Ferrari Looks to Capitalize on Brand Name as It Promises Faster Growth

MILAN—Strong sales of Ferraris Portofino and 812 Superfast models enabled the Italian luxury carmaker to raise its outlook on Nov. 4, with a new brand strategy promising even more growth.

Ferraris Milan-listed shares rose as much as 7.4% to an all-time high of 155.15 euros after it reported “solid” third-quarter results and signaled a strong year ahead.

The Cavallino Rampante, or Prancing Horse, launched a plan to enhance its brand through new apparel and accessory collections, entertainment offers, and luxury products and services for clients. They include an agreement with Italian fashion house Giorgio Armani and the opening of a restaurant with star chef Massimo Bottura in the groups hometown of Maranello in northern Italy.

Ferrari expects the new brand initiative to represent around 10% of the groups profitability in the next seven to 10 years, in what Chief Executive Louis Camilleri described as an “ambitious but realistic target”.

“It is our intention to increase the size of the cake and our share of the cake,” he told analysts in an earnings call, referring to the groups bid to expand revenues outside of selling cars.

The new branding strategy builds on the groups aggressive roll-out of new premium models.

Ferrari said core earnings would be around 1.27 billion euros ($1.42 billion) for the full year, topping a previous forecast of 1.2-1.25 billion euros.

Camilleri said that this year Ferrari would match what it forecast last year for 2020. “I think its rather premature for us to address 2020 at this time. But clearly, we do anticipate a strong year,” he told analysts.

The carmaker also increased its outlook on 2019 revenues to about 3.7 billion euros, from a previous forecast of more than 3.5 billion euros, and industrial free cashflow.

“We expect the stock to rise but (the) focus will be on 2020,” Morgan Stanley said in a note, adding that Ferraris results were better than expected across the board.

Ferrari will present its latest new model in Rome next week, taking the total to five this year, including the F90 Stradale, its first hybRead More – Source