Ferrari says going is tough in the Middle East

Ferrari earlier revealed that shipments to the Middle East declined by 16 percent in 2016 compared with 2014. (Reuters)
Updated 01 February 2018
0

Ferrari says going is tough in the Middle East

LONDON: Italian sports car-maker Ferrari says profits last year rose 34 percent, driven by a surge in V12 sales and vehicle personalization.
But the news from the Middle East was less than rosy. Ferrari revealed on Thursday that shipments to the region “recorded a decrease due to a reallocation triggered by tough market conditions.”
In earlier commentaries, Ferrari had disclosed that Middle Eastern shipments were down 16 percent in 2016 compared to 2014. The Italian sports auto company said the ME spanned KSA, Oman, UAE, Bahrain, Kuwait, Lebanon and Qatar.
Ferrari reported 2017 net profit of €537 million ($669 million), up from €400 million the previous year. Shipments last year rose by 5 percent to 8,398 vehicles, while net revenues increased 10 percent to €3.4 billion.
Ferrari said it is targeting 9,000 vehicles shipments this year and is forecasting revenues above €3.4 billion.
The carmaker said fourth-quarter profits rose by a quarter to €136 million on a 1 percent increase in revenues to €840 million. Shipments rose 4 percent to 2,017.
Sales were flat only in China, Taiwan and Hong Kong, due to a decision to terminate the Hong Kong distributor in 2016 and the new dealership not becoming fully operational until the third quarter of 2017.
Ferrari said sales in France, Italy and UK grew at double-digit pace, while Germany recorded mid-single-digit growth. Americas increased by 4.6 percent with South Korea, Singapore and Indonesia up about 12 percent.
George Galliers, an analyst with Evercore ISI in London, said in a note: “With increasing management appetite for volume growth, we see room for Ferrari volumes to grow about 76 percent between 2016 and 2025.
“Whether volumes do grow to this extent will depend on product execution. To deliver substantial volume growth, we believe Ferrari will need to introduce new model lines. This is not a risk-free exercise. New model lines can be a challenge, particularly for a brand as associated with high performance as Ferrari.”
Galliers also said that while not unsuccessful, per se, the broker felt that Ferrari’s longer-range GT cars have failed to attract the same level of demand as its sports-car models.
This would need to change, he said, suggesting that Ferrari should look to its archives and, particularly, the 1950s and 1960s, “when it produced a wide variety of vehicles with broad appeal which shared similar underpinnings and the fabled ‘250’ and ‘275’ engines.”


Egypt stock market plunges as retail investors take flight

Updated 19 September 2018
0

Egypt stock market plunges as retail investors take flight

  • Biggest index drop in Egypt since mid-2016
  • Saudi Arabia outperforms in Gulf

LONDON: Egyptian stocks tumbled to their lowest level this year on Wednesday as retail investors took flight.
A sharp rise in Suez Canal revenues, a major foreign exchange earner for the country, was not enough to quell investors concerns about the strength of the currency.
The main Egyptian stock index lost 3.8 percent which some fund managers blamed on generally negative sentiment toward emerging markets worldwide as well as more local speculation about possible currency devaluation.
“Our channel checks suggest the sell-off in the Egyptian market is local retail and institutions driven, on currency fears and speculation over a further round of devaluation,” said Vrajesh Bhandari, portfolio manager at Al Mal in Dubai, Reuters reported.
“Selling is further intensified as margin calls are triggered and technical support levels break down. The country canceled three consecutive Treasury auctions, citing investors’ unrealistic yield demands.”
Egypt’s Suez Canal revenues rose to $502.2 million in August up 6.7 percent from a year earlier according to official data released on Wednesday.
Elsewhere regional stock markets closed mostly lower with the exceptions of Abu Dhabi which edged 0.2 percent higher and Saudi Arabia, the best regional performer, which rose by 1.1 percent.
Saudi stocks are benefiting from the strong oil price which eased slightly yesterday but still hovered just under $79.
OPEC and some other oil producers including Russia will meet in Algeria on Sept. 23 to discuss how to allocate supply increases within their quota framework to offset the loss of oil exports from Iran following the introduction of sanctions by the US.
Those measures will come into force on Nov. 4 and data suggests that buyers are already retreating from Iranian crude purchases.
A key question for the oil price as well as regional stock markets in the weeks ahead will be the extent to which other Gulf oil exporters can compenaste for the loss of Iranian supplies by pumping more.