Good day and welcome to the Ferrari N.V. Full Year 2017 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the call over to host Ms. Nicoletta Russo. Please go ahead Madam.

Thank you, Sarah, and welcome to everyone who is joining us. Today's call will be hosted by the group's Chairman and CEO, Sergio Marchionne and Alessandro Gili, group's Chief Financial Officer. All relevant materials are available in the Investors 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 2 of today's presentation and the call will be governed by this language. With that, I'd like to turn the call over to Mr. Marchionne.

Thanks very much. Just couple of remarks to start-off the presentation today and the then I will pass it on to Alessandro. He will take you through the details of 2017. Broadly speaking it has been a good year. I think we made all the numbers we had targeted, I think, you saw from the headline that we actually overachieved our own ambitions. If go back to the time of the IPO, we were targeting about EUR1 billion in EBITDA. A couple of years from now, we got there much earlier. We like the shape of the EBIT and EBITDA margins that we've been able to get for 2017. It's an indication of the fact that we keep on improving the quality of the offerings. I think it's reflected in the margin generation of the house. Cash is decent. But I think more importantly from my standpoint, which is what connects us to the second part of what we've announced today, is the execution of the plan that we've outlined, at least numerically in terms of objectives for 2022 continues to progress well. I think we have entered a very interesting period in the development of Ferrari. I think the fact that we have now embraced pretty, openly the relevance of hybrid structures and the way in which we provide motion to our vehicles is something, which is going to really distinguish the Ferrari of today from the Ferrari of tomorrow. And I think that we've got a phenomenal execution going on in the field. I feel comfortable that we're going to make – and some of the stuff will be visible in 2019. So it's not as if we're talking about projects that will – are so long dated that they're associated with a long level of uncertainty. So…

Thank you Mr. Marchionne. So, good morning and good afternoon to everyone. Just a few comments on Slide 3 to cover a few items. We highlighted our engineering and design efforts where we were globally awarded with International Engine of the year and Red Dot: Best of the Best for the second and third year, respectively. As you know, we've been celebrating our seventh year anniversary. We took time to share these relevant milestones with the all of our customers for various events all over the world. And the group is proposing a dividend distribution for the holders of common shares of EUR0.71 per common share corresponding to a total dividend distribution to shareholders of approximately EUR134 million. And as a reminder, this is subject to the approval at the 2018, shareholders annual general meeting. On Page 4, we have highlighted some of the key elements of what will contribute to our performance for 2018. We've launched 812 Superfast, our latest V12 sports car and the Ferrari Portofino, our latest V8 GT. And in addition, during the Finali Mondiali last year the Mugello race track we unveiled the non-registered racing cars FXX K Evo, which is a strictly limited edition. From Page 5, we are going through the details of our 2017 financials. Our shipments reached 8,398 units, up 384 units, or 4.8% versus prior year. Results were driven by a 25.1% increase in V12 models, thanks to the GTC4Lusso, LaFerrari Aperta yet to finish its limited series run as well as the A12 Superfast that is approaching a global reach. V8 models were in line with prior year due to the California T phaseouts, offset by the 488 family and the GTC4Lusso Turbo that posted a solid performance. In terms of portfolio turnover, the California T and F12berlinetta are…

No, we can go ahead to the Q&A session. Please go ahead. Thank you.

Thank you. [Operator Instructions] We'll now move to our first question today from Monica Bosio of Banca IMI. Please go ahead.

Good afternoon and thanks for taking my questions. I was wondering if you can give us some indications about the pricing effect that we can assume for 2018. And if you can also update us on the personalization rate in 2017 and what we can expect going forward? Also on the back of the midterm guidance, should we expect an increase in personalization or a flat trend in comparison with the current state-of-the-art of the company? Thank you very much.

I'm going to try and help Alessandro with this. I can’t answer your question in detail. I'm going to give you some broad line suggestions as to how we got to the EUR2 billion. We're not doubling volumes, so we must be improving other mix of the industry utilization of the plant, it is established policy of disaster, we're trying to enrich the offering to the marketplace. And therefore, we're trying to improve our ability to extract margin from the businesses that we're currently carrying out, that something that continues into the plan. And therefore, I would have expect that – I would have expect the rational logically as a consequence of what I said personalization and pricing are both expected to improve over the midterm period. But that's just the way I look at it. You can draw your conclusion. The EUR2 billion is unmovable.

Okay, thank you.

Thank you. We'll now move to our next question from John Murphy of Bank of America. Please go ahead.

Good morning and good afternoon, guys. Just a first question and I apologize to follow-up on this midterm outlook. But I mean, as we think about this, I mean, doubling the volume between now and 2022 seems somewhat unrealistic just given the way that you run the business. So I would imagine there'd be some acceleration of growth but not an extreme acceleration. I just want to make sure that's true. And then second also, are all these vehicles going to be…

I agree, John. And then?

Okay. And then also I mean are all these vehicles going to be produced within the footprint of the Maranello because – advantage of the capacity utilization at that plant?

Absolutely, it's staying right here. By the way, just to be clear, we have a body shop, which has historically been outside, but it belongs to us. It’s about 15 kilometers away from here, but it belongs to us. So there's no adjustment to the manufacturing footprint as such. There's improvements that we're making on the production lines, to debottleneck some parts of the operations. But fundamentally, we're adding shifts and just running the machine that we have today.

Okay. And if I look at the EBITDA and free cash flow, I assume some level of taxes in the 25% range plus or minus so you have a patent box ends up, that kind of would indicate a CapEx number, which roundabout is EUR500 million to EUR600 million that you're talking about for 2018. So would it be a fair assessment to think that we are at this point reaching sort of a peaky level in CapEx and R&D investment for the development of the product range as we go forward?

Yes, I think you're looking at a couple of years of this kind of CapEx. I think we need to get over the hump until 2020. I think that's the number that we're fighting with. And I think as I said, we've had these discussions all the time about whether it's physically possible for us to spend that kind of money given the fact that we never had. But I think some of the things that we've taken on as part of the product portfolio, some of which, hopefully, will be visible, when you come and visit in September and when you see the products being launched in 2019. When you realize that we are really extending the technology bench and the reach of this house beyond anything, which is traditionally done. And so I think it's feasible that we can end up spending a number of that caliber over the next couple of years, right. And I think it's required for us to meet the EUR2 billion. I mean, there's not a single doubt in my mind that in the absence of the capital commitment, we will never ever be able to extract that kind of margin both in terms of percentage and absolute quantum that we have targeted for 2022.

Okay. And then also on the back of that, I mean, the supercars that you guys have kind of alluded to or talked about, I mean, what is the time frame for a potential launch on that and is that sort of coincide with this EUR2 billion target on EBITDA around 2021-2022?

By the way, it's in the number. The target is, I think, we're expecting vehicle some time in – the end of 2020, beginning of 2021. And it is material to the EUR2 billion, but it's not – if it isn't that, it will be another. I'm not sure. I don't think there's a single product which is solely responsible for the EUR2 billion shifts, well, I mean, it's a collection. And I think we'll talk about this when you come in September because that's really – I think you need to look at the Ferrari experience. I mean, I’m describing this to you over the phone or telling you on a piece of paper is not going to do it. You need to see it. I think you need to see in the context of a product launch. I think you need to see the impact that it has on our customers. The pricing power is exhibited by these launches. You need to see it. It is a unique environment. And I think our objective in this plan going forward for 2022 is to protect that base and enhance it. I think the marketplace will allow us to do it because I think the customer base, at least our relevant customer base is actually much wider than we have historically thought, and it certainly is growing at a pretty rapid clip size. It's not a volume issue for us. I think we need to execute well on – I think we have done well up to now, but I think we need to move it up a couple of notches in terms of intensity and reach.

Yes. I hardly agree the experience of doing a Maranello is definitely a sort of a homage or – the past and present is actually did a great experience. Maybe just one last quick [indiscernible] mundane question. How many purchases are left in 2018? And then I think there's a lot of concern out there in the market that mix is going to go incredibly negative in 2018, but there's a few more purchases and some of the specials that you guys are – limited editions you guys are doing, it might not be as big a headwind as I think some of you are offering. So how many purchases are there and what about mix in the 2018 guidance?

John, why are you worried about mix? I mean, I understand the question.

I’m not worried about mix. I mean, I think there's opportunity, but I think there's a little bit of concern in the market that with your Aperta’s being largely delivered, but that doesn't sound like not the case. So how many purchases are left to go?

Okay. By the way, there's a limited number of Aperta less than, which in and by themselves will not significantly change the physiognomy of the P&L and the margin. But it's interesting question that you're raising about the fact that when you've got supercars with a caliber of LaFerrari or the Aperta, you will end up getting twisted numbers in a period of time. And what happens is that you end up getting what I call an abnormal or anomalous margin generation coming out from that series. The strength of this house is that it can actually modulate the introduction of those vehicles and it can balance it against the reduction on baseload, so it doesn't really affect if you go through these spikes. It performs sort of strangely because of these supercars. The plan that we're going to – that we put in place now, it will be in actionable in the next three or four years, is redesign to try and smooth out that – those anomalies by making sure that we've got a steady flow of things that has a similar pricing power. We'll never be able to emulate the Aperta LaFerrari as a steady-state condition because of the fact; otherwise we're going to end up losing the uniqueness of the product on a cycle basis. But there's got to be enough, and we experienced this with the TDF or the Tour de France when they came out, we experienced this every time we've done a Speciale version of the 458 and 488. And the fact if we can modulate and arrange the deck in such a way as to have a steady flow of these, we will not end up having this worrisome mixed deterioration that you made reference. I think it'll be all right. It's going to be different because the underlying mix of products will be different, and it has to be, right? But not enough to – but not enough for us to change – enough to change directionally our progress on EBIT and EBITDA generation, it's just a different way of getting it…

Okay. Great, it’s helpful. I have a follow-up.

Yes, go ahead.

I was mentioned – on Slide 17, I know the Enzo wasn't launched in this timeframe, but it might be just helpful to show people that there was another supercar – I think 2002 to 2004 the Enzo. Just one product that's kind of missing from that chart that I think would be helpful if you can understand this [indiscernible].

Yes. The Enzo was a 2003 vehicle and we launched the LaFerrari in 2013, so it is sitting on a decade cycle. But that's the past. I think we need to adapt to a new world. I don't know – this is almost blasphemous, but I think that the technology shifts between the Enzo and LaFerrari and the next car that's coming, they're so wide and there's whole notion I'm referring to as the supercars, and they really have to be time consistent. They have to be put in a time context because they do is – this stuff is moving too quickly. I mean, the performance – and I think we should already have this conversation in Geneva after we launch the next car. I think we're just start seeing the statistics, what's get revealed and when it gets revealed in Geneva, you'll realize that we're closing the gap between the supercars and the street cars pretty quickly. So I – it's a complicated issue. I think the important thing for us is to keep while making mix of cars that keeps on improving on EBIT and EBITDA generation – generates cash and keeps the trend of growth towards the EUR2 billion unabated. That, to me – and it's not maneuvering stuff. It's just making sure that the portfolio retains that quality and never wavers on the objective. I mean, that's a – I can't have a bad year. I'm not like a bank, right? I always blame it on the central banks. I cannot – I can't have a bad year.

Very much appreciate the color. Thank you very much.

Thank you. We will now move to our next question from Martino de Ambroggi from Equita. Please go ahead.

Yes, thank you. Good morning, good afternoon, everybody. I know you stated you are not doubling volumes. Anyway, focusing on volumes; this year you are increasing volumes by 8%, which is an acceleration compared with the usual 4%, 5%. Am I right in thinking it is just a matter to offset the mix in ForEx, which would be negative this year, and the normal trend is the mid-single digit, or this could be taken as a reference point going forward?

Mr. Ambroggi, let me just repeat what I just – I think I was maybe too articulate in what I said earlier. And I'm going to try and give you a straight version of what I said. We're never going to produce a car and sell a car for which we don't have demand. The objective is to keep the growth in EBIT and EBITDA margins untouched and unwavering. And we will continue to mix the portfolio in such a way as to achieve the EUR2 billion target on or before 2022. It's that simple.

Yes, the message is very clear, but…

The only – Mr. Ambroggi, the only question you got to ask yourself is with all the standard I’m going to get confused with the order of priorities. I guarantee you that we've handled more complex issues than this one.

Okay. So looking at this picture in another way, you discussed in previous calls the target is 35%, 36% EBITDA margin. But if you are not doubling volumes and you signed EUR2 billion EBITDA, it seems to me you will exceed this level.

Okay. I agree.

Okay.

Mr. Ambroggi, what I try to say – and by the way, I mean, I will take all the responsibility for this if we fail. But what I did say initially is that the objective of Ferrari was to become standard setter in EBIT and EBITDA margin generation. We're not today. We know this.

Okay. And just two…

We need to get it done.

Okay. And just two more follow-ups. One on Formula 1, I suppose that your assumption is a steady-state as the rules are today.

I’m sorry I missed the question, Mr. Ambroggi.

Yes. The Formula 1, the revenue sharing agreement, I suppose in your 2022 target are assumed as a steady-state as they are today.

I'm assuming that our position will not worsen.

Okay. And for ForEx, when do you believe clients and dealers will get your point on the sharing of the ForEx rates?

I’m willing to suffer a slight cold in 2018. I think in 2019, it becomes everybody else's pneumonia.

Okay. Thank you.

Thank you. We will now move to our next question which comes from Ryan Brinkman of JPMorgan. Please go ahead.

Great, thanks for taking my question. Just relative to that 2022 type outlook, can you provide maybe a bit of a framework in terms of what would need to occur to generate that type of strong results? So for example, even a big picture subdivision between EBITDA, the volume contribution, the margin contribution would be helpful. And then in the past, I think you've alluded to an aspirational margin target of perhaps as much as 36%. Would it be correct to presume that generating EUR2 billion of EBITDA would require hitting that type of a margin? And what are the biggest areas of opportunity to get to that kind of margin?

Yes. There's no doubt in order for us to get to EUR2 billion, we have to get to EBITDA margins and to an excess of 36%. The real issue – and we've been sort of vocal on this even on previous calls, we've tried – I think one of the things that we realized in running this business is there's a section of the luxury sports market that we have not addressed, and we haven't addressed that because our emphasis has been very, very much on pushing the limits of the performance curve. And so we have played very hard in both V8 and V12 space by chasing performance. There's a big portion of the market, which has been unaccessible or where people have been unwilling to enter because of the demand associating with the performance vehicles. Some people feel uncomfortable in driving 800-horsepower machines, but it's something that is part of our DNA, which I think need to be reopen, rekindle, which has to do with the combination of Italian style, not just in terms of design, but in terms of interior finish and presentation and detail, which can live quite easily with our high performance engines, which are not living an extreme life. There's nothing wrong with a 600-horsepower engine because it certainly gives you enough performance, so try and enjoy the driving experience. That part of that equation of the customer base has been neglected. It's been neglected because we had a whole part of growth to go chase on the performance side. We need to rekindle this, and I think the – and hopefully, you'll see when you come to see us in September is that we've been active not only in maintaining the leading edge on performance but also developing this other part of the…

That’s fair. Thank you. And my last question is just on your recent comment that Ferrari could offer its customers a battery electric vehicle just like I think you have cleared up some misconceptions about what the Ferrari utility vehicle might be like, how many doors that might have, et cetera. And understanding that it’s early days, but is there anything that you can say now to clarify how Ferrari might approach an electric vehicle. For example we know that you need to generate Ferrari like acceleration, but how might you approach it from a sound perspective or ride and handling perspective? If it’s too early or not appropriate to comment, then maybe you could just talk about what attributes you think make a Ferrari a Ferrari? Thanks.

Well, you mentioned enough for me to be – this whole question of sound and fun to drive, the actual handling of the car are things, which are absolutely crucial to a Ferrari. And one of the things that you will notice, I mean, I have read some interesting analyst reports that suggest that that now that Tesla has done a car that does zero to 60 miles an hour in 2.7 seconds and there is no room – there is no room for supercars. Well, I would challenge anybody who's driven an electric car to try and drive at the same way we drive a Ferrari and you’d recognize immediately that the handling characteristics of the car are totally different. So whenever Ferrari will express itself in a fully electric vehicle, it will do so by making sure that both sound and handling are reflective of Ferrari’s heritage. The offering that’s available in the marketplace falls substantially short of that target. And the only thing I did say by the way, so we're clear, I did say if there is an electric supercar, it’s going to be Ferrari that makes it.

Got it.

Thank you. We will now move to our next question from Adam Jonas, Morgan Stanley. Please go ahead.

This is [indiscernible] on for Adam. Just a follow up on that, is the decision were made to do a pure EV, how would that impact your either 2018 CapEx guidance and/or your 2022 guidance?

It would not.

Okay.

Thank you. We will now move to our next question from George Galliers of Evercore. Please go ahead.

Hi, and thank you for taking my question. Just following on from some of the comments you made about appealing more to the luxury space. The GTC4Lusso T was an interesting for many Ferrari followers last year. Can you give any insight into how shipments and orders of that car have performed versus expectations? And are you attractive a new different customer to Ferrari with this vehicle?

The answer is we are attractive customers that have traditionally now been our customers. And yes, we’re making the numbers that we have built into the case. Am I happy with that? Stop, the answer is not. And the reason why we’re not is because we knew when we launched the car that that is not our area of expertise, our strength. So I think we've always – I mean, although I can make the comment with a straight face and the Portofino is completely sold out, I think if you order a GTC4Lusso now, you'll get one in 2018, I guarantee you. I can’t tell you which month, but you will get it within the year. I am not sure you are going to get one – you’re going to get a Portofino if you order today. So I think that we have had varying degrees of success with our cars. We’re spoiled by the fact that in the majority of cases, we tell you that the next 12 months are completely sold out. We’re not completely sold out of all the non-sports cars that we make. And so we need to work at this really hard. There are obviously we’re not quacking it properly. We need to get that right. And hopefully when you come and see us, the September we’ll be able to convince you that we're on the right path – we’re on the right path to get that fixed.

Great. And then on the – slightly cheeky one regarding Formula One. Clearly, you continued to have the engine agreement with Sauber, who are now wearing the Alfa livery. As the thoughts of both of Ferrari and FCA, can you shed any insights into whether that then you think the supply contract would suggest the Alfa should help Ferrari out where requested, for example, by holding out one of your competitors. And is there anything in the F1 regulations which would make such an agreement illegal or not in the spirit of the rules?

The second question that you asked is illegal question and although when I was young and foolish I was trained in law. I don’t think I am in a position to answer it. I think it would be morally offensive, whether it's illegal or not. I – just to go back that what makes it interesting is that there's absolutely no ownership connection between Ferrari and FCA other than through a common shareholders that I have up on top [indiscernible]. So I am not sure that nested off to try and connect two things. I'm happened to be involved in both. I am going to stop at the end of 2018 and it will be my last year at FCA. So this problem will vanish since I will no longer responsible for the FCA side. I will tell you honestly one of the things – the best thing that I think that could happen in 2018 is to – for Ferrari to perform up to its true potential and to take on the competition, and especially Mercedes with whom it has a lovely relationship, which has gone back about 4, 5 years, but I think it would be great if you could see a proper fight between Mercedes and Ferrari. And I think the important thing for Sauber is for – I mean they rank last, last year. So I think nobody has any illusions over the fact that they're going to win the championship in 2018 and if they do it’s genial. But I think any significant recovery from the last position they've had will be helpful. I think it’s our hope that with the engine that we provide them for 2018, they will be in a much better position to run. I think the drivers are great drivers, I think I am looking forward to a great season, but I don't expect any collaboration beyond technical arguments between Ferrari and Sauber, but now that will happen and I will not be involved at all in the management of Alfa Romeo Sauber team at all. I have nothing to do with them.

Got it, very clear. We will let good luck to Ferrari and thank you.

Thank you. We will now move to our next question from Giulio Pescatore of HSBC. Please go ahead.

Thank you for taking my question. First one would be if you could quantify the negative FX impact that is currently reflected in your guidance for 2018? And the second one would be your move to GT opens up to the Chinese market because those products are better fit for that market. So I was wondering what are your ambitions for the growth in China and in Greater China in particular. Thank you.

And let me get over the Chinese issue first. I think that we have been careful about the Chinese market because I think you’re right that I am the extreme version, the extreme incardination of Ferrari may not be the right product to have. In China, I think, we’re more hopeful that the evolvement of the GT side will become more relevant in the Chinese market. I have no specific number in the EUR2 billion that says that it is purely attributable to China. I think the geographic distribution of Ferrari on its own will be able to get deals that we get EUR2 billion if we get the product right and that to me is the more important question. On the ForEx side, I don’t know Alessandro want to add anything?

It’s something between EUR50 million and EUR70 million.

Thank you.

Thank you.

Thank you. We will now move to our next question from Lello Della Ragione from Intermonte. Please go ahead.

Hi. Thank you for taking my question. Just a quick follow up on ForEx. I didn’t get have you started to implement the new strategy in terms of pricing with the final customer already or you're approaching it?

We’re beginning. We’re started the dialogue. We have had interesting discussions with our dealers as a couple of weeks ago, but it’s not built into the numbers and I think the EUR50 million to EUR70 million is embedded in the number. We're going to try and recover if any shortfall on ForEx as early as we can in 2018, but I think it’s 2019 or later phenomenon.

Okay. And the other question you said is related more to the 2020 ambition that you had. I was just wondering since we've seen this with the utility vehicle first and now with electric vehicle, if you have some kind of let’s say it that Ferrari cannot make. So let's say you open, you paved the wayfor the utility vehicle, now we are earning about an electric version that is something might be – with something with six cylinders rather than eight or twelve, there is something that you will not produce and you can sell it right now and not change your mind on it.

No. We're producing everything we sell. I don't know whether it was your question. Are you asking me whether we're going to joint venture or something with somebody?

No, no, no, I am just asking you at this point in time you can exclude, for instance, the production of a car with a smaller engine or you're open – you stated clearly about the electric one. So I was wondering if you are willing to – as long as you maintain the Ferrari uniqueness to explore even other projects. You've said in the past that you will never produce.

No. I think it’s possible that we will downsize engines. It is quite possible.

Okay.

Without losing anything that relates to Ferrari.

Sergio, thank you so much for the answer.

Thank you. We'll now move to our next question from Thomas Besson from Kepler Cheuvreux. Please go ahead.

Hi, I have a couple of questions please. First, I'd like to ask, sorry if it’s discussed, if it was always planned to dissociate the 2020 targets from the CMD, first. And second, whether it's fair to assume that 2018-2019 should show a slightly slower rate of progress than the rate of progress you plan towards 2022 and it has been the case, for instance, in 2013-2014 during the previous five years plan?

I’m sorry. I'm trying to give you a proper answer to the first part of your question. So it was always my intention to.

I was surprised that you dissociated the targets for 2022 from CMD that was initially planned for Q2 and then postponed it to September or if I had missed something that it was always planned. That’s really a candid question.

No, and just, let me put your mind to rest. I'm not trying to dissociate anything from anything. I just – if you're going to show up here in Q2 or Q1 of 2018 and you're going to ask me, how are you going to get through to 2022 and make EUR2 billion? I can't tell you about the cars. I cannot tell you about when I'm going to launch them. I can't tell you about volume and I cannot tell you about the pricing of those vehicles because I can't tell you anything about the products, I can’t here. Even though I know it, I can't tell you. And so the real issue to me is how do I make you privy to this Ferrari world? How do I make you understand how this machine runs? And the only way I can do this is by putting you through – by making the customer experience in connection with the launch of a new vehicle as visible as I can because now you've seen it all, right? You see what a customer sees, when he sees the vehicle when it’s first launched. You see how the house handles the relationship, how we nurture their relationship to the ordering process, what it looks like to carry it through, why pricing sits, how we price for personalization, all that stuff that we do is designed to help you build a business model that allows you to understand how it is that we're going to end up exceeding a 36% EBITDA number. We're trying to be that clear because otherwise, if you guys are very futile effort on your side of the company or listen for me to show you four slides that tell you all the sausage parts, where my EUR2 billion come from. And you have no way of determining whether there is any substance of those sausage or not [ph]. I'm just trying to be to helpful. If you have a better idea, I'm more than wanting to listen.

No, I’m happy to come back to [indiscernible] which I think is a great experience. Can I ask a second question, please?

Sure.

I was wondering what is your thinking today on the risk of losing a small car manufacturer status if you go beyond the 10,000 limit, which you are likely to do probably in 2020 or 2021?

I’m not because of the way in the which the portfolio is developing with hybrid.

Great. Thank you very much.

Thank you. We will turn to our next question from Philippe Houchois from Jefferies. Please go ahead.

Yes good afternoon. Thank you. I just have a more kind of general question is you continue to have a target of net cash. And if I think about the valuation upside in your business it's very much about growth, margin, return on invested capital and cash returns. And as you know, from the auto experience or other industries, the market doesn't take a net cash position. So is that kind of – why don't you get rid of the net cash target and engage more – the market in terms of more steady cash returns to shareholders, which I think will be more attractive, unless I'm missing something and net cash position means something to you or to the business?

One, it means nothing to me, and that's, take that issue off the table. But Philippe, the fault is mine, because I think that we've indicated – I think the note was very clear, I think the footnote was. Did it exclude any type of capital repurchase. So the reason why we carved that out, I've always had this view, by the way, that I think we should never ever – we should never announce our buyback programs and trade against the market, because we're trading against ourselves. We have authority in place not to buy back shares. We have a phenomenal amount of support from the Board to carry out those executions. And in fact, we buy back capital. And I guarantee you that we will not misuse that right. We will intervene and we will do the right thing from a capital standpoint because I wholeheartedly agree with you that the value of cash on the balance sheet is zero. I mean it’s just, it's nonsensical. So we'll get rid of it properly, but we'll get rid of it.

Okay.

Thank you. We'll now move to our next question from Michael Tyndall, from Citi. Please go ahead.

Yes thanks for taking my questions. Just a couple from me. Mr. Marchionne, in the past, you spoke quite enthusiastically about the non-car business, and it would seem that the ambitions on that front have taken a bit of backseat over the last couple of years. Just wondering when you look to that 2022 target, has it been resurrected at all? Or is it still very much we're going to focus on cars and everything else one side. And then the second question is, sorry go ahead.

No problem go ahead.

The second question is just I guess it’s follow-on from Philippe's question, the dividend payout ratio went down in 2017, presumably because you've got some serious investing to do. But as we look out to 2022 and that EUR1.2 billion of free cash flow, do you have a stated ambition in terms of dividend payout as we roll through the plan?

I’m looking Alessandro I think I’ll probably across this 25 to a third, isn’t it?

25 to 40.

25 to 40. So there's no way bringing that commitment we went through the lower end of the spectrum because exactly for the reason that you mentioned because we're going to have a CapEx here and I got cheap, so we sit around the table and we're going to convince the Board when we meet that we should only be paying this level of dividend, and hopefully, the shareholders will approve when it comes. But the commitment is to pay out 25 to 40. And if we go back to Philippe's remarks earlier, even on capital, we need to start using the cash balance. Having know that in the house that has got this type of steady cash generation is nonsense. And from a capital structure standpoint, we just – we're ill structured. So we need to work on this, and buying back shares is a good way of doing a dividend helps. But I think we need some capital from the marketplace and make everybody feel more comfortable with the capital structure. But the first question that you ask, I think, is interesting because I didn't make a big point in this and I continue to make a big point of this because if it is true that this is a true luxury good, then I think it needs to be it needs to be able to find a way to express itself beyond cars. We have been very, very careful [indiscernible] has kind of helped us a lot. We spent a bit of time interfacing with other people who play in this area. Hopefully, when we get together in September, you'll start seeing the beginning of a business, which in its full articulated form could be relevant and I think should be relevant. It is not in the numbers for 2022, which are very much car driven. But the efforts have not stopped. And I think that hopefully you'll see the incarnation of Ferrari in non-car in a real way when you come and see us in September. So we'll have to wait till then.

Looking forward to it. Thanks.

Thank you. As we have no further questions I’d like to turn the call back to Ms. Nicoletta Russo for any additional or closing remarks. Thank you.

Thank you, everyone for joining us today. The IR team will be soon available for any follow-up question you may have. Thank you.

Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.