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Business Maverick: The Rich Still Want to Buy Their Ferraris: Chris Hughes

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Covid-19 has affected the production and delivery of luxury cars, but not demand from the wealthy to acquire them, as analysts have noted. The financial impact of the virus on Ferrari NV’s performance is, for now, looking like only one quarter of lost earnings. Management has handled the crisis well.

evenue fell 42% year-on-year in the second quarter, with vehicle shipments dropping 48%, Monday’s results revealed. Production slipped after factories were closed to protect workforces, and the shuttering of dealers hampered deliveries. The company decided against taking the axe to capital expenditures and costs, choosing instead to continue paying staff and to accelerate bonuses for dealers. Hence earnings per share fell 95%, while free cash flow was negative.

This has given Ferrari the confidence to be more precise in its guidance for the year. Underlying Ebitda, a measure of profit, is expected to be down just 13% year-on-year, at around 1.1 billion euros . Second-half Ebitda is expected to be up year-on-year, with the performance weighted toward the end of 2020.

 

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