Ferrari NV (RACE) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Ferrari 2020 Full Year Results Conference call. (Operator Instructions)

For your information, this conference is being recorded.

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

Thank you, Andrea, and welcome to everyone who is joining us. There are two topics that we plan to cover today: first, the Group's Full Year 2020 operating results; and then our Full Year 2021 Guidance.

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 Chairman and acting CEO, Mr. John Elkann; and our 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 Mr. John Elkann.

Grazie Nicoletta.

Good morning and afternoon to all. I would like to start thanking all of my colleagues in Ferrari for the remarkable results in 2020, a testament to the strength of our business model and resilience of our core business.

In fact, we exceeded full year guidance on all metrics in 2020.

These results have been achieved factoring the impacts of COVID-19 on all of our activities. This environment gave us the opportunity to learn more about our strengths and weaknesses, which allowed us to further fortify our company for the future.

2020 has also been characterized by the successful digital unveiling of the Ferrari Portofino M, SF90 Spider and 488 GT Modificata. Today, we have the most beautiful, most innovative and widest product range in our history.

I would like to highlight some of our achievements that we are particularly proud of.

Back on Track, which is Ferrari's program to safeguard the health of our employees in a COVID-19-secured environment, which has become a reference in Italy and around the world.

Equal Salary Certificate. In July, we were the first Italian company awarded in recognition of the same compensation amongst women and men for equivalent roles and jobs, testifying our commitment to create an inclusive and diverse working environment. And social responsibility in helping with different activities during this pandemic crisis. I'll just mention a few, which we are particularly proud of.

We launched with our clients a fundraising, matching all of their donations to support the medical staff and the health system of our community in Maranello and surroundings. We joined forces with the Italian Institute of Technology to present the open source project, FI5, a revolutionary low-cost and lightweight pulmonary ventilator. And lastly, during the 7-weeks closure of the factory, we did not use any state aid program and continued to pay full salaries of all of our employees.

2020 was also a year of celebration. Our 1,000th Grand Prix, the highest number in Formula 1 ever reached, our victories in the GP racing season. And we reached over 2.5 million visitors in our Esports Series. But our 2020 Formula 1 results reminded us that a great past doesn't equate to a great present or future. This painful reality, both for ourselves and our fans, is, that from which we must restart with humility, focusing on what will make us competitive and ultimately, lead to winning.

As we enter into 2021, which Antonio will give you more details about, we continue to work on our product plan for this exciting decade ahead, adapting it to a fast-evolving environment. Our journey to carbon neutrality will provide a wider framework for our future. We are working on a clear plan, including Formula 1 to become carbon neutral through actions taken directly and indirectly within this decade.

We are optimistic about the opportunities ahead of us and look forward, sharing and discussing the future of Ferrari for this decade at our Capital Markets Day in the first half of 2022.

Now let me address the CEO succession. We have established, as a Board, a search committee, which is responsible for a process to identify the right successor to Louis Camilleri, and we want to take the necessary time to find the best possible CEO for our company.

On this note, I would like to express my most sincere thank you to Louis, who is listening on our call today, for his personal commitment as our CEO since 2018 and as a member of our Board since 2015. His passion for Ferrari is and has been limitless. Under his leadership, the company has further affirmed its position as one of the world's greatest companies.

Louis built a leadership team that is continuing to propel our company forward as our results demonstrate, and for which I am personally grateful to him and to all of my colleagues at Ferrari.

I now hand over the call to Antonio, who will review our full year 2020 results and 2021 guidance. Since our strategy remains unchanged and our execution of it is on track, he will also directly manage the Q&A session.

I would like to thank you all and pass it over to Antonio.

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

I start from Page 6, where you can see the highlights of 2020 results, which exceeded our latest guidance in these difficult times, driven by very strong fourth quarter results. This was achieved on the back of the strength of our core business, improved Formula 1 revenues, the cost containment actions deployed during the year and a tailwind from foreign exchange compared to our projections.

Our shipments in 2020 were 9,119 units, approximately 10% less than prior year, in line with our production planning.

Group net revenues were EUR 3.460 billion, down 8.1% compared to prior year, driven by lower deliveries as well as lower Formula 1 and brand revenues.

EBITDA came in at EUR 1.143 billion, down 10% with a margin of 33%. It is worth noting that the EBITDA margin in our core business was better than in 2019.

EBIT was EUR 716 million, down 21.9%, embedding higher D&A.

Adjusted net profit was EUR 534 million, down 23.5% versus 2019 and resulting in an adjusted diluted EPS of EUR 2.88 versus EUR 3.71 of prior year. The adjusted figures reflected a tax benefit with no cash impact on 2020, as a result of the one-off partial step-up of the trademark book value in accordance with the Italian tax regulations. Industrial free cash flow for the year was EUR 172 million.

What you can't see in this chart are the fundamental dynamics underlying our business:

1. We have recorded strong order intake since summer 2020, fueled by the resumed commercial activities and the new product unveiling. As a result, on a yearly basis, we ended that with a net order intake, very much in line with 2019, despite a very different environment and the trend continued in January.

2. The order book is at record level, up 22% versus last year and covering the entire 2021 and beyond. Should we discount the effect of the production loss due to COVID-19, it would be up nearly 10%.

3. Cancellations remained well within our average experience and were actually lower than in 2019.

4. Residuals are holding up well on the back of the growth of pre-owned transaction volumes.

This happened, notwithstanding the challenges and thanks to the effectiveness in reshaping the way we engage with customers through a mix of in-person and digital events, digital reveals and more exclusive gatherings and test drives.

We, obviously, owe a great lot to our dealers for this, who have been standing by us unabated even during the most difficult outbursts of the pandemic in their respective countries.

Page 7 shows the impact of the COVID-19 pandemic that mostly hit the second quarter of 2020 due to the 7-week production suspension and the temporary dealers' closure.

The flexibility and adaptability that is inherent to our organization and the resilience of the order book underpinned a V-shaped recovery. Indeed, our Q4 was a record quarter in terms of volumes, Net revenues and EBITDA, growing double-digit versus an already robust Q4 2019.

Turning to Page 8. You can see the details of the full year 2020 shipments, down 1,012 units, following the 7-week production suspension in the first half of 2020 and dealers' temporary closure due to COVID-19 pandemic, partially offset by a gradual production recovery of roughly 500 units in the second half of the year.

Sales of both V8 cylinder and V12 were down 10.3% and 9%, respectively.

During the year, despite the COVID-19 disruptions, we managed to deliver the Ferrari Monza SP1 and SP2 as originally scheduled. The F8 family continued the ramp-up phase, offsetting the special series of the 488 Pista family, which was approaching the end of its lifecycle. The 812 GTS, whose deliveries commenced in the second quarter and reached global distribution, while the Ferrari Portofino phased out ahead of the introduction of the Ferrari Portofino M in 2021.

The deliveries of the SF90 Stradale started in Q4, following the industrialization delays experienced and then solved. In the same quarter, also the Ferrari Roma commenced deliveries.

The yearly shipments were affected by our deliberate geographic location based on the different stages of the lifecycles of our models by region. As a result, EMEA and rest of APAC were almost in line with prior year. Americas was down 19.8%, but showed a 14% upturn in Q4, thanks to the ramp-up of the 2019 models.

Mainland China, Hong Kong and Taiwan posted a decrease of 45.5% in the year, while grew triple-digit in Q4, thanks to the ramp-up of 2019 models and easy comparison versus prior year. As a reminder, we privileged deliveries in this region in the first 9 months of 2019.

Notwithstanding the challenges of the COVID-19 pandemic, we unveiled three new models in 2020. The Ferrari Portofino M, SF90 Spider and the limited edition track car 488 GT Modificata, which will hit the market in 2021. And I'm happy to announce that our portfolio will be further enriched by three new models unveilings this year.

Turning to Page 9. You can see here, displayed the walk of our group net revenues for the full year, that was down 8.9% at constant currency.

Revenues from cars and spare parts were down 4.1% at constant currency. Such performance reflects the volume decline and their personalization, partially offset by the positive mix price, mainly thanks to the Ferrari Monza SP1 and SP2. Personalization rate on cars and spare part revenues was around 18%, while down in absolute terms given the volume contraction.

Engines revenues were down 24%, mainly reflecting lower shipments to Maserati and revenues from the rental of engines to other Formula 1 racing teams.

Revenues from sponsorship, commercial and brand were down EUR 150 million, significantly impacted by the COVID-19 pandemic, resulting in a shortened number of Formula 1 races as well as lower in-store traffic and museum visitors.

Other revenues, down 18.3% at constant currency, were mainly impacted by reduced sports-related activities and the cancellation and the Moto GP at the Mugello racetrack, only partially offset by the first ever Formula 1 Grand Prix held at our circuit.

Currency, including translation and transaction impact as well as foreign currency hedges, which played a significant role, had a positive contribution of EUR 32 million, mainly the U.S. dollar.

Moving to Page 10. Let me review the change in our EBIT, which was EUR 716 million, down 21.9% or 25.3% at constant currency with EBIT margin at 20.7%. The negative variance at constant currency remains mostly the COVID-19 impact on Formula 1, brand-related activities and engine sales, partially offset by the resilience of our core business.

More precisely:

1. Volume drove a negative variance of EUR 126 million due to previously mentioned reduced deliveries.

2. Mix/price variance was positive for EUR 130 million, thanks to the Ferrari Monza SP1 and SP2 and a richer product mix and country mix in Q4, despite fewer FXX-K EVO. This was partially offset by the lower contribution from personalization programs due to the decrease of shipments and the gradual phase out of the 488 Pista family.

3. Industrial costs, research and development costs increased EUR 38 million, mainly due to higher D&A, net of the benefit of technology-related incentives recognized in the year. This also included the full cost of employees paid days of absence during the COVID-19 production suspension.

4. SG&A decreased EUR 6 million, reflecting significant cost containment actions, partly offset by Formula 1 racing activities.

5. Other decreased EUR 211 million due to the pandemic impact on the Formula 1 racing calendar, lower traffic from brand-related activities as well as engine sales to Maserati.

The total net positive impact of currency was EUR 38 million year-on-year.

Turning to Page 11. Industrial free cash flow generation for the year was EUR 172 million. The positive generation was driven by EBITDA, partially offset by:

1. Investments of EUR 709 million to fuel our long-term product development, including over EUR 60 million from the purchase of tracts of land contiguous to our facilities in Maranello. Net of the impact of IFRS 16, our capital expenditure for 2020 were slightly lower than our guidance due to a slower spending cadence in the last quarter, that we will make up in 2021. The capitalization ratio was approximately 38% for the year, basically in line with 2019.

2. The adverse working capital impact due primarily to the reversal of the Ferrari Monza SP1 and SP2 advances received in 2019 and higher product and raw material inventories to protect the supply chain in these complex months.

3. Tax payments, higher than last year, mainly as a result of the Patent Box mechanics.

Net industrial debt as of the end of the year was EUR 543 million compared to EUR 337 million last year. During the year, a total worth of EUR 130 million of shares were repurchased before the decision to temporarily suspend the program and EUR 212 million were distributed in dividends.

With respect to the share repurchase program, it's important for you to know that we remain focused on rewarding our shareholders, and the Board of Directors will decide the best course of action as the year unfolds.

At the end of 2020, total available liquidity, including undrawn credit lines for EUR 700 million committed, was EUR 2.062 billion, which compares with approximately EUR 1.880 billion as of September 30. As a reminder, an amount of EUR 500 million was just used to reimburse a bond maturing in January.

Moving to Page 12. You can see the 2021 guidance, which targets a strong rebound versus 2020, with:

1. Net revenues around EUR 4.3 billion, and such target is predicated upon having trading conditions unaffected by further restrictions or impacts from the pandemic on our core business. Revenues from Formula 1 still discounting the known uncertainties on the calendar and reflecting a lower 2020 ranking. And brand activities still dealing with the COVID-19 challenges throughout 2021.

2. Adjusted EBITDA between EUR 1.450 billion and EUR 1.500 billion, with approximate percentage margins between 33.7% and 34.9%.

3. Adjusted EBIT between EUR 970 million and EUR 1.020 billion, targeting an EBIT margin between 22.6% and 23.7%. This reflects the higher D&A, following the CapEx increase of most recent years, beside the mentioned challenges due to COVID-19.

4. In addition, we expect operational and marketing expenses to gradually resume.

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

6. Industrial free cash flow in the region of EUR 350 million. Our free cash flow will reflect higher CapEx, which we expect to amount to around EUR 800 million with a slight catch up compared to 2020, as already commented.

Finally, it is worth noting that the guidance for 2021, rests on the assumption that the exchange rate will remain in line with the last part of 2020 for our most relevant currencies.

The extraordinary conditions of 2020 affected all of us in many ways. What has not changed is the commitment and passion that we live and breath every day in Ferrari.

2021 guidance growth is an evidence of our unchanged ambitions.

We clearly know that there is a lot of focus on 2022:

On the one hand, the pandemic has clearly affected our plans. As disclosed, we have postponed some initiatives. In addition, the pace of introduction of new emissions regulations all over the world has been accelerating. To have better clarity on our future, we also need to handle the uncertainties caused by COVID-19 impacting the development of our core business, our Formula 1 racing and brand-related activities, possibly lasting longer than originally expected.

On the other hand, the inherent strength of our business model and resilience of our core business have proved their worth in this recent period, which gives us confidence in our ability to tackle challenges and possibly transform them into opportunities.

As our Chairman just said, we have an exciting decade ahead, which we look forward sharing and discussing when we meet for our Capital Market Day in 2022.

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

Thank you, Antonio. We are now ready to start the Q&A session. As a reminder, it will be managed by Antonio. Thank you, Andrea, to you.

(Operator Instructions)

Our first question comes from the line of Michael Binetti from Crédit Suisse.

I want to ask about the guidance first, I suppose. If we look at the 2022 EBITDA that we talked about at the Capital Markets Day. It had implied incremental margins of well over 50% relative to the 2019 numbers, and then your 2021 guidance implies less than 40% incremental margins versus 2019.

I'm wondering what do you consider are the components that will leave incremental margins in '21 below the trajectory that we knew about?

Thank you, Michael. We do not look that much at 2021 for the trajectory to 2022. This pretty much depends on the product mix we assumed at the Capital Market Day. As I said, we'll review it [at the next Capital Market Day] (added by company after the call). There was expected a significant growth between the 2 years. 2021, as of now, is back on the trajectory we had at the time we prepared the plan of September '18.

Let me ask you about that, I guess. If you -- if I just look at what the bridges you just gave us, if I just back out the business losses that you showed us, hard numbers in 2020. EUR 126 million of volume and EUR 211 million of loss revenues from Formula 1 calendar activities and brand activities. That would have put you at EUR 1.48 billion of EBITDA in 2020, which is the midpoint that you guided us to for 2021.

Obviously, you'll get some car business back and I know the general theme of the Capital Markets Day, long-term plan, was to keep growing the business and evolving the profitability.

So I'm just -- I'm wondering how much -- I guess, the nexus of the question is how much conservatism you feel like you need to bake in to the 2021 margin guidance today?

I think there is some. Because 2021 is still affected by significant uncertainty. I mentioned some elements in the slides that you see. I cannot be more specific in terms of amounts. But clearly, all of our business, including F1, have, to some extent, to deal with the uncertainty related to the development of the pandemic.

And then I know, John, just one last one. I know, John, I mentioned regarding a path to carbon neutrality and developing a wide framework. I thought that was a very interesting comment.

Would you mind elaborating because it's a subject of much discussion among shareholders. Could you elaborate on what you think are the key high level underpinnings to get there that we should think about as far as how Ferrari thinks about it?

Yes. I think, I can speak on a qualitative basis. Despite the fact that we are focused on the core business, we also have other activities. Our core business is basically made of the carbon footprint of our products. F1 is very specific per se. And brand-related activities also have their own features.

So first of all, we need to put all of that together and be able to compute the carbon footprint company-wide, basically. And then, given the size of this footprint, we can put together a mix initially, at least, of actions to tackle the issue, both with direct actions and with compensation.

As I said, the plan is first to achieve carbon neutrality -- sorry, a carbon footprint certification. And then at that point, we'll be probably ready to be more specific as to the actions that we'll put in place, to achieve, what our Chairman just mentioned, is the goal to become carbon neutral within the decade.

Our next question comes from the line of John Murphy from Bank of America.

Just a first question, and I think Michael's question on the 2021 guidance, I think is very important in turning up because I think we're all trying to figure out what the basis is to work off for our 2022 and beyond numbers. Because it still seems like there is some noise and pressure on 2021.

Is that kind of a fair statement to say, "hey, 2021 is still a year that's got COVID noise, some incremental costs and some other things that might not be the best way to think about building off as a basis year for the trajectory in 2022 and beyond." Is that a fair statement?

I'm not sure I got all the details of your question because the line is not very good. I understand you're asking about how 2021 may be informative as to the development of the results for 2022. Only partly, I would say, 2021 is mostly execution, assuming that COVID-19 allows us to do so, to execute well in alignment with our plans. 2022 already encompasses the expectation of the introductions of the new models. And that is where we need to be more specific later on.

Okay. And then just a second question. You mentioned personalization was lower in 2020. I'm just curious, as you think about 2021 and a recovery and then beyond, do you think that personalization will be significantly additive to results going forward? And it was a little bit depressed in 2020 because of COVID?

Okay. Thank you for this question, John. I think we discussed this a number of times in previous calls too. It's difficult to project personalization because it usually... - while the average does not move much throughout time - it actually depends on the mix of our products.

We mentioned, I think, already in a couple of calls, the fact that personalization rate has been influenced by special series. Clearly, the price of the car is also important because it affects the denominator in the total revenues. So I would not be particularly mindful about the fluctuation of this personalization rate. What actually matters, in absolute terms, are the margins that are attached to that. So you may imagine that the personalization rate for a Monza in terms of the share of revenues is lower compared to that of a Portofino or maybe of a Pista. It depends, it is a balance of all of that. But the [actual] (added by company after the call) contribution may be very different.

Okay. And just lastly, on the Concorde Agreement, I was just wondering if you could give us any basics on the positive or negative side for economics going forward? And just how we should think about that in a very basic way on the positive and negative swing factors?

Yes. I prefer to comment saying that the net impact of the introduction of the new Concorde Agreement and the budget cap is kind of neutral for us. That is the expectation, the way we monitor it throughout time.

Our next question comes from the line of Giulio Pescatore from Exane.

Now coming to the questions, I wanted to come back to the 2021 guidance, and in particular, to the free cash flow one. I really struggled to understand how to reconcile this EUR 350 million guidance also because you've given us an EUR 800 million CapEx number.

So what are the other assumptions behind this number in terms of working capital? And then, how do we think about bridging this result with the 2022 target, given that it will imply a growth of three times in cash flow generation?

Thank you, Giulio. As you know, our free cash flow is basically the result of:

How much we take out from the EBITDA due to capital expenditures.

Working capital - in a wider sense, meaning: we take into account also the impact of the advances that we receive on the Monza.

And we have a drag, a significant drag on it still in 2021. That is basically we catched some part, significant part of the price of the Monzas already in 2019 and we won't have them in 2021.

And beside the usual dynamics of the rest of working capital - that does not count much, usually - we have the tax and financial charges payment. As far as tax is concerned, you should take into account the fact that the new Patent Box scheme, basically, provides for the cash benefit to be split in 3 years. So there will be a slight reduction in 2021 compared to what we witnessed in 2019 and 2020.

Does that help?

Okay. yes, yes. a lot. And if we look at the 2022 number again, does it include any impact from new deposits for a potential new limited edition car? Or should we say, it's a clean number?

Yes. That's a fair assumption.

Okay. Okay. Then I also wanted to come back on the decision to postpone the CMD. Is that only driven by the fact that there isn't a permanent CEO at the moment? Or if there is anything else behind the decision?

I don't think we ever communicated a date for the CMD, Giulio. That's all. We didn't speak about that.

Okay. Okay. And then also looking at your shipments for Q4. I mean, you were indicating shipments down around 9% for the full year in 2020. You closed the year down 10%. Is there any, maybe, conservativeness in deliveries in the last few weeks of the year? Have you taken maybe, have you halted deliveries to kind of protect...

No, not really, it's just rounding, Giulio, just rounding.

Our next question comes from the line of Susy Tibaldi from UBS.

First of all, I would like to talk a little bit about the mix evolution to expect in 2021. Clearly, your mix is becoming stronger and stronger. At the same time, we do have the annualization of the Monza and also the Pistas being phased out. So net-net, what should we expect in terms of contribution trend to mix in 2021?

We expect mix to be positive, and this is due to the fact that we'll keep on delivering the Monza as per our plan. And we should have a significant growth in terms of the deliveries of the SF 90 Stradale. So that's the main driver of what we expect.

Okay. And then -- and when it comes to the percentage of volumes that you expect to be hybrid because you had a target at the CMD to have 60% by next year, which, I mean, at the moment, you have 2 models.

So how should we think about the step-up? And do you have, can you give us an indication of what percentage of 2021 volumes could be hybrid?

No. As you know, we prefer not to go into that. We prefer to look just at revenues. Those are much more relevant than volumes per se.

Okay. And on the CEO search, I mean, I can imagine that you cannot give details in terms of names that you might be considering. But can you perhaps discuss a little bit what are the key criteria and qualities that you are looking for in the next CEO?

I'm sorry, the question is about what? I didn't catch you.

Yes. The search for the new CEO. If you can describe the key criteria and the characteristics that you're looking at?

Yes, I'm sure the Board is considering all of the criteria that are necessary to run a company like ours. You're right, yes.

Okay. And maybe just one last one as a clarification. Can you just remind us what plans have been affected and what initiatives have been postponed as a result of COVID?

No. Once again, I think we mentioned a couple of times this year. The basics and the main drivers of our growth plan remains unchanged. It's just a question of timing for most of that. But as we are not specific in advance of the models we launched, we cannot be - even more, I would say - on the initiatives that will come in a couple of years or longer.

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

The first one is on China. Can you give us a flavor on what are you going to expect in terms of shipments from Mainland China, Hong Kong and Taiwan in 2021? And if you see some major flow of shipments in the coming year from these regions?

And the second is on the timing for the new models. Can you give us a rough timing for the announcement of the three new models in 2021?

And the very last is on the quarterly trend. I know it's difficult, but the outlook is still uncertain. So do you see some differences with quarter-by-quarter, if you can just give us a flavor about the first quarter and going forward?

Thank you, Monica. I'll start from the launches. That's a nice try. But as you know, we do not go into that sort of details.

With respect to the quarterly development of the year, we have some seasonality, something has changed in 2020 due to the impacts of the pandemic. So the comparison will not be an easy one. It's not just the development of volumes, but it's also the mix that changes and also in terms of revenue recognition for the F1 activity. So it's a bit difficult without entering into the detail of modeling, as we prefer not to do it.

The last one is on China. What we currently witness is a nice comeback of orders from there. You know, you should not ever look at our deliveries in 2019 and 2020 because you know these were affected by our decision to anticipate the introduction of a new emission regulation that wasn't expected in 2019. As a result, 2020 suffered in the comparison.

In 2021, what we currently see is a significant growth of orders, particularly and nicely, that's again an interesting one on the Roma and with a significant share of orders from women there.

So that means something in terms of the success the car may have here, even if with a thermic engine.

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

The first question I had, and apologies if you did allude to this in the comments. But just for this year, what are your assumptions around raw materials and FX?

And have you already taken actions to price through the appreciation in the euro against the U.S. dollar, which we saw last year?

Thank you, George. In terms of our policy on FX, as you know, we have a policy that provides for a hedging on a rolling basis with some target percentages. So a significant chunk of 2021 has already been hedged throughout 2020. Still, we do not go 100%, and there is room for changes and impacts from changes in FX on our results, which is minimized, but may go one side or another. As far as raw materials, for those who really matter, we have a similar policy.

Understood. And then the second question I had was just with respect to the order book. You're obviously extremely clear that the order book is very strong and extends well into next year.

Can I just ask you, is there much variation by model line or more importantly, by market in terms of what you see with respect to the order book? Or is it pretty robust across the board at this point in time?

I will describe it as pretty robust across the board, across geographies. Across the board meaning across products and geographies, nicely enough.

Great. And then the final question, just to clarify, and I think, both Michael and John have already touched on this, but I just wanted to clarify. At this point in time, you still are aiming to deliver the 2022 targets that were presented? Is that a fair statement?

I think that will come with the Capital Market Day. At that point, we may describe the strategy we are pursuing. And if and by how much, any result expected, any target expected for 2022 is to be changed.

Our next question comes from the line of Thomas Besson from Kepler Cheuvreux.

I have a couple of questions left, please. Firstly, you had because of...

Sorry, Thomas, can you maybe speak a bit louder and closer to the microphone? We have problem hearing you. Thank you.

Sure. Sorry for that, Nicoletta, is that better now?

Way better. Thank you very much.

So there a couple of questions left, please. First, on the EBIT bridge in 2020 because of COVID, you had an enormous others line, that was very negative. Should we expect part of that to reverse positively in 2021? Or is it just something that's gone?

Not sure I got, which is the part of the EBIT bridge that you were talking about?

The one called other.

Sorry. Well, you know that the other includes the impact of F1, which in principle, may come back to the extent the calendar, the F1 calendar, is not affected the same way it was in 2020. That obviously includes the revenues from the commercial rights holder and the revenues from the sponsorship, but also includes the impact on EBIT from the delays and closure of our brand-related activities.

Once again, there, we are very much dependent on the evolution of the pandemic. And finally, we are also partly dependent on Maserati, I mean in terms of volumes and margins attached to that.

Okay. Actually, give me a connection to the next question. Can you just clarify the potential financial consequences of stopping the delivery of Maserati engines? We are not fully aware, obviously, of the contract you had with them. Is there a need to write-off any asset or...

Yes, the agreement with Maserati is expected to end in 2023. You know, that business is dilutive for us in terms of margin. And furthermore, I think we outlined since the time of the Capital Markets Day that we expect to have some capacity to be freed up from the stop of their activity that may be used for the development of our models and of our powertrain going forward.

Okay. I have a last question that maybe beyond the scope, but I try it. Could you give us any hint about the 2022 CapEx plan and the timeline for the Purosangue launch, whether it's still within the frame of the initial plan or whether it's now pushed into '23?

No, I would prefer not to go into that. Once again, we said there are some developments ongoing. It's better to talk when everything is clear.

Our next question comes from the line of Massimo Vecchio from UBI Banca.

I have a follow-up question on the CapEx indication. EUR 800 million is really a big number. It's probably the highest in the history. I was wondering, if you can give us some details on what are the number 1 of 2 projects that you are investing in or, at least, by categories, if it's R&D for new propulsions? Any color would be helpful.

Sure, Massimo. By the way, this was the same target we gave -- or, better, expectation that we gave beginning of last year when we started 2020 and before being informed about the impact of COVID. And there is some catch-up in that [2021] (added by company after the call) number from the slower pace of our investment in the last part of 2020.

This is mostly product, so product development, which always is attached to that. In terms of the consideration that we have not anymore only on thermic engines. We also have, as you all know, hybrid, and we are working on other. Infrastructure is a small part of that, but we cannot disregard the development in our factory here, as we did, by the way, by purchasing some tracts of land contiguous to our headquarter here.

So as I said, it's mostly product. And this is, by the way, fully in line with what we said at the Capital Market Day back in 2018. So we're just in an execution mode there.

Our next question comes from the line of Adam Jonas from Morgan Stanley.

And I have a question for John Elkann, but I just wanted to say at the outset that, I mean, all the talk around 2022 guidance, I totally understand it, but just think about how much the world has changed in terms of CO2 and climate change and EV economics since the 2018 CMD, that almost renders the 2022 guide irrelevant, in my opinion, but just my opinion.

But John, a question for you. Ferrari vehicles, I know management in the past on tailpipe emissions, had the comment that because Ferrari vehicles are such a miniscule part of the park that it's really tiny and that you could kind of talk to regulators and somehow convince them, we're not a big deal, and you could kind of purchase credits and very easily at current carbon prices or even more than that, kind of make it, neutralize it.

But what's happening, of course, as you know, John and the team, now cities are getting involved, London, Los Angeles, Hong Kong, big Ferrari cities are kind of saying, "No, we're not going to allow the operation of ICE vehicles in the coming years." And so it just means you run the risk of having the regulatory environment move outside of your control. So with that in mind, I'd love to hear, maybe a direct question, John, can you see a day within the next decade, where the majority of Ferrari's products are 100% electric, not just hybrid because that's still considered tailpipe climate changing cars in the eyes of these mayors and cities that we're talking to and you're talking to.

Could you see, and I'm not asking to say it's going to happen, but is that too radical for Ferrari while protecting the sanctity of the brand?

Hi Adam, good to hear your voice. I think that the best way to answer is really an open invitation for next year in Maranello to talk to you and all your colleagues who are going to join us on the exciting journey that we have over this decade.

And 2030 will still be a year where we will have hybrid cars. So within this decade, we won't be seeing a Ferrari fully electric. What we will see within this decade is an electric Ferrari. And I hope you will buy one, Adam.

Our next question comes from the line of Stephen Reitman from Societe Generale.

A question on, you mentioned very impressively that your cancellation level in 2020 was lower than in 2019. Could you comment a little bit about where were the cancellations, either by geography and by product? Ready to get an idea about that.

And secondly, you alluded on the new customers that you've had very strong interest from women in China for the Roma. Can you talk, more generally, about the level of interest globally further on the Roma?

And also the level of interest for the SF90 Stradale, the other extreme, and particularly, the amount of the proportion of people who are specifying Assetto Fiorano additional uptake?

Yes. Yes. Thank you, Stephen. In terms of the cancellations, we were public in the second quarter as to the fact that we had some cancellations in North America and in Australia. They were pretty much concentrated there. From then on, we haven't seen anything specific. So the ones that we had were usually evenly distributed through other various geographies, nothing special to report.

With respect to color on the order intake for the various models. I think it is confirmed that the Roma attracts, more than any other Ferrari before, new to Ferrari's customers, which is interesting and nice. It happens also that the SF90 Stradale attracts younger customers, more -- probably - than we would have expected. And the order book for that car is very, very long. And significant preorders have been put already some months ago. And that are probably the two most interesting elements that you should take into account.

And in terms of sort of the model cancellations, were they concentrated at the lower end or the higher end of the model lineup?

I don't think there is any specific concentration on either the low or the high end of our range. They were across the board.

Thank you. There are no further questions on the line. Please go ahead.

Thank you all. Bye-bye.

That concludes the call for today. Thank you for participating. You may all disconnect.