- Group net revenues for Q2 2020 fall 42% to €571m
- Net profit for the quarter declines 95% to €9m
- Income from sponsorship, commercial and brand drops €48m to €131m
Ferrari are bracing themselves for revenue losses “in the high tens of millions” as a result of the disruption to the Formula One season caused by the coronavirus pandemic, according to company chief executive Louis Camilleri.
Speaking on a Q2 2020 earnings calls this week, Camilleri described the Covid-19 crisis as “a huge challenge to surmount” for the Ferrari group and warned that the iconic Italian carmaker would continue to feel its impact for some time to come.
“It's clearly in the high tens of millions, in terms of the hit,” Camilleri said. “We'll see in terms of next year it should be better, because hopefully, by next year, we'll be back to a full race schedule, and we will get the necessary revenues in terms of sponsorship and from the commercial rights.
“So it's a bit difficult to compare 2020 to 2021. But definitely in 2020, it is a very sizeable hit as we had anticipated in early May.”
Formula One’s delayed and truncated 2020 season got back on track in Austria last month, with this year’s shortened race schedule, which currently comprises 12 rounds all in Europe, set to see teams receive less prize money and smaller payouts from central commercial revenues.
Ferrari, whose parent company is controlled by the Agnelli family-owned investment firm Exor NV, currently sit fourth in the Formula One constructors’ championship after the opening four races.
Ferrari chairman John Elkann has previously said that the team will not be in a position to regularly compete for Grand Prix victories until 2022, a comment echoed this week by Camilleri.
“There's no denying that we're facing a very difficult season, with a car that lacks performance on several levels,” he conceded. “Our competitors, Mercedes in particular, are incredibly strong and hats off to them.”
He added: “Formula One is - this year will be, in terms of the P&L, the biggest hit we face, because of the reduction in the revenues we receive from the commercial rights holder, as well as reductions in sponsorships, given the reduction in races.”
Financial uncertainty at the Maranello-based Formula One team continues at a time when the wider Ferrari group is recording significant losses due to the ongoing pandemic.
Group net revenues for Q2 2020 totalled €571 million (US$669 million), a 42 per cent decrease compared to the prior year, while €9 million (US$10.4 million) in net profit for the second quarter represented a 95 per cent drop compared to the same period in 2019.
Revenues from sponsorship, commercial and brand - within which Ferrari’s Formula One operations are counted - dropped by €48 million (US$55.6 million) to €131 million (US$151.7 million), with that decline attributed to fewer Grands Prix in the quarter, as well as reduced in-store traffic and museum visitors.
Production and delivery of Ferrari road vehicles also stalled for seven weeks during the quarter, with shipments nearly halving compared to the prior year to 1,389 units. Income from engine manufacturing meanwhile dipped by €33 million (US$38.2 million) in the quarter, largely due to a reduction in shipments to Maserati.
Other revenues decreased €16 million (US$18.5 million), with that income primarily affected by the cancellation of May’s MotoGP race at the Ferrari-owned Mugello Circuit and a reduction in other sports-related activities.
On 3rd August, Ferrari said its adjusted EBITDA stands at between €1.075 billion (US$1.26 billion) and €1.125 billion (US$1.32 billion) for 2020. It also expects that deliveries will drop nine per cent this year versus 2019, leading to a net revenue projection of ‘greater than €3.4 billion’ (US$3.94 billion).