Ferrari N.V. (RACE) Q2 2024 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Ferrari 2024 Q2 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, [Aldo Benedetti], Investor Relations Manager. Please go ahead.

Thank you, Evan, and welcome to everyone, who is joining us. Today, we plan to cover the Group's operating results of the second quarter of 2024. And the duration of the call is expected to be around 60 minutes. Today's call will be hosted by the Group CEO, Mr. Benedetto Vigna; and Group's 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 covered by this language. With that said, I'd like to turn the call over to Benedetto.

Thank you, everyone for joining us today. I'd like to open today's call with heartfelt thank you, firstly to our clients for their continuous trust in our brand; secondly, to all our partners, suppliers, dealers and sponsors with whom we have continued to strengthen our relationship; and last but not least, to all our Ferrari colleagues, for their outstanding working passion supported by a strong sense of belonging. Many important milestone and positive achievement took place in this second quarter, among which our victory at the 24 Hours of Le Mans for the second year in a row. During today's call, I will touch upon the following four key achievements: One, very strong Q2 financial result and the continued smooth execution of the year; two, a solid order book which has evolved as expected with the new Dodici Cilindri Spider and Coupe guiding the order intake; three, a full week of activities in June dedicated to sustainable innovation. This involved all our stakeholders and culminated in the inauguration of the e-building exactly two years from its announcement at the Capital Market Day. We really made it. Fourth, build progress in raising our lifestyle, we've announced the cohesion across our company's resource. So let's start with the financial result of the second quarter, which demonstrate again strong execution and continued growth. First, revenues, they were at €1.7 billion, up 16% versus the previous year sustained by the continuing strength of the product mix and the growing demand for personalization. Second, profitability, which improved with adjusted EBITDA at about €670 million and the remarkable 39% margin. And third, the net profit, which reached €413 million. On the back of stronger personalizations and increased visibility for the remaining part of the years, we upgraded our 2024 guidance and Antonio will show you the details later in the call. The solidity of this quarter results was accompanied by continued strong brand momentum, which brings me to my second key point for today. The enthusiastic reception of our latest new sports cars, the Dodici Cilindri and the Dodici Cilindri Spider drove the order collection in the quarter, adding to an already solid order book on current models, which covers well into 2026. Such visibility relies on the loyalty of our existing customers all over the world as well as the brand appeal to the new ones, on that and keeping an eye on current macro development market-by-market. We continue to allocate our products strategically across the different regions to announce our brand strength and exclusivity. After the world premiere in Miami, we hosted several regional launches of our new [indiscernible] naturally-aspirated 12 cylinder sports cars in all major markets and they will continue in the second half of the years. I attended some of these beautiful events and I met clients from different European countries. They all praised the Dodici Cilindri’s perfect synthesis between the past and the futures. The front of the Dodici Cilindri that records the 1968 365 GTB4 with the old styling interpreted in a very futuristic way. And now we go to the third point of today's call. Innovation is sustainability and sustainability is innovation. This is our profound belief. Sustainable innovation has been the focus of a series of events that we hosted in Maranello end of this June, involving all Ferrari stakeholders. We have the workshop with around 30 of our Ferrari partners aimed at the sharing experiences and practices to reduce environmental impact. A full day was devoted to suppliers. They play a key role in our company's drive for innovation. This annual event bring together about 500 people from a few hundred suppliers from all over the world for a discussion on their contribution to sustainable innovation, which is increasingly central to our supply chain. And then a weekend was dedicated to Ferrari's employees, their families and friends, a record presence of more than 30,000 people visiting our factory, such a great emotion. I spent there the full Saturday and it was for me the first time and I will never forget this beautiful unique experience. And during that intense week, we also inaugurated the new e-building where E stands for energy, evolution and environment. And based on the concept of technological neutrality and flexibility, this new facility will house the development and production of ICE, hybrid and full electric models. Here let me remark once again, our belief. We believe that there is no single solution to future automotive powertrains. And this is particularly true during the current technology transition. Technological neutrality is a key principle for us and consistent with our strategy and we continue to invest in the three powertrains: Internal combustion engine, hybrid and full electric to provide our client with maximum freedom of choice. In e-building, we will also engineer and handcraft the strategic electrical component that are highly relevant to differentiating Ferrari's technology and performance. High-voltage batteries, electric motors and axles, in these, the full electric Ferrari requires new technologies, new components and processes, and e-building will enable us to keep our critical know-how in-house and maintain our competitive advantage in the years to come. Advantages of new e-building do not end years. It will also enable us to decouple people wise, the production of limited edition cars, such as Daytona from the development of new models. And this will allow us to place the research and developing team closer to manufacturing, shortening the product development phase and time to market. And here I would like to be very clear on one point. We did not realize the e-building with the aim of growing our volumes. Our ethos remains the same; quality, quality of revenues over quantity. On June 21, we completed the skeleton of e-building and installed the equipments. Now we are focusing on testing the processes and debugging the lines to start production of hybrid and ICE models from the beginning of 2025. For this achievement, a special thanks goes to all the colleague who have been able to maintain the e-building schedule despite all the difficulties that we experienced during these times. It has been not easy. But they made it happen by acting nimbly with focus and determination. During the quarter, we made several progresses, both in racing and lifestyle, creating stronger cohesion across our company's resources. Let's start with the racing world. In our second season, in the top class of the World Endurance Championship, we achieved an extraordinary success with our 499P at the 24 Hours of Le Mans. And this is second Le Mans victory for our upper cars. This outstanding result deserves huge praise and is a testament with exceptional teamwork of all colleagues in this perseverance. The same spirit and will to progress is vivid among our Formula 1 team. Scuderia Ferrari HP approached the 2024 Formula 1 season with the aim of always fighting at the front. We entered the summer break with encouraging signs. We scored two wins versus zero last year, and 50% more points per race compared to last year. The team remains focused and united and is pushing harder to continue to improve the performance of the cars. Our recent racing sports car event have also been the perfect stage to gather our most loyal client and showcase our lifestyle dimension. And this brings me on to my last point for today. We have recently been much more deliberate about including our lifestyle collections at our exclusive events, and sharing our latest creations with our community. The successful activation in Pebble Beach in Las Vegas last year were a first step. This year, at the beginning of May, we took a further step forward. We organized a series of engaging and unique experiences in Miami for our community. This encapsulated the elegance of our sports cars, the lure of Ferrari lifestyle and excitement of racing. This was more than just hosting events. It created a coherent, coordinated, and inclusive narrative across each of our three sources. A similar approach was also taken during the most iconic endurance race at Le Mans with the creation of a pop-up store at [indiscernible] Ferrari, which received very positive feedback from clients, resulting in improved sales and encouraging signs for the future. We are aware that Ferrari is an incredible, powerful and unique brand being extremely accessible on our side when you think of our sports cars, at the same time being very inclusive. If you think of our racing DNA and the millions of a brand enthusiast that we inspire all over the world. Among them, during the Formula One Grand Prix [indiscernible] to Ferrari enthusiast had a once in a lifetime opportunity to spend a night inside our iconic museum in Maranello, which was the setting for a unique Airbnb stay and experience not usually available to the public. We were able to create this activation by leveraging our existing assets. Our museums in Maranello and Modena and here for the first time we passed the threshold of 100,000 visitors in May alone, the Fiorano Restaurant and our historic Cavallino Restaurant. To conclude, the second quarter of 2024 has been full of significant milestones, and I believe this achievement marked continuation of our journey as we are driven on by our way to progress and the driver for excellence in everything we do, always keeping four wheels on the ground. And on this note, I hand over to Antonio to review the Q2 2024 financial results. Please, Antonio.

And good morning or afternoon to everyone joining us today. I start on Page 6, where we present the highlight of the second quarter. Continuing the trends from the first quarter, the growth rate of revenues and profitability outpaced that of our deliveries, mainly thanks to the enriched product mix and increased personalizations. Therefore, while shipments grew by less than 3%, revenues were up 16%, adjusted EBIT up 17% with a 29.9% margin. Adjusted EBITDA increased 14% with a 39.1% margin and such economic results led to a remarkable industrial free cash flow generation, despite higher capital expenditure and tax payments. Moving to Page 7, we review our shipments for the second quarter, which increased by 92 units. As already mentioned by Benedetto, we leveraged our order book visibility and production flexibility to design our product allocation across the different regions consistently with the development observed in each respective market. As a result, deliveries increased in EMEA, Americas, and Rest of APAC, while decreased by roughly 60 units in Mainland China, Hong Kong and Taiwan. The increase in deliveries was driven by the Purosangue, the Roma Spider and the 296 GTS. Additionally, we commenced the first deliveries of the SF90 XX Spider, the special series hybrid with a limited production run of 799 units. The allocation of the Daytona SP3 grew in the quarter compared to the prior year, but were lower than in Q1 in line with our plans. The shipments of the Roma and the special series 812 Competizione decreased, approaching the end of their lifecycle, while the SF90 Stradale and 812 GTS phased out. In the quarter, the hybrid share reached 48% in line with product cadence and mainly driven by the 296 GTS. On Page 8, you can see the net revenues bridge, which shows a 19% growth versus prior year at constant currency. The increase in cars and spare parts was the most relevant contributor driven by the richer product mix and country mix, as well as higher personalizations. In the quarter, personalization farther strengthened and almost 20% of total revenues from cars and spare parts, mainly supported by the Purosangue and Daytona SP3. Sponsorship, commercial and brand increased, thanks to new sponsorships related to our racing activities and improvements in lifestyle. The increasing sponsorships reflect the latest sponsors’ additions, including HP as the new title sponsor of Scuderia Ferrari in F1. Other revenues were almost flat with improved contribution from financial service activities substantially offset by the Maserati contract expiration. Currency net of edges in place has a negative net impact, mainly due to the adverse dynamics of the U.S. dollar, the Japanese yen, and the Chinese yuan versus the euro. Moving to Page 9, the change in adjusted EBIT is explained by the following variances: volume positive and reflecting the unit increase versus the prior year; mix and price, strongly positive, thanks to the robust product mix sustained by the Daytona SP3 and the few 499P Modificata sales; the increased contribution from personalizations and the positive country mix, mainly supported by the increased weight of the Americas. Industrial and R&D expenses were almost flat in the quarter. SG&A increased and reflected marketing and brand investments and the ongoing development of our digital infrastructure and organization. The events we had in Miami and Le Mans exemplify our brand investments, perfectly integrating the sports car lifestyle and racing source. Other was almost flat in the quarter. The increased contribution from new sponsorship and a new release of current environmental provisions was approximately €10 million were mostly offset by higher costs for racing, also due to better Formula 1 in season ranking. Lastly, the total net impact of currency was negative for €35 million. And as a result, the EBITDA margins stood at 39.1%. As a reminder, the exceptional EBITDA margin of 40% in Q2 2023 was supported by certain timing and other positive effect, which in part took place also this quarter. The EBIT margin reached 29.9% and benefited from flattish depreciation and amortization compared to the prior year as a result of the production cadence of current models. Turning to Page 10, in the second quarter, our industrial free cash flow generation was €121 million, reflecting the increase in profitability, partially offset by capital expenditure that are higher than last year and in line with the pace of development of our product as well as of the new infrastructure in Maranello. As previously mentioned, capital expenditure this year are progressing more linearly compared to our usual cadence due to advanced development of the product pipeline and the ongoing spending for the new paint shop. Tax payments and an increase in net working capital provisions and other primarily driven by higher inventory, which reflects both our production plans and the enriched product mix. At the end of June, the company was in a net industrial debt position for €441 million since the dividend payment and share repurchases occurred in the quarter more than offset the positive industrial free cash flow. Moving to Page 11, we revised upward 2024 guidance mainly to reflect the improved visibility on stronger personalization following the very solid result of the first six months. We are also projecting higher R&D expenses for racing and other innovation activities as well as for marketing and brand initiatives for the rest of the year. This leads us to confirm the EBITDA margin target for the year while upgrading the EBIT margin to reflect the operating leverage on G&A. The improved EPS also reflects the new estimate on the tax rate for 2024 now in the region of 19.5%, which benefits from the temporary coexistence of the two different patent box regimes. The strong profitability also turns into higher industrial free cash flow, notwithstanding the increased pace of our capital expenditure above the initial €950 million target also reflecting the updated timeline for the new paint shop, which has been accelerated compared to our plans as per the last Capital Market Day. To sum up and focus on the second half of the year, we therefore expect a positive product mix, even though to a lesser extent compared to the first half given the lower Daytona deliveries in line with our plans, the mentioned increase in R&D, OpEx and SG&A and higher G&A in line with the start of production of new models and the digital infrastructure. With respect to the quarterly pace, we confirmed the already flat softer Q3 intentionally designed in terms of volumes, model and country mix allocation to whole company in its transition to the new ERP, the Enterprise Resource Planning software for order collection, productions and management that will go live at the end of August. To conclude, the financial results that we present today underscore the solid fundamentals of our business and a flawless execution. Such results and the visibility that we enjoy give us renewed confidence to sustain this positive momentum and keep on delivering on our commitment. I thank you for your attention. And I now turn the call over to Aldo.

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

Thank you. [Operator Instructions] Our first question comes from the line of John Murphy of BofA S. Please go ahead. Your line is open.

Hi. Good afternoon, everybody. I do want to ask two maybe kind of relatively simple, simple but important questions. Benedetto, when you talk about the order book being full through 2026. That's sort of an indication that you know what your units are going to be or planning on what your units are going to be through the next two and a half years. I'm just curious as you know that and you plan for that. Is there just a much greater focus on price and mix with very slow growth in units? Or could we see maybe a little bit of an acceleration in unit growth and a slightly less emphasis on price and mix? I mean, how do you think about balancing those and sort of really the volume growth for the next two and a half years?

And the second question?

And the second question is the margins are bumping up against sort of the high end of the range of the 2026 outlook. Is there a way to maybe potentially think about recasting margin potential in the company really in light of the first question?

Okay. So I think the first one, the second that will – Antonio will have. John, thanks for your question. Coming to the first one is, we'll give – let's say what we see is an advantage in terms of mix and price and the slower growth. Okay, coming back to your first question. The second?

John, if I got your question right, in terms of the guidance and margin, this is very much driven by the development of our mix going forward. And obviously the incidents are of expenses. So if you look at Q2, I think of the rational for that is clear, but if we look forward to the second half of the year, I think there is additional costs that are partly seasonal that are denting into the continuation of the similar level of profitability. As to 2025 and 2026, 2026 is out there in terms of guidance and remains there. And 2026, we'll speak later on, beginning of next year.

Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Michael Binetti of Evercore ISI. Please go ahead. Your line is open.

Hey guys. Add my congratulations on a great execution quarter. A couple – just two questions for me. One on personalization. Can you help us understand the increase in personalization, I think you said almost 20%, maybe break down what's helping move that higher any headwinds? And I'm curious how much the mix of cars is influencing that and if the early shipments of the SF90 XX special models, are suggesting that personalization will be in line with averages or above as we move past 2Q. And then the second question is, as we think ahead to the EV next year, it's interesting to look back and see how the company has rolled out new technologies in the past. The LaFerrari introduced the KERS hybrid system and you guys chose to bring that out at a very high price, €1 million plus supercar price point. Conversely, the Purosangue you brought that out as a premium price road car with a higher unit count than the strictly limited LaFerrari. As you think about those two examples, what are the most important elements of the strategy that you think about in launching the EV?

I think the – let us start with the first one, the personalization. Michael, thanks for your question and the compliment go to all the team. The story of the personalization, we have this question several times. What we see and we are focusing in supporting the demand of increased personalization from our client. I would like you all to remember a couple of things. One, the personalization level is – does not depend too much on the model. It's about 20%. Clearly in absolute term, when you sell something that is more expensive in absolute term is bigger, but in any case is around 20%. And the second thing that I told I would like to share with you is that the dimension of the personalization that our clients like a lot is the carbon finish. We keep analyzing what is the take rate of the different optional that we offer and we see a clear dominance of everything that is carbon finish. And we have been looking at this both inside in the car and outside the cars. So we are putting our supply, we are strengthening support, strengthening, let say the supply chain in a way that we can accommodate the different client needs. So this is about the personalization. These are the two facts that are supported by data analysis or what we see in terms of behaviors of our client. The second instead is about EV strategy. Here I would like to remind that it was May 2022 before the CMD, when we had the several discussion in the company. It was clear at the time that it wouldn't make sense to push only one kind of propulsion. Technological neutrality is a key when you have, let's say, the market is not – does not know where to go. So for us, making the EV is a way to show our client that whatever is the technology we can harness in a unique way to deliver them unique driving trails. So one message that I said when I made the introduction is that we continue to believe in technology neutrality. We are acting in the direction and our plan – let's say our plan of EV introduction is as it was. We unveiled the car in Q4 2025. And we believe we are able, we will be able to deliver unique driving experience to our customers with any kind of car that we're going to make in the e-building.

Thank you very much guys.

Thank you.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of George Galliers from Goldman Sachs. Please go ahead. Your line is open.

Yes. Thank you very much for taking my questions. Obviously it sounds like, you are seeing very strong demand still for all of your products and obviously you have a very healthy order book, obviously just mindful of what we're hearing other luxury companies talk about as you've built up the order book of the Dodici Cilindri. Have you seen any areas where perhaps the market has not been as strong as you might have expected and potentially any areas where that's been more than compensated for by very high demand? Is there any sort of geographic development that has caused you to raise an eyebrow? And then the second question I had was just with respect to the very strong price mix during the quarter. Can you give us any insights into how much of that was from the contribution from Daytona SP3 and the 499? And with respect to the 499, if you are able to provide any sort of insight around the volume in the quarter, the volumes we should expect over the remainder of the year, I think that would be very helpful. Thank you.

Thank you, George. I will take the first one. The second, Antonio will reply. So the first one maybe, the question is about the Dodici Cilindri order book, right? That's what you said, Dodici Cilindri. So I can tell you that the traction of these – of both models is very strong across all the countries. There is only one country, but we knew already by the sign one country where the order book is not so strong like in other countries because it's Dodici Cilindri because there is, let me say additional tax burden that is China. But remember that when we show you the – when we share with you the Capital Market – during Capital Market Day, the plan for the four years together with the technological neutrality. We said another important thing because of the product pipeline we were developing. We said that China would've been always lower than 10% rate of China. So I would say no surprise in this respect. I would say instead one thing that the traction of the Dodici Cilindri has been stronger. I would say even much stronger than the two predecessors in the same category. I'm talking about the 812 GTS and the 812 Superfast. So we are happy about the traction of this model with a different client that I've seen. And the second is for you, Antonio.

Yes. Hi, George. During the quarter, we shipped 74 Daytona. That's why I said less than in Q1 and obviously higher than last year. And going forward, you remember we said that there's decline over the course of the second half in order to have a sort of average for the year, which is likely above 60 per quarter. The 499P, sorry, we shipped five in the quarter. There is not to be expected and even pace of delivery going forward, but more or less that would be the regionally four to five, depending on the quarter, the client.

Fantastic. Thank you very much.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Thomas Besson of Kepler Cheuvreux. Please go ahead. Your line is open.

Thank you very much for taking my questions and congratulations on the numbers. I'd like to discuss with you the possibility of seeing your averaging prices moving even higher or not in the second half. I mean, I was impressed by the step up in Q2 versus Q1. With what you said, we should expect a substantially lower number of SP3. But a much higher level of Daytona and XX, I guess. Could you help us assess whether the average price in the second half could be higher than the first half or not. And also mention the impact of the declining China share on that calculation. That’s the first question. And the second, your SF Ferrari is finished now. Could you talk about the expected evolution of the hybrid share in the coming quarters? It has reached a high level driven by now the 296 GTS. What should we expect in the coming quarters? And when should we expect you to release a new hybrid car?

I’ll take the second, Antonio will take the first. Here if maybe I would like to share with you one important point. Today, when we – you see the number of the share of the cars hybrid as I see, more or less we are around 50/50. Well, I think that there continues to be a strong traction for our hybrid model. And just yesterday I was with a few clients that they were extremely happy about the 296 GTB compared with the 458. It was thermal. And so what I want to say is that we expect the traction of the hybrid going forward in the same level that is as it has been so far. And we start to see also some positive comment about the initiative we launched at the beginning of this month, sorry, the past month in July when we extend also the warranty to the high voltage battery of the hybrid cars. So we don't see any, let's say, strange sign on hybrid. On the contrary, we see a strong positive interest and attention and driving trails that our clients are experiencing when they drive this hybrid car. So that's I think the second. Then Antonio…

The previous numbers. Anyway the second in terms of ASP for the second half of the year, I would expect it not to be not very different, maybe slightly lower compared to the first half. While with respect to the – and this is mainly due to the fact that Daytona is going down in terms of number of shipments. There will be some more SF90 XX that this will be growing. We have delivered until now few tenths of this car. There will be in the region of 100 or slightly more of this in the second half. But overall, the net impact should be the one that I mentioned.

Thank you very much.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Henning Cosman of Barclays. Please go ahead. Your line is open.

Yes. Thanks so much for taking my question. I have one question on personalization, please. I believe at Q1 stage we talked about a level of slightly higher than 19%. And at the time you said it was above average what you're expecting going forward. We are now talking, I believe, more like 20%. And you are not talking about above average anymore. So is it fair to say that at this point the expectations for personalization have shifted up and you're now expecting more sustainably a level of 20%? And the second question perhaps on residuals, I know we've been talking about residual normalization. If you could just share your latest observations and thoughts. I know you think that residual value should start to normalize to a greater degree than they have perhaps during the COVID and semiconductor period. Do you think at all that could affect your ability going forward to price successor models as large a markup as you have currently done once your buyers start to consider perhaps a more normalized development in residual values? But also more broadly, any considerations you would share around residuals will be greatly appreciated? Thank you very much.

Henning, so the first one, personalization, I mean the forecasting, the behavior of the client, you know very well is not easy. What we can, what the only thing allow me to say the best antidote or the best way to manage this is to become, to be agile, to accommodate the needs, to have some flexibility. That's the reason why we are so much proud about our e-building, because of the flexibility that allows us. So for the rest of the year, we expect in any case something that is in the range of 19%, it can go up a little bit 19.5%, but that 19% is what you can consider also for the rest of the year. That's what we are planning for. The second question instead – is a good occasion to clarify a couple of points. The first one, the residual value remains strong. There are some geographies, okay? I can mention, for example, UK, well, let's say they're a little bit weaker. But I can tell you that we have been analyzing 20,000 transactions. 20,000 transactions that have been happening in the last years, and we have seen that there are the functional personalization that are keeping their value. Then there are some personalization like the painting, some special paintings, something that is not, let's say, maybe not so appreciated by the second client that are a little bit impacted. But I can tell you that, let's say the trend remains strong. And maybe this is a good occasion to clarify everyone. Sometimes you keep reading that the people are afraid about the residual value of the hybrid cars. Well, we have been investigated. We have been working and listening to our client. We have been working in the last seven, eight months, and we announced that this warranty program that starts in July this year for all our hybrid cars in a way that we gave the peace of mind to all the clients that have the hybrid. So basically the battery, it is like many others, let me say, object in the cars and is protected by warranty. So thanks for your question.

May I ask you the follow-up question?

Sure.

To Antonio, please. Sorry, Antonio, you said some of the positive one-off effects in the bridge in the other bucket at the time of Q2 2023, I think it was. When you were talking about EBITDA, you said some of these were also present this quarter. Could you be a little bit more concrete on that, please?

Absolutely. Sorry, I thought you remember. Anyway, last year, in the second quarter, we had a release of current environmental provisions. And also we adjusted our expectations for the ranking of the year to the second place. While this year we had a similar release of environmental provisions and we maintain for a time being our assumption in terms of being first in Formula 1.

Thank you so much.

Is it clear?

Yes. Thank you.

Welcome.

Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Stephen Reitman of Bernstein. Please go ahead. Your line is open.

Yes. Thank you, again. Also, congratulations on your results. I had a question again on personalization. I think you've said in the past that Purosangue surprised you in the sense that demand was much stronger than you'd anticipated and you close the order book then reopen it again and it stretches out very far. You said that I think in the first quarter the personalization rate was very heavily influenced by collectors who were personalizing in a very high level. And maybe I had the impression you were thinking maybe this rate of personalization would not continue once these collectors had been satisfied. Maybe you could comment on what the personalization rate is looking like on the Purosangue as we go through – as went in second quarter and the rest of the year? And secondly, again, congratulations and I think it was a very good idea with the extended warranty program for the hybrid components addressing that concern. What is actually the feedback you've actually been getting from that already? It's obviously not many cars are yet at the end of their warranty on the vehicle yet. But have you already seen some take up of the plan? Thank you.

Thank you, Stephen. As I said, also the compliments go to all the team here. So let's start with the personalization. You are right. In Q1, we see the collectors, let's say pushing auto personalization. What I can tell you, I don't know if it is a sign also for the future or not. We'll see, but we see also that the new clients are particularly keen in personalization. So the good point is that we're collecting a lot of data. We are analyzing them. While we can say with certainty that the carbon finish is definitely something together with the painting, it is a personalization that shows a clear trend, a clear appeal for all the class – for the client. We start to see also that the new client. In Q2, we start to see the new client are appreciating and want to personalize more and more the car. But we don't feel confident yet to say that this is a trend like it is for collectors. We need to collect more data. That's the reason why I told you before that we expect personalization to be always in the range of 19%. We'll see. We'll update you as soon as we understand, we pick up a signal. The second instead, we've been working around seven months to set up this idea of high voltage battery warranty. And as you can understand, I mean this is online since 27 days. And I can tell you that the feedback of the client, some feedback of the client were very positive because they understand that in the cars there is something that is a limited life and we Ferrari realize it and we apply this warranty. So the first feedback are positive. We'll see what is the take rate in the quarters to come, also, because the first cars that are approaching the end of the five years are SF90, 19 plus five is 24. So we will keep you updated, Stephen. The first feedback are very, very positive because the people understand that they can – we understand and we care about the peace of mind of our client.

Can I just ask one more question please as well? And that is, obviously there've been concerns about the general luxury market. But we saw last week very strong results from Hermès in the iconic leather and saddlery business, which really defines the brand. What are you seeing, what feedback you're getting from your dealers in terms of footfall, people visiting the showroom and the series of interest? How would you say that compares to in any period you've prefer to compare it against?

Look, we don't see any sign of weakness. We see there is no trend at all introduction of visit. I can tell you that after the Dodici Cilindri announcement in Miami, we had a lot of events all over Europe. I've been attending personally several of them because we organized them close to the racetrack in Fiorano and they were full of clients. The client we were inviting were in range of 100 per night. And we were offering also dinners. Most of the time they were spending cost to the cars. They did not care about what we were offering for dinners. And so there is no weakness sign that is perceived either by us directly or by our dealers. I can tell you that there are also some clients that they want that pushing us to have two, both for the Dodici Cilindri. So let's say, we keep monitoring obviously, but we don't see any sign or weakness in this respect.

Very clear. Thank you very much.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Martino de Ambroggi of Equita. Please go ahead. Your line is open.

Thank you. Good afternoon, everybody. Martino de Ambroggi from Equita. Again, on mix. [Indiscernible] is estimating that probably one-third if not more of the mix effect in the first half this year came from the growing personalization. This is my first question.

So I'm not able to give you confirmation. I think – probably is not far away from reality, but I'm not able to confirm as of now. We'll follow-up on this.

Okay. And I understand you do not provide future guidance for the weight of personalization. But I was wondering if you had, you suffered any kind of a constraint and you were not able to satisfy all the customer's demand in the past because you are increasing the flexibility with the new e-building. So presumably you are ready or you expect some, I don't know, or maybe both to catch more than 20%?

Look, I understand you are trying to understand what is the future. What I can tell you is that, if someone added the right recipe in the world would be much richer. Today, we are planning based on the data we have. What I can assure you, Martino, is that, we have been working with our suppliers for the personalizations that are more let's say appreciated by our client and we put them in place to be agile, okay. Because I mean, just yesterday for example, we were analyzing in detail with the commercial team and also the production team what is the take rate. And the carbon, the carbon is clearly an area that – the carbon finish is an area of interest. We are sometimes in the past, the carbon, the client, the supplier, sorry, were not ready as and agile like the client wants. Now we are improving and strengthening their capability of delivering us what we need, what the client needs. This is what we can tell you. For the future is what I said before. That's what we were planning for.

In the meantime, I just checked the number and actually are not far away from reality assuming one-third of the price mix effect in H1 comes from personalization.

Okay. Thank you very much.

You're welcome.

Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Anthony Dick of ODDO BHF. Please go ahead. Your line is open.

Yes. Hello, and again, congrats for the amazing results. My first question is on the Dodici Cilindri. Great to hear your comments on the order momentum versus previous generations. I was just wondering if you might share the length of the order book of that car. You haven't said it's sold out, so I'd assume it's less than two years, but if you can confirm that, that would be very useful. And then related to this question, during Q1 results, you mentioned order book normalization, because most of your cars were sold out. So now with this new car, is the order book higher than Q1, broadly the same or lower? And then if I have time, I could squeeze a second question on ASP. Also, very impressed by the sequential ASP increase even despite lower Daytona and even stripping out the 499P. So to put this in the context of your previous comments, you expected a 10% ASP increase for the full-year. Is this still your expectation or should we expect something higher? Thank you.

Look, the first question is the order book depends a little bit if it is Dodici Cilindri, the Coupe or the Dodici Cilindri, the Spider because we start with the production of Dodici Cilindri Coupe. And this one is more than let's say 20 months. Consider also one point that for Dodici Cilindri Spider, it’s more than two years. I consider that usually we did the – you may remember we said that with this launch of the cars, we did an experiment because we launched it together for the first time in our history. We launched today together the Spider and the Coupe. And we see that the ratio between Coupe and Spider. The Spider is winning more around 60%, 65% for the order that we have in the books already. So this is the first question. The second question is, we see, let me say is for sure the orders are coming from the model that are not sold out. So the model that are not sold out are these two. So these two will continue to grow the order book and order book portfolio. And then you said the ASP, what is it?

Yes. Whether the ASP – the first one on the order book. I think it's fair to say that it remain flat because basically we had the expected decline of the orders on the previous portfolio since we are delivering the new – we are delivering the cars and at the same time, we are growing in terms of the Dodici Cilindri. I mean, please consider that depending on the model that we launch, the order book may go up or down. If it is a limited volume car, obviously it does not add too many volumes to a portfolio where we keep on delivering at the same pace. To the opposite, if we add a volume car, it's going to be different direction. In terms of the ASP plus 1% versus in H2, I think, we keep on confirming what is the expectation for the full-year, having an average ASP about in the region of 10% over last year.

Okay. Thank you very much.

Thank you.

We will now take our next question. Please stand by. Our next question comes from the line of Monica Bosio of Intesa SanPaolo. Please go ahead. Your line is open.

Good afternoon, everyone. Most of my questions have been already answered. But I have two left. One is a general curiosity. In the previous conference call, Benedetto you say that 74% of the new cars were sold to existing clients. That's fine. I'm curious about the new Ferrari SP. Any color on the pattern of the new Ferrari SP could be helpful. How is the distribution by country age powertrain? You already told us that the personalization appeal is quite high. So any colors would be helpful. And the second question is for the housekeeping, in the second quarter there was no impacts from the financial charges. I was wondering if Antonio can you give us rough indication by year end? Thank you very much.

Monica, thank you. So I can tell you this, I think that the share among new client and repeaters, let me say does not change so much, especially when you talk quarter-over-quarter. If we want, I mean we keep analyzing what is the demographic, how is changing the client profile that are approaching. One thing that we see is that also the new client like to personalize a little bit more the cars. But also here, Monica depends on the geography. It depends a little bit on the geography. There are some places where the personalization level is high. Some others where instead it's lower. So also the ratio of repeater and new client depends a little bit on the model. Maybe just as a callers, I can tell you that there are some cars that are in higher percentage of [women], okay? They go to 5% of them even to 7%. Some other car a little bit lower. But there is not a clear sign.

Okay. And in term of country distribution and the powertrain requirement?

No sign in terms of country, no sign in terms of age or so. No sign in terms of age, No, because one thing – one thought was the following. Maybe we have been analyzing the correlation between the preference of the model, the powertrain, and the age zero. Because we thought that maybe the people that are 55, they prefer the ICE instead of hybrid. Not at all true. I mean, there is no correlation.

Perfect. Very clear. Thank you.

On the second one, Monica, you may assume a number not far away from that of last year.

Okay, perfect.

So in the region of 15, very small.

Perfect. Thank you, Antonio.

Welcome.

Thank you. There are no further questions. I'll now hand over to Benedetto Vigna for closing remarks.

Thanks, all. Thanks for your time today and also for your questions. This strong Q2 results and also the continuing desirability of our brand all over the world, will allow our confidence for the development of the year and for the year to come. And I wish you a good afternoon and also relaxing summer break for the ones who are going to have it. Thanks again. Thanks for your attention.

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