Ferrari NV (RACE) 2021 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Ferrari 2021 Q1 Results Conference Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Nicoletta Russo. Please go ahead.

Thank you, Lauren, and welcome to everyone who is joining us. We plan to cover today the group's Q1 2020 operating results. In light of this, the duration of the call is expected to be around 60 minutes.

Today's call will be hosted by the group's Chairman and acting CEO, Mr. John Elkann and 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 Mr. John Elkann.

Grazie. Thank you, Nicoletta, and thank you, everyone, for joining us today. In a few minutes, Antonio will provide you with more color on this first quarter. But in summary, I am pleased to report an excellent set of results in terms of profitability, margins and cash flow, which demonstrates the strength of our leadership team and the great work of the men and women of Ferrari, whom I want to thank.

Our results also proved that the key dynamics of our business remain strong, with a record order book, up over 20% versus the prior year, with the strongest demand coming from our most profitable models. The elegance of the Ferrari Roma and our first hybrid range car, the SF90 Stradale, mean we're enjoying vibrant demand and order intake, especially in the U.S. and in China, where the size of the order book doubled in the last few months, which is a great way to start preparing our 30th anniversary there in 2022.

On the back of the above, and absent any further potential dislocation caused by the pandemic, we are confident that we are on the right track to meet the top end of our guidance for 2021 by all metrics.

As anticipated at our latest Annual General Meeting, I am also pleased to report we're making good progress with a short list of very strong candidates for the new CEO, who will lead our company. And I can promise you that our future CEO will have all the right qualities, including an intimate understanding of the technologies required to chart a successful future for Ferrari.

Innovation is deep in our DNA, and we certainly see this exciting decade of accelerating change as opening up even more ways for us to extend the boundaries of excellence and passion that are at the heart of our history and will be even more so as we create our future.

Building on our deep experience in hybridization, we're continuing to execute our electrification strategy in a highly disciplined way, with the application of our technologies, both in motor sport and in road cars we have a huge opportunity to create a unique experience for our customers.

By way of example, the SF90 Stradale has the highest power weight ratio for a hybrid car with our axial flux electric motors and best-in-class driving dynamics, thanks to the race front axle with Ferrari torque vectoring. These technologies are, as always, driven by the know-how we are applying in motor sports, where we have developed, especially in Formula 1, expertise in batteries, inverters and electric drives.

We're also very excited about our first all-electric Ferrari that we will unveil in 2025. This important landmark in our story will offer us a new language to bring the uniqueness and passion of Ferrari to new generations. We will provide you with more details of how we will incorporate this into our exciting plans for the future at our next Capital Markets Day in 2022.

On the same occasion, we will take you deeper into our strong commitment to ESG. As a company, on the environmental front, we've already committed to achieving full carbon neutrality within this decade by direct and indirect means. In parallel with the process to certify all our CO2 emissions and define science-based reduction targets, we have already started identifying both the direct actions, with a focus on energy consumption and the choice of the materials we use, as well as appropriate initiatives to offset the remaining emissions.

These important commitments to our future, and that of our planet, are possible, thanks to the resilience we have demonstrated in this last year when we acted quickly and decisively to manage the effects of the pandemic.

As you will no doubt recall, we have stated on several occasions our decision to postpone a number of our initiatives to address the impact of the COVID virus last year, both on us and on our Italian suppliers. Compared to the beginning of this year, we have decided to be more prudent on expenditures also in 2021 as we follow through with the correct decision to carefully manage the cadence of our activity.

This is also in light of the continuing uncertainties related to the pandemic, which, as we know, still remains unresolved in many parts of the world, sadly. As a result, and also taking account of the implications of COVID-19 for a brand diversification and F1-related activities, we now expect that, even though our 2022 results will be better than 2021, which, as I said, we believe will be very strong, the achievement of our '22 financial targets will be postponed until 2023.

I also want to reconfirm today the arrival of the Purosangue that will be the epitome of Ferrari's driving experience in a completely new spatial dimension and will be unveiled as planned in 2022 to be joined in due course by product launches that will power our ambitions for 2023 and beyond.

And finally, to return to the present, tomorrow is a big day. We will unveil our first new model for this year, the new Ferrari Limited Edition V12, which I'm delighted to announce, is already sold out. This confirms the strength of our business model, uniqueness of our products and the loyalty of our customers.

And with that, let me now hand the call over to Antonio.

Thank you, Mr. Elkann, and good morning or afternoon to everybody who is joining us today.

Starting from Page 4, you can see the highlights of the Q1 2021 results, which represent a very good start of the year, up also versus 2019 on almost all metrics.

Our shipments were 2,771 units, up 1.2% compared to a strong prior year quarter since in Q1 2020, the impact on the core business of the COVID-19 pandemic was still very limited. The increase versus Q1 '19 is 6.2%.

Group net revenues were EUR 1.011 billion, up 8.5% compared to prior year and 7.6% versus 2019, driven mainly by the stronger product mix.

EBITDA came in at EUR 376 million, up 18.6% versus Q1 2020 and up 20.9% versus Q1 '19. The EBITDA margin reached a record level of 37.2%.

EBIT was EUR 266 million, up 20.9% compared to 2020 and 14.6% versus 2019, embedding higher D&A.

Net profit was EUR 206 million, up 24.1% versus Q1 '20 and 13.9% versus Q1 '19, resulting in a diluted EPS of EUR 1.11 compared to EUR 0.90 of prior year and EUR 0.95 of 2019.

Industrial free cash flow for the quarter was EUR 147 million. This was also stronger than in Q1 '19, both in terms of euro amount and cash conversion, if we exclude the EUR 170 million advances on the Ferrari Monza SP1 and SP2 we collected in Q1 '19.

Turning to Page 5. You can see the details of the first quarter of 2021 shipments, up 33 units or 1.2% versus a strong prior year quarter. As a reminder, last year, we had a fairly limited impact on deliveries due to the COVID-19 pandemic since we suspended the activities close to end of the quarter.

Sales of 8-cyclinder were up 8.1%, while 12-cylinders were down 19.6%. Note, however, that with the arrival of SF90 Stradale and Spider, equipped with the V8 hybrid, the segmentation between V8 and V12 is becoming less relevant with regards to profitability. The F8 family and the 812 GTS drove the deliveries of the quarter. The SF90 Stradale and the Ferrari Roma, whose shipments commenced in Q4 '20 remain in a ramp-up phase.

During the quarter, we continued to deliver the Ferrari Monza SP1 and SP2, in line with production planning. The 488 Pista family and the Ferrari Portofino has been phased out at the end of 2020. Quarterly shipments were affected by our deliberate geographic allocation based on the different stages of the life cycle of our model by region.

As a result, EMEA was down 3.8%, America was also almost flat, Mainland China, Hong Kong and Taiwan posted a strong percentage increase, boosted by the arrival of new models and accentuated by an easy comparison versus prior year. As a reminder, we privileged deliveries in this region in the first 9 months of 2019, in advance of the early implementation of new emissions regulation. And finally, rest of APAC decreased by 16.6%.

The second half of 2021, we will also see the ramp-up of the SF90 Spider and the Portofino. The product portfolio will be further enriched with a new Ferrari Limited Edition V12 to be unveiled tomorrow and already sold out, as we said.

Turning to Page 6. You can see here, displayed, the walk of our group net revenues for the first quarter, that was up 10.8% at constant currency. The increase in revenues from cars and spare parts, up 11% at constant currency, was generated mainly by the strong enrichment of the product mix. Personalizations were in line with the prior year in absolute terms, while lower in proportion to revenues from cars and spare parts, essentially due to the phase out of the 488 Pista family.

Engines revenue were up 37.8%, attributable to higher shipments to Maserati and, to a lesser extent, to the rental of engines to other Formula 1 racing teams. The increase in sponsorship, commercial and brand was attributable to an improved outlook for the Formula 1 calendar, partially offset by lower prior year ranking as well as reduced brand-related activities due to the COVID-19 pandemic. Currency, including translation and transaction impact as well as foreign currency hedges had a negative contribution of EUR 22 million, mainly the U.S. dollar.

Moving to Page 7, let me review the change in our EBIT bridge, explained by the following variances:

volume positive, thanks to the previously mentioned deliveries;

Mix price variance for EUR 48 million was boosted mainly by the SF90 Stradale and the Ferrari Monza;

Industrial costs, research and development costs increased EUR 19 million, mainly due to higher D&A as an increase in spending in product innovation activities, net of technology-related government incentives, which were lower year-over-year;

SG&A decreased EUR 6 million, mainly reflecting the adaptation of our communication and marketing activities to the new digital environment, also due to COVID 19;

Other increased EUR 24 million, mainly due to the improved outlook for the Formula 1 calendar and higher contribution from other supporting activities as well as Maserati, partially offset by lower prior year ranking and reduced brand-related activities due to the COVID-19 pandemic.

The total net impact of currency was negative EUR 18 million.

As a result of what I just mentioned, EBIT reached EUR 266 million, up 28.5% at constant currency with EBIT margin at 26.3%. The strength of the mix will continue over the year, while OpEx, mainly in marketing activities and expenses for product innovation, will increase as planned in the second half of the year, leading to 2021 guidance margins.

Turning to Page 8. Industrial free cash flow generation for the quarter was EUR 147 million. The positive generation of the quarter was driven by the strong EBITDA, partially offset by investment of EUR 151 million. For reference, please remind that Q1 2020 includes a portion of land purchased nearby the Maranello plant.

The capitalization ratio was approximately 38% for the quarter, increased versus prior year, essentially due to a timing difference in R&D spending for Formula 1. The adverse working capital and other impact was mainly due to higher inventories and the reversal of the Ferrari Monza's advances received in 2019.

Net industrial debt as of the end of the quarter was EUR 420 million compared to EUR 543 million at December last year. Note that in March, we restarted our multiyear share repurchase program with EUR 150 million tranche to be executed within the end of September. In addition, at the 2021 Annual General Meeting, a dividend distribution of EUR 160 million was approved and due on May 5, 2021.

At the end of the quarter, total available liquidity was EUR 1.73 billion, following the reimbursement in January of EUR 500 million 2021 notes and including undrawn committed credit lines, improved to EUR 750 million.

On Page 9, we have the 2021 guidance already presented in February and subject to trading conditions remaining unaffected by further impact from the COVID-19 pandemic during the course of the year. In summary, we target:

Net revenues around EUR 4.3 billion, sustained by our core business with a rich mix. Revenues from Formula 1 racing activities and brand-related activities is where we still have most of the uncertainties, particularly in respect to the Formula 1 calendar and the format of the racing events due to the evolution of the pandemic;

Adjusted EBITDA between EUR 1.45 billion and EUR 1.5 billion, with percentage margins between 33.7% and 34.9%;

Adjusted EBIT between EUR 970 million and EUR 1.02 billion, targeting an EBIT margin between 22.6% and 23.7%;

Adjusted diluted EPS between EUR 4 and EUR 4.20 per share, assuming approximately 20% tax rate;

Industrial free cash flow in the region of EUR 350 million.

To conclude, I echo our Chairman and highlight our growing confidence in targeting the top end of such guidance range as a result of the pretty satisfactory performance of the first quarter, but especially comforted by the record order book, the diversity of the new order flow, together with cancellations in line with our norm and a very dynamic preowned market sustaining residuals.

In addition, we expect that the prudent management of our capital expenditure also in 2021 will likely support our cash generation for the year.

With that said, I turn the call over to Nicoletta.

Thank you, Antonio. We are now ready to start the Q&A session. Thank you.

(Operator Instructions)

We will now take our first question from the line of Stephen Reitman from Societe General.

Yes. A question on your revised guidance. When you look at the factors that were given in September 2018, EBITDA was EUR 1.8 billion and EUR 2 billion over 38% EBITDA margin, and the free cash flow of EUR 1.1 billion or so. You seem to be quite close at least as far as EBITDA margin, and considering your D&A, that's still really achievable.

Obviously, the free cash flow is where there's probably the big deficit at the moment. Now we know that you're going to be receiving a large amounts of deposits for the successor to the Icona model. So I'm wondering, does this indicate that the next Icona may be delayed by 1 year. And so you're expecting the big cash inflow to come in 2023 rather than 2022?

And secondly, nearer term, on the guidance for 2021, considering 26.3% margin that you've reported in the first quarter and what is a very good , given your order book and the demand you described for your highest margin models. What are the factors that bring you back to the guidance range you gave of 22.6% to 23.7% for the full year?

Stephen, it's Antonio speaking. In respect of 2022, I think what we just said, meaning: the capital expenditure have been delayed, and this implies a postponement of some deliveries from 2022 to 2023. This is the reason why we are actually postponing also the guidance to the following year. And this, of course, has an implication both in terms of EBITDA and in terms of cash flows. In addition to that, we are considering, currently, a slight change in mix that might have contributed also to this.

With respect to the margins, I mean, we have been very pleased with the margin of Q1. This has been significantly supported by the contribution of our Ferrari Monzas and the SF90 Stradale. Going forward, we expect that, as mentioned, the product mix remains strong. What we are actually planning is a gradual restart of the activities during the course of the year, meaning additional OpEx compared to what we have seen in Q1. And this is going to basically drive us to the average I mentioned.

And your next question comes from the line of Monica Bosio from Intesa Sanpaolo.

Just another follow-up on the postponement of the guidance. For 2021, the company is confident to achieve the top end of the guidance. But the 2022 guidance has been postponed.

I understand that part of the CapEx has been postponed from 2022 to 2023 with an impact on the EBITDA. But it would be more useful for us to have more colors on this, especially, how much of the postponement is attributable to the core business? And how much is attributable to the sponsorship and brand-related activities? This could be very helpful.

And second question is on the working capital trend. How are you dealing with potential supply chain shortage? And what should we expect in terms of working capital and in terms of inventories across the next quarters?

Monica, thank you very much for your questions. As we have communicated in 2020, and today, we have made a judicious choice of delaying expenditures. And the reason we've done it is linked to the uncertainties we are still living linked to COVID-19, which means that the mix and the deliveries of models are different than what we were expecting. Hence, the reason why we are postponing to 2023, the results we were aiming to achieve in 2022.

I would also like to make clear that we do have uncertainties on the brand diversification and Formula 1, which we are assessing very judiciously as the months go forward. But it is really on the back of lower expenditures, which have a direct consequence on deliveries and mix.

I also would like to reaffirm that our objective, being to build and continue building for the long term the value of our company, we, as our founder, Enzo Ferrari, has always made clear, we want to make sure that we manage well demand and that we keep disciplined in terms of how we manage demand.

On working capital, we believe that Q2 will be in line, and we are managing all the different issues that we are seeing in supply chain in a way that we feel confident in being able to address and mitigate those risks. I hope, Monica, I've answered your questions.

And your next question comes from the line of Michael Binetti from Crédit Suisse.

I just want to go back in time to February to the last call and when on that call, I think you made the statement that the cars were on track to hit the 2022 plan, all the 15 cars that were in the plan would be released. I'm wondering what changed since then that pushed out the '22 guide with a little more specific, if you could.

And I'm wondering how much, if anything, the declaration of 2025 being the release for the electric vehicle versus previously saying that it would be just this decade. So a little more clear there. Does that add some expense to the plan relative to what we initially were thinking for '22?

Michael, Antonio. I remind in the full year call, I said the 15 launches were confirmed, and this is still the case. So what we are now considering is the pace of the deliveries that we expect to happen by the end of 2022. And on that, the postponement, or better, the dilution of the capital expenditure over the course of these 2 years has an impact. Does this answer your first part of the question?

I don't understand. If all the cars are still being launched, is the revenue and EBITDA contribution to the EUR 1.80 billion to EUR 2 billion of EBITDA that was planned by 2022...

Yes.

Even though all 15 cars are being launched, some of the revenues and EBITDA are now happening after the end date of that plan?

Yes. What we said is that basically, the 15 launches will happen. So the cars will be presented in line with our expectation. It's just the time of their delivery: this is going to be diluted over the course of 2 years.

Okay. Any comment on whether the electric in 2025 had some expense to the initial plan for '22?

So Michael, that's a very good question, and you have wrote extensively on it. We believe that within the targets we have of expenditures, we are including electrification without adding to it. We do believe that we will have, also for the measures that we've mentioned before, a better 2021 and '22 will be in line where we were expecting in terms of overall investments. So we just see this as a prioritization rather than increasing the absolute number of investment.

Okay. I guess I'm still trying to understand if the new guidance for 2023 is EUR 1.80 billion to EUR 2 billion of EBITDA. I guess that means a 2-year EBITDA CAGR of about 9.5% to 15.5%, and you delivered 14% in 2015 to 2019. 2021, obviously, is a soft year as economies reopen. But you've got SF90, you've got Monza, huge margin cars and you're planning 5 new car launches, I think, in 2022. And you did comment today that the SF90 is bringing the profitability of V8 and V12 closer together.

I'm trying to understand what lowers the CAGR? Because it seems like a very full and profitable growth period after 2020 as the baseline through '23. What causes it to be lower?

Very simple. As Antonio was mentioning, the rate of delivery has changed on the back of decisions we've made in 2020 and continued doing in '21 in terms of rate of expenditures. So that means that we have invested less last year and will this year than expected, but it will have revenue and profit coming later than what we were expecting, number one.

Number two, as I said before, Michael, we are intentionally managing demand in a way that we continue to build on the strength of our business model, which is really managing the demand side.

And your next question comes from the line of George Galliers from Goldman Sachs.

The first one, just following up on the last question. Could you just help, maybe -- obviously, you've said the pace of deliveries is different next year to what you anticipated. But is that because 1 of the 15 cars will be shipped later in the year than you had initially envisaged? Or is it because effectively, you're just going to ship fewer of them next year than you had initially envisaged due to demand or due to kind of pacing the business to maintain exclusivity?

I think the answer is there are a couple of cars that are part of our project which have been postponed, that will be delivered in fewer units compared to our original expectation of 2018.

Then the second question I had was, when I look at the top line CAGR now from this year to the original 2022 target, but now 2023 target, it's less than an 8% revenue CAGR between this year and 2023, despite the introduction of the Purosangue, which will presumably contribute significant volume.

When we think about the top line growth for Ferrari in the longer term, where are you with respect to the brand extension exercises that you announced back in November 2019? I think you highlighted that you managed to leverage a relatively small percentage of the EUR 800 million retail value of Ferrari branded goods. And how important is the fashion show that you plan to hold in June in capturing more of the brand extension opportunity at Ferrari?

Okay. Thank you, George. The question can be answered this way. As to the growth rate going forward, first, I can talk only about what happens in 2023, and that is very clear that the growth rate is going to be reduced compared to what we originally expected. So there is less of an hockey stick to 2022 and a more gradual growth as a result.

And in terms of the contribution of brand diversification, this is an area, John mentioned before, which has been impacted by the pandemic. On that, it's fair to say we have been delayed, and we still are due to the restrictions that we have in a number of countries in respect of their activities.

Clearly, we expect a boost in terms of contribution coming from the activities that we'll present this year, but it is predicated upon having all the opportunities to restart selling in a normal way going forward.

I think the importance of the fashion show in mid-June is really to demonstrate the legitimacy of Ferrari as a full liner in the luxury space. And that is really the aim that we have.

And how much time will that be translated in revenue, it really, again, is a question of managing properly the cadence where it's much harder to be able to build organic growth in pricing points within the luxury space versus what we used to do, which was more of a licensing model. And the show is really going to be a reflection of, hopefully, what you will be able to see as the potential that exists.

Great. And one quick final housekeeping one, if I may. Just when we look at the revenue and EBIT bridge, the revenue from engine sponsorship, commercial and brand increased by EUR 15 million, but the EBIT in the other line increased by EUR 24 million, so a higher amount. Can you help just explain what is the incremental factor driving the EUR 24 million improvement at the EBIT level in that other bucket?

Sure, George. I mentioned in my comments, I guess, one is the contribution from other supporting activities that do not have that much in terms of revenues, but add a positive performance in terms of EBIT and then lower costs related to our expectation in respect of the performance in F1 this year.

Hi, everyone. Thanks for taking my question. So, I want to go back on the previous question actually. So -- I mean, the first question was, if I understood that correctly, is the phasing, is the cars delays due to a lower number of vehicles sold over the life cycle, or is just the fact that you're going to be launching them later in the year and therefore in 2022 we are going to see a lower amount. So, if I think about these cars that you're delaying, I mean, is it fair to assume that the overall number of cars that you're planning to sell is pretty the same over the life cycle, you're just postponing them by one year. I just want to make sure I understand this correctly.

You answered the question, Giulio.

Okay. Perfect. Okay. I just want to clarify. And then the second one on the deposits, I mean, I wonder if Antonio could maybe specify how much of deposit outflow did we see in Q1? And how much should we expect for the full year? And still on deposits, will you be getting deposits for 812 Superfast Speciale?

On the deposit on demand, I think the impact on the quarter is about EUR 20 million, the reversal of the deposits. In respect of the 812 speciale, let's say the car that we'll launch tomorrow, we are planning to have some, yes.

And the next question comes from the line of John Murphy from BofA.

And I'm sorry to keep asking about the guidance, but I have the benefit of hearing a number of answers. So maybe I could ask something specific and see if I can characterize the guidance correctly for 2022 to 2023. It seems like the next Icona is going to be delayed a little bit. So that's impacting volume to some degree, the cash flow even more.

And then there are some expenses that were lower in 2021 and '20. It will be caught up in 2022. But by the time we get to 2023, we're back on track to a post, hopefully, for all of us, a post COVID world and a normalized year. Is that a correct way to characterize what's going on here?

Yes. I think the description of what happens to 2023 is pretty much in line with what you said. Yes, you're right. Then of course, what will happen from 2023 onwards would be the subject of the next Capital Market Day that we plan to give you necessary color to explain how we see the development of our range going forward and the implications of that. But yes, you described it right.

Okay. And then a second question. If we think about the success of the Stradale and sort of the electric hypercar, I mean, how do you balance the portfolio of hybrids versus EVS?

And there's a big question of whether Ferrari really should go all-electric in the long term, just given how many miles or how few miles are actually driven on the vehicles each year and the negative impact of producing an EV versus an ICE or an hybrid. I'm just curious, philosophically, you could certainly argue if you want 100% electric, it might take 50-plus years to get the benefit to the environment. But if you go hybrid and take the benefit of the torque pattern of the 2 powertrains together, you actually would get better performance, both on the road and for the environment. So I'm just curious, John, as you think about that balance over time, what do you think the answer is?

I think that there are great answers to those questions, but I do not want to anticipate them as that is going to be the fun about meeting next year in our Capital Markets Day. And I also think it's important to make sure that as we think about our electrified future, it is an improvement to our existing baseline. Improve our capabilities within the applications of new technologies.

And your next question comes from the line of Philippe Houchois from Jefferies.

I've got 3 questions, if I can. The first one is you're aiming to be carbon neutral, well, everybody else is aiming to be carbon neutral. And I'm just wondering though, you're Ferrari. You're expected to lead the industry. Why don't you aim to be carbon negative? And also that way offset, even though it's little miles that is covered by the average Ferrari, it will be a signal that you are definitely still leading the industry. That's my first question.

The second one is, so you're telling us that you are slowing down the rate of expenditure and you effectively slowing down the rate of growth of the business to some extent, if I follow the earlier questions. At the same time, you've resumed buybacks. Don't you think you are potentially sending the wrong signal about the long-term growth of Ferrari by slowing down the growth and doing buybacks? I'd be curious to have your views on this.

And the last point is, I think, as there's a mention of a release about Patent Box benefit. I believe that the first round the Patent Box ended last year. So have you secured the new round? Is it for three years? Is it five years? Should we also expect that you will benefit going forward from between 5 and 7 points of lower tax rate, if that's the case that you renew the Patent Box regime?

Philippe, great questions. We want to achieve our carbon neutrality within this decade with the ambition of being the first ones to achieve that objective. Once we have achieved that objective, then the natural evolution of it is to be positive. So look at it as an evolution rather than an end goal.

In terms of buybacks, we have been very coherent with what we have communicated in terms of capital distribution, and our buyback is a reflection of our ability to generate cash flow.

And I will let Antonio answer on Patent Box.

In respect of Patent Box, yes, we are applying the Italian law on that, which basically provides, as a difference if you do not require an advance agreement, to get the benefit in cash in three installments. So there is a slight modification in the calculation for P&L purposes and in terms of the cash impact, it is basically diluted in 3 installments over the next 3 years.

And your next question comes from the line of Henning Cosman from HSBC.

The first one is a clarification. On your opening remarks with respect to the change in the order book, please. I believe you said that the order book is up 20% in Q1 as a whole and doubled in China and the U.S. Is that what you said? And does that imply that the order book...

China, China, China. It was doubled in China, which is why I made the reference for that to be a very encouraging sign as we will celebrate our 30th anniversary in 2022 in China.

That's great. Is it possible to say if Europe was then still up directionally as a region within the 20% for the group overall?

It is flatter there.

Okay. Flat. And yes, I also need to apologize to keep asking about the guidance, but I was hoping to hear from yourselves if the 2022 guidance and on all metrics, do you actually want us to assume for 2023 now the same numbers because I don't think you actually said that yourselves. Or could it also be above the 2022 ranges, especially considering you have the Purosangue then?

We will be able to have much more clarity as we approach 2022 in our Capital Markets Day. What we have said today is that we expect the results we were aiming for in 2022 to be achieved in 2023, and that our results of 2022 will be higher than the ones we will achieve in 2021, which we expect to be very strong results and on the high, high end of our guidance. That's what we said.

Understood. And then if you don't mind me clarifying. Finally, for the Capital Market Day, are you expecting to give us a new 2023 guidance then given that you've now sort of introduced the interim period of 2023 by delaying? Or are we expecting 2025 targets? Are you able to comment on that already, please?

It would be premature, and I think that it really is important for us to be able to give you a longer view as we meet in 2022. The objective is really, as we are entering this decade of great opportunity and change to direction we see where Ferrari wants to be within this decade.

And your last question comes from the line of Thomas Besson from Kepler Cheuvreux.

I have a few as well, please. First, could you please give us some feedback from your customers on the decision that you've now affirmed to build the EV and to build EVs faster than planned?

Second, I'd like to come back to Henning's last point. In '23, you're going to have probably almost a full year of Purosangue, even if we assume it's delayed, maybe it's going to start being ramped up only in Q2, but you'll have a lot more Purosangue units in '23 than you would have had in '22 in the initial scenario. So I'd like as well to understand the extent to which it could effectively overshoot in 2023.

And lastly, I would like to clarify comments you've made around the brand strength, Formula 1, vertical integration. Is it thinkable that during the CMD next year, you tell us that Ferrari leaves Formula 1 to join something else to be more consistent with, let's say, a greener future, and that is effectively consistent with more vertical integration?

So there are big discussions at the moment on the future of Formula 1 and we are very much present in that conversation with the ambition and aspiration of being absolutely carbon neutral as a sport and as our activity is linked to that sport. So that is exactly the direction of travel.

It will be hybrid technologies, and those hybrid technologies are very important within the V6 because that is the same capabilities that we will be using for our other motor sports activities. As you know, we announced that we will be entering the Endurance arena and also in terms of our road cars, which will have V6 hybrids. So no doubt that the thread from a technical and technological standpoint is there.

Our customers' expectations are that we are continuously able to innovate and to be at the pinnacle of technology, and that is why we are looking ahead in a very excited era where we can achieve more with the new technologies that electrifications are providing us, and the SF90 is a perfect example of that.

In terms of how will '23 look like, I think that we have answered most of the questions, and it's probably a better topic to touch in 2022 when we meet for the Capital Market Day.

There are no further questions at this time, so I would like to hand back over to the speakers for the final remarks.

Thank you, everyone, for joining us today on the call. The IR team will be soon available to answer any follow-up questions you may have. We wish you a lovely rest of the day. Bye-bye.

This concludes today's conference call. Thank you all for participating, and you may now all disconnect.