According to Ferrari, its sales growth is expected to tumble during its first year of independence from Fiat Chrysler Automobiles (FCA). The company’s guidance led the stock hit the lowest level since its initial public offering (IPO) last October 21.
The car maker said that about 7,900 cars are expected to be shipped this year, up by three percent from last year. In 2015, shipments jumped six percent despite the 22 percent shipment decline in China due to the pressing market turmoil in the country.
A few weeks ago, Ferrari CEO Sergio Marchionne expressed his belief that the company can achieve its target output of 9,000 cars by 2019.
Furthermore, he believes that things will turn out well for Ferrari as long as it stands by its philosophy of building fewer models than the demand. During a conference call, Marchionne said that Ferrari has a “strong backlog of orders” in its aim to preserve the exclusivity of its vehicles.
Moreover, he stated that he doesn’t see the Chinese economy recouping this year. Marchionne also added that Ferrari will not make efforts to uplift demand with an SUV. The stock dropped 12 percent, closing the session at $34.98. The company’s spinoff from FCA, which included a listing in Milan, was fulfilled earlier this year.
IG Group analyst Vincenzo Longo claimed that the sluggish growth in China led to the company’s decision for its profit target this year to be “not-too-aggressive.” He explained, “Last year’s results showed some weakness, and the China issue is here to stay.”
Accordingly, Ferrari’s adjusted earnings excluding interest and taxes are seen at over €770 million for the year. This growth is slower than last year, during which the company’s profits surge nearly eight percent to €748 million. In the fourth quarter, it declined 6.20 percent. On the other hand, Ferrari’s net industrial debt during the last quarter amounted to €1.94 billion.