Good day, and thank you for standing by. Welcome to Ferrari 2025 Q2 Results Conference Call. 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, Maggie, and welcome to everyone who's joining us. Today, we plan to cover the group's second quarter 2025 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. 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, and thank you, everyone, for joining us today. Despite an uncertain macroeconomic environment, ongoing geopolitical tensions and market volatility at Ferrari, we continue to execute our business plan with focus, discipline, and confidence. We base this confidence on the solidity and uniqueness of our business model, the remarkable level of visibility that we enjoy, and the continued loyalty of our community. We remain confident and well prepared to navigate potential macro threats, including trade tensions, currency fluctuations, and financial market volatility, which require an increased level of cautiousness. While we can't say that we are completely immune to global events we might encounter, our ability to adapt has been remarkable. Among all factors that underscore our solidity and continuous progress, there are five I would like to underline with all of you. First, we are on track with our product development, particularly with the Ferrari Elettrica, which I had the pleasure to drive a couple of weeks ago on the racetrack. And I can assure you how excited we are for the upcoming launch. Second, we continue to evolve our stunning offering. In July, we introduced the Ferrari Amalfi, the 11th model of the 15 model roadmap that we announced in 2022 during our last Capital Markets Day, and our third launch of this year after the two special series, the 296 Speciale and Speciale Aperta. Such a number of new model launches and technology advancements require an incredible team effort and effective management of complexity and utmost agility, which is something we should all be proud of, especially in the current context. Third, we continue to hold a strong order book entering 2027 without considering the newly launched cars, and with all the range models currently in production substantially sold out. Indeed, the newly launched Ferrari Amalfi is at the initial stage of the order collection, and the demand for the 296 Speciale family is significantly high, nearly reaching full coverage of its life cycle. Fourth, we continue to invest in what makes us Ferrari: client centricity, product excellence, and technology advancement. Thanks to the ideas of our people, we can continue to evolve and innovate. Proof of this are the 341 colleagues who were internally awarded for developing patent ideas in 2024. Lastly, in line with our plans, the production ramp-up of our e-building is proceeding at pace, as is the construction of the new paint shop, where we have just finished the walls and are about to install the equipment. Additionally, during the quarter, we began the construction of a new track near our facilities dedicated to sports car testing. This will enhance the accuracy and repeatability of road car testing, a further effort to ensure product excellence. Equally important is that we continue to deliver strong financial results. Indeed, Q2 '25 saw continued growth in all key metrics. A few key numbers to share with you include: first, total revenues reached approximately EUR 1.8 billion, a 4.4% growth year-over-year with flat deliveries; second, strong profitability with EBITDA in excess of EUR 700 million; and third, the industrial cash flow at EUR 230 million. At the beginning of July, we hosted over 1,500 guests from around the world on the Amalfi Coast for the spectacular premieres of the new Ferrari Amalfi, our latest V8 range model. The Ferrari Amalfi redefines the concept of contemporary sportiness, combining high performance, versatility, and refined aesthetics. The name of the new model is a tribute to Southern Italy and one of the most fascinating coastlines in the world. Amalfi was chosen to once again associate Ferrari with Italian beauty and a place that symbolizes our country. I was present for the first of three incredible evenings of the World Premiere, where we achieved unprecedented client engagement and brand visibility. Indeed, this new model was also displayed in the town's main square for all residents of the Amalfi Coast, tourists, and enthusiasts to enjoy. This model will allow us to nurture existing clients and attract new ones, enlarging the Ferrari community, and initial feedback has been extremely encouraging. Moments like this always remind us of the importance of human relationships. Such moments strengthen the sense of community and unite people with the company and with our Ferrariste. From our Ferrari Cavalcades to our Racing Days and Racing Challenges to our World Premiere, each of these exceptional events is designed to create unique memories and experiences, which are essential to nurture our community's passion and elevate our brand following. Within client events, racing activities also play a key role. At the circuit of Spa-Francorchamps last June, we presented the new 296 GT3 Evo, a race car that will make its debut in the 2026 season. The 296 GT3 Evo perfectly fits within the array of our activities and is instrumental to enrich the experience on track for our racing clients. On the subject of racing, I will once again express my personal congratulations to the Ferrari team who secured the third consecutive win at the 24 Hours of Le Mans. This is an incredible achievement and an encouraging reminder of our ambitions. Thanks to this extraordinary result, Ferrari will now keep the winner's trophy forever, a right granted to those who secure victory in three consecutive editions. In the same spirit, we are making good progress in Formula 1. We know that the season started below expectations, but in recent races, the team is constantly fighting for podiums and wins. Lastly, in line with our racing heritage and spirit of innovation, we have presented the Ferrari Hypersail project. This revolutionary boat is currently under construction in Italy, and it will see us take on an unprecedented new sporting challenge in the world of sailing, allowing us to keep on pushing the limits of what is possible in a new arena. Moreover, open innovation and two-way technological transfer between the sports car and nautical sector are key in this project. Aerodynamics, energy efficiency, power management, and flight control systems are just a few examples in this respect. All these challenges remind us that we have to continue to improve in everything we do with focus, determination, and four wheels on the ground. I would now like to hand over to Antonio to review in detail the Q2 2025 results.

Good afternoon, Benedetto, and good morning or afternoon to everyone joining us today. Starting on Page 5, we provide the highlights of the second quarter, which represents a solid continuation of the year. First of all, the second quarter was basically not impacted by the incremental tariff in the U.S. as we leverage the inventory already present in the country. Compared to the same quarter of last year, revenues and profitability grew single digits with flat deliveries. Mix and personalization were the main drivers of growth, along with rising revenues, which led to particularly strong percentage margins and a solid industrial free cash flow generation. On Page 6, we will delve into our Q2 2025 deliveries. Shipments in the quarter were driven by the 296 GTS, the Purosangue, and the Roma Spider. The SF90 XX family increased its contribution. The 12Cilindri family continued its ramp-up phase, while the 296 GTB decreased and the SF90 Spider approached the end of its life cycle. Shipments of the Daytona SP3 were lower than the prior year and sequentially decreasing in line with our plans to conclude deliveries in the third quarter of 2025. In the quarter, we had a significant changeover of models. And despite the gradual phaseout of the Daytona SP3, the product mix was sustained by the higher end of our product offering, namely the SF90 XX family and the 12Cilindri family. As customary, the geographic breakdown reflects the different product cycle as well as the company's deliberate allocation strategy. On Page 7, the net revenues bridge shows a 5.1% growth compared to the prior year at constant currency. Revenues from cars and spare parts were driven by the richer product and country mix as well as higher personalizations. Personalizations continue to be very strong, accounting for approximately 20% of total revenues from cars and spare parts, supported by the Daytona SP3 and the SF90 XX family in terms of model and mainly by the adoption of carbon and paintings in terms of offering. Sponsorship, commercial, and brand activities increased, thanks to the additional sponsorships we have this year and improved performance of the lifestyle activities, as well as higher commercial revenues linked to the better prior year Formula 1 ranking. Currency, net of hedges in place, had a slightly negative impact in the quarter, mainly related to the U.S. dollar dynamics. Moving to Page 8, the change in EBIT is explained by the following variances. First, mix and price, positive; thanks to the enriched product mix sustained by the SF90 XX and the 12Cilindri families, increased contribution from personalization and a positive country mix, supported by the Americas. These were only partially offset by lower deliveries of the Daytona SP3. Second, industrial costs and R&D, mainly due to racing and sports cars R&D costs expensed with flat D&A. Third, higher SG&A, reflecting racing expenses and brand investments. Lastly, the other line was positive, mainly due to racing and lifestyle activities, lower cost due to adjustments made to the Formula 1 in-season ranking assumptions that we revised downward, partially offset by last year's release of car environmental provisions. Percentage margins were very strong in the quarter, with the EBITDA margin at 39.7% and EBIT margin close to 31%, also benefiting from flat D&A determined by the model changeover. Turning to Page 9, our industrial free cash flow generation for the quarter was strong at EUR 232 million, reflecting the increase in profitability, partially offset by the negative change in working capital provisions and others, primarily linked to higher inventory in line with our production plan. This quarter, the net impact of advances was positive, but far less significant than in Q1. Capital expenditures were mainly focused on product development and the progress in the new paint shop construction, and finally, the seasonal payment of taxes. Net industrial debt was EUR 338 million at the end of June 2025, also reflecting the dividend payment that occurred at the beginning of May. Lastly, in relation to our multiyear share repurchase program of EUR 2 billion, we intend to resume the repurchases, aiming to complete the program by year-end. Moving to Page 10, we confirm the 2025 guidance with stronger confidence on all metrics and removed the 50 basis point risk on percentage margins following the recent agreement on U.S. tariffs as well as lower industrial costs in H2 compared to our initial expectations. All this is based on current information despite the remaining uncertainty with respect to the timeline of application of the lower U.S. duties on cars and other products manufactured in the European Union, which should impact the second part of the year. Bearing in mind that for the rest of 2025, we anticipate deliveries will be deliberately reduced compared to 2024 to prioritize quality of revenues over volume, a softer product mix versus the first half of the year, mainly linked to the Daytona SP3 phaseout in Q3 and the first units of the F80 shipped in Q4, higher SG&A linked to corporate and commercial activities planned for the remaining part of the year, higher D&A in line with the development of our portfolio, and greater headwinds from FX, assuming that the current weakness of the U.S. dollar against the euro persists for the remainder of the year. The first half of 2025 reminded us of the world's unpredictability and the importance of agility and flexibility. In this context, we continue to execute our strategy with discipline and focus. Today's strong results mark continued progress on our growth path, backed by our unique business model and the remarkable visibility that we enjoy. Thanks for your attention, and I turn the call over to Nicoletta.

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

Our first question comes from Stephen Reitman from Bernstein.

I have a few questions. First, could you comment on the developments in residual value in key markets? Secondly, can you provide more details on why industrial costs in the second half are expected to be lower than previously anticipated? And third, can you explain the change in R&D capitalization versus amortization, resulting in a lower benefit compared to what we observed in the second quarter?

Thank you, Stephen. Regarding the residual value in key markets, we mentioned previously that the U.K. was experiencing some pressure. We have implemented certain actions that are yielding positive trends. We are also working on some models in the U.S., but I wouldn't say there is anything unusual. As for the second question about industrial costs and our expectation for them to decrease, Antonio can provide more insight on that.

Stephen, regarding the actual costs, this is primarily due to a favorable comparison with last year. Last year, we had significantly higher costs for racing in the second quarter, which we do not have this year. Additionally, we have successfully reduced quality costs compared to last year. Looking ahead to the second half of the year, we have improved expectations based on supply chain costs, which have been better than initially anticipated, resulting in lower inflation. As for your third question about R&D capitalization in the quarter, this is simply due to the overlap of our projects. We capitalize the spending for models that have been internally approved, so it depends on that, while the remaining portion expensed to the P&L is related to racing. This is influenced by the pace of development of our car in both Formula 1 and the World Endurance Championship.

So to be clear, the reduction in industrial cost doesn't reflect maybe postponements or delays to any programs?

No, absolutely not.

Next, we have Susy Tibaldi from UBS.

So first one, regarding your cars and spare parts growth at 3%. This is lower growth than we have seen in quite some time. So it seems that the ASP was weaker than maybe some people in the market expected. Was that something to do also with personalization? Or how do you expect this ASP to then evolve for the rest of the year? Because my impression was that Q3 was meant to be, let's say, the weakest part of the year, whereas Q2 also ended up being quite weak. So it would be helpful to get a bit more clarity there. Secondly, regarding your COGS. The gross margin was extremely strong, stronger than we have seen in a very long time. It was somewhat surprising given that your ASP ended up being a bit weaker than expected. So what were the moving parts in the COGS that led to this sort of strength on gross margin? And how should we think about it going forward? Lastly, regarding the U.S. So now that the tariffs have been lowered, I suppose that you will choose to no longer increase prices to the same extent. But is there going to be maybe in Q3 some sort of friction because some cars were shipped that were affected by these higher tariffs? How does it work? Some clients will get a different price compared to other clients. Can you just elaborate on that?

Okay. Susy, I'll take the third one, and then for the first two, Antonio will comment. As you remember, we were timely in announcing the commercial policy on 27th March when the tariffs were in place. We will not change the commercial policy until this new 15% tariff is actually implemented. As of now, it has not yet been implemented; it will take some time. You may remember that when we spoke last time in this event, we said that the invoice for the clients would clearly separate the tariff in a specific line. This is to make it clear to the client that part of the price reflects our costs, while another part reflects the tariff based on the country where the car is sold. So when the 15% tariff becomes effective, we will adapt our commercial policy. Now, Antonio, please cover points one and two.

Thanks, Susy. Regarding the first question about the 3% growth, that has to do with the development of the product mix based on our plans. I don't know how analysts are making their forecasts. But this growth is in line with our plan of deliveries in terms of models. As far as personalization is concerned, penetration remains very strong at 20%, and we actually see a continuing positive trend. Therefore, we are encouraged by this. Regarding the cost of goods sold, the strong performance in Q2 is attributed to the efficiency we achieved and lower inflation, including quality. So these are the main drivers. Does that answer your questions?

Yes. But when we then think about the rest of the year, especially in terms of mix and so on, the expectation was that Q3 was going to be the bottom for this year. So that's still the case? So Q3 could still be weaker than...?

If I look at the sports car business, it goes without saying that Daytona will be lower because it will be the last quarter we sell it. We don't have the F80 yet, and we only have a few units of the F80 in the last quarter. Overall, the development of our margins also depends on the racing activity and the development in racing activity regarding the cost of goods sold.

Next, we have Adam Jonas from Morgan Stanley.

My first question is on the Elettrica. I'm not trying to get you to share any significant details ahead of things. But remind us, is this product positioned as more of a halo type of vehicle that would be offered to existing Ferrariste or is it designed to expand and bring in new Ferrariste right away? How do you envision this?

Thank you, Adam, for the question. I can tell you that regarding Elettrica, it is indeed designed for both existing and new community members. We want people to be in love with the car, and we do not want to push it too hard. It is targeted at both existing Ferrariste as well as potential new members who will be attracted to the addition of this model. We ask you to bear with us a few more weeks, and by October, it will be clearer.

Okay, well, I thought it was a very good answer if I say so myself, but you did better. You got me. My second question would be, are there enough changes from key governments around CO2 emissions? I understand that Ferrari does not design products for CO2 rules, but are there any impacts from recent regulatory changes that will affect the timing or medium or long-term product rollouts of your electric products?

Adam, I think that for sure, there is no company in the world that can control how things evolve outside of their wall. We control what we do. We proceed, as Antonio and I mentioned, with focus, determination, discipline, and agility. I believe having a company like Ferrari that is more or less in the same place allows us to make decisions quickly. We are confident in our commercial policy, and we keep working on sustainability initiatives including adapting to evolving regulations.

Next question comes from Monica Bosio from Intesa Sanpaolo.

I hope you can hear me. My first question is on the Amalfi. I'm curious about the company's goals for it. Do you expect to attract new customers with the Roma? My second question concerns the 296 Speciale. Benedetto, you said there is overwhelming demand, and the orders are nearing the completion of the life cycle. Any color on regions or customer demographics would be useful. Lastly, on the Dodici Cilindri, you mentioned it sells less in China due to tax. What models do you see gaining traction in China?

Thank you, Monica. I'll start with the last question. Last time, I was generic telling you about Dodici Cilindri not only as a car but as a motorization because the tax on the Dodici Cilindri is higher in China. The number of people willing to pay more is lower in the market. That's why I mentioned we have a new car, Amalfi, that will be more suitable for the Chinese market. Regarding Amalfi, it offers us the opportunity to improve our offering in countries like China and attract clients from other brands. I can share that we are already receiving orders, and delivery will begin in the first semester of next year. Regarding the 296 Speciale, demand is robust across various regions including the Middle East, Japan, the U.S., and Europe. The model's design, including unique colors like green Nürburgring, is generating significant interest globally.

Very clear. I have a follow-up housekeeping. You mentioned that Q3 would see the last deliveries of Daytona, but we will have a few deliveries of F80 and more visible impacts from SF90 XX and Dodici Cilindri. Can we assume that these could offset the loss of Daytona?

In terms of mix, we expect the second half to be pretty neutral compared to last year, as a result of the changeover with the lower Daytona disappearing in Q4 and the initial sales of the XX and Dodici Cilindri.

Next, we have Thomas Besson from Kepler Cheuvreux.

I have a few questions as well, please. I'd like to start with the share of hybrids in the quarter, which was the lowest in a couple of years. Can you provide guidance on what we should expect for the next 6 to 12 months? I guess it's related to the lower volumes of the Speciale versus regular versions. Second question, you mentioned increased confidence in the guidance, and you removed the 50bps cautious element. But at the same time, you are aligning pricing to the evolution of tariffs. Could you explain why you don't keep this 50bps cautious element? Lastly, regarding the 'other' line in your financials, it was higher than usual for the second quarter in a row. Can you clarify whether we should expect this line to stay elevated and partly offset the lower mix in the second half of the year?

Thank you, Thomas. I'll take the first one. The share of hybrids reflects the offered model lineup, so you shouldn't take it as fixed quarter by quarter. Currently, we see higher volume cars that are reducing in number, such as the 296 Speciale. Therefore, the demand ratio will depend on what we produce. For the overall growth and EBIT, I think Antonio can comment.

On confidence regarding guidance, the main reason is our expectation of lower industrial costs in the second half compared to what we originally anticipated. This helps offset our targets, along with the revised assumptions on the Formula 1 ranking. On the 'other' line for the second half, I expect growth in contributions from new sponsors will be lower than in the first half, while the overall contribution from the Formula 1 commercial rights holder should remain, but not at the same extent as in the first half.

Next, we have Flavio Cereda from GAM.

A very quick question for Benedetto. Regarding the delay in launching the second electric vehicle due to perceived lower levels of demand, can you clarify what the position is?

Thank you, Flavio. That's a good question. I can confirm that we are on track with our electric car’s unveiling in Q4 2025. We are keeping all of our promises concerning timelines and have no delays. The anticipation is building up, and we ask for a bit more patience as the unveiling approaches.

Next, we have Anthony Dick from ODDO BHF.

I have a couple of questions regarding tariffs. First, have you observed any signs of client cancellations or postponed orders due to tariff clarity? Second, could you help clarify how you expect tariff costs to evolve over Q3 and Q4? I know sometimes you batch your orders. Should we expect a significant share of volumes at the 27.5% rate in Q3? And finally, can you share the shipments of the Daytona SP3 in Q2?

Antonio will manage these questions with all the detail.

Starting with the Daytona, we do not provide advance shipment numbers. For Q3, we expect approximately 40% tariffs. Currently, an agreement has been reached, but implementation details are still pending; thus, we have certain cars imported at the 27.5% rate. Regarding your first question, cancellations related to tariffs have not been discerned in customer behavior, but there is a wait and see attitude among some due to uncertainty rather than clear cancellations.

Regarding overall client demand, we have a solid order book for existing models and a record backlog, especially in regions like Asia, while some clients may be taking a cautious approach based on current offerings. However, our new launches will help enrich our portfolio.

Next we have Henning Cosman from Barclays.

I would like to revisit the 40% electrification ratio for your 2030 targets. While you've never mentioned a second electric vehicle, can we expect any discussions on this topic during the upcoming CMD? Additionally, as we see resilient pricing on launches like Amalfi, is there any reason to suspect that upcoming launches will not follow that pricing strategy? Finally, could you clarify the Daytona shipments, as you mentioned about 40 left for Q3, which means approximately 60 in Q2?

Thank you, Henning. Yes, you can expect a detailed discussion on our electrification strategies during the Capital Markets Day. We aim to maintain the same principles and transparency and will detail our plans for the coming years. Regarding pricing, we make these decisions considering the market conditions and the unique positioning of each model, and will disclose specific pricing details as needed. Regarding Daytona shipments, you are correct with your approximation; there were approximately 60 delivered in Q2.

Next comes José Asumendi from JPMorgan.

Antonio, can you comment on the balance in the second half between mix, price, and then industrial costs, R&D, and SG&A? Do you think the balance of both categories will lean positively or neutrally? Additionally, Benedetto, could you comment on CapEx? Where do we stand and how might we think about CapEx over the medium term in light of ongoing innovative projects?

As previously mentioned, we are committed to delivering on our promises without deviation, including our CapEx plans. You'll see more details on our strategies for the future at the Capital Markets Day, but I can confirm we are on track with everything we committed to all shareholders.

In terms of balance for the second half, we expect a positive contribution from mix and price to earnings while industrial costs will generally have a negative impact. However, as previously mentioned, we foresee a lighter second half leading to less negativity than we initially anticipated. SG&A costs are anticipated to be a negative considering the numerous events, launches, and infrastructure expansions we are engaged in.

Our last question comes from Tom Narayan from RBC.

I wanted to clarify, did you say Daytona's shipments were 40 in Q2 or 60? And regarding Stephen's earlier question about residual, did you mention that is affecting the stock price? Could you clarify the U.S. residual?

Regarding the Daytona shipments, we shipped approximately 60 in Q2, and for Q3, we will have about 40 remaining. On the question of residuals in the U.S., we don't have any specific concerns currently. The earlier comment regarding the U.K. market was about some commercial actions we are undertaking which have had a positive impact on trends.

Thank you for all the questions. This concludes the Q&A session. I will now turn the conference back to Benedetto Vigna, CEO of Ferrari, for closing remarks.

Thank you for your time today and for all your questions. We look forward to seeing you at the Capital Markets Day on October 9. Until then, have a good morning or afternoon, wherever you are on this globe. Thank you again for your attention and questions. Have a great rest of August.

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