Ferrari N.V. (RACE) Q2 2021 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Ferrari 2021 Q2 Results Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded today, Monday, the 2nd of August 2021. [Operator Instructions]. I'd now like to hand the conference over to your first speaker today, Nicoletta Russo. Please go ahead.

Thank you, Gino, and welcome to everyone who is joining us. We plan to cover today, the group's second quarter 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. Since our team today is connecting from different countries, please forgive us if there are moments of silence during the call while we manage the transition between speakers. With that said, I'd like to turn the call over to Mr. John Elkann.

Thank you, Nicoletta, and thank you, everyone, for joining us today. The very strong numbers we're reporting are once again an expression of the extraordinary skills, relentless endeavors and passionate dedication of all the men and women of Maranello. But most of all, they are testimony to the unique and enduring power of Ferrari to inspire the dreams of our loyal owners all around the world and the ones of our new customers. June was our record order collection month ever, which is a big achievement for us, driven by a large number of Ferrari soon to be first-time owners, strong guarantee for our future. In the second quarter, we delivered a strong set of results across all metrics, above pre-pandemic levels with an EBITDA margin of 37%, thanks to the particularly rich mix of this part of the year, boosted by the SF90 Stradale and Ferrari Monza. The mix will normalize in the second half, leading us to confirm our guidance on all metrics. Whilst for the industrial free cash flow, thanks to working capital, we now project to approach €450 million in 2021 versus our original guidance of $350 million. Today's call is the third and final one. I will host as Ferrari's CEO. Following our announcement in June of the appointment of Benedetto Vigna as our new CEO, commencing on September 1. Benedetto joined Ferrari from ST Microelectronics, where he has been responsible for creating, building and leading the company's largest and most profitable business. His proven leadership qualities, his impressive track record as an entrepreneur and innovator, his absolute fluency in the technologies that are shaping our industry fit strongly with the ambitious plans we have for our future. I'd also like to take the opportunity today to share with you some additional perspectives I have gained over these months in my role as CEO. During which time I've had the privilege of working more closely than ever with my Ferrari colleagues. Most importantly, these months have allowed me to live more intensively the uniqueness of Ferrari. I have seen us close the total commitment and passion in every corner of our company to ensuring that Ferrari is and always will be the very epitome of pure luxury, an expression of exclusivity that is imitated but can never be reproduced elsewhere. That is why everything we do will always focus on being distinctively Ferrari, which the opportunity set of electrification, electronics and other technologies that are coming available will allow us to make even more distinct and unique products. This is why every day, we are finding new ways to excite existing Ferrari owners whose loyalty as repeat customers reflects the unique relationship they have developed with our company, and we with them. And just as importantly, we are building new strong bonds with the next generations of Ferrari owners. And I'm pleased to tell you that new to Ferrari customers accounted for 60% of the orders for our entry models in the first half of this year. The average owners age is also coming down and we have doubled the number of women owners in the last years with China leading the way with 1 out of 5 buyers being a woman. In Q2, we brought you 3 new model launches, the 812 Competizione and the 812 Competizione Aperta, our special series V12 exclusively limited to our most loyal and committed customers, which already sold out at launch. And then the Ferrari 296 GTB, our first V6 hybrid road car with the Ferrari batch, targeting a new and younger Ferrari owner since the unveiling in late June, orders are flowing fast. The Ferrari 296 GTB is the third hybrid car in our range, following on from the SF90 Stradale and Spider. But while the latter are our range supercar, the new 296 GTB is the most fun to drive car for drivers of all levels. But what I would like to highlight most is not just the increasing pace of our electrification plans, but our ability to use and invent technologies in a way that is uncompromisingly and distinctively Ferrari. In this last quarter, we have also shared with you taste of our exciting future in a different dimension. In addition to unveiling the latest additions to our richest and most complete model lineup ever, we stage our first runway event to showcase our men's and women's fashion collection and reopened the historical -- the historic Cavallino restaurant in Maranello, both to great acclaim. These generated 100 million reaches with very strong demographics, both in terms of gender, 45% women and 55% men where 85% of them being in the 18 to 34 age range. These positive reactions we received are early indications, not only of the strength of Ferrari with new audiences, but also of the ability to execute in a way that is true to our history, our values for our future, moving into new areas in a considered way and always relentlessly focused on excellence. A further example of this is our launch on the Fortnite platform, combining virtual and physical and our core product with our capsule collections, further strengthening our reach, both in terms of audiences, but also entering new geographies and demographics. At the same time, we are more focused than ever on the importance of our motor racing routes. In Formula 1, our young and exciting driver pairing has brought new energy to the entire Formula 1 team. We are also working intensively on our return to the Hypercar class and in particular, to the Le Mans 24 hours rates in 2023. Success in at the very highest level of motor racing is in our blood, as we have proven with our victory in the 24 hours of Spa-Francorchamps and the Endurance cup of GT World Challenge this weekend. Working even more closely in these months with our racing teams has only sharpened my and our determination to deliver victory on the track and to ensure that we capitalize even more on the opportunities for technology transfer from our motor racing activities to our road car programs. Just as an example, the V6 hybrid is common to our different racing activities, but also to the new car we just launched. We will share much more about the ambitious plans we have for every aspect of our business at our next Capital Markets Day, when we also be celebrating the 75th anniversary of the founding of our company by Enzo Ferrari. This will set out the path we will take during this decade, but it will be much more than this. It will provide the foundations on which we will build the continuing long-term success of Ferrari as the world's most distinctive and most innovative luxury brand moving swiftly to create continuing growth opportunities from the changes of a fast transforming world, but never compromising on our commitment to be the unmatched expression of Italian excellence. Benedetto, our colleagues and I look forward to welcoming you to our Capital Markets Day in Maranello which is now set to take place on June 16 next year, when we will take you deeply into our plans for the coming years. In the meantime, we continue to be laser focused on our performance in the second half of this current year. It has been a unique privilege for me to lead Ferrari as its CEO since the end of last year. And the insights it has given me leave me even more excited about our future. It is one in which the opportunities for Ferrari to create emotion and value are stronger than ever, and I look forward very much to working closely with Benedetto and his team to take Ferrari to new levels in every way. I would like also in concluding tell you how proud I am that in June 30, we have been awarded the 3 stars of FIA, F-I-A Environmental Accreditation program. And on July 12, we have been confirmed equal salary company, and that confirmation also came in North America. This is very important and something that we're very proud in Ferrari because it shows how our commitment to ESG is a true commitment. I would now like to hand over to Antonio, who will take you through the details of a great second quarter, to which I'd like to thank him and all the Ferrari colleagues for what they've done. Thank you.

Thank you, Mr. Chairman, and good morning or afternoon to everyone who is joining us today. Starting on Page 6, you can see the highlights of the Q2 2021 earnings, a very solid set of results, significantly up, not just in comparison with the second quarter of 2020, but also compared to the same period of 2019 on almost all metrics. As a reminder, the COVID-19 pandemic hit us the most during the second quarter of last year when we add the production and delivery suspension. Our shipments were 2,685 units in Q2 this year, almost doubled versus the prior year quarter, while they were almost in line with the second quarter of 2019. Group net revenues were €1.035 billion, nearly doubled compared to prior year and up 5.2% versus 2019, driven mainly by volume and stronger product mix. EBITDA came in at €386 million, 3x higher versus the second quarter of 2020 and up 23% versus Q2 2019. The EBITDA margin stood at 37.4% in continuity with the strong profitability registered in the first quarter of this year. EBIT was €274 million, 12x higher compared to Q2 2020 and up 14.8% versus 2019. Net profit was €206 million versus €9 million in Q2 2020 and up 12.6% versus Q2 2019, resulting in a diluted EPS of €1.11, up nearly 28x versus prior year. Industrial free cash flow for the quarter was robust at €113 million. Please note that Q2 2019 still benefited from the collection of advances on the Ferrari Monza. Turning to Page 7. You can see the details of the shipments of the second quarter 2021, almost doubled versus the second quarter of 2020, which was heavily impacted by the production and delivery suspension due to the spread of the COVID-19 pandemic. Sales of 8-cylinder were up 111% and 12-cylinder were up almost 38%. Please note that such segmentation is becoming less and less significant of the development of our mix since the introduction of the SF90 Stradale. The deliveries of the quarter were driven by the F8 family and the 812 GTS together with the SF90 Stradale and Ferrari Roma, which reached global distribution. The Ferrari Monza SP1 and SP2 continued to be delivered in line with planning and the first deliveries of the new Ferrari Portofino M commenced in the quarter. All geographic regions positively contributed in the quarter given the easy comparison as a result, EMEA was up 89%, Americas increased 70%, Mainland China, Hong Kong and Taiwan posted an exceptionally high 564% increase, boosted by the arrival of new models and accentuated by an easy comparison versus prior year. As a reminder, we privilege deliveries in this region in the first 9 months of 2019 in advance of the early implementation of new emissions regulations. Finally, rest of APAC was up 92%. As you all know, in the quarter, we unveiled 3 new models, the 812 Competizione and 812 Competizione Aperta, both limited series already sold out. All the shipments will commence in Q1 2022 and Q4 2022, respectively. And the 296 GTB, our first V6 hybrid range model whose first deliveries to our clients will start in Q2 2022. Moving to Page 8, you can see displayed the walk of our group net revenues for the second quarter, up 86% at constant currency. The increase in revenues from cars and spare parts up 101% at constant currency was boosted by the easy comparison on volume and the strong enrichment of the product mix, along with the positive contribution from personalization. Personalizations were up versus prior year in absolute terms, sustained by volumes, while in line with historical average in proportion to revenues from cars and spare parts at around 17% due to the phaseout of special series. Engines revenues were up 118%. The improvement is related to higher shipments to Maserati and, to a lesser extent, to the rental of engines to other Formula 1 racing teams. The increasing sponsorship, commercial and brand was attributable to the more favorable Formula 1 calendar and brand-related activities, partially offset by lower prior year ranking. Currency, including translation and transaction impact as well as foreign currency hedges had a negative contribution of €30 million, mainly U.S. dollar. Moving to Page 9. Let me review the change in our EBIT bridge, explained by the following variances. Volume positive for €144 million, with shipments almost doubled Q2 easy comparison. Mix price variance also positive for €113 million, thanks to the strong contribution of the SF90 Stradale and the Ferrari Monza SP1 and SP2, along with personalization. Industrial costs, R&D costs in line with prior year, which included the full cost of employees paid days of absence during the COVID-19 production suspension. SG&A negative by €4 million, mainly reflecting communication and marketing activities of recent unveilings and lifestyle events. Other positive by €24 million, mainly due to the more favorable Formula 1 calendar, higher contribution from brand-related and other supporting activities as well as from sales to Maserati, partially offset by lower prior year ranking. The total net impact of currency was negative for €25 million. As a result of what I just mentioned, EBIT reached €274 million versus €23 million of the prior year and with an EBIT margin at 26.5%. Turning to Page 10. Industrial free cash flow generation for the quarter was €113 million. The positive generation in the quarter was driven by the strong EBITDA, partially offset by €166 million of investments that are progressing in line with full year guidance. The capitalization ratio was approximately 42% for the quarter, increased versus prior year, essentially due to a timing difference in R&D spending in relation to Formula 1 activities. The adverse working capital and other impact was mainly due to higher inventories and the reversal of the Ferrari Monza SP1 and SP2 advances received in 2019. Higher tax payments mainly to refer to the new patent box regime, which provides for the annual benefit to be cashed in 3 yearly installments. Net industrial debt as of the end of June was €552 million versus €420 million as of the end of March. The increase was due to the dividend distribution of €162 million, including distribution to noncontrolling interest and the share repurchase for a total of €82 million more than offsetting the positive industrial free cash flow generation in the quarter. On Page 11, we revise upward of our 2021 guidance on industrial free cash flow generation, which is now projected to approach €450 million, mainly sustained by an improved net working capital, thanks to the collection of advances on the new special series starting in Q3 and the increase in trade payables due to our capital expenditure being weighted over the last month of the year. We also reiterate our confidence to reach the top end of our guidance range for the remaining metrics. As a reminder, our guidance relies on the assumption that trading conditions remain unaffected by further impact from the COVID-19 pandemic during the course of the year. And with regard to the development of our operating margins in the second half of this year implied by our guidance, let me remind that the mix will reflect a larger weight of the Ferrari Roma and Portofino M remaining anyway positive versus the second half of 2020. OpEx will increase as planned, mainly due to marketing activities expenses for product innovation and R&D spending for Formula 1. To conclude, we remain highly confident for our own future, firmly supported by the vigor of market demand. With that said, I turn the call over to Nicoletta.

Thank you very much, Antonio. Gino, please, we are ready to open the Q&A session. Thank you.

[Operator Instructions]. Our first question comes from the line of Adam Jonas from Morgan Stanley.

First, I just have to say, the choice of Mr. Vigna, I think, is a real genius masterstroke given the company's opportunities over the next decade, and I'm telling my clients, you don't want to bet against the guy who hired Sergio. So I think you might have done it again, but a lot of work to do. John, what gets you most excited about the EV opportunity at Ferrari and what worries you the most about that transition?

Adam, thank you very much, and I definitely look forward continuing on a great choices of leadership, which ultimately, as you well know, leadership is what makes the difference in any organization. So we're very blessed that we have Benedetto joining Ferrari. What really excites me, Adam, particularly for Ferrari about electrification is that it opens up a whole new world. And the good thing that I'm seeing in Ferrari is that it's really being taken very, very much as a new -- as an additional, not only new, as an additional field in which we can really get the cars to be even better. And all what we've learned in the hybridization and all what we're learning also through the racing activity, which I've been very close to are really giving us the opportunity of an unchartered waters in terms of what we could see applied. I also think that the opportunity set that we have at Ferrari is really one where having the opportunity of having a much wider set of technologies, of which electrification is one will enable us to be even more inventive and innovative. So just to summarize that, one, the spirit in which I see the organization reacting to the challenge, seeing it as a huge opportunity. Secondly, just the imagination of things that we can do that we would never have imagined. And there are good things that, that we'll be announcing that are going to come up. So that's really exciting. In terms of what I feared the most actually, I've been really trying to look at every angle and seeing in which ways we could -- we should mitigate some of the transitions that are happening. And I must confess Adam. I feel very, very positive about what electrification does to us. Also because I do believe that in the next decade, 2030 to 2040, we'll have additional choices because ultimately, electrification is solving one issue, which is emissions, but it's not solving carbon footprint as we all know well. So as we get to solve carbon footprint, and we need to innovate not only on the car side, but also on the sources of energy making sure that we get 2 sources of energy that are carbon-free, we will end up having many, many more choices. So for example, I do think the development of fuels and e-fuels are going to allow us probably to do more on our hybrids than potentially our combustion engines with that -- with those technologies in the energy space coming up. Hydrogen might also get us to places we have -- we can imagine now. So I feel very, very positive, both on the electrification journey that we started for this decade, but even more of what we could actually see coming in the next decade. So that was a long answer, Adam, but I hope I diffuse as much enthusiasm that I feel the organization has.

That's a very realistic answer. And just a quick follow-up. If you compare the 10-year growth opportunity, if I'm thinking 10-year plus longer-term secular growth opportunity that Ferrari has as an internal -- primarily internal combustion car company, let's say we were having this conversation of 2 or 3 years ago or the 2018 CMD, versus now, do you see -- how do you see moving towards full electrification in that -- at least in that direction, how does that change the growth profile of Ferrari into 2030? Is it similar, higher, much higher? I'm just curious -- I don't want to put words in your mouth, but just qualitatively, do you think it changes the growth?

It is ultimately dependent on two variables. One, which is our choice, of trying to make sure we are consistent with growth in order to maintain uniqueness and exclusivity. Secondly, to the pace and cadence at which we're able to get to market more innovative products. If you get the two together, you should actually have higher growth linked to the opportunity of actually doing more, then it's a question of how you substitute 1 technology with the other. But I feel that the biggest challenge, Adam, is being careful of not accelerating the growth opportunity. I think the overall opportunity is bigger than it was. We just need to be very disciplined in not trying to capture it too fast, but waiting to have really the best and the most unique in terms of products that we can deliver.

The next question comes from the line of John Murphy from Bank of America.

This is Aileen Smith on for John. I wanted to follow up on Slide 4 on the commentary around the Ferrari customer base. Specifically new to Ferrari owners comprising 60% of orders for entry-level models. Where has this metric trended over the past several years? And as you think about the optimal mix of shipments over the long term, how much is comprised of new owners versus existing owners particularly as Ferrari perhaps establishes itself as a newer technology leader consistent with your comments on the EV shift and with Benedetto's appointment as CEO?

That's a great question. What you would tend to have is depending again on the decision around growth rates to make sure that you're able to keep the uniqueness and exclusivity in really having loyal customers and repeat customers who ultimately will also migrate to some of our more exclusive and higher-margin products whilst we increase the funnel, and we need to be thoughtful about how we do that because we have 2 big areas of part younger customers, which we are reaching. One is China, and the growth rate of the first half is very encouraging in China, but there's still a lot we can do in China. And secondly, women. I think that there is an imagery that Ferrari is mainly a car for men. And I think there are many, many women who will prove that's not true. And what's interesting is that actually that is happening in China, where, as I said, 1 out of 5 cars we're selling are to women.

Okay. So that's a metric that has gone -- is it fair to assume it has gone up in the past couple of years and could perhaps improve going forward, the new 2 Ferrari owners?

Sorry, I missed the question.

Sorry, just a clarification. That metric percentage of new to Ferrari owners is something that has improved over the past several years as you're tapping into the China market or with women customers and it's something that could improve going forward? Is that a correct way to interpret that?

Correct. As I said, what we're really trying to do is work in making sure we have the right funnel because ultimately, what we want is to have loyal customers, which is the strength Ferrari has had. And we need to manage the growth of those loyal customers by being able to have new Ferrari owners. And we feel that the data that we've been working on and confirming it in the last 6 months is very encouraging. What is -- what's the right mix, as I said, will depend on the growth trajectory that we want to have, which, as all of you know, for a company like Ferrari needs to be managed extremely carefully because ultimately, we would rather make sure we have sustainable pricing power rather than volume capability.

Great. That's very clear. And then second question on the macro side of the equation. Obviously, supply chain challenges are very much lingering into the second half with the semiconductor shortage and has been kind of rolling the traditional automakers over the past 6 to 12 months. And if we look at latest productions from IHS, Europe appears to be one of the more impacted regions in the third quarter. As a reminder for us, was there any impact from the semi shortages that you felt in the second quarter or that you see hitting the third quarter? Or have you largely evaded some of this pressure by perhaps being able to shift production and deliveries across different models?

We have been managing it very precisely as we're able to work to an order book. That has helped us plan ahead and the volumes that we generate are also such that we have more mitigants in terms of being able to face the chip shortage. But ultimately, it will depend on how long this happens. We are now assuming that we will see a market that stabilizes in 2022. Of course, if that -- if that were not to happen, then we'll have to manage accordingly.

The next question comes from the line of George Galliers from Goldman Sachs.

Given the industry seeming inevitable transition away from ICE by the 2030s in Europe at least, whether it's noise emissions or CO2 pollution, do you see a risk that social acceptance of ICE will become increasingly challenging in the same way we have seen social acceptance of smoking fur and precious skins changed in the last two decades? And picking up on comments you made around hydrogen and e-fuels. If we look at the main players in the auto industry today, it is clear the investment is being prioritized towards actually electric vehicles rather than hydrogen or e-fuels. As a result, it seems reasonable to question what infrastructure will actually be to support these technologies and who's going to make that investment. Can you see Ferrari investing in infrastructure to support their products and customers if you choose the technology path, which is differentiated from the mainstream?

Yes. What I said was that the electrification path is what we are working during this decade. What we don't know is the technology set that will be available as we start dealing with carbon neutrality as we should from upstream to downstream, which will mean that we'll have changes within the energy supply, which could lead to having alternatives, for example, e-fuels or hydrogen. But that is really a 2030, 2040 and most likely midpoint 2035, where we'll see this happening. What we want to make sure is to be able to use the technologies available, which today are hybrid going to electric and exploiting those to the fullest and in the best way possible. We believe that -- and that is proven in many different areas that as long as you're able to produce the most extraordinary products as we have and do them with what technology and what social acceptance is, we see no limit to our -- to the possibilities that we have in terms of acceptance. And there, again, I think it's very interesting to see how Ferrari is also being perceived. As I mentioned, we did the launch combined launch of our car and the capsule on the platform of Fortnite and you see a very strong appeal to a younger demographic. So we believe that we are actually very encouraged by what's ahead.

Great. And then just one quick question on the cash flow guidance change. You mentioned the timing of deposits. Can you confirm that deposit on a model which you have not unveiled but plan to unveil at some point next year?

I'll have Antonio answer it, but it's not that we haven't unveiled.

Yes. The deposit I mentioned are the deposit on the 812 Competizione and Competizione Aperta that will start in Q3.

So the next question comes from.

A further data point on the strength of our products but most importantly, of the desire from our loyal customers and collectors to own them.

Would you like to proceed to the next question, sir?

Yes, please go ahead.

Susy Tibaldi from UBS.

My first one is just to go back to your full year EBIT guidance -- sorry, EBITDA guidance. It -- I understand you explained the various drivers of why in H2, we're going to see the mix not as strong, some costs are increasing, but the guidance effectively implies that in H2, your EBITDA margin is going to be lower, both of 2020 and also 2019. So if you can just add a little bit more to help us understand why we should see this? And my second question would be on your latest launch, the 296 GTB. Could you discuss a little bit the economics of this new model? We can see that the starting price is similar to obviously higher than your other entry-level cars are similar to the F8 Spider. But on top of that, obviously, has the hybrid components. So just to think about the economics, how is it helping the mix, the margin that would be super interesting.

Yes, Susy. With respect to the guidance for the rest of the year, I mentioned 3 items. One is mix, which remains strong, meaning that we expect mix to be a positive compared to the second half of last year, which was already robust, even if less than in H1 this year. And then equally importantly, impacting the reduction in the EBITDA margin, the increase in OpEx, which is either selling expenses or increasing in R&D expense to the P&L. And those refer to the spending for F1, which basically reflects the fact that next year we'll have new technical and sporting regulations coming in. And then the fact that in the second half of this year, we expect to have more races. So the 3 elements that play an equally irrelevant role are the 3 that I just mentioned. With respect to the 296 GTB, as you know, we do not give details as to the precise margins. You should conclude that in any event, this is the new entry level of the sport range hybrid, and we expect its marginality to be in line with the entry level of the sport range we are used to.

The next question comes from the line of Giulio Pescatore from Exane.

This is Giulio from Exane. First question for John. When you talk about developing new technologies to continue to excite your customer base, am I right in thinking that you're not only referring to speed and driving performance? And in this context, what are you learning from these new to Ferrari customers? Do they care about engine noise? Do they care about handling and on-track performance as much as your established customer base?

They do. And the truth is that you can improve it even more. So what really is a big motivator is the uniqueness that Ferrari has in terms of what it's able to have in a car and the emotion that it provides to you as you drive it. And we are just seeing from all the different projects we've been working and also the launches of the car, of which we're very proud of the one we just launched is that you are going to have between electronics, electrification, materials, software, a huge amount of opportunities that will improve that. And of course, there's always in the back of your minds, what will the returns of those investments and how big those investments will be. The reality is that you also have investments which are not that big. And if you take into account software, for example, and what effect it can have on the actual experience. And more importantly, the opportunity set of who you can work with. And that is something that Benedetto from his experience will be able to accelerate for us as a company is also going to give you a very large leverage in terms of all the different industries and potential partners you can have in that path.

Okay. The second question is a bit more boring around regulation. I'm sure you've seen that the European Commission is considering starting a ICE ban in 2035 and also removing your small volume manufacturer status. So can you maybe comment on how much of a risk is that for you? And are you afraid of the cost that, that might entail.

I think that there is a strong determination of getting the climate agenda and Europe wants to lead the way and wants to be ambitious in this objective, which is 1 we subscribe as a company as we truly believe that the work that we started doing on ESG is very important. And the way we are thinking and we continue to think on how we operate and the products we do need to be mindful of what it means in terms of impact for our environment. I think, as I said, that we will be moving on from the emission regulations to a wider regulations around energy. And I believe that as we have worked as we are in getting our electrification path forward, we will have many more opportunities and also being able, for example, as I mentioned before, in cases of fuels and synthetic fuels or biofuels to also use some of our existing technologies in different ways. So we see the regulation as welcome because it's part of an ambitious plan that Europe wants to have, which is important for the world overall. And we believe that what it will do to our organization, and I say this because I've seen it, is just making and creating very exciting, very exciting opportunities in terms of the products that we could be -- that we will be thinking of and bringing to market.

The next question comes from the line of Monica Bosio.

The first one is on CapEx guidance. As a matter of fact, the second quarter CapEx was a little bit below my expectation. Would it be fair to assume roughly €800 million of CapEx by year-end? And I would really appreciate if you can give us a flavor on the next year given that the Capital Markets Day will be at a mid of June. And the second question, I hope not to appear to naive. But as for personalization, as you noticed a different approach amongst young newcomers in Ferrari and women as for personalization in comparison to the past.

Antonio?

Yes. With respect to the guidance for this year, Monica in respect of CapEx, this remains unchanged, up to €800 million. As you know, the growth of the expenditure throughout the year is rather exponential, and this explains why there is more weight on the last few months. With respect to CapEx for next year, fortunately, you need to wait for the full year call, where we'll comment on that. With respect to personalization, I don't think we have sufficiently detailed data point on the behavior of younger clients. I'd rather associate the difference in the degree of personalization to the type of car, meaning special series and partly high-end sport cars are the ones which command more personalizations compared to the entry levels.

Okay. So it remains a matter related to the type of car, not the capital base profile.

Yes.

The next question comes from the line of Henning Cosman.

And thanks for the comments around the order intake and all the color that you've given. Are you prepared to also talk about the order book a little bit. I think in the past, you've shared comments about the length of the waitlist. And of course, in view of the order intake mainly referring to the new models. I'm curious if you're able to confirm that you've now reached the inflection point where the order book is normalizing a little bit and has maybe come down. So any color around that would be much appreciated, please.

I'll let Antonio address that. What I said was June was our record month in terms of order book. So we've never had such a strong order book in our history.

Yes, you answered, John, actually, no inflection point we have been growing.

Okay. So it's not just -- sorry, just to completely clarify it's not just in terms of order intake. It's also the order book, yes, that still keeps on rising.

Correct.

We want to leave some of those orders for Benedetto.

Yes, I understand. In fact, if I can just check on that, that you bring up the CEO succession. Should we expect any additional detail around midterm financials or electrification plan any time before the CMD that you have now set? Or will you indeed leave that until the CMD itself? Is that really what we should be expecting?

Yes, that's correct. We want to -- we really want to make sure that Benedetto has the time to have a comprehensive view of the company. And we also want to give ourselves a longer time line, as I mentioned. So we really think that with all the changes that are happening, it's important to give a long-range view and really be able to share how we're thinking about the decade to come. So we won't have interim sessions before the Capital Markets Day in June of next year.

That's clear. And maybe 1 final clarification on the order book. Are we exclusively talking in terms of units here? Or does it also refer to the euro value of the order book being record high?

We always refer to unit.

So it could be lower in euro terms given the mix of the more entry models now?

No, this is not the case. But as I said, we only comment on units.

So just to be clear, it's in units, but it will be higher in value, okay?

Next question comes from the line of Stephen Reitman from Societe Generale.

Yes. My question is about outside technology. When you launched the SF90 Stradale, you're used -- you were sourcing axial-flux motors from the start-up, YASA automotive in the U.K. which has now been acquired by Mercedes who say they're going to honor existing contracts. But does Ferrari -- does this takeover make Ferrari think that it needs to develop more of these kind of componentry in-house or secure it by buying other manufacturers and pioneers in this field?

That's a great question. We actually have had good conversations with YASA, of course, but also with Daimler. And the level of customization that they're working with us is such that those technologies are not going to be applicable to others. And working with a company as ours is very stimulating in terms of being able to just push boundaries further. So that is a good example of how we do think that we are going to be able to actually partner with more counterparts and where there's probably no company as Ferrari, who really can be a partner to just push boundaries. And the good thing is also because of the nature of what we do and the volumes we have, it's a very good laboratory to really try and see what works and how it works. So we're very excited about the opportunity. We think for YASA, Daimler is a good home. And we believe that within the industry and more importantly, outside of our history, we are going to benefit very much from partnerships and joint programs.

Did Ferrari have consider acquiring it itself -- acquiring YASA or so?

No, it has not.

Next question comes from Thomas Besson.

Thomas Besson from Kepler Cheuvreux. I have two very quick questions, please. Can you give us a few words about the racing strategy and the choice of the racing series you're going to be part of with Lambo, F1. I think you're still not part of Formula E and the importance of winning in this kind of races versus just supporting future technological developments. I have kind of follow-up questions on the comments you have made on the long term on hydrogen, et cetera, on the energy development that we could see after emission development. On the principle, is it thinkable to imagine in the long run to have Ferrari vehicle powered by a fuel cell?

Those are very good questions. We believe that racing is -- and the reason why we are extending our racing presence is, is to be present in all the different competitions. We think Formula E is not as challenging as the other ones. And ultimately, we want to make sure to be part of competitions in which we can really put our capabilities to work. And we have proven that we -- and this weekend, as I mentioned, the victory in Spa-Francorchamp is a good example that we have the ability of being more present in racing. That has 2 benefits to our business. The first one is we're seeing that we have a part of our customers who actually are interested in that part of the business and have developed a whole line around racing. And if you think as the world is going to evolve, tracks are going to enjoy no doubt growth in the years to come as people will want to experience these incredible cars on tracks, and we are seeing that as a growth area. We also secondly believe that there can be -- more can be done in terms of technology transfer from the track to the road. And finally, the racing activity has fueled a very large audience of Ferrari -- before the Ferrari fan for which it's important for us to win, and we can also work with our very large audiences in being able to have a much clearer entertainment strategy than what we've had up to now and that can very well develop in what today is broadly defined as gaming and entertainment. And that part of our company and our growth is very much dependent on our ability in making sure that we occupy the right place for Ferrari in the racing space. And no doubt that our Formula 1 activity, which clearly has been very disappointing for too long, can learn a lot, especially as it's now going to go through changes with budget caps through minor disciplines. So we also believe that for us being stronger in multidiscipline will also be a way of strengthening where today is our largest weakness. But again, as I said, we are lucky with two pilots that are young, ambitious and want to win are now definitely stimulating the overall organization. In terms of how do we think about fuel cells and other technologies. As I said, I think it's going to be a next chapter after we go through this electrification wave, which reduces emission on the car. We need to address upstream how we decarbonate and how we make sure that we actually are finding solutions for our environment, which work, and those will lead to new forms of energy. And we, again, think -- and that's the segue that the racing arena is a good one in which you can experiment some of these technologies. So it was a long answer, but I hope it captured your interest.

Thank you very much. This concludes today's conference call. The Investor Relations team will be soon available to answer any follow-up you may have. And we thank you all for attending today's conference call. Bye-bye.

Thank you all. Thank you for your support.

Thank you very much.