Ferrari NV (RACE) 2015 Q4 法說會逐字稿

Good day and welcome to the Ferrari NV 2015 results conference call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Ms. Nicoletta Russo, Head of IR.

Please go ahead.

Thank you, Tina, and good day to everyone on the call.

There are two topics that we would like to cover today.

First, the group full-year 2015 operating results and then our full-year 2016 guidance.

In light of this, the duration of the call is expected to be around 60 minutes.

All relevant materials are available on the Ferrari investor relations website.

Today's call will be authored by the Group Chairman, Sergio Marchionne, and Mr. Alessandro Gili, Group Chief Financial Officer.

At the end of the presentation, they will be available to answer your questions.

Before we begin, let me remind you that any forward-looking statements that 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 full-year 2016 results presentation and the call will be governed by this language.

With that, I'd like to turn the call over Mr. Marchionne.

Thanks very much, Nicoletta.

I'm going to keep my comments relatively short.

[Do the opening] here and pass it on to Alessandro to take you through the details of 2015 and the guidance for the current year.

The best way to describe 2015 is that it was, in our view, was a phenomenal year, with the best results in the history of Ferrari.

We fired on all cylinders, pardon the expression, but I think we were able to deliver, certainly in terms of operating performance, exactly what we had set out in our road show back in the fall of last year.

The forecast for 2016 is a confirmation of what we told you when we were presenting the Ferrari case with [investor base].

The order backlog continues to be strong.

Every indication that we will achieve, and in all likelihood, exceed the numbers that we're providing you with guidance.

I think the important objective for us remains, as I mentioned, last year when we met, that we would be targeting at the earliest possible time the production of La Fiat [billion] in EBITDA from the house.

All efforts are in the direction of formula one key doing well.

I think we are getting ready now for the trials of the cars in the month of February, I think it's ultimately to start racing on March 20 in Australia.

And the indication is the performance will be in line with the expectations that we laid out last year.

So I'm done now, then I'll pass it on to Alessandro and I will be more than glad to take questions.

Thank you, Mr. Marchionne, and good morning, good afternoon, good evening to everybody.

If you are using the deck that is supporting the call, on page 3, we're discussing our full-year results, which I'm very proud to present as the [liko] set that we got, as Mr. Marchionne mentioned before.

Our shipment goods were 7,664 units, for the full year 2015, showing an increase of 6%.

This was less led by V8 models up 17% thanks to the success of California T, 458 Speciale, and the newly launched 488 GTB, which more than offset the end of the life-cycle of the 458 Italia and the 458 Spider.

On the other end, V12 models were down 24%, due to the F12berlinetta and the FF being at their 4th and 5th year of commercialization respectively.

Please let me remind you that we started shipping the F12tdf in December.

Group net revenues reached EUR2.85 billion, up 3%, which is higher than the guidance we provided in October.

Adjusted EBITDA reached EUR748 million, with a margin increase of 110 basis points, which was better than guidance.

Our net profit for the Group was EUR290 million, the highest we've achieved, [Scuderia] Ferrari up 9%, which is the highest level ever reached.

Our net debt position as of December 31 was EUR1.938 billion, better than guidance, which included obviously the self-liquidating portfolio of our financial receivables and net-to-debt was EUR797 million.

Our key to free cash flow generation for full-year 2015 was EUR390 million and let me remind you that we commence our financial results using non-GAAP measures, as defined on page 22 of the deck that we consider key to describe our financial performance.

During the fourth quarter of 2015, we unveiled the F12tdf, which we began shipping in December, as I mentioned before.

New units for 2016 by the [ready un] contribution for 2016.

The results of Scuderia Ferrari in 2015 were positive and we are targeting what we [a relevant range before] 2016 season.

Finally, Ferrari completed a spinoff from FCA on January 3, 2016 and commenced trading at the Milan Stock Exchange on January 4 this year.

Our targets for 2016 are [aligning] our guidance.

Shipments, including limited edition supercars, should reach approximately 7,900 units.

This will result in the support net revenues in excess of EUR2.9 billion, assuming FX at current market conditions.

Adjusted EBITDA is expected to be about EUR770 million.

Net debt is expected to be lower than EUR1.95 billion, excluding the self-liquidating financial receivables portfolio below EUR750 million.

And that includes the distribution to shareholders that we have highlighted in our press release, which is subject to the approval of the 2015 annual accounts and reviewable [dipatarela] financial statement by the Board of Directors.

If we move to page 4, we're showing our operating highlights for 2016.

Net revenues were up 3%, mainly due to cars and spare parts, resulted in an increase of 7%, driven by volume, FX and personalization, which contributed to cars and spare parts for 16%.

And were partially offset by engines which were down 30%.

Adjusted EBIT for the grouping EUR69 million to EUR472 million, resulting in a 200 basis point margin growth.

The adjusted EBIT improvement benefited from various variables and a more detailed explanation will be given and we commence page 7.

EBIT totalled EUR444 million versus EUR389 million, resulting a 150 basis point margin increase.

Our adjusted EBITDA improved by 8%, achieving EUR748 million.

The result was driven by stronger grading performance, partially offset by lower D&A as a result of the phase-out of the 458 family.

EBITDA [to the] EUR719 million, showing an increase of EUR41 million versus last year.

Full-year 2016 free cash flow generation was primarily driven by the strong increase in cash flow from operating activities, which included the following one-time (inaudible) cash inflows: the sale of certain investment properties, the reimbursement of the financing of inventory related to the establishment of the Maserati standalone business in China and the sale of some financial assets portfolio of FFS S.p.

A. and FFS KK, which are two of our consorted 80 subsidiary, [arguing] the financial services area, partially offset by the one-time extra bonus payment in December, which was made to all the Ferrari employees for the amount of EUR5,000 each.

Net debt was EUR1.938 million the end of December from EUR566 million net cash as of December 31, 2014 and this was primarily due to the capital reorganization in connection with our IPO and spin-off, partially offset by the strong free cash flow generation.

If we move on to page 5, to where these [dial-in] shipments, at the end of December, we have Americas, which represents 34% of our total shipment, which was up 7%.

USA performance was primarily driven by California T and continued contribution of LaFerrari.

EMEA, representing 44% of our total shipment, increased by 2%.

In UK, Ferrari's largest market in EMEA, which had a 5% increase in shipment supported by 458 Speciale and the California T.

Strong performance was reported in Italy, up 17% thanks to 458 Speciale and California T. Germany and Italy experienced a slowdown, the first due to a Company decision to reduce allocation to announce a carpet effect and the lesser due to the F12berlinetta being in its 4th year of commercialization.

Greater China, lost 8% of total shipment decreased by 10% for 8% in total shipments for the group.

Hong Kong and Taiwan, shipments increased by 22% thanks to California T and 458 Speciale.

China mainland shipments dropped by 22% due to the 458 family phase-out and the F12beriletta being at its 4th year of commercialization.

Please keep in mind that China represents less than 5% of our total shipments.

Rest of Asia-Pacific representing 14% of total shipments, increased by 26%.

And Australia, our shipments increased by 44%, driven by California T and 458 Speciale.

Japan, which had a right around increase of 33%, mainly driven by federal market conditions and the growth in Japan was driven by the California T and 458 Speciale.

Moving to page 6, we're providing the bridge of our net revenue, which reached EUR2.854 million, up 3% versus last year, mainly due to higher volumes.

At cost and currency net revenues would have declined by 3%.

Let me also highlight that during the fourth quarter of 2015, we benefited from the leaders of the 488 GTB, which completed its distribution roll-out and the commencement of shipment of 488 Spider and F12berlinetta.

Cars and spare parts were in total in change of EUR136 billion, increased from that line in revenues.

Americas increased by 40% thanks to due to higher sales from La Ferrari, higher volumes, and FX input.

Rest of Asia-Pacific showed and increase of 23%, mostly related to higher volumes versus last year in Japan, partially offset by EMEA down 12%, mostly due to FX and lower shipments in Italy.

Greater China down 11% due to lower shipments.

The proportion of V12 models shipped 12 from 27% from 12 months ended December 31, 2014 to 19% for 12 months ended December 31, 2015, and was primarily driven by a 34% decrease in shipment of F12berlinetta, attributable to the type of the car being in its 4th year of commercialization.

Shipments of V8 models increased as a result of achieving full production of the California T, 458 Speciale A and 488 GTB, partially offset by increases in shipments of 458 Italia and the 458 Spider and 458 Speciale.

On engine revenues, engine net revenues generated EUR219 million for the full-year 2015, an increase of EUR92 million, or 30% from EUR311 million for the full-year 2014.

The EUR92 million decrease was almost totally attributable to a decrease in net revenues, generated by 31% decrease in the volumes of engines sold to Maserati.

Sponsorship, commercial and brand net revenues reached EUR441 million for 2015, an increase of EUR24 million, or 6% from EUR417 million for 2014.

Other net revenues amounted to EUR114 million for 2015 versus EUR90 million for 2014, primarily driven by the performance of other supporting activity.

Moving to page 7, where we have our adjusted EBIT bridge, you can see that year-over-year changes in adjusted EDIT in items.

Volumes were up for EUR45 million thanks to higher volumes of 383 cars, excluding LaFerrari, maybe due to higher sales of California T, 458 Speciale A, and the newly launched 488 GTB.

Positive contribution also came from personalization.

Mix was lightly negative announcing to EUR6 million, mainly due to growth of V8 versus V12, partially offset by higher sales of LaFerrari and the special car FXXK.

Industrial costs and R&D were down EUR3 million, attributable to the 2016 development of the power unit for F1 racing activity, partially offset by a lower R&D on road cars, primarily R&D in product D&A of the 458 family due to the phase-out, and efficiencies on production costs.

SG&A costs were down by EUR15 million, mainly due to our focus on directly operated retail stores, corporate costs and it was also the [dual leasing[ in the US and Italy, and F1 racing activities.

Positive impact from transaction exchange rate net of hedging, resulted in an increase of EUR41 million, mainly due to US dollar and GBP that was partially offset by yen.

Other, as a final item, was up by EUR7 million, includes better results from brand and commercial activities and to a lesser extent, supporting activities, including Ferrari Financial Services.

On page 8, we are providing the bridge of our net cash and we show the evolution from the EUR566 million.

That's positive as of the start of the year, with a net debt of EUR1.938 million at the end of the year.

These were driven by the capital reorganization in connection with our IPO and spin-off, partially offset by the strong free cash flow generation as well as the [deagon] and payments related to our minority shareholders in China.

The positive free cash flow generation was primarily attributable to strong operating performance of EUR748 million and a net increase in the financial receivables portfolio of EUR121 million, partially offset by taxes paid, negative working capital performance of EUR39 million, mainly attributable to [exsqueeze] in payables, primarily driven by full production LaFerrari in 2014, while at the end of 2015, the product [lafifer] was nearing completion and shipments are planned to be completed in Q1 2016, partially offset by collection on inter-company related [party] receivables.

CapEx (inaudible) and was EUR317 million, driven primarily by investments to sustain our product offering net to the one-time cash influx on the sale of investment property.

On page 9, we're providing the details of the net debt analysis, made of the following elements: the capital reorganization in connection with the US IPO is up to a EUR2.8 billion (inaudible).

The completion of the [cradiac agreement] that took place in November with a [certain stem] third-party [tent] comprised of EUR1.5 billion meet loans from productivity and we EUR0.5 billion which shorten ability.

The finalization $100 fringe line from a third-party event on a fortune of our financial services portfolio did well.

And so repayment of the FCA loan, which took place a the end of December and the seven [FCA FFS Inc] that was EUR411 million.

Even in payments related to our minority shareholders from China and the acquisition of the NCI, all were offset by free cash flow generation of EUR390 million and other minority facts.

On page 10, we have provided the detail of our debt maturity schedule, which is shown as a result of the trades agreements and the refinancing transaction which was finalized at the end of the year, at last the new trade agreement specifically were finalized in the US for the financial services portfolio.

On 11, we have provided the details of our guidance.

We're providing the outlook of shipments, including limited-edition supercar, will reach approximately 7,900 units, which will support net revenues in excess of EUR2.9 billion, assuming FX at current market conditions.

Adjusted EBITDA is expected to be above EUR770 million and net debt is expected to be lower than EUR1.95 billion, excluding the self-liquidating financial receivables portfolio, EUR750 million, which includes the distribution to our shareholders, subject to the approval of the 2015 annual accounts and the review of the other relevant financial statements by the Board of Directors.

On page 12 until the end of the deck, we are providing an overview of the main activities that were done in 2015.

Page 12 has the overview of our launches of our vehicles.

Just to summarize, the 488 GTB, the 488 Spider, and the F12tdf.

On page 13, we are providing the summary 2015 results in Formula 1 and over the year and are waiting and looking forward to the March 18 starting of the new season for this year.

On page 14, we are providing all client relations activities which are relevant for 2015, have been completed into our --included in our performance and also our client relation activities.

Page 15 is providing the overview of the brand and our store presence.

We are operating with now 12 directly operated stores and more than 23 in franchising and also we've got a plan to support the growth from this perspective.

And page 16 is providing the overview of the corporate structure as a result of the IPO and the spin-off which took place at the beginning of the year with the leasing at the Milan Stock Exchange in January of this year.

With that, I hand over to Mr. Marchionne for any closing remarks.

I think we can take questions.

Before we start the Q&A session, please let me remind you that we are a one-segment Company.

Just another ancillary group for the car business.

[Fertefela] one is our marketing tool and therefore we do have a surprising [cost] in our P&X and for the community has provided a good level and we don't have business [unitour] segments.

With that, I'm going to turn it back to the operator and we will begin the Q&A session.

Thank you.

(Operator Instructions)

John Murphy, Bank of America.

Good morning and good afternoon, everybody.

A first question, if maybe, Alessandro, we could go to appendix 21.

I'm just curious if you can give us the adjustments for the profit before taxes, the tax rate and the net income.

Because I think people are little bit confused.

The adjusted EBIT and adjusted EBITDA look very strong relative to expectations, but I think there's some confusion about what the adjusted net income is for the EUR24 million that you're incurring for the IPO process.

Actually we don't have an adjusted net income.

That is net income as it is, so there are no adjustments for that, while adjusted EBIT and adjusted EBITDA are reflected in the items related to the IPO and spin-off cost and we've obviously adding 2015 as one-time costs as well as the extraordinary statement of Ferrari employees of EUR5,000 as mentioned before as well as the partial offset for the gain that we had in connection with the state of the investment property.

So All of these amounts combined sum up to EUR29 million for 2015.

But we are not adjusting our net income so that is the pure net income as a Company.

But those costs, they presumably are one-time, are included, or expensed I guess, in this income statement.

So they are not backed out for the net income is what you're saying?

Yes, no.

That's why I don't say that's the pure net income including those costs.

And our tax rate at the end of 2015, 33%.

There is a slight increase compared to last year, which is primarily driven by the fact that we had reflected the change in the future tax rate on the Italian perspective, which is impacting the net DPA and DPL of the year.

So it's the one-time over 1% negative contributing to the net income of the year (multiple speakers).

Okay, but if we wanted to back those numbers out, that would be the EUR24 million that you are adjusting for on adjusted EBIT, right?

Would go to the pre-tax profit and then would be applied, the same tax rate would be applied, correct?

Yes.

Okay.

So the EPS looks like it's more $0.36 as opposed to the $0.28 when we back those numbers out.

Does that sound about right?

Yes.

If you had to back out EUR29 million, that would be your adjusted net income would be EUR319 million.

So you're recalculating that or we can do the math.

And I believe it's correct.

Okay so it's about that rate.

Okay and also, if we look at page 8 and look at the EUR390 million of free cash flow, if we took out the one-time items, I apologize, I didn't follow that on page 8, what were the one-time positives and negatives?

What do they amount to if we look at the free cash flow?

The free cash flow is basically all positive amounts related to the one-time, as I mentioned, so the state of investment properties, the reimbursement from on the Maserati loan, and the state of the financial receivables portfolio.

You give one negative item, you pay off, extraordinary payoff for the personal which we did in December.

So the total of those would be, of the positive and negative one-time free cash flow numbers?

Yes.

I'm sorry I missed what was the total?

You want to know how much they amount was in total?

Yes.

We just want to understand the ongoing free cash flow power as we're modeling this forward so we know what we're walking off of in 2015.

Including one-time, close to EUR100 million.

Got it.

Okay.

Thank you.

And then just secondly, as we think about the ongoing product launches and roll-off, how much of the LaFerrari is left to be delivered and recognized in 2016 and if we think about that relative to the F12tdf ramp, how much of the 799 of F12tdfs are going to be delivered in 2016 according to your plan?

We're not delivering all of them in 2016 and the effect of the F12tdf is essentially offsetting also the negative effects of the come-out of the LaFerrari.

So you're basically, in your forecast, assuming that the LaFerrari and the F12tdf will be a relative neutral on mix?

Yes, correct.

Okay.

And then as we think about the engine business and the Levante launch, at what point in 2016 will the Levante launch and the presumably the engines that go along with that product really hit and help the engine business?

Second half of 2016.

Okay.

And just lastly on FX, you have nothing assumed for your guidance for 2016.

It's basically at current spots with no benefit from hedging or any shifts that would happen in the market?

There is a partial roll-off, as I think we said a certain number of times during the road show, which is coming 2016 in the second half of the year.

[Fried currencies] expected to roll-off completely by the first half.

Okay.

Great.

Thank you very much.

Ryan Brinkman, JPMorgan.

Great.

Thanks for taking my question.

First one is really just on the R&D assumptions, if you can provide that color, that are embedded in the 2016 guidance.

And then, more generally, if you could comment on the how the larger project is going to moderate R&D over the medium-term.

Total R&D in terms of capital expense chart, lots of products are component and all of the touring is going to be EUR360 million in total for CapEx.

If you need to add the amount in terms of expending, you need to add also the influx on the T&L, which is partially driven by our R&D for innovation which is expense flat of the DDR and racing activity, which is going to be lower than what we had in 2015.

Just as a broad statement on the takedown of CapEx, there is a significant work that has been going on at a Formula 1 level now to find really which trains are spending on racing activity at least for the duration of the concord agreement from 2020.

And I think a lot of this has to do with time and the efforts that have been made in the last six months on the summarization of the prior units.

And there are additional work done to point out to make sure that the revisions to the staffing in 2017 will reasonably be expected to solve the distortion in the R&D profile of (inaudible).

So I feel roughly comfortable with 2016 is in mind, the record amount of money to get ready for the 2016 season.

I think we're going to see these numbers on the Formula 1 side come down relatively quickly once 2017 is nailed down and sort of adjusting the structure to run Formula 1 until 2020 (multiple speakers).

I think both Alessandro and I have been relatively clear on the CapEx profile going forward.

I think most of the large investments have been made in terms of the architectural and fire trained choices that we've made here.

So we expect these numbers to taper down as we walk the walk all the way into 2018 and 2019 until the next cycle starts.

Great.

Helpful.

Thank you.

And then just last question, it sounded like an answer to one of John's questions that you are guiding mix to be roughly a push next year.

Can you just talk about the other drivers?

Firstly, if that's correct, but also the other drivers in the walk from adjusted EBITDA of EUR748 million in 2015 to EUR770 million in 2016.

Any sort of directional color about volume or currency hedges.

You provided some color on R&D just now, but some of the other components of the bridge, please.

Thank you.

To begin with, it's too hard [having more currency] in 2015 to 2016.

As we've been doing contributions.

So the mix side, I think we covered that.

Volume is going to be right around that as Sergio just mentioned and the other one element, as we said, is the FX contribution in the second half of the year.

And then we will still have that lower [like historical] amount of the SG&A as a result of keep on focusing on stores activity for the brand side.

So those are the main drivers for the walk in.

D&A is likely to hold in 2020, 2016 again, as a result adjusted life cycle, I'll call it, that's all that.

Thank you.

Richard Hilgert, Morningstar.

Thank you.

Good morning and good afternoon.

I appreciate you taking my questions.

Just looking at the individual country changes in volume, China being down a little more than 9%, I guess almost 10%.

Given the environment over in that market, it seemed like that environment was something that was all throughout 2015.

Does it make sense to think of China directionally as having reached a trough and that 2016 we should see maybe some slight improvement in volume from that region?

No.

I think the best, the most intelligent view of China is to hold volumes at 2015's level.

Okay.

So unchanged for 2016 versus 2015.

That's right.

And did I hear correctly, I'm sorry I'm having some difficulty hearing the call.

23% effective tax rate for 2015, full year?

33%.

33%.

Okay.

All right.

Very good.

And was curious, just taking a look at the guidance next year versus this year, maybe implying a slight increase in volume from one year to the next.

But I'm trying to square that with the longer term target of 9,000 vehicles shipped in 2019.

If I'm looking at the ramp, it seems like the shipments might be a little bit off of what I might have expected, in order to eventually get to that 9,000 if we're expecting somewhat of an even ramp.

Can you talk little bit about how you get from here to the 9,000 and where that ramp goes?

Is it more of an increase later on or is it in the middle?

Where does the change happen year over year in the shipments?

Look, we said 9,000 cars as what we consider to be the natural limit of the volume [rendition] for Ferrari.

It is not an issue -- the loftiness of the increase is not an issue from the production side inside Ferrari.

It just isn't, just given the limited number of Ferraris that we make.

We have since stated publicly that we will never build the car in excess of what market demands.

So the modulation of that increase is based on market penetration and the model of the car.

We have not talked specifically about which models get launched in what year.

And I think you're just going to have to bear with us as we roll-out the product portfolio between now and 2019 to justify the volume of 9,000.

I can't tell you when.

Okay.

Thank you very much.

Stuart Pearson, BNP Paribas.

Yes, good morning, and good afternoon, sir.

So just a couple questions.

Firstly, just to clarify on the net debt position and the guidance.

I think for FCA equates your number I think of [EUR963] million for your net industrial debt if you like, or ex the -- or the finance receivables.

I wondered if you could confirm that number, and that compares to EUR750 million or below EUR750 million you're guiding for?

Because I guess, that implies roughly EUR300 million of free cash flow you're guiding for this year?

I just wanted to check that number?

And the second question was just -- really going back to this margin, because I'm maybe just slightly disagreeing with the initial question.

I would have thought 14.7% margin in Q4 was quite a disappointment in a way, given where we were in Q3 around 500 basis point sequential contraction.

Now I know there is some seasonality, some worker payments.

And so I wonder if you could just talk about the differences there, the drivers there, especially with respect to personalization?

I understand that may have been a bit weaker in Q4, so just how you expect that to trend in 2016 and why?

Thank you.

So the [core] of net debt, as we said that in the press release was in connection to the FCA reading our preliminary results on a consolidated basis, with their view.

There is a different definition of the net debt, and the net industrial debt, so differences that you're looking for is just a difference in definition.

We are, considering our net debt, per our definition is just a simple difference within our cash position and our net debt position, which is made of all the credit agreement that we finalized by other debt that existed to fund the financial services company.

So if we take that out -- so we take out the self- liquidating portfolio, we are at the EUR800 million.

For the -- and that is consistent to the number we provided during the [deal] inclusive of the number in Q3.

Sorry, I missed the number.

If you take out the self-liquidating receivables, the number would be -- so the EUR1.938 billion would be, just to compare to your EUR750 guidance?

EUR797 [million] for 2015 actual, and EUR750 million for our 2016 guidance.

EUR797 million?

Now, we have just -- listen, we have just been getting feedback from the market, about the fact that the market does not understand the total debt, the EUR1.9 billion.

The debt -- net industrial debt position of this house is EUR800 million.

Under -- (multiple speakers)

Nobody would ever show numbers over EUR1.9 billion under normal circumstances.

We don't segregate financial services from the rest of our operations, which probably is the aggregation number.

The difference between the EUR790 [million] that Alessandro made reference to on the total debt, is a self-liquidating position.

It will pay itself off.

I understand the difference.

But then, that implies that's after the dividend, your' re only guiding for your EUR840 million or something of free cash flow this year then?

Is that, is that correct?

For 2016, we've [put] the upper limit of debt at EUR750 million.

Okay.

Okay.

Thank you.

It includes a dividend of EUR87 million for the year, or a distribution of EUR87 million, which is what we've declared.

Okay.

And then, a question, sorry on the margin and the personalization?

Thank you.

So I believe your question was on Q4.

The -- we had explained that part of the reason for [announcing] this in the way that we have expenses, in particular for R&D.

So I think we need to prepare for a new season.

We are -- we have a higher spending on R&D in Q4, and particularly in Q1, in order prepare for the season.

That's why the Q4 numbers are lower than the Q3 numbers, which were somehow exceptional.

So in terms of how 2016 is going to perform, although we had a negative contribution of the -- for the phase-out of the Maserati, which is still only partially in Q1 of the year, but then it will roll off.

And as I've mentioned before, in terms of mix, that it is going to be offset by (inaudible) to the front, which is basically going to be distributed through all the different quarters of the year.

But we have -- but first half, they come from the second half, also due to the effects which I had mentioned.

So that's providing a different geography to our financial results during 2016.

So you will see the effects, positive contribution coming in the second half of the year.

But just go back to Q3, and try to compare Q3 to Q4.

We were crystal clear on the roadshow, and every call that we've made in connection with the IPO that Q3 was an unusual operating performance quarter, and that we would not be repeating it in Q4.

As he said, this 2015 is the highest operating margin that this house has ever achieved.

That's clear.

Thank you.

Martino De Ambroggi, Equita.

Thank you.

Good afternoon, and good morning everybody, actually from Equita.

My first question is on the guidance for the current year.

I'm sorry, but the line was not particularly good.

I was wondering if you could recap the CapEx for the current year and D&A?

And also, if for the current year, we should expect a positive impact on tax rate because of the patent box under the fiscal system in Italy?

Well, [total] CapEx for the year is expected to be lower than EUR350 million.

And the patent box that you mentioned is tax rate, it's under the (inaudible).

We haven't reflected, and it's not going to provide a relevant amount until the [policy] is accepted, and until we exactly know how much is the contribution, and it's subject to approval of a specific ruling that has not been finalized yet.

And so, we have ruling, but need to get it.

And the amount, the total amount which is going to distributed to the Company in -- for all companies who are operating Italy under the [patent box] regime.

So it's not a fixed amount that we can define at the moment.

It's going to be more relevant, if we get in 2017 on.

Okay.

And the second is on the adjusted EBITDA guidance, above EUR770 million.

Based on the notes that I have, my estimate typically it's generated by the ForEx effect for the current year.

And by the way, consensus is above EUR800 million.

So just understand that, if you could elaborate on the real potential for the EBITDA margin for the current year?

Or on the other side, what are the negative items affecting the positive ones?

I think EBITDA is [ultimately] in line to what we had highlighted in the past, in terms of progressive performance.

Our volumes are growing as you see, from our preliminary numbers to the 7,900 unit.

So that's a positive contribution, in terms of volume and mix is going be very lightly negative.

That is, basically going to be a slightly offset by the phase-out of LaFerrari.

So we need to consider that LaFerrari contribution was I think, both 2015 and in 2014.

So we are substantially offsetting all the effect of LaFerrari, and our guidance is higher than the 2015 results, and the 2015 adjusted EBITDA, which was the highest one achieved by the Company.

So we believe it's in line with our expectations in the Company and in line with our plan.

Okay.

And the very last one, the net debt guidance, could remind what is the impact of non-recurring items for this year?

Non, apart from what -- as we said, a distribution to the shareholders, which is going to be -- which is included in the guidance, and is expected to be approved by the Board, as regard to the review of the financial statement of 2015.

That is the EUR87 million which we have in our press release today.

Yes, okay.

So nothing else.

Okay.

Thank you.

Neel Mehta, Morgan Stanley.

Thanks, and good afternoon.

Just a couple questions from my end.

First, I know that greater personalization has been highlighted as an opportunity to expand margins, maybe a long-term opportunity?

But could you elaborate more on that, and maybe give us color, or just the order of magnitude on the margins that are associated with cars which have been customized, through maybe your tailor-made or special equipment programs?

And then my second question, just on spare parts.

Could you give us a sense of how much of the revenue is spare parts within the car and spare parts segment?

And any color on margins within that category?

And the type of growth you've seen over the last few years with, specifically relating to spare parts?

Thank you.

By the way, I'm amazed that you are asking questions about spare parts.

There is not anybody who makes spares as (inaudible) in the world that wouldn't give you remotely the number on spare parts.

Not one.

But I will give you a benign answer.

It is by definition, one of the most profitable parts of the business.

Unfortunately, the only way you can make money in spare parts is by making the car.

If you don't make the car, there is no spare parts to attach to the vehicle itself.

But it is significant profit contributor.

In the case of Ferrari, and when you compare it to the rest, those people that make vehicles, they probably play a less relevant part than it does in other automakers, because of the potential margin that generate in new part sales.

The question about personalization, and we cannot give you numbers on the margin (inaudible) but it's substantially higher as you move up the personalization curve.

So when you get to tailor-made, those margins are significantly higher than on a standard car.

But there are varying degrees, to the extent that -- and I think we are being relatively successful at pushing the personalization option to our customers view as the margin increased from [where they are].

I can't give you numbers.

All right.

Thank you.

Thomas Besson, Kepler Cheuvreux.

Thank you very much.

I have a few questions as well please.

Could you help us on where gross going to come from in your opinion in 2016, as we assume it's not from China?

Can you please repeat the question, because we really didn't hear it very well?

Sorry.

I'm not sure I understood what you said.

If you can, please repeat the question, because we didn't get it.

Okay.

Sorry for that.

Could you please help us just on where volume growth will come from in 2016, please, as it's not going to come from China?

So the growth will [primarily] coming from -- will be coming from the Americas, of the US is a main consumer for there, and EMEA, which is obviously, those are two largest regions.

I think we covered, also in parts of China, and generally, the -- it's less than 5% of our total shipment.

So as you can imagine this quarter, it's going to be -- expected to be stable.

So it's still not going to be a relevant [market] in terms growth, and it's not coming -- it'd never be -- also when we described our strategy for the doing the IPO.

So the two main contributors are the Americas with the US, and EMEA.

Very good.

Can you give us the numbers of TDF that have been shipped in 2015?

And also the number of LaFerrari that have been shipped in 2015, please?

On the LaFerrari, we are not providing the number, but as we have said in the past, 2015 was slightly higher than 2014, and we have small [pay] in Q1 this year.

TDF was really at the very beginning, so a few units, not relevant for 2015 at all.

Just for your information, if you trying to work the numbers off, LaFerrari was a limited edition car.

We sold 500, and starts 499.

If they are evenly split between 2014 and 2015, they are about 450 a year.

Even if there is an -- if we calendar adjust them, one year to the other, they're not materially off on that number.

Great.

Thanks.

Lastly two small questions.

Can you explain the dividend policy, please from here?

I'm sorry, but we couldn't hear again the question.

Sorry, could you comment on the dividend policy of Ferrari, please?

25% to 40% of net.

Okay.

Thank you.

Last question.

At what date, do you expect to publish the full accounts, please?

I'm sorry, again.

The line is a bit unclear.

Could you kindly repeat?

Sure.

When, what date should we get the full accounts for Ferrari, please?

I'm sorry.

Can you kindly speak closer to the microphone?

Thank you.

Yes, I will speak right on the microphone.

I'm sorry if the line is bad.

Could you please tell us when you will release the accounts of the Company, the full accounts of the Company, please?

Full accounts, sorry.

So the full is expected to come from the Board of Directors later in February.

So close to the end of February, and that is when we will be publishing our [20-F], and our annual report which is required for Dutch, under a Dutch requirement.

Thank you very much.

You're welcome.

Stephen Reitman, Societe Generale.

Yes, good afternoon.

Thank you.

Could you tell me if you have any more clarity on negotiations with the [relevant] authorities on the CO2 targets that you will be meeting for -- in the relevant regions, Europe and the United States for 2020 and 2021?

No, we do not have any additional information to give you.

Other than, obviously to comment that the discussions are ongoing.

I don't expect to have any [seismic] from the discussion.

I think we understand, from a public portfolio, it will have to happen.

I have said this publicly that, I do think that ultimately the introductions of a hybrids in Ferraris will be inevitable.

It will make it much easier.

And can you give me your average CO2 score across your fleet in 2015?

To be perfectly honest, I don't know.

And obviously, it depends on -- it depends on jurisdictions.

The initial control systems vary by area.

Is it roughly -- is a figure I have in mind for 2014 is about 270 grams.

Does that sound reasonably in the ballpark?

It does not sound unreasonable, but I -- you and I are not [graphing] it.

I don't have enough information to give it to you, but it does not sound unreasonable, given what I know.

Thank you.

Michael Binetti, UBS.

Hey, guys.

Good afternoon.

If I -- I want to back up a little bit, because everybody has asked quite a bit about some of the details here.

But if we just try to connect the story for 2016, to some of the longer-range thinking that you guys talked about during IPO.

In the revenue guidance for 2016, will put you right at what we thought was about the top of where the guidance was initially going to be for revenues for 2017.

But as I look at the incremental margins next year, they're going to be a little bit lower here.

And I know, and you tried to give us a little bit of color on the walk on EBITDA margins.

But if the unit targets are what they are, but the revenues are maybe running a little bit ahead of what you thought, in the original 2017 plan.

A lot of the story was some of the cost items starting to lever in 2016.

It sounds like that -- maybe some of those might have shifted out to 2017.

I know Sergio, when we're talking through the roadshow process, you thought maybe some of the Formula 1 cost reductions.

It seemed to me like some of the Formula 1 cost reductions you were talking about, were going to be occurring more in 2016.

It sounds like some of those have now moved to 2017.

Maybe just some directional guidance on each of lines in the P&L, to help us connect what you're saying about 2016, to what we originally were thinking about 2017?

So the best [angle] I can give you in 2016, is that the numbers that I understand that was quoted in the guidance, was greater than the number that we posted.

And I think that there is a view out there, that we have never -- we have historically not missed numbers.

I think the numbers that we are giving you will measure against actual performance as we go forward.

I confirmed everything that I told you on the roadshow, but the reduction in F1 costs.

And the fact, that this house will be presently gearing up, and getting to ready to leverage off the investment that is made in the [architecture] The cars that are falling off, we'll see -- the launch of a new car.

There are at least three new cars that are coming off the portfolio on a yearly basis.

Just let us, go out there, produce the numbers on a quarterly basis.

We have indicated clearly in guidance that these were the lowest numbers of a possible set of ranges of outcomes.

I think it we will do better than what we've indicated.

But that's what it is.

And taking into the [PNS] decline as [proved] guidance, is going to be unhelpful to you, or to me, right?

Okay.

And then, could you comment on -- because obviously, probably more than our fair share of turmoil around the world right now, and volatility in some of the different markets.

Would you mind commenting on what you are we're seeing related to the wait list for the product in some of the different regions, given what we're seeing with the Chinese economy, the US stock volatility, and then obviously, some of the oil markets are under pressure there, and they are important markets for you as well.

Look, I mean, for me to try and make sense of the reaction equity markets to what's going on, is an [impossible task].

I don't understand it.

I don't understand the reaction of -- why our share price, announcing when we had the best earning in our history, and the stock around it.

But we have not seen, in terms of customer interface, any impact from what we're discussing here, in terms of lowering our expectations or the order book.

We have not seen cancellations.

The order book continues to be as strong as ever.

And you understand, we make less than 8,000 cars a year.

So the ability, the placement of distribution network is not an issue And we remain conscious of the fact that obviously, we are dealing with an incredibly affluent customer base.

That customer base today, based on what we know, today is not suffering from the events that you have described.

Having said this, I think China has never been a significant portion of our portfolio, nor do we expect it to be a significant portion of our portfolio in 2016.

The rest of the world is actually doing well.

Notwithstanding what capital market followers are saying, we are okay.

You see the numbers from Ferrari [just reported] this morning.

70 months (inaudible) of sales growth.

The market is actually doing a lot better than people are assuming.

So it's all right.

Okay.

And then, if I can add one last question, Alessandro.

As far as personalization, I think you talked about that being about a 15% lift to the average prices for the vehicles.

Where did that -- what percent did that end at in 2015, and what is your thoughts baked into the 2016 outlook?

Thank you.

We covered that before.

It's [16]% in -- the actual 2015.

So we are expecting to be in line in 2016, [although we'll] get the benefit of high volumes.

We can move to the next question, thank you.

George Galliers, Evercore.

Hello, and thank you for taking my questions.

First question, I know you don't comment on future products.

But conceptually, given a significant number of upcoming products from peers in the crossover space, would you ever consider a crossover for Ferrari?

And is the FF platform and drivetrain something which could be adapted for crossover at some point in the future, if you did decide to take that path?

The answer to your second question is yes.

And the answer to your first question is that, you'd have to shoot me first.

Okay.

Thank you.

And then, secondly, and then, apologies if you've already visited this, but the line wasn't perfect.

Just coming back to FX and the change in which you hedge.

Very simply, given what you have hedged in today's spot for the unhedged part, do you expect FX to be a similar tailwind in 2016 to the EUR45 million last year, or to be greater or smaller tailwind?

Yes.

So yes, you expect it to be a greater tailwind, is that correct?

No, it's correct, that is in line with [2015].

Okay.

Very clear.

Thanks.

Alexis Albert, Barclays.

Hi, good afternoon.

Thank you for taking my questions.

Two questions.

The first one is regarding you're [Dura Tech].

I knew you don't want to communicate on the wait list on DuraTech, but considering the lack of visibility in the [India] (inaudible) sector, it would be great to have an idea of when we talk about ordering DuraTech Ferrari, are we talking about six months, or are we talking about 18 months?

It would be great if you could give us some color on that.

This is my first question.

Second question is regarding the financing.

What would you say is the share of Ferrari being financed?

The answer to your first question is, between the two numbers that you are right.

Okay, great.

Thank you.

That is useful.

And regarding financing?

Regarding financing on the new car side, it's on the new vehicles, we have a penetration rate of 33% on average.

Okay.

So 33% is the Ferraris being financed by yourself, right?

No.

That is the financing that we are -- yes, it's all through -- I'm sorry, financing is on [part of our] financial services company, 33% of our new cars.

Okay, including all source of financing?

We just do retail financing, that we do.

We don't do any -- (multiple speakers)

Okay.

But do you have assumptions internally of, is this of 33% for you, what is it's total?

So the financing coming from the dealers in general, is not a number that we know exactly, so we know how much we are financing directly.

It's one out of three cars.

Okay.

Thank you.

Lello Della Ragione, Intermonte.

Hi, thank you for taking my question.

Probably you answered it before, but the line is terrible here.

It's about personalization.

You gave the number for 2015 during the presentation, but it wasn't clear from here.

And can you repeat what your target for 2016, and which will be -- is the personalization in terms of percentage, moving forward, the evolution of it even beyond 2016?

Thank you.

I'm sorry, but could you [generally] put some --?

The percentage, and we covered that (inaudible).

So 15% was the actual that we had, in terms of contribution on the top line.

In 2015 -- I'm sorry, 2014.

2015 was [16%] and we are expecting the same level in 2016.

Last, as I had mentioned, the additional fact that we will have higher volume in 2016.

Okay [50%] on top of the average selling price, right?

1, 6, so 16%.

Okay.

16% on top of the average sell ling price.

Okay.

And can you just probably answered even to this one, but the line is terrible.

Can you please give us any indication on what we should expect on gross margin level for 2015, so with the costs that you had up there, in terms of [Roma] deal and [employee]?

Thank you.

So we have -- we are expecting obviously to keep on realizing efficiencies on our [government here], in line with what we had in 2015.

Okay.

Thank you.

There are no further questions at this time.

I would like to turn the call back to your host for any additional or closing remarks.

Hello.

Thanks everyone for attending today's call.

Thank you.

Bye.

That will conclude today's conference call.

Thank you for your participation.

Ladies and gentlemen, you may now disconnect.