Good day and thank you for standing by. Welcome to the Ferrari 2022 Q3 Results Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nicoletta Russo, Head of Investor Relations. Please go ahead.

Thank you, Sharon, and welcome to everyone who is joining us. Today, we plan to cover the group's Q3 2022 operating results 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 the 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. With that said, I'd like to turn the call over to Benedetto.

Thank you, Nicoletta. Thank you, everyone for joining us today. On behalf of everyone at Ferrari, I would like to begin this call by remembering with gratitude Mauro Forghieri, who has passed away. He had such an important impact on Ferrari's history and motor racing. We will always remember his passion and determination that drove the evolution of our company over the years. With Mauro, we won no fewer than 11 F1 drivers and constructors championship titles and five endurance titles. Our thoughts and our prayers are with his family at this sad time. And now, let's go to the third quarter. The third quarter has been very, very strong with all key P&L metrics up double-digits versus last year. Revenues increased 19% with shipments up 16%. EBITDA and EBIT were up 17% and 11%, respectively. And industrial free cash flow generation was very sound. The very robust financial results we present today are further proof of the strength of our business and that's why we revised upward our 2022 guidance on all metrics. The current macroeconomic scenario brings new challenges on a global scale. This is true for us and this is true for our partners. Indeed to guarantee smooth production, we are supporting our supply chain with tangible measures. Moreover, as we said in the last call, we have taken action on pricing to adequately react to cost inflation, focusing on the following three areas: one, price definition of new models; two, personalization offering; and three, mid-single-digit price increase on selected models and markets. Having said that, we continue to enjoy a very strong momentum with a remarkable order intake in the quarter, considering that our clients could order only a few models. Such a positive trend is visible all over the world. Since last time we spoke, a quarter ago, four important events took place, receiving large enthusiasm from our clients. Firstly, the Purosangue World Premiere; secondly, the Cavalcade Classiche; thirdly, Esperienza Ferrari; and lastly, several lifestyle initiatives. Let's start with the World Premiere of the Purosangue in Tuscany. We hosted 2,400 of our most loyal clients from all over the world at Teatro del Silenzio in Lajatico. We promised our clients something new unlike any others, a true sportscar able to deliver the same driving thrills as our most extreme models and we delivered exactly on that promise, designing and engineering the Purosangue as an authentic four-door, four-seater Ferrari sports car. There was no better reward for the entire team than to see clients wonder in front of the Purosangue. Their reception was hugely enthusiastic and they praised its performance, the design and driving thrills. On performance first, they welcomed our most iconic and powerful V12 engine with a brand new configuration, which delivered 725 horsepower. Moving to design, they were surprised to see the roominess on board given the compact size, the driving position typical of a sports car close to the floor and reclined, the welcome door solution, which enables easy ingress and egress, and the electrochromic glass roof that can be added during personalization of their vehicle. Finally, yet importantly, the promise of impressive driving thrills further enhanced by the active suspension technology, which makes its debut on this model. We talked about this technology at the Capital Market Day. With all that said, I know you all are curious about how many orders we already have and how long the order book is. But you also know that we do not provide this kind of detail. Trust me, it is unlike any other. It is way above our most promising expectations. And now after Purosangue, let's talk about the second important event of the quarter, Cavalcade Classiche in the Dolomites, featuring 65 vintage Ferraris and their owners from all over the world. The cars paraded through the towns of Trentino Alto-Adige embodying key moments in Ferrari's 75-year history. This unique event is designed on one side to bring owners together to share authentic and memorable experiences; on the other, to create a single community united by its passion for Ferrari. And now the third event, Esperienza Ferrari, based at the heart of the Fiorano racetrack, where we created a unique and elegant space for our clients. Over five months, we hosted 1,250 clients, of which more than 40% were new to Ferrari and organized 2,500 test drives to let them feel the driving thrills unleashed by the 296 GTB. As I told some of you during our latest roadshow, this memorable experience is also open to our Ferrari people. And in fact more than 500 employees have so far enjoyed it, feeling even more connected to Ferrari. And to conclude on the events held in Q3 after Purosangue, Cavalcade Classiche, and Esperienza Ferrari, let's focus on the lifestyle pillars. We launched the first product of our partnership with Richard Mille, an ultra-flat watch limited to 250 units, which embodies the shared values between both brands combining deep engineering know-how with cutting-edge state-of-the-art innovation. At the Monte Grand Prix last September, a special Giallo Modena apparel and accessories collection was launched to celebrate our 75th anniversary and this series of limited edition items in yellow sold out in the online stores in a few hours. And lastly, during the last fashion week in Milan, our lifestyle team showed on the Teatro Lirico stage the Spring/Summer 2023 fashion collection receiving international praise. This new collection centered around the theme of dreams was inspired by the timeless values that have turned the Ferrari dream into reality. And talking about dreams, let's remember that the Ferrari dream has its roots in racing. And so let's recap together where we stand in the various categories in which we compete, the achievements we have delivered, and the new opportunities ahead of us. Let's start with Formula 1. Last time when I was talking here, I said we were fighting for the championship. While we have returned to being competitive this year, we cannot be satisfied with this year's results. Now we focus on the last races of the season and in preparing ourselves in the best way possible for the next one. In competition GT3, we celebrated the 500th victory of the Ferrari 488 GT3, which makes this model the most successful Ferrari racing car ever, an extraordinary record and the previous legacy that will pass to the new Ferrari 296 GT3 due to make its track debut at the 24 hours of Daytona next January. Such success in competitive GT3 is coupled with the victory of Ferrari in the series with both drivers and team wins. Lastly, we hosted our Finali Mondiali at the Imola racetrack just a few days ago. The feast of high-performance racing celebrated the final event of our sport activity together with our clients, fans, and employees. 38,000 motorsport enthusiasts gathered to share their passion, making this moment the perfect stage for the unveiling of the Ferrari Le Mans Hypercar. 499P is the name of this fantastic car. These new cars mark Ferrari's return to the FIA World Endurance Championship's top class next season exactly 50 years after we last fought for outright victory in that championship. And now, it's time to update you on our ESG actions that are very important in our plan. In our journey to reach carbon neutrality by 2030, we have already implemented the one-megawatt fuel cell installation and the partnership with Climate Seat announced at the Capital Market Day. In addition to this, the team has been deploying three further initiatives during this month. Firstly, in line with our plans, we are installing additional new photovoltaic panels on the roof of the Maranello buildings, delivering a total power of approximately 1.5 megawatts by year-end. This will be operational by the end of next quarter, and I will update you in the next call. Secondly, we planted the first trees within our forestry initiative Bosco Ferrari in Maranello. The first area of woodland spans six hectares out of an overall 30 hectares to recreate an ecosystem with significant environmental benefits, and we are seeing increasing interest from many Italian municipalities to join this initiative, which makes us very, very proud. Thirdly, in addition to our plan shared at the Capital Market Day, we are continuing to streamline our production processes and to identify actions to reduce energy consumption and CO2 emissions. These efficiencies are possible thanks to the ideas, awareness, and action of the Ferrari people. Here I would like to give you a couple of examples. Thanks to the adoption of new filters in our foundry, we are reducing our scope three upstream carbon footprint by 1% and saving more than 250 tons of aluminum per year. No CapEx required, only brain power. By recovering the heat dispersion in our engine testing process, we reduced the natural gas usage by approximately 2% of our yearly consumption. Finally, let me highlight two important achievements related to our people and the next generation. On one end, we received the confirmation of the equal salary certificate in Italy and North America. This is a testament to our commitment to an inclusive work environment where the importance of merit is guaranteed to attract, retain, and develop the talent that will accelerate Ferrari's innovation in the future. On the other hand, we inaugurated the e.DO learning centers at the Fermo Corni higher education institute in Modena. Promoting education is a core part of Ferrari's ethos and this relationship with the local community. The new laboratory aims to help students enter the world of science and technology, which is an investment in their futures. And now, I will hand over to Antonio to review in detail the Q3 2022 result.

Many thanks, Benedetto. And good morning or afternoon to everyone joining us today. Let's start on page 7 with the highlights of the third quarter. Another very strong quarter indeed with double-digit growth on key metrics. Shipments were 3,188 units, up 16% versus the prior year. Group net revenues were €1.250 billion, up 19%. EBITDA reached €435 million, up 17% year-over-year with an EBITDA margin of 34.8%, lower than last year given the absence of the Ferrari bond. EBIT was €299 million, up 11% with an EBIT margin of 23.9%. Percentage margins were in line with our expectations, mainly reflecting the product mix and D&A evolution. Net profit came in at €228 million, up 10% versus the prior year, resulting in a diluted EPS of €1.23 compared to €1.11 in Q3 2021. The industrial free cash flow generation in the quarter was €290 million, which implies a cash inflow for the nine months close to €600 million, almost €100 million higher than last year. Turning to page 8, you can see the details of the Q3 shipment. The product portfolio in the quarter included seven internal combustion engine models and three hybrid models, representing 81% and 19% of shipments, respectively. As mentioned by Benedetto, in the quarter we were continuing to serve an impressive order book across all models. Deliveries increase were mainly driven by the 296 GTB, which was in the ramp-up phase along with the A12 competition. The Ferrari Portofino M and F8 family continue to sustain deliveries growth, partially offset by lower contribution from the SF90 family. There were no Icona deliveries in the quarter as the Ferrari Monza phased out in Q1 this year. Geographical locations were driven by product cadence. Mainland China, Hong Kong, and Taiwan continued to post double-digit growth versus the prior year, reflecting the strength of the demand and representing approximately 14% of our total shipments in the quarter, 11% in the nine months. As a reminder, such a strong performance in the region represents for us a positive in terms of absolute profitability, but it also implies margin dilution linked to duties and consumption tax. On page 9, you can see the work of our group net revenues, growing 13% at constant currency. In Q3, we consolidated the trends already explained in the previous quarters. Cars and spare parts driven by higher volumes and personalization with personalization were at around 18% in proportion to revenues from cars and spare parts. Engines decreased due to Maserati. Such supply agreement is approaching its expiration in 2023. Sponsorship, commercial, and brand reflected the better prior year Formula 1 ranking and the contribution from lifestyle activities led by retail sales and museum visitors despite lower sponsorship. Currency had a positive impact, mostly related to the US dollar and the Chinese yuan. As we move to Page 10, let me review the change in our EBIT year-over-year explained by the following guidances. Volume positive €62 million, reflecting the shipment increase; mix/price variance negative for €26 million and mainly impacted by the lack of Icona and the softer range model mix, partially offset by the increased contribution from personalization and country mix. As previously mentioned, the strong performance in China was supportive in absolute terms even though it contributed to soften our percentage margins. Industrial and R&D expenses grew €34 million in the quarter, mainly due to higher depreciation and amortization and obviously cost inflation. SG&A were negative by €17 million, mainly reflecting communication, marketing, and lifestyle activities. Other finally was slightly positive for €3 million, reflecting the improved prior year Formula 1 ranking and higher contribution from lifestyle activities, partially offset by lower sponsorships, reduced contribution from Maserati, and other miscellaneous expenses. The total net impact of currency was positive €41 million. Turning to Page 11. Our industrial free cash flow generation for the quarter reflected the strong profitability and a positive contribution from working capital and other, mainly related to the collection of the Daytona SP3 advances. This was partially offset by €198 million of capital expenditure that is progressing in line with our full-year program of about €800 million. In the quarter, the capitalization ratio of our development expenses was approximately 45% increase versus the prior year also as a result of the cap research spending in Formula 1. Net industrial debt as of the end of September 2022 was €256 million, decreased by €130 million compared to June 2022, reflecting the solid industrial free cash flow generation net of the €85 million of share repurchases. On Page 12 as already mentioned by Benedetto, we revised upward our 2022 guidance across all metrics, sustained by a continued strong business performance of personalization and a tailwind from foreign exchange rates. Such improved targets encompass the assumptions of continuing cost inflation through our supply chain and this is mostly visible in the EBITDA margin guidance, which for the short term is rather flattened by such increased costs. To conclude, the results we have presented today, the robustness of our business model and the success of our product portfolio in the current trading conditions continue to fuel our confidence for the remaining part of 2022, setting the ground for another great year and more to come.

Thank you, Antonio. Sharon, we are now ready to open the Q&A session. Thank you.

Thank you. Your first question comes from Michael Binetti from Credit Suisse. Please go ahead. Your line is open.

Congratulations on a strong quarter. I understand the macro environment is challenging. I would like to know your thoughts on the 2022 guidance for €1.8 billion to €2 billion of EBITDA. Although you are raising the forecast, do you believe it may be conservative by this time next year? I'm interested in how you anticipate revenues and profitability to develop across your business lines, particularly in the cars segment. How do you see that contributing? Additionally, how will the P&L or the lifestyle and sport businesses evolve as you reengage with core sponsors and expand into areas like Le Mans and the lifestyle categories you mentioned? I am also curious about the main challenges you foresee in achieving margin levels for the first electric Ferrari in 2025 that align with the averages of the rest of your fleet.

Thank you. Thank you for the question, Mike. So, let's start from the first one. As Antonio said and these numbers are showing, we feel very confident, and that's the reason why we are increasing, number one, the guidance for this year, and we are also very positive for next year. This is thanks to the order book that we have, which is, let me say, spanning all the products we have as well as all the regions. So this is the first important message. Now, if you talk about the bigger challenge for electric car, I think, I would say, I would split the answer into two parts. If we talk about product development, where we are, we are fully in line with our project development. So we are proceeding as per plan. And this is true, as I said, on the technical side, but if I go to see on the profitability side, this is fully in line with our long-term view, mid-term view that we shared with you at Capital Market Day. This year we made a lot of progress in optimizing, on one side, the architecture of the cash. On the other side, also optimizing and strengthening our relation with some strategic suppliers.

Thank you. Are you finished, Michael?

I am. Thank you.

Thank you. I will now go to the next question. Please stand by. And your next question comes from the line of Giulio Pescatore from BNP. Please go ahead. Your line is open.

Hi, everyone. Thanks for taking my question. The first one on the order book. I understand you're not going to comment any more details on where the order book stands. But can you maybe share any color on the composition of this order intake? Is this achieving the goal you had in mind for this model? Anything you can share on that would be very interesting. The second one on the order book. I noticed that you're now defining it as remarkable vehicles record in pretty much any other presentation in the last few quarters. I don't want to read too much into this, but is that a function of the availability of models? Is there anything else? Are you seeing a softening in order? Anything on that would be also helpful. And then the last one on the 296 GTB. If you look at the number of hybrids you sold in the quarter, it was pretty much flat sequentially versus Q2. I was expecting maybe an increase because of the ramp-up of the 296. Are you just giving priority to other older models, given the demand, or is there any delay on the ramp-up of that particular model? Thank you.

I'll start with the last question about the 296 and the division between ICE and hybrid models. So far, the ratio has consistently been 80-20. We anticipate this ratio will shift, especially with a stronger order book for the GT and the 296 Spider. This is significant, as it suggests we will see an increase in the hybrid share within our lineup. Moving on to the first question regarding the Purosangue, we hosted nearly 2,500 clients who attended the World Premiere in Tuscany. The reception has been very positive in terms of performance and design, with some clients even having the chance to test drive the cars. However, I want to reiterate two key points we mentioned at the Capital Market Day. First, we do not intend to exceed 20% of the annual volume for this vehicle. Second, our order backlog is well managed, so we are unable to accommodate additional visitors at our factory right now. If you were to visit, you would see that we have made sufficient preparations to meet our production targets for the naturally-aspirated V12 engine. The orders we have received for the Purosangue are quite unique, as they resemble those for limited edition cars rather than typical volume models. Lastly, regarding the net order intake, we are consistently growing our order book today. However, we anticipate a decrease in this momentum since we are sold out of many models. Currently, customers can only purchase a limited number of models from our dealers, including various configurations of the Purosangue and the 296. We expect some slowdown in the order book growth, which we have planned for, and we are encouraging our dealers to enhance customer experiences through different avenues. This provides additional context on the three questions you raised.

Very clear. Thank you very much.

Thank you. We will now go to our next question. One moment please. And your next question comes from the line of George Galliers from Goldman Sachs. Please go ahead. Your line is open.

Yeah. Thanks very much for taking my question. Actually the first question was just following on a little bit from Giulio's question. It sounds like you don't have any capacity constraints on the hybrid cars. So I just wanted to ask about the lower shipments of the SF90, while you saw a positive contribution from older models like the F8, particularly as first deliveries of the SF90 Spider only commenced in Q3 last year, hence full deliveries of that vehicle have been in progress for less than 12 months. Is this a temporary effect? Should we expect growth in SF90 at some point in coming quarters, or are you actually seeing a bit of a wind down in terms of the SF90? The second question, I had was just on the 499P, which I think has got everyone with a keen interest in the auto industry and Motorsport extremely excited. Is it reasonable to expect at some point a road car derived from this product? And just to revisit, I think the introduction of the Icona series, I believe originally it was flagged as bridging the gap between the hypercars which you typically only introduce at least once every 10 years. Could you see a hypercar and Icona model in production in tandem, or would the intention still be that Icona bridges the gap between the hypercars?

Okay. So we start from the first one, George. One, is the capacity constraint you were saying. So I would like to say one thing. One of the key strengths of Ferrari is the ability to manage different models in production also because the line that we ever not fully automated, but there are human beings that are able to give flexibility and agility to the production line. If you came here, you clearly see that, the same manufacturing line can manage ICE or hybrid cars. So what I can tell you is that, number one, we are producing as planned. There is no deviation. The other complements go first of all to the team that is able to manage a complicated supply chain; and two, also to our partners that are very much supportive. Another important message is that, the agility of this line is thanks to the presence of people that with their passion and dedication are able to make this line very agile, accommodating what are the clients' needs. So this is very important. When it comes to 499P, I'm glad you also like the car. I can tell you that, I was with the colleague, it is really nice car. It is a big step forward for us. I don't want to comment on your question because as you can imagine, our product strategy and what we intend to do is also part of our secret source. And I'm really sorry, I cannot discuss more detail. But I can tell you that, as you have seen in the past, Ferrari is very good at using all the things that are developed by the team. Thank you.

Thank you. We will now go to our next question, one moment please. And your next question comes from the line of Evan Silverberg from Morgan Stanley. Please go ahead. Your line is open.

Hi. It's Adam Jonas. Everybody, can you hear me?

We hear you, yeah.

Great. Benedetto, I just wanted to kind of reconcile, you said that the order book for Purosangue is fully satisfied, but you'd still order it at a dealer. So I just want to confirm it's not quite sold out officially, correct?

Adam, it's a good deduction.

Thank you. China accounted for 14% of total sales compared to 9% last year, which has been dilutive to margins but beneficial in terms of profit in dollars and euros. What are your thoughts on what a normal or steady-state level of China's contribution as a percentage might be once your other launches start gaining traction in Western markets?

Adam, as we said in the Capital Market Day, we believe the right number for us exposure in China, if you want, is between 10% and 11%.

10%, 11%? Great. Thanks, so much. And just finally, if I can squeeze one more in and I'll shut up. You talked about strategic partnerships as you kind of get closer to production of your first pure EV in 2025. I know this call is too early for major milestones there. But would next year, by end of next year, be too soon for you to disclose your battery cell partner, or should we wait until beyond '23 for that type of announcement? Thanks, everybody.

Adam, you know that the battery, we are a supplier. The cell, we do not even disclose the cell supplier, cell maker also for 26 and the SF90. I believe that, this is an important part we want to keep for us. So, what I can tell you and all the colleagues on the phone is that, the development of the cars is proceeding as planned and we did a big step forward in Q3. But unfortunately, we cannot tell you, who is going to be the cell supplier.

Thank you. We will now take our next question. One moment please. And your next question comes from the line of Stephen Reitman from Societe Generale. Please go ahead. Your line is open.

Thank you, and good afternoon. I have two questions. First, it has been mentioned that unique circumstances have resulted in a limited number of vehicles available for sale due to delays in launches and impacts from COVID. When do you anticipate that your dealers will have a broader selection of vehicles to sell? Secondly, could you share your insights on the trends in residual values? I understand that dealers respond to this, but I know you monitor the situation closely as well. Thank you.

I start from the second point, Stephen. We do not see any change in the trend of residual values. While some models are appreciating, overall, there has not been a significant shift. In fact, we think that the high demand for many models will provide an opportunity for our dealers to also focus on the pre-owned business. As for the first question regarding timing,

And our Distribution Dealers Annual Meeting here in Modena where we had 500 people visiting us. Let me say they are very supportive, very much engaged, and they fully agree on our plan for the future in terms of new car launches. So, there is very, very strong traction and we are working very well with them and they with us.

I start from the second, Stephen. The trend on residual value remains unchanged. We see some models appreciating, but overall, there has been no significant change. In fact, we believe that many sold-out models will give our dealers the opportunity to focus on the pre-owned business. The first question was about the timing. I start from the second, Stephen. We do not see any change in the trend on residual value. While some models are appreciating, there has not been any significant change. In fact, we believe that the high demand and sell-out status of many models will provide our dealers with an opportunity to also concentrate on the pre-owned market. The first question was regarding the timing.

Thank you very much. I would now like to ask the next question. One moment, please.

Good afternoon everyone. I hope you can hear me. My first question is about Purosangue. The average personalization rate is 18%, but could we expect a higher rationalization rate, perhaps around 23% or 24%? Am I being too optimistic with this assumption? My second question is strategic in nature. When do you envision introducing an electric model that serves a similar purpose to the Purosangue? Lastly, it might be early to ask, but do you have a rough breakdown of the customer profile for the Purosangue by gender and age group? Thank you very much.

Thank you, Monica. Let me start with the Purosangue. It offers a wide range of accessories, options, and personalization opportunities. One particularly interesting feature is the electrochromic glass roof, which has received great appreciation. I believe there are possibilities for even greater personalization, but ultimately it depends on our clients and how much they wish to customize. I would be presumptuous to estimate the personalization rate of our clients. What I can say is that the available options are quite extensive. As we've observed in Q3, and regarding our Q4 guidance, there is a positive trend driven by personalization. As for the electric Purosangue, may I address that in relation to your second question? Yes, as I mentioned earlier, our plans for the future are confidential because we believe they give us a competitive edge. We will utilize technology while always prioritizing our clients and the excitement we aim to create. While I cannot share specific details of our plan, I can say that we have a clear strategy. Regarding our customers, we have a solid understanding of Purosangue's market. I can confirm that it has been very well received by both collectors, often referred to as VIPs, and new potential buyers. The response to this model has been robust across various demographics and regions.

Thank you very much. Benedetto, it was very clear. Thank you.

Thank you. We will now take your next question. One moment. And your next question comes from the line of John Murphy from Bank of America. Please go ahead.

Good afternoon. Just one additional question on the Purosangue. I mean, you've mentioned that it could be as much as 20% of your volume, and you would limit it there. If we look at the volumes that you put up this year in 2022, that would imply that you might be able to do three thousand to three thousand five hundred of the Purosangue's growth going forward. I'm just curious, based on your order book right now and what you're thinking, if that is a number you think is achievable and if we were to think about something like that, that would equate to about four to five years of the volume growth that most people are expecting. So, it seems like that would be sort of a high number. Just curious as you dimension where that segment actually could be for you? I know you're governing in a 20%, but is that something you think can happen more quickly, or based on your order book, maybe it might take longer?

Thank you, Johnny. Maybe, I misunderstood you said that 3,500 per year? So yes, assuming you're going to do about 13,000 units this year, I mean just grossing it up and just saying, if you're going to limit the Purosangue at 20%, you would add specifically 3,250 units to that base of 13,000 that would be Purosangue to get to 20% mix, at Purosangue. I'm not referring to incremental numbers. I'm indicating that up to 20% of our annual volumes will be Purosangue. For instance, if we anticipate 13,000 units, that would amount to approximately 2,600 units. I can share that we are nearing our target. This is the most detailed information I can provide, along with the fact that the car has garnered significant acceptance from attendees, as customers traveled from around the globe to experience it. The enthusiasm has been remarkable; people appreciate the performance, design, and driving experience. During those days, our marketing team arranged for selected customers, chosen through a lottery, to drive the vehicles for about 40 kilometers. While I can't disclose all details, there are videos of individuals genuinely emotional about their experience. The acceptance has been strong, owing to the performing design and driving experience, and we are very close to achieving our target. As I mentioned, we are committed to not exceeding the 20% threshold of our annual volumes, regardless of what they may be.

We look forward to driving it. Just a second question real quick. If we think about 2023, mix is going to be a major positive with the Daytona and the Purosangue, it sounds like pricing is a small positive for you right now and that's likely to continue. Volume presumably will be up. Raws are easing, other cost inflation might not be too bad. It sounds like your earnings may gap open next year. I think the consensus is for better than a 20% increase in EBIT. Is there any major headwinds that I might be missing, or we should be thinking about or even positive factors we should think about besides those major ones for 2023?

I mean, the Capital Market Day was clear about the target also for next year. Clearly, we are paying close attention to the story of the inflation, and this is also the reason why we said in the previous call, we are increasing prices for next year. But for the rest, we are proceeding as planned. And as in the past, we delivered on premise, on our promises we want to continue to deliver on our promises. This is our daily commitment to the people here and obviously to all the shareholders.

Thank you. We will now go to our next question. One moment please. And your next question comes from the line of Thomas Besson from Kepler. Please go ahead. Your line is open.

Thank you very much. It's Tom Besson from Kepler Cheuvreux. I'd like to first follow up on Jonas's question, if that's okay. I know you prefer not to provide exact numbers, but when you mention that 20% of the volumes will emerge, I think we should consider that a few years down the line. Does that only take into account the current capacities with the two shifts of the existing production lines, or does it also include potential incremental capacities from BDs? Should we anticipate production numbers around 2,500 or possibly more like 3,000 to 4,000 units annually for Purosangue? That's my first question. Thank you.

No, we will not see a significant change in our capacity. We want to maintain the exclusivity of all the cars we sell, including the Purosangue, as I mentioned in June when we met in Maranello. This car is not intended to significantly increase our volume as it is for other competitors in the industry. For us, it's a unique sports car unlike any other, and we aim to limit our production to a maximum of 20% of our yearly volumes because we believe that exclusivity and uniqueness are essential to our product strategy. We don't want to double our volumes or invest heavily in capital expenditures because maintaining exclusivity and uniqueness is our guiding principle.

Second question on ForEx. When we look at 2023, is it reasonable to expect another decent boost from ForEx, given your hedging positioning, or have we seen always the bulk of the benefits from that bucket?

Okay. This is a good question for Antonio because otherwise he was silent. So, it's good. Thank you, Jonas for keeping my attention alive.

I think the question really depends, of course. I mean we hedge foreign exchange on a rolling basis; that means that we basically project on 2023 the trend of 2022. Whether this will be a positive or a negative depends on how the foreign exchange rates behave on a spot basis. All in all, we try and have approximately 70% of our total exposure at in advance declining over time. So we are basically projecting into 2023, the trend we have witnessed in previous months. If the dollar goes to $1.10, obviously we have a huge positive. If it goes to $1.80, sorry to $2.80 it's going to be a negative. That is the sense of my answer. I hope it helps.

It's very clear. Just a very quick follow up. Can you confirm the date of for deliveries for Purosangue please? You'll have the first deliveries?

Yes, in Q2.

And your next question comes from the line of Philippe Houchois from Jefferies. Please go ahead. Your line is open.

Thank you and good afternoon. I have two questions. First, I'm following up on the used values. If I understand correctly, you mentioned that there has been a remarkable order intake across models, which is likely to lead to better used values, rather than the used market being overly impacted by economic sensitivities, making buyers hesitant. My first question is whether Ferrari is directly benefiting from improvements in used values? Are there agreements in place with dealers that allow for profit sharing when they benefit from these improvements? My second question relates to the Purosangue and the 20% cap. If I understood you correctly, this car performs as well as any Ferrari, and you take pride in it. Is the 20% cap arbitrary? For years, there was concern that SUVs might harm the brand, but that's not the case here. You’re aiming to diversify your product portfolio rather than risk losing a model that could eventually dominate your volume. Is that accurate?

Okay, Philippe. I will start from the first one. When it comes to the pre-owned business, we have no profit sharing. Okay? So there is no process sharing with our dealers. It's their business; they manage it in the way they want. Let me say unique. What we have to do to help them is always to think about the uniqueness and exclusivity of the model. So this is what we do. When it comes to Purosangue, I think I would like to take this opportunity to remember that there are two orders that in Ferrari do not fit well, the Ferrari and utility, these are I mean SUVs. As I said it's not an SUV. Putting together the utility word with Ferrari, I think we all agree is nonsense. Now the story of our Purosangue, that is a new category. It's unlike any others that are pushing and is very well appreciated, where we said the 20% because we believe that this is a car like the other cars we have in our range. We will have – if you make the math, we will have four to – around four cars per year, four to five cars, so it's around 20% the split of the cars that you put on the market. So that is not, I would say literally, there is a rationale behind that is always meant to preserve the uniqueness and exclusivity because we consider Purosangue a car like the others we have in terms of volume split and unlike any other cars in that sale of the category from other competitors. It's a unique car, and we want to preserve uniqueness and exclusivity. Maybe you can turn utility into uniqueness. Yes. I will make a good one.

Thank you. We will now go to our next question. One moment please. And your next question comes from the line of Tom Narayan from RBC. Please go ahead. Your line is open.

Hi, yes. Tom Narayan, RBC. Thanks for taking the questions. The first one is on the guidance you guys have out there for 2023. I know that's – it does feel, I think somewhat scale. And I think some investors may be just wondering why maybe you have withdrawn it or commented on it. I know usually you only comment on the annual guidance in the full year call, but I was just curious if there was any commentary on the current Q3 guidance that you have out there. And then the second question on Purosangue. A number of us on this call attended this Rolls-Royce event and we were – I found it surprising to hear that a lot of customers for that brand really didn't care as much for software or assisted driving in those sorts of features and cared more about luxury aspects of the car and stuff like that. Just curious if this is what you were hearing from your latest event from consumers looking at the Purosangue as well? Thank you.

I start from the second one. If I understand well, Tom, is how much is valued to the softer in this kind of car. I'd like to say that, when you talk about the luxury cars and this is true we have seen now I am in this role since 14 months, it's true that there are features that are maybe important in mass market cars, but are not at all important in luxury cars. You have had the pleasure to talk with many customers during this year. So what I can tell you is that the software, the digital, and the electronics in the cars must be placed in the right value because if you exaggerate, nobody will appreciate that value. Not to comment specifically on Purosangue, but I can tell you that when you talk about luxury cars, it is a place where typical dimensions that are important for the mass market players do not find the spot and meaning in this world. When it comes to 2023 guidance, I think you understood well we provide the guidance for 2022. I can repeat what Antonio and myself said before that we see business model is very robust. The order portfolio is very strong, and we feel confident about this year and next year, but we do not provide any specific guidance. Sorry, Tom.

In addition to what we said at the Capital Market Day, of course.

Yes.

Thank you. We will now take our next question. One moment please. And your question comes from the line of Anthony Dick from ODDO. Please go ahead. Your line is open.

Yes, thanks. Thanks for taking my question. I had a first one on the 2022 margin guidance. It seems in Q4 you're going to have probably some positive product mix with the SF90 some positive mix ramping up of the FX tailwind and also maybe fewer expenses with fewer events. Yet your Q4 EBITDA margin guidance is for a very moderate increase in terms of margins. So I was just wondering if there were any particular headwinds to expect from the margins in Q4? And then a second quick question on the topic of energy and energy supply. I understand that you use a lot of gas production in your factories and Italy is reliant quite heavily on Russian gas. So I just wondered, if you put in place any measures to significantly reduce your gas consumption or any contingency plans you had in case the country faced a gas shortage next? Thank you.

Okay. So I take it, Anthony, I'll take the one on energy and I'll let Antonio comment on the first one. So I would like to clarify a few things. Number one, we do not rely on Russian gas. Number two, we produce almost 80% of our energy coming through the three generators that we have in our factory. Number three, as I showed you, we are working – we are increasing the share of electricity that we are generating in house and we are also reducing the energy waste through better efficiencies or let me say leveraging the ideas that the team has. If you remember, I was talking about reducing the gas consumption by 2% that's a good number that has been done by putting the people around the table. We are putting also some contingency plans in place, because in case there are some national, let me say, national direction we will stick to them. But we are putting contingency plans in place. Clearly, the stock that we have is also a way to manage this situation. For the first one, I would like Antonio to comment.

To your question on the implied margin for Q4, Anthony, I think these are in line with the nine months in terms of EBITDA, so 35% expected to be confirmed in the last quarter. In terms of the rationale, I think directionally, you may think of the business being particularly strong in terms of personalization in addition to what the range of models that we sell may provide. We have a positive from foreign exchange rates compared to the initial expectations for the year. The only negative factor is cost inflation. So all-in-all, I think we are in line with what we had expected throughout the year.

Okay. Thanks very much.

Thank you.

Thank you. I will now hand the call back to Benedetto Vigna. Please go ahead.

Thank you. Thanks to all of you for your time today, and also for all your useful questions. As you have heard a few minutes ago from myself and Antonio, we did what we said. We delivered on all that we promised, and we look with great confidence to Q4 and beyond. Before closing, I also take the occasion to thank all the men and women at Ferrari in Maranello, and the whole of the world that contribute daily to the success of our company. For the time being, have a good afternoon everyone. Thanks again for your attention, and talk to you in a quarter. Bye-bye.

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