Ferrari (RACE.US) released its financial report for the second quarter ending June 30, 2021, on August 2. According to the report, Ferrari achieved revenue of 1.2 billion dollars in the second quarter, a substantial increase of 81% year-on-year from the $697 million in the second quarter of 2020; semi-annual revenue was $24 billion, an increase of 36% year-on-year, which was mainly due to car deliveries

In the second quarter of 2020, due to the impact of the new crown pandemic, the global production of automobiles and auto parts was stagnated from April to June, and many orders were delayed in delivery. The decrease in passenger flow caused a decline in passenger flow in stores and exhibition halls and superimposed the cancellation of some racing activities. Therefore, Ferrari's operating income in the second quarter of 2020 is only $670 million, and the growth rate has also fallen to a historical low point. Due to the low base in the second quarter of last year, as the impact of the epidemic gradually dissipated, Ferrari's production activities and deliveries returned to normal, and revenue in the second quarter of this year achieved substantial year-on-year growth.

Ferrari's performance growth is also reflected in its net profit. This quarter, Ferrari achieved a net profit of $242 million. In the second quarter of 2020, due to the heavy blow to sales, Ferrari's net profit was only 10.5 million dollars. This quarter's net profit was compared with the same period last year. A surge of more than 20 times. The adjusted net profit was $321.5 million, compared to only $2.7 million in the same period last year.  

Splitting the company’s business structure, Ferrari’s revenue mainly comes from three businesses, namely automobiles and spare parts, engines and sponsorship, commercial and brand businesses. The automobile and spare parts business is the company’s largest source of revenue contribution. In the second quarter, this business achieved revenue of $750 million, accounting for 85% of total revenue, an increase of 95% year-on-year, mainly due to the company’s rich product structure and personalization that promoted sales Growth and lower sales in the second quarter of last year. The engine business mainly provides engines to Maserati and some racing teams. This quarter achieved revenue of $38 million, an increase of 118% year-on-year. In addition, sponsorship, commercial, and branding businesses achieved revenue of $77 million, an increase of 11% year on year.     

From the perspective of car deliveries, in the second quarter, Ferrari delivered 2,685 cars, a significant increase of 93.3% year-on-year from 1,389 in the same period last year, nearly doubled. Among them, the sales of V8 models increased by 111.2%, and the sales of V12 models increased by 37.6%, which was the main driving force for the increase in delivery of Ferrari cars. As the negative impact of the epidemic has dissipated, since the fourth quarter of 2020, Ferrari's car deliveries have gradually returned to the level before the epidemic.

All Ferrari sales regions contributed positively to the increase in vehicle deliveries in the second quarter. Among them, the European region is Faraday's main car sales area, and the second quarter car delivery volume was 1,337 vehicles, an increase of 89% year-on-year; followed by the Americas region, the second quarter achieved delivery volume of 649 vehicles, an increase of 70% year-on-year; China, China’s Hong Kong, and China Taiwan’s performance was even stronger. Car deliveries in the second quarter were 166 vehicles, a 564% increase from the 25 vehicles in the second quarter of last year, mainly driven by the launch of new models; deliveries in other parts of the Asia-Pacific were 533 vehicles. A year-on-year increase of 93%.

Finally, let's look at the cash flow situation of Ferrari. Free cash flow and free cash flow from industrial activities are the two main indicators for measuring company performance. Thanks to the increase in net profit, Ferrari's cash flow performance is relatively healthy. This quarter, Ferrari’s free cash flow was 80 million dollars, compared with negative 107 million dollars in the second quarter of last year, industrial free cash flow was 96 million dollars, and negative 157 million dollars in the second quarter of last year.

At the same time, based on the outstanding performance of the second-quarter report, Ferrari raised its guidance for industrial free cash flow this year to approximately 383 million dollars, higher than the previous estimate of approximately 298 million dollars

Opportunities and challenges coexist during the epidemic. Unlike some Internet companies, the auto industry has been hit hard during the epidemic. Ferrari is a global luxury car brand. In addition to the decline in car deliveries caused by production stagnation, it will also hit consumers' consumer demand for luxury goods to a certain extent. As the epidemic dissipates, Ferrari's performance will increase sharply in the short term. There will be a decline in the next few quarters.