Ferrari's core profit rises 7% despite shipment dip during software transition

The car shipments dipped but Ferrari reported a 7 per cent increase in core earnings for the third quarter. The luxury sports carmaker said the decline was part of a planned transition to a new software system to streamline operations and automate business processes. Over the summer, the company introduced a new enterprise resource planning (ERP) system to replace two older systems that it used to handle sales and production.

Ferrari's switch prompted it to pause production and deliveries, leading to a 2 percent decline in vehicle shipments that reached 3,383 units. China is the most significant drop with a decline of 29%. Despite this, Ferrari noted that though it has limited exposure in the Chinese market.

Ferrari CEO Benedetto Vigna also pointed out that volume and mix (in the third quarter) also reflected our decision to help the company transition to a new ERP, which is now complete and not a factor in the fourth quarter. The company also plans to organise a capital markets day in the second half of 2024 to outline its future strategy.

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The shipment dip was overshadowed by Ferrari’s growth in profits, driven by robust demand for its higher-end models, including the V12 Daytona SP3, which has a list price of around 2 million euros, and the track-only, limited edition 499P Modificata at 5.1 million euros. The contribution of the high-end models to the quarterly result was another 60 million euros. Customisation services also had a growing role to play, with a greater proportion of customers selecting bespoke design features.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the July-September period were 638 million euros (USD 696 million) in line with analysts' predictions. It confirmed full year forecast, including an EBITDA target of over 2.5 billion euros.

Despite the solid results, Ferrari's stock dropped 6.4% on Tuesday, reflecting investor caution. Shares have risen around 35% this year, with analysts noting that while the results were strong, they were not "spectacular."