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Ferrari shares skid as debt and outlook disappoint

Italian luxury sports carmaker Ferrari announced on Tuesday an increase in its net profit last year, but investors dumped its shares after being spooked by its debt and disappointed with the 2016 outlook.

Ferrari shares skid as debt and outlook disappoint
Photo: Giuseppe Cacace/AFP

Net profit rose at the brand with the famous prancing horse logo by 9.4 percent last year to €290 million.

The debt of €1.94 billion, the result of its spinoff from Fiat Chrysler and entry onto the Milan stock exchange, was considerably higher than the €1.7 billion expected by analysts.

Moreover, Ferrari expects the debt to rise slightly this year, while the increase in sales to shift down a gear.

While sales rose by six percent in 2015 to 7,664 vehicles, the company only expects a 3.1 percent gain this year to 7,900 cars.

Adjusted operating profit should also climb by three percent to €770 million, but revenues are only expected to rise by half that rate to 2.9 billion.

The modest outlook combined with the high debt level disappointed investors, with Ferrari shares finishing the day down 9.6 percent at €33 euros. The Milan market was down 3.05 percent overall.

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ECONOMY

Fiat promises no job cuts in return for state aid: report

Fiat Chrysler has agreed to the conditions laid down for a state-backed €6.3 billion euro loan, including a promise not to relocate or cut jobs, Italy's Sole 24 Ore daily said Sunday.

Fiat promises no job cuts in return for state aid: report
Robots manufactured by Comau are pictured on the assembly line of the Fiat 500 BEV Battery Electric Vehicle. Photo: AFP

The state auditor has approved the guarantee, but it still needs to be signed off on by the economy ministry, the paper said.

The request for state support on such a large loan has proved controversial, particularly with the company's corporate headquarters in Amsterdam.

FCA — which directly employs close to 55,000 people in Italy — has said the loan is essential to help the group's Italy operations and the whole industry to weather the crisis triggered by the coronavirus pandemic.

The company will commit to investing 5.2 billion euro in Italy on new and existing projects, and up to 1.2 billion euro on its 1,400 or so foreign suppliers, said Sole 24 Ore, Italy's financial newspaper.

 

FCA will also pledge not to cut any jobs before 2023.

The loan will be funded by Italy's largest commercial bank Intesa San Paolo and 80 percent guaranteed by export credit agency SACE, the daily said.

The government has said FCA would face sanctions if it failed to stick to the conditions laid down for loan. Sole 24 Ore said the fine for breaking the agreement could be in the region of 500 million euros.

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