After A Strong 2017, Ferrari Aims To Double Profit

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MILAN (Reuters) - Sportscar maker Ferrari (RACE.MI) is looking to double core earnings to 2 billion euros (1.75 billion pounds) by no later than 2022 and become debt free a year earlier, betting on firm demand for supercars and new launches, including hybrids and an SUV.

FILE PHOTO: A partially covered Ferrari car is pictured before the opening of the Frankfurt Motor Show (IAA) in Frankfurt, Germany September 11, 2017. REUTERS/Kai Pfaffenbach/File Photo

CEO Sergio Marchionne does not expect to double deliveries, but aims to keep pushing technological boundaries, launch new special editions and expand a customisation programme to drive profit margins, which stood at 30 percent last year.

Ferrari is also expanding its product range to vehicles that appeal to a larger demographic. Hybrids will be part of the portfolio from 2019, and an SUV is expected to be launched by late 2020.

Downsizing engines was a possibility in future as long as Ferrari’s uniqueness is preserved, Marchionne said.

“We are absolutely convinced that these numbers are doable,” Marchionne told analysts on a conference call, adding that profit margins could rise to at least 36 percent by 2022. “The house is firing on all cylinders, we are in a good place.”

The Italian group’s medium-term outlook helped push its shares up more than 8 percent at one point on Thursday. They closed 7.5 percent higher at 103.2 euros.

FILE PHOTO: The steering wheel of a Ferrari at a car dealership in Singapore June 1, 2017. REUTERS/Thomas White/File Photo

Ferrari’s forecast suggests an average annual core earnings growth of 14.1 percent, or 17.9 percent, if it achieves the target a year early, said George Galliers, an analyst at Evercore ISI.

“This type of earnings growth is unlikely to be seen by any other automotive OEM over the coming five years,” Galliers said.

However, he said the stock was not cheap and it remained to be seen if projected growth would be enough to attract investors over the coming months.

After being spun-off from Fiat Chrysler (FCHA.MI) two years ago, Ferrari (RACE.N) has sought to show it can increase profits without the backing of its parent. The group has clocked up several years of record earnings, helped by a number of special edition models.

Ferrari reported on Thursday an 18 percent rise in 2017 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to 1.04 billion euros, in line with analysts’ expectations and helped by sales of its 12-cylinder models. They include the GTC4Lusso and the 812 Superfast, the company’s most powerful model to date.

For this year, Ferrari forecasts an adjusted EBITDA of at least 1.1 billion euros and shipments above 9,000 vehicles, up from 8,398 vehicles in 2017.

Marchionne sees no impact from currency fluctuations, saying Ferrari was strong enough to set its own pricing.

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