Ferrari N.V. Common Shares

Good day and thank you for standing by. Welcome to the Ferrari 2024 Q1 results conference call. At this time, all participants are in a 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 on your telephone. You will then hear an automatic message advising your hand is raised. To answer your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Thank you, Sandra, and welcome to everyone who is joining us. Today we plan to cover the Group Q1 2024 operating results 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 covered by this language. With that said, I'd like to turn the call over to Benedetto.

Thank you, Nicoletta, and thank you everyone for joining us today. I just came back from Miami, where I spent one week together with our clients, the fans, the sponsors, including HP, our new title sponsor, and all brand enthusiasts. You should have been there with me and all Ferrari colleagues. you would have been experiencing the brand power of the Prancing Horse. Indeed, for the first time in our history, we saw our company racing, sport cars, and lifestyles have been working in unison together to provide all the people in Miami a truly unique experience. But before sharing with you more detail about this fantastic event, I would like to thank our Ferrari colleagues for their outstanding work and dedication, our clients, for their loyalty to our brand, and all our partners, suppliers, dealers, and sponsors. Without their tireless effort and dedication, the strong result we present today would not have been possible. So let's start with the financial result of the first quarter. We can say that it is a strong start to the year, with double-digit growth on key metrics. Thanks to an even more robust product mix, and a strong trend in personalization. Three are the key highlights. One, total revenues reached approximately 1.6 billion euro with flat deliveries. This, once again, plays testament to our strategy of value over volume. Two, we enjoyed a strong profitability with EBITDA at 605 million euro. And three, industrial free cash flow generation reached more than €320 million in the quarter. The order book on our current models continues to be very strong, with a normalization in line with our expectations, with almost all models substantially sold out. And in the last week, we opened the order book for the dodici cilindri, coupe and spider. For the first time for our range models, We unveiled the Coop and the Spider together because we want to leave the freedom of selection to our clients. The first feedback from our two new models has been extremely positive. Several clients have said, it's not a matter of either or. We love both. I talked with a client from all over the world, from China, from Korea, from US, from Europe. They were all astonished by both models. Our new Dodici Cilindri are amazingly beautiful and high performance. They are the perfect blend of tradition and innovation, elegance and sportiness. Our clients' opinions are obviously paramount, but I am also proud to say that the Roma Spider has been recognized with a Rode Dot Award, best of the best in the product design category. And the Ferrari SF90 XX Stradale and one of kc23 have also been awarded red dot awards all these are truly innovative vehicles enabled by our nd innovation and in fact in 2023 just in italy we submitted 181 patent applications one every two days and always on the subject of innovation Last month, we inaugurated the E-Cell Lab in collaboration with the University of Bologna and NXP Semiconductors. This laboratory will make a significant contribution to research in electrochemistry, and the project reflects the importance of collaboration between the academic and the business world. But there is much more in it. This lab will foster innovation in our local area and help us to build the skills of the future. Talking of technology collaboration, we have renewed our partnership with SK Yon, a leader in the field of high-performance cell manufacturing with whom we have collaborated for many years, and we will continue to innovate further. As you can see, we are fighting on all cylinders in the execution of our business plan and product development, but perhaps I should instead say we are charging ahead because in 2024 we will set another significant milestone in our electrification journey. In fact, on the 21st of June, exactly two years since our last capital market day, and as we promised you during all our previous calls and meetings, we will inaugurate our new building. This state of the art and highly flexible plan will assure us of the flexibility and technical capacity in excess of our needs for years to come. Here, we will handcraft the dedicated electric axles and batteries that will power future Ferraris, exactly like we promised you two years ago. A special thank goes to all the colleagues that have been able to maintain the building schedule despite all the difficulties we experienced in these turbulent times. It has not been easy, believe me, but they made it happen. Grazie. Moving to the next page, the pictures show clearly the essence of one Ferrari ethos. And believe me, there is no better way to exemplify it than our recent activities in the United States. As I told you at the beginning, last week Ferrari hosted an unforgettable series of brand experiences in Miami, which immersed international clients, sponsors, tifosi, dealers, and brand enthusiasts into the Ferrari universe. It began with Cavalcade International, one of our most prestigious driving events, which attracted about 70 Ferraris and their owners from all over the world as they drove together through the scenic landscape of Nashville, in Tennessee first, and later in Florida. The journey culminated in Miami with the world premiere of the Ferrari 12-cylinder and the Ferrari 12-cylinder Spyder. our new two-seater Berlinettes powered by front-mid naturally-accurated V12. These models are the perfect embodiment of the Prancing Horse DNA, offering incomparable performance and handling with sophisticated design. You should have seen the emotion of all our clients. My words would never be capable to transmit to you those emotions. These events were accompanied by a privileged view of the latest fashion capsule collection inspired by the story of racing on American tracks and the vibrant energy of Miami. The capsule collection had a warm reception. It was nice to see most of our clients wearing many pieces of our lifestyle collections during the long weekend. And last but not least, a fortunate few clients had the opportunity leave the miami grand prix to its fullest with exclusive and elegant hospitality of casa ferrari right at the heart of the race i am also proud to say that the miami grand prix was the start of a new partnership hp has become our title sponsor with a multi-year collaboration that encompasses a shared commitment to innovation trust and excellence, as well as commitment to sustainable futures, from carbon neutrality to the education of the next generation. In HP, we have found the same values which make it an ideal partner. I know them since more than 20 years, and for both our companies, people are the center of whatever we do, because it is only people, it is only people who are able to blend together the tradition and innovation. Not all of our clients, T4C and brand enthusiasts were able to attend the event in person. Thus, we reached them through social media channels to nurture their sense of belonging. Lastly, before moving on, I would like to thank you, our shareholders, for your continued trust. And among you, I'm delighted to welcome around 4,700 new shareholders among our dear colleagues. Indeed, Around 98% of our employees have taken advantage of the broad-based share ownership plan launched by Ferrari that I described to you a few calls ago. This initiative demonstrates our desire to foster the sense of belonging that makes us unique and underlines once more how we continuously strive for excellence. And on this note, I hand over to Antonio to review the Q1 2024 financial results. Please, Antonio.

Thank you, Benedetto, and good morning or afternoon to everyone joining us today. Starting on page five, we present the highlights of the first quarter results of this year. As you can see from this page, the first quarter saw shipments the prior year, while revenues and profitability grew double digits As Benedetto mentioned earlier, the robust mix was the main driver. Let me briefly go through the main highlights. Revenues of €1,585,000,000 up 11%. Adjusted EBIT of €442,000,000 up 15% with a 27.9% margin, 100 basis points higher than last year. Net profit of 352 million euro, leading to an adjusted diluted earnings per share of 1 euro and 95 cents, up 20 percent. Adjusted EBITDA of 605 million euro, up roughly 13 percent with a solid margin at 38.2 percent. And finally, strong industrial free cash flow generation of 321 million euro. Moving to page 6, we can now add more color to the shipment number of the first quarter. As usual, the geographic breakdown reflected our choices of volume and product allocations in the different markets. As a result, deliveries increased in EMEA by 39 units, in Americas by 35 units, rest of APAC was almost flat, and allocations to mainland China, Hong Kong, and Taiwan decreased by 79 units. Moving to the product portfolio overview, during the first quarter, the Roma Spider continued its ramp-up phase, while the Puro Sangue reached global distribution. Deliveries of the 296 family continued, sustaining the 46% average share. The allocations of the Daytona SP3 increased in the quarter in line with our plans, and above the average for the rest of the year. Lastly, some models were approaching the end of their life cycles, namely the SF90 Stradale and the A12 GTS. The SF90XX Stradale GSF90, XX Spider, and obviously the newly launched 12-cylinder Coupe, with the start contributing at their respective pace this year, while the 12-cylinder Spider was from 2025. On page seven, you can see the net revenues bridge, which shows a 13% growth versus prior year at constant currency. The increase in cars and spare parts was the most relevant contributor, driven by the richer product mix and country mix, as well as higher personalizations. In the first quarter, personalizations came in strong and in line with our expectations of approximately 19% in proportion to driving cars and spare parts. The main contributors were the Puro Sangue and the total cardboard finish for the Daytona ST3. Sponsorship, commercial and brand increased thanks to the higher sponsorships for our racing activities, partially offset by the lower Formula One rankings achieved in 2023 compared to 2022. With regard to sponsorship, the additional contribution is provided both from new sponsors and different phasing of sponsors signed last year. Other revenues were flat with improved contribution of financial services offset by the decrease of the sales of engines to Maserati whose supply contract expired at the end of 2023. As previously flagged, within the other revenue, We have now reclassified any residual sales of engines to third parties, whether for sport cars or racing. Currency has a negative net impact of approximately 25 million euro, mainly due to the adverse dynamics of the Chinese yuan, Japanese yen, and US dollar versus the euro. Moving to page 8, the change in adjusted EBIT is explained by the following variances. Volume, slightly negative, mainly reflecting lower range model deliveries. Mix in price, positive for 123 million euro, thanks to the robust product mix sustained by Daytona SP3. As a reminder, we show in this bar the whole contribution from the Dicona pillar, including the volume variance. The increased contribution from personalization, and a positive country mix, mainly driven by Americas. Industrial and R&D expenses grew 29 million euro, led by innovation expenses, mainly for our sports car development, as well as higher depreciation and amortization. SG&A increased 12 million euro and mainly reflected the ongoing development of our digital infrastructure and organization. Other positively contributed for 6 million euro. The increased contribution from sponsorship and the release of private car environmental provisions in the USA, the latter worth approximately 10 million US dollars, were partially upset by the lower Formula One ranking achieved in 2023 compared to 2022. Lastly, the total net impact of currency was negative for 23 million euro. Turning to page 9, in the first quarter, our industrial free cash flow generation was strong and reached 321 million euros. It reflected the increase in profitability, partially offset by capex for 195 million euros, 45 million euros higher than last year, and in line with the pace of development of our products and infrastructure. Capital expenditure during 2024 will develop more linearly compared to our usual cadence, particularly as we start spending for the new Spain shop. And second, a moderate increase in networking capital, mainly led by trade receivables. At the end of March, the company was in a net industrial cash position, for 38 million euro, notwithstanding 136 million euro of share purchases occurred in the quarter and residual impacts from currency and IFRS 16. Following the annual general meeting approval in April, the dividend distribution of approximately 440 million euro was paid on the 3rd of May, thus impacting the balance sheet of the second quarter. Finally, let's move to page 10, which confirms the guidance for 2024. We are really pleased by the solid Q1 performance, the continuing strength of the order book, and the positive business trends, also emphasized by the enthusiastic reception of the dodici cilindri and the great partnership started with HP. On this basis, we do look with great confidence at the next steps in the execution of our plan for the current year and beyond. I thank you for your attention and I now turn the call over to Nicoletta.

Thank you, Antonio. We are now ready to open the Q&A session. Please, Sandra, go ahead.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To answer your question, please press star 1 1 again. We will now take the first question. Coming from the line of George Galliers from Goldman Sachs, please go ahead.

Good afternoon, and thank you for taking my questions. The first question I wanted to ask was just to help provide some clarification about the order book. You talked about some normalization, but you also, in the opening marks, referenced the order book being very strong. Could you just help us understand what normalization means? Is this just the fact you have more slots available now going into 2026 and with the Duodici Cilindre? Or is there another element to it? And could you just confirm you haven't seen any pickup or abnormal behavior with respect to cancellations? The second question I had was around innovation. And Benedetto, obviously you referenced the large number of patents that you continue to file. Just with respect to the patents and the innovation, is there any one area where you are particularly active today, such as aero or chassis dynamics, software or electric powertrain? Or is the innovation really across the board and all of the different technologies obviously in play at Ferrari? Thank you.

Thank you, George. Thank you for your question. I will start with the first one. As a normalization, what does it mean? And so let me say in this way, it's a simple math, okay? Because we are in a situation where a lot of our models are sold out. And we have the two new models that were announced last week. And thanks for the effort to pronounce well in Italian. Thank you. The Dodici Cilindri. Well, the order of these two cars are not yet in our portfolio. So normalization for us meant that, as we said also at the beginning of the year in February, we were expecting the product portfolio to go a little bit down because there was not too much for the client to order. And this question, I would like to take this opportunity to clarify something important. The order book that we have goes well into 2026. This is very important. I want to clarify this because we have models that are, let me say, for which we have a long waiting list. The second point, no abnormality of cancellations. We saw less order coming from China. That's true. But we don't see an abnormality of cancellation. We don't see any pattern either in terms of country or in terms of models. We see some clients that want to have some more model. They have to wait longer because there is a long wait time. Like, for example, the Burosangwe. The other point was about the IP. The IP is the innovation, let me say, that we are running and we are patenting goes across the board. There are some areas that are, let me say, a little bit more present. What is related to the driving trails? So if you come, let me say, in our patent portfolio, we'll not find many patents about things that are not strategic for us, like autonomous driving. but when it comes to anything related to the driving trails or this interacting with the car well over there that one is an area of attention and focus for our patenting activity great thank you very much thank you we will now take the next questions

From the line of John Murphy from Bank of America, please go ahead.

Hello, everybody. I just had two questions. The quarter was a very Ferrari-like quarter with volumes flat, very significant revenue growth from price and mix and personalization. So it was really proved out the model. But I think if we look at the two walks, I was just wondering if you could give us some information on or color on the EBIT change versus the revenue change, because it was a very clean quarter with volumes almost flat year over year, but EBIT up $123 million versus revenue up $166 million, which would give you a 74% contribution margin, which I think is not being appreciated necessarily in the stock at the moment. So I don't know if you can talk about that on a relative basis, but if you could give us sort of color of how we should think about contribution margin and X volume, because it was very strong in the quarter, about 74%, as far as I can tell.

It's a nice question.

I would like to... There are three main elements that contribute to the increase in contribution margin. The first one is the product mix, whereby it's important to flag the role of the Icona. Actually, I think I said in my comments on the bridge that the Daytona contributed higher than they would do over the course of the rest of the year in the first quarter. Secondly, personalization. Personalization is very strong. So it's above the 19% that we had for the rest of the year, slightly above. The third is country mix. Obviously, with China down, that helps in terms of even of the marginality. I don't know whether it is a sufficient color. There are a couple of other elements that also contribute to 499P, also a couple of models sold in the quarter, but that's what explains the strength of this contribution of mix and price.

Okay, maybe just one follow-up to that. I mean, basically what you're saying is this 74% contribution margin X volume is is the kind of number we should think about in the future? And then just one follow-up on Parasangwa.

There is one element to take into consideration. The Daytona is higher this quarter than the rest of the year.

Okay. And then just on the Parasangwa success, I mean, that form factor obviously is somewhat unique. But Benedetto, you're having incredible success there. Could we see a successor to that in the next couple of years? And what would that mean for the business?

Look, also another interesting question. I can tell you that yes, ProSank is having a lot of traction and the order book is very strong. It goes well ahead. But I don't want to comment on, I cannot, I would like, but I cannot because secrecy is a way to fit the serability of what we do. Clearly, Clearly, we are learning a lot from this model, and usually, let's put it this way, we like to use what we learn, but I don't want to say if there will be a success or whatever.

That's very helpful.

Thank you very much, guys. Sorry about this, John.

No, understand, but thank you very much. That's good color. Thank you.

Thank you. We will now take the next question. from the land of Tom Narayan from RBC Capital Market. Please go ahead.

Thanks for taking the question. The first one I have is on China. You mentioned it was down a little. Just curious maybe if there's something driving that. I know that there are some just inherent reasons to not be as aggressive there with CO2 restrictions there and tariffs and such. We'd love to hear maybe a little more on what's happening in China, if there's anything, any commentary there first. Thanks.

Thank you, Tom. I would like to share with you some color about China. That is pretty interesting. So we did some analysis. It's funny to see that if you go in China and if you compare what was happening one year ago and this year, Basically, there are two numbers that are swapped in terms of car that we ship to mainland China. Okay, we're talking about mainland China. Clearly, if I see versus one year ago, there is a stronger traction of hybrid model. One year ago, we were shipping more ICE than hybrid. This year, we are shipping more hybrid than ICE. And this brings also Since the hybrid model are basically sold out, a little bit is left to be sold. This is an impact and is also, let me say, gives you more color about the meaning of normalization in that country. So I wanted to share a little bit more color because China has a different meaning for us versus the other luxury brands acting in that region. It's a different meaning because for us, since the beginning, since the capital market day, as Antonio said, we want to keep mainland, sorry, greater China. So ABC, mainland China, Taiwan and Hong Kong below 10%. Because we want this market to get more acquainted with our brand. To be in the family of Ferrari, you need some time. And you needed to give time to the client in a country to understand what does it mean to be our client. So having said that, it's clear that, let me say, in China, we had this kind of normalization that was also our, if you want, deliberate choice, because the number of model we can sell there are not so many. And we wanted to keep always below 10%.

Thank you for that. And a quick follow-up on personalization. The guidance is to stay at that 19%. That was the same amount in 2023. So effectively flat. Pura Sangue is coming in. I think you also said Daytona above that level. So I guess the question would be, is there upside potential to that 19% to your guidance in 2024? Or Maybe it's because the initial folks who are getting the pure Sangue are more likely to personalize because they are maybe more VIP, etc. I'd just love to hear more on your thoughts.

No, I think the trend of personalization is not specific of a model. What I can tell you, let me say, in other lessons learned, we like to register to report at least to us what are the lessons learned. and to share with you is that, you know, this year we increased the price of personalization. You may remember last call we said that we increased the price of the new model and we increased the price of personalization. Well, what we saw that, yes, there was an increase on the price of the price of personalization, but there is not been any impact on the ratio of personalization. So this is a lesson learned. We increased the price of the personalization. But if the client wants to personalize, they keep personalizing. And this is also the reason why when the previous colleague asked the contribution year over year to the elite, Antonio was telling contribution from personalization, product mix, a country mix.

Also, if I may add, the higher the average price of car, the lower the percentage, it's just a mathematical formula. So the more we sell Daytona.

Yeah, understood. Thank you.

Welcome.

Thank you. We will now take the next question from the line of Monica Posio from Intesa San Paolo. Please go ahead.

Hello, everyone. I hope you can hear me, and thanks for taking my questions. The first one is on the Dodici Cylindri. I was wondering if the Dodici Cylindri might carry a higher ratio of personalization, or if there are any particular features that might carry a higher personalization context not only on the price side. Any color is appreciated on this side. And my second question is on the country mix, which was favorable in the first quarter. Should we expect a similar impact also in the coming quarters? Thank you very much.

Thank you, Monica. I think the first one, the second, I leave it to Antonio. let's say two things for the Dodigy Chilindri, okay? Coop and Spider. Actually, three things. One, as I said, that the client like, love, sorry, love both of them. Two, I've been talking maybe around 60, 70 clients, spending time with them in the two evenings we had in Miami. I saw a strong interest of the client for new colors. So Arctic white, as well as verde toscana so there was a strong uh with the many clients telling i will take i will order these colors uh some client asking for uh two different color on two different cars the coupe and spiders what i can tell you that the last important point is that we agreed we i mean we increased the price as you have seen the price is 395 k for euro for the coop and 435 for the spiders. The number of the personalization, let me say, what will be the trend we'll discover together. But I think there are enough personalization option for the client. And as I said, there is a lot of interest for the new colors that let them get in love even more. There are many dimensions we can explore over there, Monica, but we wanted to start from a price that is higher than the predecessor of this cash. The second one I would like to, Antonio, if you can operate.

Thank you, Benedetto. Ciao, Monica. I think as far as the country mix is concerned, over the course of the year, I expect a modest positive impact.

Sorry, can you repeat, Antonio?

Sorry.

Okay. Okay.

Thank you very much. Okay.

Yes.

Welcome.

Thank you. Thank you, Antonio.

Thank you. We will now take the next question from the line of Adam Jonas from Morgan Stanley. Please go ahead.

Ciao, everybody. A couple questions. First, can you remind us of your sales today by unit volume? What percentage of your volume are delivered to clients that already own a Ferrari and how that changed in recent quarters?

I have a follow-up. We were waiting for only this question.

I have a follow-up.

I can ask it now or wait.

No, no, we were taking notes on a piece of paper, so maybe you can go. So one is the percentage of repeaters. The second?

Yeah, so again, the first question, to be clear, is what percentage of your volume are delivered to clients that already own a Ferrari or were existing owners replacing a Ferrari, if that makes sense?

Sure, very clear.

And the second question, Benedetto, is you have been making efforts downstream with your dealers and franchise dealers on trying to capture more of the recurring revenue and establish a more intimate relationship, if I can say so, with your clients, including things like increasing your hit rate on repurchasing a secondhand vehicle. I know there's other efforts that you're doing, but if you could give us an update on how that's going Since you kind of re-emphasize the efforts there, that would be appreciated. Thank you. Grazie.

The first question is very, the first answer is very simple. Adam, let's say the repeaters, what we call the repeater, the people that are already client, it depends a little bit on the model. So you have models where the repeater is in the range of 10, let's say 30, sorry, 30, 35%, to a situation where the repeaters are going to around 80%, 85%. So it is, in average, in the year 2023, 74%, 74% of our new cars were sold to existing clients, okay? So this is the answer. The second, the dealers. uh what we are doing together with the dealers is to push more on between to make the relation more intimate as you said we are working on two dimensions number one is the personalization the personalization so that we can enrich the we can personalize more the cash and the second is the ferrari approved in in these days i mean last week actually we launched in usa the ferrari approved program that is something that allows we want to link more and more the we want to nurture more and more the pre-owned market and to this we launched the ferrari approved initiative that is intended to link, to bring more in the family, the client, to avoid them going, let me say, to use gray workshop or gray dealers. And for this, we agreed with our dealers some activities so that there is an incentive for our client to go back and to stay in the family. So these are the two things we are doing. Adam.

Thank you.

We will now take the next question from the line of Michael Benetti from Evercore ISI. Please go ahead.

Hey, thanks, guys. And Benedetto, first I want to say congrats on the 98% of the employees participating in the stock program. I know that's something that's been important to you since very early on in your time here. Thank you. Just, I guess, a question on the margin cadence through the year as we think about the puts and takes, particularly in second quarter. I think, you know, I think you said there'll be less Daytona after the first quarter, but I think here we are in May. I think the SF90XX models start to shift in the second quarter with the Coupe and then the Spyder later in the fourth quarter. I know those are high-price point cars, and it sounds like they're very heavily personalized. Is there, you know, As we look at that mixed bridge, does that slow because there's less Daytonas through the rest of the year? And does the margin lift from Daytona slow through the year? Or does the XX pick it up and that can be more linear through the year? And then I guess secondly, maybe just on some of the new items, how does the HP sponsorship flow into the P&L, which lines and what is the timing around when you start to record that, if that's a new addition to 2024 guidance. And then I guess my last one is, Benedetto, on the e-building, I know that that's an important input to the EV that you've announced for next year. Will we see the output from that building start to show up in your commercial activities before the EV and maybe what would that look like?

Thank you, Mike. I think the third one, And Antonio will elaborate on the first two. So the e-building, as I said, will be, let's say, the electric cars will be done in the e-building. But in these buildings, because we always give a priority to flexibility, we will also have other cars assembled over there, the hybrid. So yes, we will have some hybrid cars that will get out, will be manufactured, assembled, let me say, in this e-building. But the electric cars, the plan for electric cars stays as we committed two years ago. And the e-building will be inaugurated the 21st of June, as I said before. So don't expect, let me say, any electric cars to get delivered before what we told you. I mean, we stick to our plan. We are in line with that. For the other two, the HP sponsorship flowing in the P&L and the margin cadence.

Yeah, I go. Hi, Mike. The first one, in terms of the cadence, the margin cadence is partly dictated by that of the deliveries of Zaytona, which we expect to be higher in the first half compared to the second. Even if in the second half, at some point, we'll get also the SF90XX Stradale for delivery. But we expect anyway the overall mix in price impact to remain above 10% compared to last year in terms of growth. And as far as the HP sponsorship flowing into the P&L, it will start from the second quarter. Do not disregard the fact that this is just a portion of the year. So it's not a full year sponsorship, this one. And as these things do not happen overnight, as you may imagine, we encompass that already largely in our guidance for the year, the beginning.

Okay, thank you very much.

Welcome.

Thank you. We will now take the next question. From the line of Steven Reitman from Bernstein SG, please go ahead.

Thank you very much.

I have some questions about the Pura Sangue at about the 12-cylinder. First of all, on the Pura Sangue, you say it has reached global distribution. So that means that it's also reached the production cadence that's equivalent to the 20% target you would normally have for the vehicle over the lifetime of the product. Secondly, on the 12-cylinder, could you comment, first of all, on your thought process and how you came about The pricing on this vehicle, obviously, which is a 30% uplift on the A12 Superfast, and I believe a 27% uplift on the A12 GTS, obviously big increases. And secondly, also on the 12-cylinder, the fact that you're launching the two vehicles together, although, as you mentioned, there is a delay before the Spyder comes out, is a release to customers. does that indicate a higher degree of flexibility you now have within your production system that you can actually develop these vehicles in tandem and have them out in a very short space of time compared to in the past when there was a quite long gap between these kind of vehicles? Thank you.

Thank you, Stephen, for your question. So coming to the first one, the Purosangue, well, we can say that in Q1, the deliveries of Purosangue were below 16% of the volume we shipped. So we are not yet at the 20%, you can assume for the year that will be around 18% overall. Coming back to the 12 cylinders or 12-cylinders like we like, well, the 12-cylinders, the price, let's say we agreed to have a higher price, a substantially higher price than the previous version, because we believe there is a lot of innovation, a lot of activities have been done by the company, by all the team to put together traditional innovation. And also, let me say, when you try it, because we tried it several times with Antonio and all other colleagues on the track and on the road, there is the right mix between driving trips elegance and sportiness. So, let me say, I think this price is what the cars deserve to have also for all the work that has been done. I have to say that also during the two nights, let's say, the world premieres, we have been talking about the future of the cars, about the Some clients were telling, I do not believe you've been able to reach such high performances in a car that was already high performance. Now we're thinking about four steering wheel that is really unique and brake by wires. A lot of innovation has been done on this car, mainly on the aerodynamic, on the power control, on the power unit. so also on the interior side the display the central display yes one thing that the client appreciated a lot is that we listened we had the comment we have a central display that is very high-end very easy to be to be used um you said well i mean the reason why we launched the two models together the coupe and spiders is the first time that we launched this for our range cars is because we want to give more freedom to client it means that we are i have flexibility in-house so we prepared ourselves to have this higher flexibility in-house because it's uh it's something that is also i mean we met several times we have to to learn to know more our client and this is a way also to learn from our client how they react when they see the two model together We are ready because we have a flexible manufacturing line.

Thank you.

If I go back again about the pricing on the 12-cylinder, I apologize in Italian. If the price increases, does that give us any idea of the future direction of when you launch also replacements for the next series of vehicles? We could be expecting this kind of degree of price uplift. on these vehicles. Obviously, with the 296 GTB, it was about a 14% increase, but I think on the Roma Spider versus the Portofino M, it was about 16%.

This is another interesting question. I think that it's clear that there are two things that we have to balance. One is all the innovation that we are offering to our clients, and number two, the willingness they have to pay a higher price. What I can tell is that Yes, there is, as we said also in several meetings, there is an upward, a lift upward of our prices, as you have noticed well, for the 296, for the Roma Spiders, and for the 12-cylinder. I think this is important. I mean, we always said, you know, we want to grow. We want to give priority to value over volume. If you see also the deliveries of this quarter, basically they've been flat.

versus one year ago. Very well clear. Thank you very much. Thank you, Steven.

Thank you. We will now take the next question from the line of Anthony Dick from OdoBHF. Please go ahead.

Yes, thank you. Just a follow-up question on the HP title sponsorship. and so quite a significant partnership you've signed there and so I was just wondering how that affects the profitability profile of the F1 business is this something that could actually improve the profitability of the business or is it just made largely to cover any cost increases that you might expect in the coming years maybe especially in 2025 with likely some higher wage expenses And then a second question on the paint shop. Just wondering if you could update us on the development of the paint shop and what kind of investments and ramp up could we expect for that new building? Thank you.

Okay, the first question, yes, it improves. Very simple answer. The second, the paint shop, yes, we laid down the foundation in the last part in Q1. And let's say the total investment is a part of the investment plan we declared to you two years ago. You remember we said 4.4 billion euro.

2022, 2026.

Yes, over five years. Out of which, let me say 1.1 billion was for infrastructures. And the paint shop as the building are part of this 1.1 billion euro over the five-year cycle. So nothing new, Anthony. We are moving according to the plan. The building will be announced next month as per plan, and the paint shop started in Q1 as per plan. And the whole is part of this basket of 1.1 billion euro.

Thank you. Thank you. We will now take the next question. From the line of Martino D'Ambrogi from Equita, please go ahead.

Thank you. Good afternoon, everybody. Sorry to bother you on the profitability in Q1 and customizations, but you mentioned that customization was higher in Q1 than the 19% projected for the full year. Am I right in assuming 21% first? And second, you also mentioned the higher is the price, the lower is the customization.

Martino, can I just stop you on this one just to avoid any misunderstandings? We guided the market to 19% for the full year. And I just said in Q1, we're slightly above 19%. So that's it. But it's not significantly different.

Okay? Okay. Okay. And the second part always on this question is you mentioned that the higher is the price, the lower is the customization as a percentage of sales. It's a simple math fact. But you also mentioned that the Puro Sangue is ramping up and the Daytona had a higher contribution in Q1 than the rest of the year. I remember you mentioned in the previous call Daytona was expected to deliver 60 units in this quarter, so maybe it was higher. And the two things together

show that probably it is not in this quarter that the relationship the higher is the price is the customization for the overall picture so i don't know if you're right in the sense that the first quarter we had higher deliveries of the daytona and the puro sangue is ramping up now global distribution but it's not yet at 20 percent the When we said at the beginning, we are guiding to 19% average, obviously take into account that we do not have full visibility of personalization over the rest of the year. Because the decision on personalization is taken by the clients toward the end of its waiting time, a few months before delivery. So it's actually an assumption, the one we are not in a position to project on a precise math for the following quarter, particularly as we go towards the end of the year. I think 19% on average is a fair assumption.

Okay, thank you. And the second question is on costs. Probably referring to the previous question on HPE sponsorship, am I right in assuming it is offsetting the Hamilton contract and just to have an idea of the formula one contribution going ahead regardless of the ranking you will have this year which is probably higher than than last year we said before martina it improves this was the same question that we got no so no but the hamilton contract in the middle i know you do not disclose the the precise figures and so on but i suppose this it helps to cover the Hamilton contract that will come next year.

No, no, but your answer, your question is very clear. And our answer, yes, it improves. We don't disclose the A or B, the plus and the minus or the equal, but it improves. Okay, thank you. Thank you, Martino.

Thank you. We will now take the next question. from the line of Gianluca Bertuzzo from Intermonte Team. Please go ahead.

Hi everybody and thank you for taking my question. I'm sorry to bother you on the partnership with HP. Are we talking about triple digit sponsorship here such as the previous long-standing title sponsor? And second and third question are about volumes. Can we expect a an acceleration of volumes deliveries throughout the year or can we assume a stable evolution? And on cost inflation, did you change expectation or the development is aligned with your thinking at the beginning of the year? Thank you.

I think the first two and the cost is Antonio will help us to go through. So HP, we never disclose the numbers. also because in the contract, if you see the contract we signed with all our sponsors, we cannot, we cannot, this information is confidential. So we cannot disclose the number if it is one, two, three, four, five digits, whatever, whatever measurement unit you're thinking to. The second is the volume. We said since ever that we value, we give priority to value versus volume. So Let me say, you know how many cars we did last year. We also said that the growing volume will be very limited. You see that Q1, basically, we did, to be precise, seven units less than last year. So let's say we do not expect at all any acceleration of volume. This is not, I mean, what a brand like us should do. And that's also the reason why, if you remember the previous question of Stephen, Stephen was saying, uh why you have been uh what is the rational behind this strong price increase because we want to give always priority to value over volume for the cost inflation antonio can yes it's very simple we haven't changed our assumptions for the rest of the year actually okay thank you very much welcome thank you we will now take the next question

from the line of Thomas Besson from Kepler Chevrolet. Please go ahead.

Thank you very much. I'd like to come back to the seasonality of earnings and talk as well about the seasonality of CapEx and Fricashlow, just to make sure I understood correctly. What I understood is that earnings would likely follow the shape of your deliveries for the Icona. lately have a better first half than the second half. I just want to confirm that. And I think you said as well that CapEx would be more linear this year than in previous years where it would have been more back-end loaded. Is that correct?

Maybe just clarify on the first one. I commented the development of the gross margin, the contribution margin, if you wish, which is dictated by the decadence of the Daytona. When you look at the entire P&L, obviously there are other seasonalities that cross over the top part of the profit and loss. Overall, I would not expect significant differences over time. But for probably Q3, that could be normally happens a bit lower. With respect to CAPEX, you're right. I said usually we experience an exponential growth of capital expenditure over the course of the year. In 2024, we expect the growth to be more linear because several projects are already well advanced. We are basically finishing up on the development of the eBuilding, and we have the ramp up of the expenditure on the new paint shop.

Thank you. My second question, I know you want to keep some surprises. I look forward to visiting it. This e-building, when we come there, are you already making something in it? Are we going to see something? Or is it just going to be for us to present your projects in more detail when it comes to both the one to every component you're going to make there and cars? Or are you already manufacturing something in the building?

We told you, maybe we were not clear in the past. In September, we started to get the first equipment. In December, we started already to assemble some components for our cars. So now we'll see how to manage it the best we can. But it's not an empty shell. We don't do this inauguration with empty shells, Thomas. There are people working over there. There are components made already over there.

I would have been prepared to come for a religious visit as well, Benedetto. Last question on forex, please. The headwind was a bit larger than I thought in Q1. Can you give us an indication of what we should expect for the full year?

Well, we have said we expect the dollar to stay in the area of 110. then let's see what happens. It's rather unpredictable. For example, the impact of Chinese yuan and the Japanese yen both last year and the current year is negative and larger than we would have bet on. As you know, we edge our currency exposure on a 12-month rolling basis, so this smoothens a bit the impact. But overall, I would expect this to be negative for the rest of the year.

Okay, thank you very much. You're welcome. Thank you.

Thank you. We will now take the next question from the line of Gabriele Gambarova from Banca Acros. Please go ahead.

Yes, thanks for taking my questions. Just a couple left for me. Is it possible to know the precise number of SP3 Daytona delivered in Q1?

Yes. Approximately 80.

80. Wow.

Yeah.

And another question, again, on price and mix, very strong in Q1. The balance between this 80 and 123, am I right, assuming that is made of, let's say, bigger deliveries of puro sangue?

I don't know. Can you please repeat the question?

yes uh just wondering uh was wondering if uh the poor sangue had let's say an important role in the improvement of a price in meat so in q1 uh okay sorry okay we do not

give the details of the overall product mix impact. I told you that overall the product mix impact is positive, and this is because of the Daytona. The other significant contributor remains personalization. And the third one is country mix.

OK. Thank you very much. Very last question. Just to check, Antonio, if I understood well.

Just for the sake of clarity, Puro Sangue, in terms of contribution, is average compared to the rest of the range, percentage-wise.

Very last question. I understood right. You said you expect price and mix to give a higher than 10% contribution across the rest of the year.

I said that the increase of price and mix, as you can measure it as the ratio of the average selling price compared to last year, is expected to be above 10% on the full year basis.

Okay, perfect. Thank you very much. Welcome.

Thank you. We will now take the next question from the line of Henning Kosman from Barclays. Please go ahead.

Yeah, thank you so much for squeezing me. And I have also one more clarification, I'm afraid. But I'm still trying to reconcile your comments with respect to high number of Daytonas. I think very strong personalization mix on the first pro sanguis to be delivered, perhaps only a modest geographical mixed effect in the course of the year, perhaps a little bit less in Q1. So I would have thought these comments all sort of add to thinking that the Q1 margin is more towards the top end of the range that we can perhaps expect across the quarters for 2024. But then again, um you know similar to to the to the previous point that the colleague made if um if the revenue per unit stays at about 10 or price makes days about 10 i'm struggling to reconcile that how that would be consistent with a full year margin of below 28 percent i mean perhaps you can help us one more time to reconcile that and then on another topic that hasn't come up the second question is residual values if i'm not mistaken um you had made comments around the degree of residual value normalization in the context of better availability of new cars i don't know if you wanted to share anything there um i just wanted to give you an opportunity if you wanted to share something on residual values thank you very much

I think the first one, maybe Antonio can add some more color and I will comment about the second. So I start from the second also for the ease of discussion. The residual value. There are, let me say, the residual value keeps pretty well. There has been one country that has been suffering a little bit. for one specific model, but the situation is coming basically to, is recovering. So we don't see any strange pattern over there. Coming to the first question, Antonio will elaborate more, but what I would like to underline is that we are not changing the guidance. Absolutely.

I mean, we are asked about color for the development of product, of price and mix over the rest of the year. And I try and simplify what I said before. I mean, Price and mix has been particularly strong in Q1. These have been supported by the number of deliveries of the Daytona, which is higher compared to the average for the rest of the year. And the other element that contributed positively was personalizations. And obviously, as I said, the other information that I put is that we expect on average price and mix to be growing 10% or above that in the course of 2024 compared to last year. This means that over the course of the quarter, in terms of contribution margin, depending on the actual cadence of Daytona, will probably be slightly lower compared to the first quarter of the year. This is it. Does it help?

I might follow up with the team afterwards, but thank you. OK. Okay. Thank you.

Thank you. I would now like to turn the conference back to Benedetto Vigne for closing remarks.

Thank you. Thanks for your time. Thanks also for all your questions. The strong Q1 result and also the strong brand desirability are fueling our confidence for the development of the year and also forward. This is the key message that we wanted to pass to you. And I wish you a good afternoon and thank you again for your attention. Grazie.

This concludes today's conference call. Thank you for participating. You may now disconnect.