Ferrari pushes back profit goal amid pandemic

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Ferrari pushed back its profit target for next year after delaying investments and some deliveries in the pandemic but stuck to its timetable for a first electric car by 2025.

The luxury carmaker famed for its ‘Cavallino Rampante’, or ‘Prancing Horse‘, badge had predicted adjusted core earnings of 1.8-2.0 billion euros ($2.2-$2.4 billion) in 2022.

But on Tuesday, the Italian company said it was postponing that target to 2023 because of the pandemic, even though it expects results to grow this year and next.

“We expect the prudent steps we took in 2020 and are continuing in 2021 to adjust our expenditure in response to the COVID-19 emergency will postpone by one year the achievement of our year-end 2022 guidance,” Chairman John Elkann said.

In a call on first-quarter results, Elkann told analysts the pandemic had also taken its toll on Ferrari’s drive to diversify its brand into other luxury areas and on its Formula 1-related activities.

A Milan-based trader said the target delay was bad news for Ferrari’s highly-valued shares. “This has raised concerns that the COVID-19 impact on the company could be greater than expected,” he said.

Ferrari shares closed down 8% in Milan.

But the company said excellent quarterly results, robust net orders and a record order book made it confident of reaching the top end of its 1.45-1.5 billion euros adjusted earnings forecast for this year.

“Our 2022 results will be better than 2021, which … we believe will be very strong,” said Elkann, the scion of Italy’s Agnelli family, which controls Ferrari through its holding company Exor.

Morgan Stanley analysts said the delayed guidance did not change Ferrari’s long term challenges, such as the industry shift towards electric vehicles.

It “leaves plenty of room for new management to discuss the potential beyond 2023 including an expanded model range,” they said.

Elkann, who confirmed Ferrari would launch its first SUV next year, the Purosangue, said an electrification drive was already included in the group’s capital spending targets, without the need for any additions. Ferrari last month promised a first full-electric model for 2025.

The company, which is still searching for a permanent replacement for former CEO Louis Camilleri, who stepped down in December, repeated it was making good progress with a shortlist of strong candidates.

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