the reduction of supplies to Maserati, whose contract expired at the end of 2023. Therefore, from the first quarter of 2024 onward, any residual contribution from the sales of engines to their parties whether for sports cars or racing, will be reported in the bar named other. Currency has a small negative net impact, mainly reflecting the opposite dynamics of the US dollar, Japanese yen, and Chinese yuan. Moving to page 10, the change in adjusted EBIT is explained by the following values. Volume, positive, and reflecting the limited increase in shipments. Mix and price, also positive and very strong, for 461 million euro, thanks to very favorable product mix, sustained by the Daytona SP3, and the S19 families. Country mix, driven by the Americas and mainland China, Hong Kong and Taiwan, despite the small decrease in deliveries in the year. and today increased contribution from personalization and pricing. Industrial and R&D expenses grew 166 million euro, mainly due to higher depreciation and amortization, cost inflation, and higher Formula One expenses. As DNA was negative for 43 million euro, mainly reflecting the continuous development of the company's digital infrastructure and organization. In addition, we kept on adding resources to enhance our brand investment, which encompass all our marketing, lifestyle, and other initiatives designed to enhance the brand recognition among clients. HADR was positive for 81 million euros, combining higher Formula One commercial revenues, as well as better ranking in 2022 versus 2021, new sponsorships, higher contribution from lifestyle activities, and certain releases of provisions already discussed during the year. The total net impact of currency was positive for 15 million euros. With the positive net support of these variances, we reached the yearly records of EBITDA and EBIT margins that we commend. Turning to page 11, our industrial free cash flow generation was remarkable in the year, reaching 932 million euros, reflecting the increased profitability, partially offset by financial charges and taxes, and most of all, capital expenditure for 869 million euros increased in line with the pace of development of our products and infrastructure. The already flagged significant increase in the working capital, which reflects both the inventor expansion built to protect our delivery plans and the enriched product mix. Net industrial debt at the end of December improved below the €100 million mark, reflecting the robust industrial free cash flow generation partially offset by our initiative's due reward shareholders. Dividends and buybacks were worth approximately €800 million altogether, implying a distribution of roughly 85% of the industrial's weakest load innovation. Finally, let's move to page 12. Building upon the visibility we enjoy, we outline the guidance for 2024 as a further solid step towards our target for the years to come. Let me explain the drive of Sustaining 2024 along the growth trajectory that we have designed. on Ford car, product, and country mix will be positive and much more relevant volume once again, with an increased contribution from the Daytona SP3 and a constant personalization rate. Commercial ratings from racing in Formula 1 will be affected by the lower ranking achieved in 2023 compared to 2022, despite a higher number of races in the 2024 calendar. Lifestyle activities will continue to increase the support, the top line, while investing a larger share of resources to speed up the pace of development. Cost inflation is expected to proceed through the supply chain, and SG&A will increase in line with revenues due to continuing brand investment and digital development. The above will contribute to the further profitability expansion while we expect inflation brand and infrastructural expense, as well as increased Formula One spending due to the higher budget caps to flatten our percentage margin in line with 2023. The industrial free cash flow generation will be sustained by our profitability, partially offset by capital expenditure of approximately 950 million euro, as many projects will enter in their advanced stage of development. a still negative change in working capital in its broader meaning, mainly due to lower net advances collected from clients, and increased tax payments proportional to the growth of our income in 2023. The underlying assumption on the US dollar exchange rate is that it will fluctuate around 1.1, implying a negative effect impact compared to 2023, including edges. That said, we are obviously conscious of the stronger business performance recorded so far, despite the higher cost inflation. Such performance has been driven by the product mix, which will remain rich over the business plan, and has been further enhanced by both the actions on pricing and the exceptional demand for personalization. For sure, we continue to stay focused on pricing and product enrichment, And reassured by the visibility granted by our order book, we have turned the confidence into the high end of our 2026 target, as Mendez just said. I thank you for your attention, and I now turn the call over to Nicoletta.
Benedetto
Thank you, Antonio.
Nicoletta Russo
We are now ready to open the Q&A session.
Operator
Thank you. As a reminder, to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, please press star one and one on your telephone and wait for your name to be announced. Thank you. We are now going to proceed with our first question. And the questions come from the line of John Murphy from Bank of America Securities. Please ask your question. Your line is opened.
John Murphy
Hey, good morning. This is John Babcock actually on the line for John Murphy. Just quickly, you talked about doubling the hybrid share from 2022 to 2023, you know, from 22% of shipments to 44%. Out of curiosity, do hybrids tend to be favorable for mix? And then also, can you talk about what the customer reception has been to hybrid engines and if this is something they're asking for?
Benedetto Vigna
okay i will comment about this yes it's true we doubled our share of hybrid this testifies that we are able in ferrari to use the technology in a way that is unique coming back to the specific question i would say that uh to pay two points number one the profile of the customer using this technology is not this not so much different from the one using the thermal traditional cash and number two profit wise they are in the same ballpark as all the other cars. For us, each car is a business initiative, and all of them have to deliver according to our standards.
John Murphy
Okay. Appreciate that. And then also, just given what's going on in the Red Sea, could you just quickly discuss if this is creating any challenges for Ferrari?
Benedetto Vigna
The challenge in the Red Sea is basically we don't see it at all. We double-checked that. with our suppliers, there is nothing that is impacting us. So no impact on our production or delivery of cash.
John Murphy
Okay, that's great to hear. All right, that's all I have for now. Thank you.
Operator
Thank you. We are now going to proceed with our next question. And the questions come from the line of Michael Binetti from Evoco ISI. Please ask a question. Your line is opened.
Michael Binetti
Hey, guys, congrats on finishing up a terrific year. Thanks for taking our questions here. I guess, first off, could you, Antonio, could you give a little context around the guidance for free cash flow lower this year? I'm wondering if there's an acceleration in some of the development spend and maybe any delta in the deposits for supercars included in the free cash flow outlook or excluded. And then on personalization, Maybe just a little bit on the strategy there going forward after a really good year on personalization last year. Is there an opportunity to take some pricing to help offset some of the cost increases that you're seeing across the business there?
Benedetto Vigna
Hi, Michael. I think the second one, the FCS related question, Antonio will elaborate. So yes, the personalization, I mean, we are a luxury company. Of course, we have to do that. Personalization is an important vector of growth for us. And it offers also an opportunity for pricing up. And we started this year to review the price up in the mid-digit area. So percentage is important. Yes, too, we are going to touch the price for this important dimension. The free cash flow, Antonio?
Nicoletta
Yeah, I'll try and explain the three reasons. The first is clerical, we're just paying more taxes. The second one is we are spending more on CAPEX. $950 is what we have in mind for the year. And this is just because we have products that are now very close to the launch and number of products. And the third is the deposit cycle. This is just signing, basically. There are, I mean, we collected our... quite a bit in 2022 and 2023, we have kind of net reversal and in addition some new advances collecting in 2024, but the negative, the impact overall is negative. Modestly negative.
Michael Binetti
Okay. Okay. I guess if I could squeeze one more in, you know, with the, I guess with the E building still on track for mid-year, Benedetto, can you tell us what we'll see early on as far as you guys start to commercialize that? What are some of the first things we'll see from outside of the company as you guys start to look to commercialize that?
Benedetto Vigna
This morning, me and Antonio were in the building. So we are on track. It will be up and running starting this June. And this will be a place where we will assemble not only electric cars. Electric cars, as you know, will be ready if we are on track for Q4 2025. So also in the electrification journey, we are fully on track with our plan.
Antonio
Thank you. Thanks again. Great to hear, guys. Thank you, Michael.
Operator
Thank you. We are now going to proceed with our next question. And the questions come from from UBS. Please ask a question.
Susi
Hello, good afternoon. I have three. I'll ask one at a time. So first one on the demand. Within the luxury sector, we are seeing some softening of demand, but it appears that the higher end exposed to the wealthier cohort is still doing extremely well. And it seems also from your opening remarks that based on residual values, on feedback from dealers, you're not really seeing anything, but just to double check, is the economic picture at the moment having any impact at all on the Ferrari customer? Is there any comment, any additional color you can provide?
spk13
Look, as we said in the call myself and also for Santoni, the demand of the book is pretty strong.
Benedetto Vigna
It goes well into 2025. At the end of 2025, in some cases, even more. We do not see any negative signal, particular negative signal on this topic, we keep doing as planned. Clearly, there is not, in our client base, there is not an impact in any kind of, in any respect. Thanks. If you want, we can submit more callers. We had the dealer annual meeting end of November. We have been visiting several dealerships in USA, in Asia, in different countries, in Europe, and there is really a strong traction toward our brand.
Susi
Thanks. On the margin guidance for 2024, which basically implies sluttish margin, I wanted to understand if your core cars and spare parts business is also seeing sluttish margins or perhaps that core business is seeing some underlying improvement but then is offset by the dilution of some of the other segments where you are choosing to invest a little bit more. So it'll be quite interesting to understand the dynamics in your various segments.
Nicoletta
That's in fact the explanation, Susi. I try and explain it. So our product mix and personalization are obvious, but we expect the cost base below that to impact us and to flatten the margin. If we wish, within the cost of goods sold, is just the budget cap which is growing on the F1 racing activities that is growing year after year and is biting in the upper side of the PNL.
Susi
Okay, and the last question for 2024. When we think about the phasing, is it fair to assume that the year is going to be a little bit more front-end loaded, given the mixed evolution, or is it going to be quite similar quarter on quarter?
Nicoletta
I don't see a significant difference yet. There might be nuances, but not significant changes. Usually Q4 remains slightly softer. particularly in terms of volume allocations. But as of now, nothing to flag.
Benedetto
Okay. Thank you.
Antonio
I said the fourth floor, not the first. Sorry.
Operator
Thank you. We are now going to proceed with our next question. And the questions come from the line of Steven Reitman from Societe Generale. Please ask your question.
Steven Reitman
Yes, good afternoon again. Congratulations for the very strong result. Also, congratulations on the quality of the result. We certainly noticed that the positive impact from R&D capitalization was considerably lower in 2023 than in 2022 or 2021, so points to the higher quality there as well, I think. Question, you mentioned about the Pura Sangwe has now gotten to a cruising speed in terms of production. Does that suggest that we are on track to see that reach the 20% of the sort of annual sales because it looks like in 2023 it was only in the hundreds. So that would be a considerable ramp up. And if you could comment on what the personalization levels are looking like, I imagine that people are paying a lot of money in terms of personalizations in order to secure bill slots as well for these in terms of to make their orders attractive. And secondly, if you could comment on China. You did mention that you are strategically looking at that market in terms of also managing in terms of the margin implication on sales in China. But I think there was an expectation that sales were going to maybe increase a little bit in the fourth quarter because they'd be deferred in from the third quarter in 2023. But we actually saw quite a big drop in 2020 in the fourth quarter. So I'm just wondering if you could say of any issues about the sort of like the demand in that market as well. Thank you.
spk13
Thank you, Stephen.
Benedetto Vigna
Thank you also for the congratulations that we will pass to all the teams that made it possible. Coming back to the story of the Puro Sangre, in 2023, we shipped a few hundred Puro Sangres. In 2024, we will be at a cruising speed that is 20% of the total. So basically, I mean, your assumption, your calculation are pretty in line with our plan.
Nicoletta
The personalization, but if I may, Benedetto, just to complete on that, I wouldn't focus on 20% of each single year. We said 20% of the yearly sales on average when we communicated around the capital market day. Mathematically, even if Benedetto is a mathematician. Yes, we are not that much.
Benedetto Vigna
No, look, the story of Puro Sangue, the personalization, Stephen, clearly the Puro Sangue offers a lot of degree of the personalization. We see clients that are looking at the rims, the livers, the painting, the roof. So there are some opportunities over there. And last year, we have been working a lot to strengthen our supply chain for all the personalization that the car is offering to the client. The second question was about China. Well, China for us, I would like to say that there are three words about China. The number one for us is a young market. Young market, it means that the client, let's say the number of cars that we ship to this market It's not so many. To me, the market is very young. We have to let it grow with the right speed to avoid, let me say, indigestion. The second, it's a niche market still, because if you make the map, you're talking about 1,200 cars. It is written in the chart. We have a slightly decrease this year, but we are talking about a decrease in the range of a few tenths of units. that since the market is smaller, it may look a few percent over there. And then the number three, we said since the beginning that we will keep China, let's say, around 10% because it is not margin accredited. But again, it's important that in each country, as our history testifies, we let grow the attachment to the brand with the right speed. Because if you grow too fast, the clients don't get used to what is Ferrari. This is what we have done in other countries, and this is what we intend to do also in China.
Puro Sangue
Thank you. Thank you.
Benedetto
Thank you. We are now going to proceed with our next question.
Operator
And the questions come from the line of Tom Narayan from RBC Capital Market. Please ask your question.
Tom Narayan
Yeah, thanks for taking the question. Question on the, you know, the strong plug-in hybrid performance. Just curious if you could extrapolate that for the eventual BEVs, full electrics you plan to sell. Is there really a translation there to say that, you know, consumer demand for plug-in hybrids could potentially mean that, you know, you know, this cohort would be interested in full electrics, or are those buying the plug-in hybrids just, you know, just across the board, similar to your existing portfolio of customers?
Benedetto Vigna
Look, we post ourselves many times this question. We've been talking to our client directly and indirectly, I mean, to the dealers. I don't think there is any extrapolation possible in this respect. I believe that we will have clients that will – will only take the the red car the ic will have client that will take ic and hybrid yesterday we will we will have client that we get in our family only because we have the electric cars so i believe that uh you know we see very often that the answer is that you know i need the kind of because i need to go in places that will not be allowed by regular So I think any combination of these three colors, red, the blue, and the green is going to be possible. And I don't think that the hybrid cars is an extrapolation. The only thing we take as a lesson is that looking at what happened in 2023, that there is always a way. To use the technology in a unique way, in the Ferrari way, that also client skeptical at the beginning of hybrid, turn to the hybrid. This is the point. I remember once I had a breakfast with a client that was skeptical about the hybrid, and then he went to try it, and he bought the hybrid. And this is pretty common. So this is a confirmation that our strategy to keep alive the three colors, the red, the blue, and the green, is the right one.
Tom Narayan
Okay, thank you. And my follow-up, you know, with obviously everyone really interested in your guys' electrification journey that will happen, just curious if we can expect capital markets events for investors and for ourselves as well coming up this year potentially or next year?
Benedetto Vigna
Well, this year for sure not. We are working for next year, but not for sure for this year. Only one point, the electrification journey, not really happening. It's already started to happen since a while. So this is important. This is a key message we passed on the Capital Market Day two years ago.
Antonio
We are already on the electrification journey since a few years.
Puro Sangue
Understood. Thank you. Thank you.
Benedetto
Thank you. We are now going to proceed with our next question. And the questions come from the line of Thomas Besson from Kepler Chevro. Please ask a question. Hello, Thomas. Your line is open. Please ask a question. Hello, Mr. Besson. Your line is open. If you can hear us, your line is opened. We are now going to proceed with our next question.
Operator
And the questions come from the line of Henning Kosman from Barclays. Please ask your question.
Henning Kosman
Yeah, hi. Good afternoon. Thank you very much for taking the question. Interesting that you're emphasizing price and personalization so much. I'm not sure I understood you correctly, Benedetto. Did you say you would raise price in the mid-single-digit percentage range on personalization specifically, if you could just confirm that? And if you would also... Confirm. Yeah, right. And on pricing in general, are you willing to make some comments there? I think we recently talked a bit about the commercial opportunities on pricing in general, not just on the personalization. I know there's always the balance, of course, not upsetting your loyal customers who've been waiting for so long. But then again, you have opportunities because the order book is so long already and you're virtually sold out. If you could update us on the commercial pricing opportunities there. And then second question on personalization, if I understood Antonio correctly, the exit rate of 2023 was 19%. If I'm not mistaken, you're guiding 18% for 2024. You typically have three months of visibility So I was just wondering how it's trending into Q1 where I believe you have some degree of visibility already. Is it in line with the 18 or is it still on the level of the exit rate if that's not too precise? And then finally, third question on the Daytona. Antonio confirmed again in the opening remarks, 30 to 40 per quarter. I believe you've sold around 150 so far out of the 600. So that would imply you still have 12 more quarters to sell worth of Daytonas. That seems pretty long. So I'm wondering if you would accelerate the Daytona volumes at some point so that it doesn't become such a long life cycle. Thank you very much.
Benedetto Vigna
Thank you. Personalization at owner for Antonio. I take the ASP. So as I told you, the answer to the first question, yes, it's confirmed. We increased the price of the personalization exactly like you understood. When it comes to the price of the cars, don't forget that last year, throughout the year, we've been increasing the price. And it's also important that we consider that on the other side, there is a client that has been let me say, looking at Ferrari, and we have to behave properly when it comes to the pricing increase. You're really executed, and we have to be respectful of our clients. While for personalization, in Daytona, Antonio, you can... Sure.
Nicoletta
On personalization, you got me right, meaning in 2023, we're almost at 19%, and 2024 is based on an assumption that we'll maintain more rest debt rate. visibility as of now is in that direction. And the last question, Daytona, yes, you're right. We expect to grow there, to move from 30-40 to approximately 60 per quarter next year.
Antonio
Very good. Thank you so much. You're welcome.
Operator
Thank you. We are now going to proceed with our next question. And the questions come from Zalando. Monica Buzio from Intesa San Paolo. Please ask a question.
Monica Buzio
Good afternoon. I hope you can hear me, and thanks for taking my question. The first one is on the ABDA margin that you guided, Flatish, for 2024. I understood that it is due to a cost base related to the production of more complex products. I can imagine that there is also a weight of the cost of labor. So I'm just wondering if you can give us some indication. What is the weight of the cost of labor on this Fletish guidance? Any hints could be useful for us. The second question is on the lifestyle. In the preliminary remarks, Benedetto anticipated that You're expecting an increase in the lifestyle revenues. Can you please help us to figure out growth rate for 2024? And the third question is on the advances from SP90XX and the SPDR. I remember that in the last call you said that you are going to collect advances on the car. I'm wondering if you can give us any indication on the amount and on the timeframe across the year. Thank you very much.
Benedetto Vigna
Thanks, Monica. Antonio will take one and three, and then I will reply to your number two.
Nicoletta
Yeah, I apologize. I thought you would start. Anyway, on limiting energy, it's not just the higher cost base or related to better. It's not related to the additional complexity of the production. I mentioned basically three elements. One, cost inflation. Cost inflation is still there. It includes cost of labor. We have an agreement in place with the trade unions for an increase year-over-year of 4%, which is embedded in business assumptions. But even components, and generally speaking, the supply chain that is still embedded in current pricing, the impact of the inflation that has been going through the economy in the last 12 months so that is an element it's not a complexity the second one are expenses for brand development including lifestyle of course we are investing to grow the business and also our digital impressions we we are growing and we need to grow even in that respect including a significant rejuvenation of what we currently use. And the last element, which is biting both cost of goods sold and R&D expense to the P&L, is the expenses for the Formula One. Since the budget cap, which was originally meant to decrease over time, is actually growing since it has been agreed among the various teams to index spending to inflation. So year over year is going to have a negative impact. OK? OK. And in terms of your last question on the advances on the SF90, yes, we are collecting. We have not disclosed yet which are the targets. I just said year over year, take into consideration that the difference will be negative. So 2024. smaller than 2023.
Benedetto Vigna
Okay. So, Monica, for the lifestyle, let's say 2023, three important things. Number one, we improved the retail performances because there is more traction to our collection. Two, we saw there is a strong, I mean, a successful activation when you have events in conjunction with our racing and brand events. In three, we had a record museum visitors, around 750,000 is a lot. In 2024, if I have to define it, I define it as a year of progress because we have a list of activities that are aiming to build the scale and also to expand the network and let me say our network, while if you want, we elevate the visibility of our brand. So it's a year where we are aiming to grow as well. And also in this respect, we are in line with what we declared in June 2022 with our target to double this activity, the revenues of this activity by 2026.
Monica Buzio
Okay. Thank you, Benedetto. Thank you. If I can add just a follow-up on the country mix. You say that the country mix will keep positive in 2024. I'm just wondering if it will be similar to the one seen in full year 2023.
Nicoletta
Yeah, as of now, I wouldn't consider country mix being an additional positive in 2024.
Monica Buzio
Okay, thank you very much.
spk03
more or less like thank you thank you thank you we are now going to proceed with our next question and the questions come from the line of george calias from goldman sachs please ask your question yeah good afternoon and thank you for taking my questions obviously one of the standouts of 2023 was the very strong price mix and we look at your five-year plan you were targeting around the $700 million improvement in EBIT from price mix by 2026. We're only two years into the plan, and you've delivered close to 65% of that target. Obviously, on this call, you've been mentioning new initiatives around personalization and pricing, and there are clearly still several important new launches to come. So is it fair to say there is a decent amount of upside to that original 700 million euros that you flagged back at the CMD. The second question was also relating to something you talked about at the CMD, which was how you were going to leverage partnerships to co-develop best-in-class solutions with respect to electrification. I was wondering if you could give us some insights into how those partnerships have evolved. Have there been any unanticipated challenges And conversely, have there been any areas where your partners have really surprised you positively? And if yes, would you be able to give us any small examples or snippets? Thank you.
Benedetto Vigna
Thank you, George. I think the second one, the first one, I will ask Antonio to reply. So you remember very well during Capital Market Day, we clearly said we leveraged the partnership for electrification, but also for other technologies, because don't forget that we are making luxury cars, and there is much more than simple electrification. We are doing lots of innovation also on hybrid cars, on thermal cars. So having said that, we are having a positive surprise on the willingness of the partners to work with us. We have partners in different places going for new generation materials, to new generation, let me say, advanced electronics, to advanced display, and we are having, as I said, we are very positively surprised by all our partners, and we are working with partners in Asia, in USA, and also in Europe. I can mention the one that the one that we publicly released on the 11th of April was with Samsung for the next generation cars. But there is another one I cannot mention. I can tell you that we are working also on the way material for the cars are realized because, as we said multiple times, the sustainability for us is important. We want to be carbon neutral by the end of this decade, and we realized that to achieve our goal, to go, to proceed along our way, we need to work with partners that are also involved in the material preparation. So, very positive surprise across the globe. Very happy, both, because I have regular meetings with them. We are happy on our side. They are also happy on their side.
Nicoletta
So, Antonio, you follow me. Sure. your own strong please surprise me i mean if we compare with our assumption and the capital market day uh you're right we've been doing better and i think we flagged a number of times this year that personalization particularly surprised us in terms of their strength however it's fair to say that even the cost base has been much higher than we would have expected the positive of course is the fact that the improvement from personalization pricing has been such that allowed us to more than offset the impact of inflation. Now, if we look forward, is there an opportunity for an upside on personalization? If the trend continues the way we have seen, potentially, yes, in terms of revenues. Whether this will flow through the P&L, it will very much depend on what happens to the cost base. Exactly.
Antonio
in parallel with what happened in 2023.
spk03
Great. Thank you.
Puro Sangue
Welcome.
Operator
Thank you. Due to time constraint and to keep the conference within the hour, we now end the question and answer session. I will now hand back to Mr. Benedetto Vigna, CEO, for closing remarks. Thank you.
Benedetto Vigna
Thank you. Thanks all of you for your time today and also for your question. The strong 2023 results basically are the result of our strong brand desirability, and also the confidence that we are having on this year and forward is thanks to the traction that our product has with all our clients. I wish you a good afternoon, and I thank you, together with all the Ferrari team here, for your attention and for your interest in our brand. Thank you so much.
Operator
Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you and have a good day.
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