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CRIF Ratings affirms Ferrari’s long-term issuer rating at “BBB+/Stable”

Unsolicited rating without participation

CRIF Ratings (‘Agency’) has affirmed Ferrari S.p.A.’s (‘Ferrari’) Long-Term Issuer Rating at “BBB+”. The outlook remains “Stable”.

Ferrari is a leading manufacturer of luxury performance cars, with 10,131 cars sold and consolidated revenues of EUR 3.8bn in FY19. The rating analysis has been performed on Ferrari’s consolidated perimeter (‘Group’), including the parent company Ferrari NV (‘FNV’). The rating has been assigned by CRIF Ratings on an unsolicited basis, without participation of the rated entity and relying only on publicly available information.

The affirmation of the rating reflects Ferrari’s sound operating performance and cash flow generation as well as its solid business profile, supported by a high geographical diversification of consolidated sales and a wider product range compared to its direct competitors. In FY19 the Group maintained sustainable credit metrics, in line with the previous year and with CRIF Ratings expectations. The financial profile remained conservative, with the Net Debt to EBITDA ratio slightly down to 0.9x from 1.0x in FY18 on a consolidated basis, while it remains stable at 0.4x on an adjusted basis. Moreover, the Group’s gearing remained in line with the previous year (Net Debt/Equity at 0.8x) and its liquidity profile was confirmed at satisfactory levels, also thanks to the new EUR 350m RCF due in 2024.

In the Agency’s view, Ferrari will comfortably cover the debt maturities in 2020 (c. EUR 414m in sum) thanks to the available liquidity sources of approx. EUR 1.25bn at YE19 (including the undrawn RCF), although expecting lower positive FCF generation due to the impacts linked to the Coronavirus pandemic. However, a moderate refinancing risk will materialize in 2021, as scheduled reimbursements will total EUR 783m, of which EUR 500m related to the bond due in January 2021 and EUR 277m related to the revolving securitization programs (self-liquidating debt).

The Stable outlook reflects CRIF Ratings’ expectations that Ferrari’s ability to maintain the net leverage below 2x and 1x on consolidated basis and adjusted basis, respectively, over the next 24 months. The Agency expects the Group to comfortably manage the refinancing risk, thanks to its sound track-record in tapping the capital markets, maintaining its credit metrics consistent with the assigned rating class.

CRIF Ratings’ base scenario envisages weaker operating performance for Ferrari in 2020 due to the Coronavirus pandemic, as witnessed by the first supply chain issues in March 2020 which led to the suspension of production for at least one month. Although the Group’s FCF may be under pressure in 2020 due the pandemic, in CRIF Ratings’ view Ferrari could leverage on mitigating factors to address this situation, such as reducing dividend pay-out or Director’s remuneration as well as reviewing its CAPEX program. The Agency anticipates a low single-digit top line organic growth already in 2021, but it envisages possible negative pressure on the rating whether the pandemic translates into a prolonged slowdown both of production activities and of demand for luxury cars, which would further affect the Group’s financial flexibility.

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