Ferrari N.V. — FY2020 Form 20-F
Reporting period: Year ended December 31, 2020. This annual filing does not provide standalone fourth-quarter financial results. Financial statements are audited and prepared under IFRS, in euros.
Business context and financial performance
Ferrari designs, manufactures and sells luxury performance cars globally, alongside brand, racing and financial-services activities. COVID-19 caused a seven-week production suspension, delayed deliveries and disrupted Formula 1 and brand activities.
| Metric | FY2020 | FY2019 | Change |
|---|---|---|---|
| Shipments | 9,119 cars | 10,131 | Down 10.0% |
| Net revenue | €3,460 million | €3,767 million | Down 8.1% |
| EBIT | €716 million | €917 million | Down 21.9% |
| EBIT margin | 20.7% | 24.4% | Down 3.7 percentage points |
| Net profit | €609 million | €699 million | Down 12.9% |
| EBITDA | €1,143 million | €1,269 million | Down 9.9% |
| Operating cash flow | €838 million | €1,306 million | Down €468 million |
| Free cash flow | €129 million | €600 million | Down €471 million |
Cars and spare-parts revenue declined 3.1% to €2,835 million. Sponsorship, commercial and brand revenue fell 27.5% to €390 million, primarily reflecting fewer Formula 1 races and lower store and museum activity. Engine revenue decreased 24.0% to €151 million, largely due to lower Maserati engine orders and reduced Formula 1 engine-rental activity. Ferrari cited a positive product mix and price contribution, including Monza SP1 and SP2 deliveries, which partly offset lower volumes.
Liquidity, debt and capital
- Cash and cash equivalents were €1,362 million, up from €898 million. Total available liquidity, including undrawn committed credit lines, was €2,062 million versus €1,248 million.
- Total debt rose to €2,725 million from €2,090 million. Net debt was €1,363 million versus €1,192 million; net industrial debt, excluding financial-services net debt, was €543 million versus €337 million.
- Ferrari issued €650 million of 1.5% notes due 2025, receiving net proceeds of approximately €640 million. It also secured additional committed credit lines; €700 million remained undrawn at year-end.
- Capital expenditure was €734 million, compared with €706 million. Share repurchases were temporarily suspended effective March 30, 2020; €130 million of repurchases occurred during the year.
- The 2020 dividend of €1.13 per common share was approved. A €0.867-per-share dividend, approximately €160 million in total, was proposed for shareholder approval in 2021.
Material changes and unusual items
- COVID-19 reduced production, shipments and Formula 1 and brand-related activity. Ferrari resumed full production by May 8, 2020; management said the business partially recovered in the second half.
- Costs declined less than revenue, and fixed costs continued during the shutdown, contributing to the lower EBIT margin. R&D expense was €707 million, up from €699 million, including higher amortization of capitalized development costs.
- Net profit included a non-recurring €75 million net tax benefit from a partial tax step-up of trademarks. Reported EPS was €3.29; adjusted net profit was €534 million and adjusted EPS was €2.88.
- Operating cash flow and free cash flow fell substantially. Management attributed the pressure to lower earnings, the pandemic-related disruption, reduced customer advances for Monza models, increased inventories and higher taxes paid.
- Former CEO Louis Camilleri resigned in December 2020. Executive Chairman John Elkann served as interim CEO while the Board searched for a successor.
Outlook, risks and contingencies
Ferrari gave no quantified 2021 financial guidance in the provided filing text. Management expected pandemic effects to continue in 2021, with uncertainty around Formula 1 race schedules and a gradual recovery in brand activities. It reported increased inventories to mitigate supply-chain disruption and continued investment in new models, hybrid technology and future product development.
- Key risks include further pandemic disruption, volatile luxury-car demand, preserving brand exclusivity while increasing volumes, product-launch execution, hybrid and electric technology costs, emissions regulation, foreign-exchange movements and reliance on suppliers and Maranello/Modena facilities.
- Formula 1 performance and commercial income are uncertain; Scuderia Ferrari finished sixth in the 2020 Constructors’ Championship.
- Warranty and recall provisions totaled €107 million at year-end, including €6.8 million for the Takata airbag recall. The auditor identified warranty and recall provisions as a critical audit matter.
- Legal proceedings include vehicle safety, emissions, contractual, intellectual-property and warranty matters. Outcomes and possible losses are uncertain; the filing states some matters could exceed recorded provisions.
- Ferrari reported no material impairment charges for goodwill or other long-lived assets. The auditor issued an unqualified opinion on the financial statements and internal controls.
Important facts for investors to verify
- Separate underlying performance from the €75 million one-time tax benefit; compare reported net profit and EPS with adjusted figures.
- Assess the durability of cash generation after the sharp decline in operating cash flow and free cash flow, alongside higher industrial net debt and capital spending.
- Track the pace of shipment recovery, order-book strength, product mix and regional allocations, especially the decline in China, Hong Kong and Taiwan shipments.
- Monitor 2021 pandemic, Formula 1 and brand-activity developments, plus supply-chain availability and any updated management guidance.
- Review warranty and recall estimates, outstanding litigation and emissions-compliance exposure, including the status of regulatory petitions and requirements.
- Confirm the CEO succession outcome and evaluate governance and related-party considerations, including the overlap with Stellantis and Exor.