Ferrari N.V. (RACE) Q1 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Ferrari 2021 Q1 Results Conference Call. At this time all the participants are in a listen-only mode and please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Nicoletta Russo. Please go ahead.

Thank you, Lauren, and welcome to everyone who is joining us. We plan to cover today the Group's Q1 2021 operating results. In light of this, the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the Group's Chairman and acting CEO, Mr. John Elkann; and Group CFO, Mr. Antonio Picca Piccon. 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 said, I'd like to turn the call over to Mr. John Elkann.

Grazie. Thank you, Nicoletta, and thank you everyone for joining us today. In a few minutes, Antonio will provide you with more color on this first quarter, but in summary, I am pleased to report an excellent set of results in terms of profitability, margins, and cash flow, which demonstrates the strength of our leadership team and the great work of the men and women of Ferrari whom I want to thank. Our results also proved that the key dynamics of our business remained strong with a record order book up over 20% versus the prior year with the strongest demand coming from our most profitable models. The elegance of the Ferrari Roma and our first hybrid range car, SF90 Stradale mean we're enjoying vibrant demand and order intake especially in the U.S. and in China where the size of the order book doubled in the last few months, which is a great way to start preparing our 30th anniversary there in 2022. On the back of the above an absent any further potential dislocation caused by the pandemic, we are confident that we are on the right track to meet the top end of our guidance for 2021 by all metrics. As anticipated at our latest annual general meeting, I am also pleased to report we're making good progress with a short list of very strong candidates for the new CEO who will lead our company. And I can promise you that our future CEO will have all the right qualities, including an intimate understanding of the technologies required to chart a successful future for Ferrari. Innovation is deep in our DNA, and we certainly see this exciting decade of accelerating change has opening up even more ways for us to extend the boundaries of excellence and passion that are at the heart of our history and will be even more so as we create our future. Building on our deep experience in hybridization, we're continuing to execute our electrification strategy in a highly disciplined way. With the application of our technologies both in motorsport and in road cars, we have a huge opportunity to create a unique experience for our customers. By way of example, the SF90 Stradale has the highest power weight ratio for a hybrid car with our axial-flux electric motor and best-in-class driving dynamics, thanks to the RACE front axle with Ferrari torque-vectoring. These technologies are as always driven by the know-how we are applying in motor sports where we have developed especially in Formula 1, expertise in batteries, inverters, and electric drives. We're also very excited about our first all-electric Ferrari that we will unveil in 2025. This important landmark in our story will offer us a new language to bring the uniqueness and passion of Ferrari to new generations. We will provide you with more details of how we will incorporate this into our exciting plans for the future at our next Capital Markets Day in 2022. On the same occasion, we will take you deeper into our strong commitment to ESG. As a company on the environmental front, we've already committed to achieving full carbon neutrality within this decade by direct and indirect means. In parallel with a process to certify all our CO2 emissions and define science-based reduction targets, we have already started identifying both the direct actions with a focus on energy consumption and the choice of the materials we use as well as the appropriate initiatives to offset the remaining emissions. These important commitments to our future and that of our planet are possible, thanks to the resilience we have demonstrated in this last year, when we acted quickly and decisively to manage the effects of the pandemic. As you will no doubt recall, we have stated on several occasions, our decision to postpone a number of our initiatives to address the impact of the COVID virus last year, both on us and on our Italian suppliers. Compared to the beginning of this year, we have decided to be more prudent on expenditures also in 2021 as we follow through with the correct decision to carefully manage the cadence of our activity. This is also in light of the continuing uncertainties related to the pandemic, which as we know still remains unresolved in many parts of the world, sadly. As a result and also taking account of the implications of COVID-19 for a brand diversification and F1 related activities, we now expect that even though our 2022 results will be better than 2021, which as I said, we believe will be very strong. The achievement of our 2022 financial targets will be postponed until 2023. I also want to reconfirm today, the arrival of the Purosangue that will be the epitome of Ferrari's driving experience in a completely new special dementia. And we'll be unveiled this plan in 2022 to be joined in due course by product launches that will power our ambitions for 2023 and beyond. And finally to return to the present, tomorrow is a big day. We will unveil our first new model for this year, the new Ferrari limited edition V12, which I'm delighted to announce, is already sold out. This confirms the strength of our business model, uniqueness of our products and the loyalty of our customers. And with that, let me now hand the call over to Antonio.

Thank you, Mr. Elkann, and good morning or afternoon to everybody who is joining us today. Starting from Page 4, you can see the highlights of the Q1 2021 results, which represent a very good start of the year up also versus 2019 on almost all metrics. Our shipments were 2,771 units, up 1.2% compared to a strong prior year quarter, since in Q1 2020 the impact on the car business of the COVID-19 pandemic was still very limited. The increase versus Q1 2019 is 6.2%. Group net revenues were EUR1.011 billion, up 8.5% compared to prior year and 7.6% versus 2019 driven mainly by the stronger product mix. EBITDA came in at EUR376 million, up 18.6% versus Q1 2020 and up 20.9% versus Q1 2019. The EBITDA margin reached a record level of 37.2%. EBIT was EUR266 million, up 20.9% compared to 2020, and 14.6% versus 2019 embedding higher D&A. Net profit was EUR250 million, up 24.1% versus Q1 2020 and 13.9% versus Q1 2019. Resulting in our diluted EPS of EUR1.11 compared to EUR0.90 of prior year and EUR0.95 of 2019. Industrial free cash flow for the quarter was EUR147 million, this was also stronger than in Q1 2019, both in terms of Euro amount and cash conversion. If we exclude the EUR170 million advances on the Ferrari Monza SP1 and SP2 we collected in Q1 2019. Turning to Page 5, you can see the details of the first quarter of 2021 shipment, up 33 units or 1.2% versus a strong prior year quarter. As a reminder, last year we had a very limited impact on deliveries due to the COVID-19 pandemic; since we suspended the activities close to end of the quarter. Sales of 8 cylinder were up 8.1%, while 12 cylinder were down 19.6%. Note however that with the arrival of the SF90 Stradale and Spider that kept with the V8 Hybrid. The segmentation between V8 and V12 is becoming less relevant with regards to profitability. The F8 family and the 812 GTS drove the deliveries of the quarter. The SF90 Stradale and the Ferrari Roma was shipment commencing in Q4 2020 remain in wrap-up phase. During the quarter, we continue to deliver the Ferrari Monza SP1 and SP2 in-line with production planning. The 488 Pista family and the Ferrari Portofino have been phased out at the end of 2020. Quarterly shipments were affected by our deliberate geographical location based on different state – in the different stages of the life-cycle of our model by region. As a result, EMEA was down 3.8%; America was also almost flat; Mainland China, Hong Kong, and Taiwan posted a strong percentage increase boosted by the arrival of new models and accentuated by in easy comparison versus prior year. As a reminder with privileged deliveries in this region in the first nine months of 2019 in advance of the early implementation of new emissions regulation, And finally, rest of APAC decreased by 16.6%. The second half of 2021, we'll also see that ramp-up of the SF90 Spider and the Portofino M. The product portfolio will be further enriched with a new Ferrari limited-edition V12 to be unveiled tomorrow and already sold out as we said. Turning to Page 6; you can see a displayed the walk of our group net revenues for the first quarter. That was up 10.8% at constant currency. The increasing revenues from cars and spare parts up 11% at constant currency was generated mainly by the strong enrichment of the product mix. Personalizations were in-line with the prior year in absolute terms, while lower in proportion to revenues from cars and spare parts essentially due to the phase out of the 488 Pista family. Engines revenue were up 37.8%, attributable to higher shipments to Maserati and, to a lesser extent to the rental of engines to other Formula 1 racing teams. The increase in sponsorship, commercial and brand was attributable to an improved outlook for the Formula 1 calendar partially offset by lower prior year ranking as well as reduced brand related activities due to the COVID-19 pandemic. Currency including translation and transaction impact as well as foreign currency edges at the negative contribution of EUR22 million mainly the U.S. dollar Moving to Page 7; let me review the change in our EBIT bridge explained by the following variances. Volume is positive, thanks to the previously mentioned deliveries. Mix price variance of EUR48 million was boosted mainly by the SF90 Stradale and the Ferrari Monza. Industrial costs, research and development costs increased EUR19 million, mainly due to higher D&A as an increasing spending in product innovation activities net of technology-related government incentives, which were lower yeah-over-year. SG&A decreased EUR6 million mainly reflecting the adaptation of our communication and marketing activities to the new digital environment, also due to COVID-19. Other increased EUR24 million mainly due to the improved outlook for the Formula 1 calendar and higher contribution from other supporting activities as well as Maserati, partially offset by lower prior year ranking and reduced brand-related activities due to the COVID-19 pandemic. The total net impact of currency was negative for EUR18 million. As a result of what I just mentioned EBIT reached EUR266 million, up 28.5% at constant currency with EBIT margin at 26.3%. The strengths of the mix will continue over the year, while OpEx mainly marketing activities and expenses for product innovation will increase as planned in the second half of the year, leading to 2021 guidance margin. Turning to Page 8; industrial free cash flow generation for the quarter was EUR147 million. The positive generation of the quarter was driven by the strong EBITDA partially offset by investment of EUR151 million. For reference, please remind Q1 2020 including a portion of land purchase nearby the Maranello plant. The capitalization ratio was approximately 38% for the quarter increase versus prior year, essentially due to a timing difference in R&D spending for Formula 1. The adverse working capital and other impact was mainly due to higher inventories and the reversal of the Ferrari Monza's advances received in 2019. Net industrial debt as of the end of the quarter was EUR420 million, compared to EUR543 million at December last year. Now that in March, we restarted our multi-year share repurchase program with EUR150 million trend to be executed within the end of September. In addition, at the 2021 annual general meeting, a dividend distribution of EUR160 million was approved and due on May 5, 2021. At the end of the quarter, total available liquidity was EUR1.730 billion, following the reimbursement in January of EUR500 million 2021 note at including undrawn committed credit lines improved to EUR750 million. On Page 9 we have the 2021 guidance already presented in February then subject to trading conditions remaining unaffected by further impact from the COVID-19 pandemic during the course of the year. In summary, we target net revenues around EUR4.3 billion sustained by our core business with a rich mix. Revenues from Formula 1 racing activities and brand related activity is where we still have most of the uncertainties, particularly in respect of Formula 1 calendar and the format of the racing event due to the evolution of the pandemic. Adjust EBITDA between EUR1.450 billion and EUR1.500 billion with percentage margins between 33.7% and 34.9%. Adjusted EBIT between EUR970 million and EUR1.20 billion targeting an EBIT margin between 22.6% and 23.7%. Adjusted diluted EPS between EUR4 and EUR4.20 per share, assuming approximately 20% tax rate; industrial free cash flow in the region of EUR350 million. To conclude, I echo our Chairman and highlight our growing confidence in targeting the top end of such guidance range as a result of the previous satisfactory performance for the first quarter, but especially comforted by the record order book, the diversity of new order flow together with cancellations in line with our norm in a very dynamic pre-owned market, sustaining receivables. In addition, we expected a prudent management or capital expenditure also in 2021 will likely support our cash generation for the year. With that said, I turned the call over to Nicoletta.

Thank you, Antonio. We are now ready to start the Q&A session. Thank you.

Thank you. [Operator Instructions] We will not take our first question from the line of Stephen Reitman from Société Générale. Please go ahead. Your line is open.

Yes. Good afternoon. My question is on the revised guidance. The – when you look at the factors that was given in September [Technical Difficulty] EBITDA was EUR1.8 billion and EUR2 billion over 38% EBITDA margin and the free cash flow at EUR1.1 billion or so. You seem to be quite close at least for the EBITDA margin and considering your D&A, that's still really achievable. Obviously the free cash flow is where there's probably the big deficit at the moment. Now we know that you're going to be receiving a large amounts of deposits for the successor to [Technical Difficulty] model. So I'm wondering, does this indicate that the [indiscernible] delayed by one year, and so you're expecting a big cash inflows coming 2020 or 2022? And secondly, near time on the guidance for 2021 considering 26.3% margin that you reported in the first quarter. And what is very good given your order book, the demand you described for your highest margin models and what are the factors that bring you back to the garden range you give of 22.6% to 23.7% for full year? Thank you.

Hi, Stephen; Antonio, speaking. In respect of 2022, I think what we just said meaning the capital expenditure has been delays and this implies a postponement of some deliveries from 2022 to 2023 is the reason why we are actually postponing also the guidance to the following year. And these of course is an implication both in terms of EBITDA and in terms of cash flows. In addition to that we are considering currently a slight change in mix that might have and contribute also on this. With respect to the margins, I mean, we have been very pleased with the margin of Q1. This has been significantly supported by the contribution of our Ferrari Monza and SF90 Stradale. Going forward we expect that as mentioned, the product needs to remain strong. What we are actually planning is a gradual restart of the activities during the course of the year, meaning additional all techs compared to what we have seen in Q1 and this is going to basically drive us to the average as I mentioned.

Thank you.

And your next question comes from the line of Monica Bosio from Intesa Sanpaolo. Please go ahead. Your line is open.

Yes. Good afternoon and thanks for taking my question. Just another follow-up on the postponement of the guidance. For 2021 the company to confident and to achieve the top-end of the guidance but 2022 guidance has being postponed. I understand that part of the CapEx has been postponed from 2022 to 2023 with an impact on the EBITDA. But it would be more useful for us to add more color on these especially how much of the postponement is attributable to the core business and how much is attributable to the sponsorship and brands related activities, this could be very helpful? And second question is on the working capital trend, how are you dealing with potential supply chain shortage and what should we expect in term of working capital and in term of inventories across the next quarter? Thank you very much.

Monica, thank you very much for your questions. As we have communicated in 2020, and today we have made a judicious choice of delaying expenditures and the reason we've done it is linked to the uncertainties we are still living through linked to COVID-19, which means that the mix and the deliveries of models are different than what we were expecting. Hence, the reason why we are postponing to 2023, the results we were aiming to achieve in 2022. I would also like to make clear that we do have uncertainties on the brand diversification and Formula 1, which we are assessing very judiciously as the months go forward. But it is really on the back of lower expenditures, which have I direct consequence on deliveries and mix. I also would like to reaffirm that our objective being to build and continue building for the long-term, the value of our company. We as our founder and so Ferrari has always made clear we want to make sure that we manage well demand and that we keep disciplined in terms of how we manage demand. On working capital we believe that Q2 will be in line and we are managing all the different issues that we are seeing in supply chain in a way that we feel confident in being able to address, and mitigate those risks. I hope Monica I've answered your questions.

Yes. Thank you very much, John. I really appreciate it. Thank you.

And your next question comes from the line of Michael Binetti from Credit Suisse. Please go ahead. Your line is open.

Hey guys, thanks for taking our questions here. I just want to – I want to go back in time to February to the last call and just when I'm on that call, I think you made the statement that the cars were on track to hit the 2022 plan. Although all the 15 cars that were in the plan would be released. I'm wondering what changed since then that pushed out that the 2022 guide was a little more specific if, if you could, and I'm wondering how much if anything that the declaration of 2025 being the release for the electric vehicle versus previously saying that it would be just this decade. So a little more clear there, does that add some expense to the plan relative to what we – what we initially were thinking for 2022?

Hi, Michael, Antonio. Reminding in the full-year call, I said the 15 launches were confirmed, and this is still the case. So what we are now considering is the pace of the deliveries that we expect to happen by the end of 2022. And on that, the postponement or better the delusion of the capital expenditure over the course of these two here as an impact. Does this answer your first part of the call for the question?

No, I don't understand if all the cars are still being launched. Is the revenue and EBITDA contribution to the EUR1.8 billion to EUR2.0 billion of EBITDA that was planned by 2022? Even though all 15 cars are being launched, some of the revenues in EBITDA are now happening after the end-date of that plan?

Yes. Then what we said is that basically the 15 launches will happen. So the car will be presented in line with our expectation is just the time of the delivery is going to be diluted over the course of two years.

Okay. And any comment on whether the electric in 2025 adds some expense to the initial plan for 2022?

So Michael, that's a very good question. And you have wrote an extensively on it. We believe that within the target we have of expenditures, we are including electrification without adding to it. We do believe that we will have also for the measures that we've mentioned before a better 2021 and 2022 will be in line with where we were expecting in terms of overall investments. So we just see this as a prioritization rather than increasing the absolute number of investment.

Okay. I guess I'm trying – I'm still trying to understand if the new guidance for 2023 is EUR1.8 billion to EUR2 billion of EBITDA. I guess that means a two-year EBITDA CAGR of about 9.5% to 15.5%, and you delivered 14% in 2015 to 2019. 2021 obviously a soft year as economies reopened, but you've got SF90, you've got Monza, huge margin cars, you're planning five new car launches, I think in 2022. And you did comment today that the SF90 is bringing the profitability of V8 and V12 closer together. I'm trying to understand what – what lowers the CAGR, because it seems like a very full and profitable growth period after 2020 is the baseline through 2023. What causes it to be lower?

Very simple, as Antonio was mentioning, the rate of delivery has changed on the back of decisions we've made plenty of continued doing in 2021 in terms of rate of expenditures. So that means that we have invested less last year and will this year than expected, but it will have revenue and profit coming later than what we were expecting number one. Number two, as I said before, Michael, we are intentionally managing demand in a way that we continue to build on the strength of a business model, which is really managing the demand side.

Thanks, guys.

And your next question comes from the line of George Galliers from Goldman Sachs. Please go ahead. Your line is open.

Thank you for taking my question. The first one, just following up on the last question; could you just help maybe obviously you've said the pace of deliveries is different next year to what you anticipated. But it's not because one of the 15 calls will be shipped later in the year than you had initially envisaged, or is it because effectively you're just going to ship fewer of them next year venue that you had initially envisaged due to demand or due to kind of pacing the business to maintain exclusivity?

Thank you, George. I think the answer is, there are a couple of cars that are parts of the project would have been postponed, that will be delivered in fewer units compared to our original expectations for 2018.

Thank you. Then the second question I had was when I look at the topline CAGR now from this year to the original 2022 target, but now 2023 target is less than an 8% revenue CAGR between this year and 2023, despite the introduction of the Purosangue, which will presumably contribute significant volume. When we think about the topline growth for Ferrari in the longer term, where are you with respect to the brand extension exercises that you announced back in November 2019? I think you highlighted that you managed to leverage a relatively small percentage of EUR800 million retail value of Ferrari branded goods. And how important is the fashion show that you plan to hold in June in capturing more of the brand extension opportunity at Ferrari?

Okay. Thank you, George. The question can be answered this way. As to the growth rate going forward, first I can talk only about what happens to 2023, and that is very clear that the growth rate is going to be reduced compared to what we originally expected. So there is less of an [indiscernible] to 2022 and a more gradual growth as a result. And in terms of the contribution of brand diversification, this is an area John mentioned before, which has been impacted by the pandemic. On that we – it's fair to say we have been delayed and we still are due to the restrictions that we have in a number of countries in respect of their activities. Clearly, we expect a boost in terms of contribution coming from the activity that will present this year, but that is predicated upon having all the opportunities to start – restart selling in a normal way going forward.

I think the importance of the fashion show in mid-June is really to demonstrate the legitimacy of Ferrari as a full liner in the luxury space. And that is really the aim that we have. In how much time will that be translated in revenue? It really, again, is a question of managing properly the caterers, where it's much harder to be able to build organic growth in pricing points within the luxury space versus what we used to do, which was more of a licensing model. And the show is really going to be a reflection of hopefully what you will be able to see as the potential that exists.

Great, thank you. And one quick final housekeeping one if I may. Just when we look at the revenue and EBIT bridge, the revenue from engine sponsorship, commercial and brand increased by EUR15 million, but the EBIT in the other line increased by EUR24 million, so a higher amount. Can you help just explain what is the incremental factor driving the EUR24 million improvements at the EBIT level in that other bucket? Thank you.

Sure, George. I mentioned in my comment, I guess, one is the contribution from other supporting activities that do not have that much in terms of revenues, but at the positive performance in terms of EBIT and then lower costs related to the – our expectation in respect of the performance in F1 this year.

Great, thank you very much [Technical Difficulty] specify how much of deposits out probably this year in Q1 and how much should we expect for the full year? And still on deposit, will you be getting deposits for the 812 Superfast [indiscernible]?

On the deposit on Monza, I think, the impact on the quarter is about EUR20 million, the reversal of the deposit in respect of the 812 special, let's say, the car that we'll launch tomorrow, we are planning to have some, yes.

Okay. Thank you.

And the next question comes from the line of John Murphy from BofA. Please go ahead. Your line is open.

Good afternoon. And I'm sorry to keep asking about the guidance, but I have the benefit of hearing a number of answers. So maybe I could ask something specific and see if I can characterize the guidance correctly for 2022 to 2023. It seems like the next Icona is going to be delayed a little bit. So that's impacting volume to some degree, the cash flow even more. And then there are some expenses that were lower in 2021 and – 2020 it will be caught up in 2022, but by the time we get to 2023 we're back on track to a post – hopefully, for all of us, a post-COVID world in a normalized year. Is that a correct way to characterize what's going on here?

Yes, I think, the description of what happens to 2023 is pretty much in line with what you said. Yes, you're right. Then, of course, what will happen from 2023 onward would be the subject of the next Capital Market Day that we plan to give you necessary color to explain how you see – we see the development of our range going forward and the implications of that. But yes, you described the right.

Okay. And then my second question if we think about the success of the Stradale and sort of the electric hypercar, I mean, how do you balance the portfolio of hybrids versus EVs? And there is a big question of whether Ferrari really should go all electric in a long-term just given how many miles or how few miles are actually driven on the vehicles each year and the negative impact of producing an EV versus, an ICE or in a hybrid? I'm just curious, philosophically, you could certainly argue if you want 100% electric, it might take 50 plus years to get the benefit to the environment. But if you go hybrid and take the benefit of the torque pattern of the two powertrains together, you actually would get better performance both on the road and from the environment. So I'm just curious, John, if as you think about that balance over time, what do you think the answer is?

I think that there are great answers to those questions, but I do not want to anticipate them as that is going to be the fun about meeting next year in our Capital Markets Day. And I also think it's important to make sure that as we think about our electrified future, it is an improvement to our existing baseline.

Okay, all right, thank you very much.

So that it improve our capabilities within the applications of new technologies.

Thank you very much.

Thank you. And your next question comes from the line of Philip Houchois from Jefferies. Please go ahead. Your line is open.

Thank you very much and good afternoon. I've got three questions if I can. The first one is you're aiming to be carbon neutral, well everybody else is aiming to be carbon neutral. And I'm just wondering, you Ferrari, you expected to read the industry. Why don't you aim to be carbon negative and also that way offset even though it's little miles that is covered by the average Ferrari. It will be a signal that you are definitely still leading the industry. That's my first question. The second one is, so you're telling us that you are slowing down the rate of expenditure and you're effectively slowing down the rate of growth of the business to some extent if I follow the earlier questions, at the same time you've resumed buybacks. Don't you think you potentially are missing the wrong signal and about the long-term growth of Ferrari by slowing down the growth and doing buybacks because of your views on this. And the last point is I think there is a mention in the release about Pattern Box benefit. I believe that the first round of Patent Box ended last year. So have you secured a new round? Is it for three years? Is it five years? Should we also expect that you will benefit going forward from between five and seven points of lower tax rate if that's the case that you renew the patent box regime? Thank you.

Phillip, great questions. We want to achieve our carbon neutrality within this decade with the ambition of being the first ones to achieve that objective. Once we have achieved that objective, then the natural evolution of it is to be positive. So look at it as an evolution rather than an end goal. In terms of buybacks, we have been very coherent with what we have communicated in terms of capital distribution and our buyback is a reflection of our ability to generate cash flow. And I will let Antonio answer on Patent Box.

In respect of Patent Box, yes, we are applying the Italian law in that, which basically provides as a different, if you do not require for an advance agreement to get the benefit in cash in three installments. So there is a slight modification in the calculation for P&L purposes and in terms of the cash impact is basically diluted in three installments over the next three years.

Right, okay. Thank you very much.

Welcome.

And your next question comes from the line of Henning Cosman [HSBC]. Please go ahead. Your line is open.

Thanks for taking my questions. The first one is a clarification on your opening remarks with respect to the change in the order book please. I believe you said that the order book is up 20% in Q1 as a whole and doubled in China and the U.S. Is that what you said? And does that imply that the order book is down than…

China, China, China, it was doubled in China, which is why I made the reference for that to be a very encouraging sign as we will celebrate our first year anniversary in 2022 in China.

That's great. Thank you. Is it possible to say if Europe was then still up directionally as a region within the 20% for the group overall?

It is flatter now.

Okay, flat, thank you. And yes, I also need to apologize to keep asking about the guidance, but I was hoping to hear from yourself if the 2022 guidance and on all metrics, do you actually want us to assume for 2023 now the same numbers, because I don't think you actually said that yourself, or could it also be above the 2022 ranges, especially considering you have the Purosangue with them.

We will be able to have much more clarity as we approach 2022 in our Capital Markets Day. What we have said today is that we expect the results we were aiming for in 2022 to be achieved in 2023. And that our results of 2022 will be higher than the ones we will achieve in 2021, which we expect to be very strong results and on the high end of our guidance, that's what we said.

Understood. And if you don't mind me clarifying finally for the Capital Markets Day, are you expecting to give us a new 2023 guidance then given that you've now sort of introduced the interim period of 2023 by delaying or are we expecting 2025 targets? Are you able to comment on that already, please?

It would be premature and I think that it really is important for us to be able to give you a longer view as we meet in 2022. The objective is really as we are entering this decade of great opportunity and change to directionally see what Ferrari wants to be within this decade.

Okay. I appreciate it. Thank you.

Thank you.

And your last question comes from the line of Thomas Besson from Kepler Cheuvreux. Please go ahead. Your line is open.

Thank you very much. I'll have a few as well, please. First, could you please give us some feedback from your customers on the decision that you've affirmed to build the EVs and to build EVs faster than the planned? Second, I'd like to come back to Henning's last point. In 2023, you're going to have probably almost a full year of Purosangue even if we assume it's delayed, maybe it's going to start being ramped up only in Q2, but you'll have a lot more Purosangue units in 2023 than you would have had in 2022 in the initial scenario. So I'd like as well to understand the extent to which it could effectively or should in 2023? And lastly, I would like to clarify comments you've made around the brand strengths Formula 1 vertical integration. You did think about that during the CMD next year, you tell us that Ferrari leaves Formula 1 to join something else to be more consistent with, let's say, a greener future and that it's effectively consistent with more vertical integration. Thank you.

So there are big discussions at the moment on the future of Formula 1, and we are very much present in that conversation with the ambition and aspiration of being absolutely carbon neutral as a sport and as our activity is linked to that sport. So that is exactly the direction of travel. It will be hybrid technology. And those hybrid technologies are very important within the V6 because that is the same capabilities that we will be using for our other motor sports activities. As you know, we announced that we will be entering the endurance arena and also in terms of our road cars, which will have V6 hybrids. So no doubt that the Fred from a technical technological standpoint is there. Our customers' expectations are that we are continuously able to innovate and to be at the pinnacle of technology. And that is why we are looking ahead in a very excited era where we can achieve more with the new technologies that electrifications are providing us and the SF90 is a perfect example of that. In terms of how will 2023 look like, I think that we have answered most of the questions and it's probably a better topic to touch in 2022 when we meet for the Capital Markets Day.

Thank you very much.

Thank you Thomas.

There are no further question at this time. So I would like to hand back over to the speakers for their final remarks.

Thank you everyone for joining us today. The IR team will be soon available to answer all follow-up questions you may have. We wish you a lovely rest of the day. Bye-bye.

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