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Ferrari NV (RACE) Q4 2021 Earnings Call Transcript

RACE Earnings Call - Final Transcript

Ferrari NV (NYSE: RACE) Q4 2021 earnings call dated Feb. 02, 2022

Corporate Participants:

Nicoletta Russo — Head of Investor Relations

Benedetto Vigna — Chief Executive Officer

Antonio Picca Piccon — Chief Financial Officer

Analysts:

Michael Binetti — Credit Suisse — Analyst

Adam Jonas — Morgan Stanley — Analyst

Susy Tibaldi — UBS AG (London Branch — Analyst

John Murphy — Bank of America Merrill Lynch — Analyst

Giulio Pescatore — BNP Paribas Exane — Analyst

Martino De Ambroggi — Equita SIM SpA — Analyst

Stephen Reitman — Societe Generale SA (UK) — Analyst

George Galliers — Goldman Sachs International — Analyst

Monica Bosio — Intesa Sanpaolo SpA — Analyst

Presentation:

Operator

Good day and thank you for standing by. Welcome to Ferrari 2021 Full-Year Results Conference Call. [Operator Instructions] After the speakers’ presentation, there will be the question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your first speaker today, Nicoletta Russo. Please go ahead.

Nicoletta Russo — Head of Investor Relations

Thank you, Nadia, and welcome to everyone who is joining us. Today, we plan to cover the Group’s full-year 2021 operating results and 2022 guidance. In light of this, the duration of the call is expected to be around 60 minutes. Today’s call will be offset by the Group CEO, Mr. Benedetto Vigna; and Group CFO, Mr. Antonio Picca Piccon.

All relevant materials are available in the Investors section of the Ferrari corporate website. And at the end of the presentation, we will be available to answer your questions.

Before we begin, let me remind you that any forward-looking statements we might make during today’s call are subject to the risks and uncertainties mentioned in the safe harbor statement included on Page two of today’s presentation, and the call will be governed by this language.With that said, I’d like to turn the call over to Benedetto.

Benedetto Vigna — Chief Executive Officer

Thank you, Nicoletta. Thanks — thank you everyone for joining us today. Three months have passed since last time we met digitally altogether in many things have happened in our company.

Today, I will be delighted to take you through the 2021 result and I will provide a little taste about what’s happening in our company. Our performance in 2021 was very robust from both a quantitative and qualitative point of view. Numbers first, we closed the year setting a new record in terms of result across all metrics posting double-digit growth and above pre-pandemic level. The results were higher, than the target we had already upgraded when we shared our third quarter results.

Five excellent result to remember. First EUR4.3 billion revenues materially exceeding for the first time in our history, the threshold level of EUR4 billion. Over 11,000 car shipped, we have a significant growth in all region. In China, our deliveries doubled year-over-year. 35.9% exceptionally strong EBITDA margin reached at a record level, impressive EUR640 million industrial free cash flow generation, mainly thanks to the advances collected on the specious — special series and thanks to the discipline and timing of capex spend. And all these, we have no impact on our product plan. The last point is we have the strongest ever order book in our history, up double-digit versus the prior year and covering well into 2023, we’ve all regions showing significant growth.

How did we achieve these excellent — these five excellent result? Firstly, we have to thank our incredible customers both existing and new. And all the woman and all the men of Ferrari for their outstanding work. Secondly, it was possible thanks to the strong margin contribution of the Monza SP1 and SP2. Thirdly, these was further boosted by our decision to seize commercial opportunities on certain models in line with our order intake evolution. We also benefited from deliveries of the SF90 Stradale being moved to ’21 from previous year 2020. And last but not least, we have capitalized on a strong economic climate as evidenced also by the solid performance of our pre-owned business and on the enthusiasm of our customer, who is delighting, sharing their Ferrari passion with us has been so evident at our event.

After these five external result, the five key priorities we focused on all the year 2021. Product excellence, customer experience, motor racing, brand diversification and carbon neutrality. Let’s start with product, last year we unveiled four new models, demonstrating our leadership in technology, in design and driving experience, they all received an enthusiastic response from the market and worldwide acclaim.

In May, we unveiled the 812 Competizione and the 812 Competizione Aperta our latest special series with its revolutionary aerodynamics and they were all sold out prior to the official launch. As a testament to the vigorous demand for our V12 models. Just in month later in June, we launched the accelerating 296 GTB featuring our latest hybrid powertrain combining a V6 turbo and electric motor. It exceeded previous models, order intake over the same relative period, and now a solid pipeline of experiences for our customer is already planned for the current year, further fueling [Phonetic] our ambition for this model. I drove this car several times and the go-kart feeling had the fun to drive experience, you can have a really unique, believe me.

A few you weeks ago in November, the new icon the most powerful V12 ever made, who’s unveiling, I had the pleasure of attending in Florence surprised our most loyal Ferrari stay, I’m talking about the Ferrari Daytona SP3, a masterpiece of craftsmanship, performance and design are really awarded internationally in limited to 599 units, which have all been allocated in advance of its premier and we went up demand way exceeding the limited series plan.

So we enter this year ’22, with considerable momentum, thanks to two factors: one, the strongest ever order book into a broad portfolio of models. The order book, first, it has never been so strong. The positive trend characterized the whole year and continued in Q4, when we experienced impressive order intake, despite our decision to close the order collection on certain models. Second, the new product portfolio not only do we have the broadest, most innovative and most beautiful range of cars ever offered to our customers. But we also plan to further enrich these. We’ve two [Indecipherable] launches this year, completing the 15 launches promised at the Capital Market Day in 2018.

In this year in ’22, we will unveil the much-anticipated Purosangue, which I’m confident will exceed our customer expectation. Either of it several times in the hills around Maranello, the day and night for the test and they can’t justify that the driving experience is really astonishing. But I do not want to say more to avoid, to spoil such a surprise. Now after product, customers, experience. In the course of 2021 it has been really liberating to be able to start ranging events with them again. To mention a few of them, we marked Cavalcade’s 10th anniversary, we’ve a very special event in Sicily for Classic and modern drivers. And we started our [Indecipherable] activities, culminating in the Finali Mondiali to Mugello, where I met so many of our customers and friends, all passionate about Ferrari.

Now our motor racing activities. 2021 was our best ever season in GT racing with Ferrari winning the drivers and manufacturers world titles in FIA World Endurance Championship and with victory at the 24 hours of Le Mans with our 488 GT3 Evo. The Formula 1 2021 season also showed encouraging sign towards it end with third place in the Constructor Championship. 2022 is the first year with a complete new set of technical rules and our new car will be presented in a few days on February 17th.

We are also redefining our strategic partner along three direction: one, we welcome back Banco Santander. Two, we tap current segments with a new partner such as CEVA Logistic in the transportation space. Three, we strengthen our relationship with leading-edge technological partners such as Amazon Web Services in Wales [Phonetic] to be at the forefront of digital technologies and Web 3.0. Such stronger partner portfolio confirms once again we continued [Indecipherable] of the most successful team in F1 history Scuderia Ferrari.

And what about brand diversification? Well, last year we made excellent progress in extending our brand into exciting new territories. In June, we launched the first ever Ferrari fashion collection. In July, we reopened the iconic Cavallino Restaurant in the heart of Maranello and in the second half of last year, we renovated our stores in Italy and USA. In 2022, we planned to move forward and the first important milestone will be the upcoming fashion show in Milan later this month.

Last but not least, carbon neutrality by 2030. In a forward step towards our goal in Q4, we received ISO 14064 certification for our calculation of the Group’s carbon footprint. This certification has been really an important step forward. In addition to our electrification journey, we are also committed to addressing both direct, indirect emission with a focus on energy, immaterial across all our entire value chain.

As always, our focus was not only on external stakeholders. We continued to invest in our employees through to our founder’s believe that Ferrari is made above all by people. We invested the — in training for our employees, caring for their well being and nurturing the diversity of talent in our company. Our efforts were rewarded in 2021 by equal salary certification for the second consecutive year in Italy, and for the first time in United States. The years has been really outstanding, thanks to the passion, the dedication of Ferrari people and to reward their achievement in line with the Company’s strong performance indicators. I’m really pleased to announce the company, the yearly competitive award up to slightly over EUR12,000 for our employees.

And now after the 2021 highlight, let’s have a look at the future, it’s our future. A small taste before providing the full picture on June 16 when we meet here. We are targeting 2022 to be a solid year on the trajectory to reach the 2023 EBITDA target of EUR1.82 billion as announced in 2018. How do we want to do this? How we want to achieve this goal?

Well, there are three clear directions we identified. Number one, we will carefully manage a vibrant order intake in line with our strategy to pursue controlled growth to preserve our brand exclusivity. Two, we will manage the months as phase-out, whilst Daytona’s deliveries will start in 2023. Three, as I already explained in the last call, innovation requires partners. And it is what we started to do. Lot from Amazon in Wales just to mention a few of them. In some other important technology partnership will follow-up in the near future.

2022 is a very important year for us, it’s not only the 75th anniversary of our Company, it also sets the foundation for a new business plan, which will be presented at our Capital Market Day on June 16 here in Maranello. This will also be location to meet in person some members of our new organization, recently announced and achieved through both the promotion of home-grown talents and the number of key strategic external hires. The new organization has signed to further foster innovation, optimize processes, enhance agility and increase collaboration. People are the soul of our company and I’m confident we will seize the opportunities ahead of us in this fast evolving environment.

I will now hand over to Antonio, who will review the 2021 result and 2022 guidance.

Antonio Picca Piccon — Chief Financial Officer

Thank you, Benedetto. And good morning or afternoon to everyone, who is joining us today.

Let me start on Page seven, where you can see the highlights of the 2021 earnings, a very strong year, which shows high double-digit growth on all metrics, compared to 2020. And more meaningfully a remarkable increase versus pre-pandemic levels. Our shipments reached 11,155 units, up 22% versus the prior year and 10% versus 2019.

Group net revenues were EUR4,271 million, increased 23% versus prior year and 13% versus 2019, driven mainly by volume and stronger product mix. EBITDA came in at EUR1,531 million, up 34% versus 2020 and close to 21% versus 2019. The EBITDA margin reached a record level of 35.9% boosted by the contribution from the Ferrari Monza and otherwise, very rich product mix.

EBIT was EUR1,075 million, up 50% versus 2020 and 17% versus 2019. The improvement of both operating margins, compared to our latest guidance, mainly reflects the upward revision of the commercial revenues from the F1 commercial right holder recorded in Q4.

Adjusted net profit was EUR833 million, up 56% versus 2020 and 19% versus 2019, resulting in an adjusted diluted EPS of EUR4.5 improved by 56% versus prior year. Industrial free cash flow for the year was exceptionally strong at EUR642 million, supported mainly by the collection of the advances for the 812 Competizione.

Turning to Page eight, you can see the details of the shipments of the full-year 2021, up 22% versus 2020. Sales of eight cylinder were up about 35%, while 12 cylinders were down 16%, mainly due to the reduced volume of the 812 Superfast, which was phase out in the year. Our deliveries were driven by the range models the F8 family, the Ferrari Roma, and the SF90 Stradale, which reached global distribution. The Portofino M and SF90 Spider in wrap-up phase. Shipments of the Ferrari Monza SP1 and SP2 were higher, compared to the prior year, in line with planning and reaching the end of production. All geographic regions posted double-digit growth.

Moving to Page nine, you can see the walk of our group net revenues, up 26% at constant currency. The increase in revenues from cars and spare parts, up almost 29% at constant currency was supported by higher volumes and strong enrichment of the product mix, along with personalizations. Revenues from personalizations were higher than the prior year in absolute terms sustained by volumes. They were in line with historical average at around 18% in proportion to revenues from cars and spare parts.

Engines revenues were up about 26%, the improvement is related to higher shipments to Maserati and to a lesser extent to the rental of engines to other Formula 1 racing teams. The increase in sponsorship, commercial and brand up close to 13% at constant currency was attributable to the more favorable Formula 1 calendar and brand-related activities, partially offset by lower prior year ranking. This increase reflects also the upward revisions of the commercial revenues from Formula 1, that I mentioned before. Currency including translation and transaction impact, as well as foreign currency hedges at a negative contribution of EUR80 million, mostly related to the US dollar and the Japanese yen this quarter.

Moving to Page 10, let me review the change in our EBIT bridge explained by the following variances. First, volume was positive for EUR220 million, reflecting the shipments increase. Second, mix price variance was also positive for EUR212 million boosted by a richer product mix. Thanks to the SF90 family and the Ferrari Monza SP1 and SP2 along with personalizationas, partially offset by the ramp up of the Ferrari Roma and the Portofino M and the reduced contribution of the 812 Superfast. As already mentioned by Benedetto, the product mix in 2021 was further boosted by our decision to seize commercial opportunities on certain models in line with order intake evolution and also benefited from deliveries of the SF90 Stradale being moved to 2021 from 2020.

Third, industrial and R&D expenses increased EUR65 million, mainly due to higher D&A, product innovation activities and Formula 1 expenses net of technology related government incentives, as well as start-up costs. Fourth, SG&A were negative by EUR14 million, mainly reflecting communication and marketing activities of model unveilings and lifestyle events, as well as the Company’s organizational development.

Lastly, other increased EUR83 million, reflecting the more favorable Formula 1 calendar and higher contribution from brand related and other supporting activities, partially offset by the impact of the lower Formula 1 ranking of 2020. The other net impact of currencies was negative for EUR77 million. As a result of what I just mentioned, EBIT reached EUR1,075 million at 50.2% versus the prior year, with an EBIT margin of 25.2%.

Turning to Page 11, industrial free cash flow generation for the year was remarkable and equal to EUR642 million sustained by the strong growth in EBITDA and the collection of advances on the 812 Competizione. The working capital dynamic, including the above mentioned advances, provisions and other receivables and payable was almost neutral, also due to the cadence of our capital expenditure, which stood at EUR737 million. The capitalization ratio was approximately 39% for the year and in line with the prior year.

Net industrial debt as of the end of December, 21 was EUR297 million, compared to EUR543 million at the end of 2020. It’s worth mentioning that excluding the dividend distribution of EUR152 million and EUR231 million of share repurchase, we would have been cash positive at year-end.

Let’s move on Page 12, here we explain the main drivers of our guidance for 2022, which targets a solid growth and continues to demonstrate the EBITDA progress on the trajectory to reach our 2023 EBITDA target of EUR1.8 billion to EUR2 billion, as announced back in 2018. While in 2022, our profitability will continue to expand in absolute terms, carefully leveraging our record order book, percentage wise, the marginality will be flatten by a product mix, which will be richer, but not enough to offset the negative impact of the Monza phasing out end of the right owner deliveries starting in 2023. More diversified by — but lower revenues from sponsorship and as step-up in D&A in line with the start of production of new models, which will start the deliveries in 2023 or which contribute marginally in 2022.

On the industrial free cash flow side, the generation will be robust supported by the strong operating results and the collection of advances on the Daytona SP3. This will be partially offset by capital expenditures of approximately EUR800 million, as we expect the lower capex seen in 2021. To re-phase partly in 2022, but also by much higher taxes commensurate to the very strong results posted in 2021.

Page 10 to 12, we show the progress that we aim to achieve based on our guidance, since our starting point of 2018 and till the end of 2022. In essence as of the end of this current year, we want to be very close to what we promised at the 2018 Capital Markets Day for the accumulated EBITDA. And fully on target in terms of cumulated industrial free cash flow generation over the plan period, albeit with the different time profile.

And we want to achieve such results, despite the impacts of this pandemic. Subject to meeting our ambitions, I believe this will prove once again, the resilience and strength of our business model based on brand exclusivity, product excellence, leading edge technology and innovation. Such awareness allow us to look at the future, with great confidence.

With that said, I turn the call over to Nicoletta. Thank you.

Nicoletta Russo — Head of Investor Relations

Thank you, Antonio. Nadia please, we are now ready to start our Q&A session.

Questions and Answers:

Operator

Thank you. Dear participants, we will now begin our question-and-answer session. [Operator Instructions] The first question comes from the line of Michael Binetti from Credit Suisse. Please go ahead.

Michael Binetti — Credit Suisse — Analyst

Hey, good morning guys. Thanks for all the detail today and for taking our questions. I guess, I’m trying to think about the structure of the guidance you laid out for 2022 relative to where we were at. I know you guys have been focusing us on the 2018 Analyst Day and help in explain the differences and similarities as you pushed out the EUR1.8 billion to EUR2.0 billion next year. But your — this year you’ve got revenues in line at EUR4.8 with the low end of that original plans, but EBIT below by maybe EUR100 million at the low end of the plan?

Maybe you could just help us understand what’s different on the same revenue base that drives EBIT, a little bit lower this year and if it’s, I think you were originally said maybe a few units for [Indecipherable] would start to ship in 2022, today you clarify that — that will be in 2023. So, maybe it’s the timing mismatch. But I wonder how much it might be attributable to the profitability of gross [Phonetic] relative to the overall fleet if that’s — is that a car that you view is accretive to corporate margins, which are the rest of the fleet?

Benedetto Vigna — Chief Executive Officer

Antonio can you help with…

Antonio Picca Piccon — Chief Financial Officer

Thank you, Michael. If I got your question right, I think the difference, compared to the guidance we gave back in 2018 is largely due to the different timing of introduction of the car’s, compared to what we modeled at that time. Obviously, we are seizing the commercial opportunity that we are having. So the significantly strong order books on V8 entry models is helping in that respect.

And while as we mentioned, I think the gap that we have between the phase-out of the Monza and introduction of the Daytona is impacting the level of the EBITDA — the margins, both EBIT and EBITDA. In addition to that, as far as EBIT is concerned, we have this DNA impact, which is due to the fact that we start producing new cars that are coming in the next one. I don’t know whether this is enough or I think in terms of color, and this should help.

Michael Binetti — Credit Suisse — Analyst

Let me follow that one second, you know, you have that Daytona and Purosangue confirmed to start shipping next year after what you described is a headwind from mix this year largely Monza. But if the guide is now EUR1.8 billion to EUR2 billion for next year, the low end of that guide assumes EBITDA growth will slow to about 6% in 2023 from 11% in 2022. How should we think about the top-end versus the bottom-end of the guidance in that range? What scenario do you see that would explain a slowdown to an EBITDA growth next year? Maybe there is some phasing of investments as you guys look at the big initiatives like electric of those kind of things. I’m just curious, if you could help us think about that?

Benedetto Vigna — Chief Executive Officer

Yes, I think volumes will keep on growing anyway with better margins with mix, which will be stronger was supported by the new icona coming in and this is and being — as far as the contribution of our core business. And then we added the other businesses that we expect also to grow. I mean, brand is still very low in 2022 expected to be better. In terms of F1, there are some elements that is including the budget cars introduction to that’s, of course, in terms of the cost side.

Michael Binetti — Credit Suisse — Analyst

Okay. Thanks and congrats on a great year guys. Appreciate it.

Benedetto Vigna — Chief Executive Officer

Thank you.

Operator

Thank you. The next question comes from line of Adam Jonas from Morgan Stanley. Please ask a question.

Adam Jonas — Morgan Stanley — Analyst

Thanks very much and I cannot wait until June 16th. That’s going to be really — that’s going to be so special. So look forward to meeting you all in person. Benedetto, when you — you guys recently struck a deal with a Swiss Blockchain company Velas Network. How should investors think about the potential for the Ferrari brand in the Metaverse or in the NFT or digital space?

Benedetto Vigna — Chief Executive Officer

Thank you for the question Jonas and also looking forward to meet you in person on the 16 of June. I think that as we said, it’s important that we look and we see how the new technologies can help our brand. For sure, the digital technologies, the web 3.0 technologies that they’re using the Blockchain and the NFT is an area that is can be interesting for us, it deserves some attention. And there are many as you know there are many — there is a lot of movement on the market about this. Some companies even changed the name and they think this is an area that where we have to put our attention. And that’s reason also why I put we have in place. If you have seen in the organization, a department that is called digital in retail, because it’s an important dimension that we as Ferrari we have to evaluate it to consider for the future.

Adam Jonas — Morgan Stanley — Analyst

Okay, look forward to learning more about that Benedetto. My follow-up is, do you believe electric vehicles expands the addressable market for the Ferrari brand and if so, how?

Benedetto Vigna — Chief Executive Officer

So do you think that the electric vehicles will expand the brand?

Adam Jonas — Morgan Stanley — Analyst

Do you think that as Ferrari brings forth all electric vehicles that that grows the addressable market and revenue potential for the brand? And if so, how do you see that happening or why?

Benedetto Vigna — Chief Executive Officer

Okay. I think the point is the following, I mean electrification is one technology like the digitalization that we will harness always in our unique Ferrari way. As you know, we already started to hybridize our model a few years ago. We have already three model on the road that are pretty much successful, SF90 Stradale Spider and 296 GTB and I believe that the electrification is a way is a technology the way that can help our brand to keep it at pace with the time. That’s what I believe, Adam.

Adam Jonas — Morgan Stanley — Analyst

Okay. Thanks, Benedetto.

Operator

Thank you. The next question comes from the line of Susy Tibaldi from UBS. Please ask your question.

Susy Tibaldi — UBS AG (London Branch — Analyst

Hi. Thank you for taking my question. And so my first one would be just to go back on my first question on the ’22 guide. So your revenue guide for 2022 is quite high and so given that the mix is going to be not that strong, it kind of implies a good step up in volume. And so I was wondering if this is a correct assumption or if there is something else that will contribute meaningfully to the top line because you mentioned that also in terms of some sponsorship is little bit lower. So it seems like this good increase in revenues should come mostly from the volume growth. So I just wanted to check if that’s the right way to think about it.

Antonio Picca Piccon — Chief Financial Officer

Hi, Susy, Antonio speaking. Your assumption is correct. Volume will be higher, so we will grow there and it is because of the order book is significantly higher than we’re used to so this is covering well into 2023. It is not true that the mix is weak. I mean, actually the product range mix is high. It’s simply not enough improving compared to the loss of the Monza and the introduction some few some months later of the Daytona.

Susy Tibaldi — UBS AG (London Branch — Analyst

Okay.

Antonio Picca Piccon — Chief Financial Officer

Okay. But basically year-over-year volumes will be positive and mix we expect to be slightly negative overall.

Susy Tibaldi — UBS AG (London Branch — Analyst

Okay. Okay, got it. And on pricing, so in ’21, it was the first time that you pushed through a like-for-like price increase about 2%. If I remember correctly, it was mostly due to the inflation — to the inflation. And given that inflation for the moment is not really going away, should we expect something similar for ’22? Like are you planning to potentially push through some price increase if — to affect the inflation or was it a one-off in ’21?

Antonio Picca Piccon — Chief Financial Officer

Yes. This is a good and important point, I mean there is some pressure on the energy on the aluminum cost, and we will apply this price increase to consider for that, but we will also leverage other important levers when it comes to the pricing of the new model and selected — I mean a price increase of selected model and also the personalization. So this is an important factor we are factoring in Susy.

Susy Tibaldi — UBS AG (London Branch — Analyst

Okay, very clear and very quick just a follow-up on your free cash flow that you saw in this slide you should have you basically you’re in line you achieved the EUR2.4 billion to EUR2.8 billion accumulated cash flow as promised. So basically the fact that you were guiding previously to a $1.1 billion to $1.25 billion industrial cash — free cash flow is just a matter of phasing, right because it feels like that has been just phased differently due to the phasing of the models or was there some kind of advances for future maybe hypercar, which have now been changing the timing?

Antonio Picca Piccon — Chief Financial Officer

You got it right Susy, phasing is the exact answer.

Susy Tibaldi — UBS AG (London Branch — Analyst

Okay, perfect. Thanks a lot.

Benedetto Vigna — Chief Executive Officer

Welcome.

Operator

Thank you. The next question comes from the line of John Murphy from Bank of America. Please ask your question.

John Murphy — Bank of America Merrill Lynch — Analyst

Good afternoon, everybody and thanks for the time. Just wanted to follow-up on that pricing discussion, I mean obviously there’s cost inflation that’s going on, but you’re talking about your order book being longer than it ever has been before. So is there a greater opportunity to take price expanded to your customers as there’s cost inflation to you, they’re relatively sophisticated to offset that, but then also to maybe help balance out the supply and demand in the business it’s a very high class problem. But it seems like there might be a greater pricing opportunity than you’ve ever even had before.

Benedetto Vigna — Chief Executive Officer

Thank you. I think this is what you say is important and we are considering I mean we are applying the price increase and we are monitoring carefully what’s happening on these two dimension of energy and aluminum. And again as I said, we will introduce also new model and we will apply in the right way the pricing. So this is an important dimension that we are careful about also because we will know what is the pressure that there is in the supply chain all over the world. On the other side, I have to say that we have also on the supply chain. I mean we have some good partner and reliable partner we can leverage on.

John Murphy — Bank of America Merrill Lynch — Analyst

Okay. Then just the second question on the transition to EVs. You know it’s very interesting to be torn as a V12 naturally aspirated engine you know that sounds great to me personally. But you know obviously there’s a push towards EVs, given your close relationship with your customers and you kind of build design engineer and build what they want. What are you hearing from your customers at this point on this transition? I mean many other companies are slaves to guessing where EV penetration will go and what they should do with their powertrain investments. But you have direct access and good discussion and relationships with your customers. So what are they telling you? They’re going to Daytona it seems like they’re saying, hey we probably don’t want this right now, but the reality is some people might. I mean what are your customers telling you right now?

Antonio Picca Piccon — Chief Financial Officer

I think we have I mean we have different kind of Ferraris each one with its own preferred let’s say model in the propulsion. So we have Ferrari that you’ve have seen them in Florence when we launch the Daytona and they were extremely, extremely happy and delighted to see such a beautiful car. I have seen also a customer trying the 296 GTB that is a kind of different, different car with different feeling. So I think that if you want to get my feedback from the customer is that we have customer, we have a different feeling, different needs, different perception and even the same customer for different moment can have can prefer the V12 aspirated one or the V6 Hybrid. So there is a mix of different customer with different feeling and different need, different emotion.

John Murphy — Bank of America Merrill Lynch — Analyst

But it’s fair to say that you’re not guessing at this, you’re having in discussions with your customers, so what you’re introducing and you’re building, it’s what they want. You’re never going to give — you miss estimate the EV penetration on the models, right? I mean it is something that’s well known by you through that order book and your discussions with your customers, is that a fair statement?

Benedetto Vigna — Chief Executive Officer

I’m seeing that there is a clear trend and we would work on that for sure and it’s a vehicle and you will see the strategy line up here in June 16. What I want to say is that there are customers, different customers that prefer different kind of propulsion scheme. So we are aware of obviously what’s happening. We have plan for that. But we are also aware of the different feelings and different emotions of the customer want to get with different propulsion scheme.

John Murphy — Bank of America Merrill Lynch — Analyst

Okay, great. Thank you very much.

Benedetto Vigna — Chief Executive Officer

Thank you.

Operator

Thank you. The next question comes from the line of Giulio Pescatore from BNP Paribas Exane. Please ask your question.

Giulio Pescatore — BNP Paribas Exane — Analyst

Hi, thanks for taking my question. I just want to follow up on the previous point. In your answer I just want to follow up on the previous point. In your answer, did you mean that as long as customers will want combustion engines, you would be willing to provide them, even if we think about 10 years or 20 years down the line?

Benedetto Vigna — Chief Executive Officer

I think that the technology is useful as far as it addresses the customer’s needs. We have to delight the customer. We have to, I mean, this is important for us. So, if we are moving piston or we are moving other things. That’s what we want to do.

Giulio Pescatore — BNP Paribas Exane — Analyst

Okay. Thank you. And then the second question on the order book for the 296 GTB, which you said build faster than the previous predecessor of that vehicle. Does that mean that that car could potentially do the same type of volume that attribute let’s say they did in did in the past? And can maybe talk about the difference in demographics between that vehicle and 488?

Antonio Picca Piccon — Chief Financial Officer

Maybe I.

Benedetto Vigna — Chief Executive Officer

Yes, you can go, Antonio. I think you have a summary.

Antonio Picca Piccon — Chief Financial Officer

One provided forecast on volume lifecycle. However, as I said — as Benedetto said before, the receipt has been very strong in terms of order compared to our previous internal benchmarks. The other element, yes, I think you are addressing the fact that the — our customer base for this guy is slightly younger and it is true.

Benedetto Vigna — Chief Executive Officer

I mean, really, you need to drive it to experience it.

Giulio Pescatore — BNP Paribas Exane — Analyst

Well, absolute to provide a driving experience that just seem to be more than happy to do it. Fantastic. Great to hear. I’ll do that. Maybe just one last one before I pass on to the next speaker. On the free cash flow for 2022, I really struggle to breach your guidance, which feels very, very conservative at the lower end of this. I understand a step up in capex, I understand that they’re going to be higher taxes but can you maybe help us with the amount of deposits that we should expect from the Daytona and the how many deposits did you receive last year for the competitors because it’s really difficult to reach these numbers?

Antonio Picca Piccon — Chief Financial Officer

Well, I’ll not comment on the degree on conservatives of the estimate, but basically in our cash flow is very simple. I mean, we have the EBITDA and you know what the guidance is. What we said about capex. I think the old question is about the working capital where we include in the wider definition, also the impact of the advances on the limited series cars. So the Daytona, we are talking about more than EUR200 million more or less in terms of current estimate. The other element you should not underestimate the impact of taxes because we are obviously paying taxes, both in terms of the balance and the advance on the basis of the results of 2021. And it makes a big difference compared to what we paid in 2021 based on the results of 2020 that were impacted by the pandemic. I hope this provides you a better understanding of the detail.

Giulio Pescatore — BNP Paribas Exane — Analyst

Yes. But you’re still benefiting from the Patent Box, right?

Benedetto Vigna — Chief Executive Officer

Yes. The Patent Box is helping, but not in terms of cash nor the level it did at the very beginning, because the law provide for the benefit cash wise in three-year installments. So this has been already visible in 2021 and it will be obviously in 2022.

Giulio Pescatore — BNP Paribas Exane — Analyst

Okay. Thank you.

Benedetto Vigna — Chief Executive Officer

Welcome.

Operator

Thank you. The next question comes from the line of Martino de Ambroggi from Equita. Please ask your question.

Martino De Ambroggi — Equita SIM SpA — Analyst

Thank you. Good morning. Good afternoon, everybody. My focus is on capex, which is a portion of the lower free cash flow for the current year. So the EUR800 million may be considered a sort of peak for capex, or should we expect that it will go beyond EUR1 billion annually going forward? And when you talk about partnerships, I remember you also mentioned partnership in order to reduce capex. I clearly understand you cannot talk about something that was not announced, but just to elaborate a bit on this in order to understand what could be the magnitude of the reduction in capex if any?

Benedetto Vigna — Chief Executive Officer

Thank you. Thank you, Marco. You remember, well the partnership are an important way forward for us. And as I said also before there will be some partnership that — some important partners for us and we will announce in the near future, i.e., I think that I mean it’s important that there’s always also what I said in my previous slides to keep a strong discipline about capex and to keep the momentum into to make sure to do something innovative. It’s important that we decide what we do internally and we decided in what we want to do with our partners outside. So the two words are partnership and discipline. And as I said, in the near future, you will hear about an important partnership on something that is important for our car, but for which let’s say we believe the best way forward is partnership.

Martino De Ambroggi — Equita SIM SpA — Analyst

And on the amount of capex EUR800 million could be considered as a peak?

Benedetto Vigna — Chief Executive Officer

You can consider this is more or less a good number to think about because we will use, as I said, the partnership to optimize and to be disciplined.

Martino De Ambroggi — Equita SIM SpA — Analyst

Okay. Thank you. And talking about volumes based on what you commented before I would expect higher volume growth than the usual let’s say average of 6% we saw in the last few years.

Antonio Picca Piccon — Chief Financial Officer

Yes. It is the better result of the significant net order intake, increase that we have seen this year. So we need to serve this one, obviously we’ll be very careful because the concept of cars remains crucial to our business model. And this is an element of significant attention we’ll play all leverages to manage this one.

Benedetto Vigna — Chief Executive Officer

And for sure, the broadest portfolio — the broad portfolio we have is helping to protect sort of brand exclusivity because in this year we have a lot of models that are in production.

Martino De Ambroggi — Equita SIM SpA — Analyst

Thank you.

Operator

Thank you. The next question comes from line of Stephen Reitman from Societe Generale. Please ask your question.

Stephen Reitman — Societe Generale SA (UK) — Analyst

Yes. Good afternoon. Thank you for this. I understand what you’re saying about the mix in 2022, so just to dig a little more detail in that. First of all, it’s my understanding that you’ll still be selling some bonds as in the first quarter of 2022. So if you could see maybe something out there. And my second question is about the cadence of deliveries of the 812 Competizione. How many would you expect to be delivered in ’23?

Benedetto Vigna — Chief Executive Officer

Yes. There is a lot of noise on the background. We are having problem to understand your question. And then it seems there is someone unmuted.

Stephen Reitman — Societe Generale SA (UK) — Analyst

I’ll try again, sorry, okay, try again.

Benedetto Vigna — Chief Executive Officer

Sorry about that.

Stephen Reitman — Societe Generale SA (UK) — Analyst

Yes, I’m sorry, no. I just wanted to ask, so first of all, I understand that you will be selling still some 812 [Indecipherable] in the first quarter of this year [Indecipherable] model. Will that have an impact expected in the first quarter of this year still? And secondly, could you talk about the cadence of deliveries of the 812 Competizione, obviously, a very high margin car for you in the course of 2022. Thank you.

Antonio Picca Piccon — Chief Financial Officer

I think in terms of the model, we’ll complete the deliveries of the Mandarin in Q1, however, in the absolute number will not be as high as it has been during the last quarter of this year. The 812 Competizione and Competizione Aperta will be spread quite evenly across the four quarter.

Stephen Reitman — Societe Generale SA (UK) — Analyst

Thank you.

Benedetto Vigna — Chief Executive Officer

Welcome.

Operator

Thank you. The next question comes from the line of George Galliers from Goldman Sachs. Please ask your question.

George Galliers — Goldman Sachs International — Analyst

Thank you for taking my question. Yes, the first question I had was just on the volumes. Obviously, you’re now above 11,000 units. I think in the past, previous management mentioned that max capacity was about 15,000 units on the existing industrial footprint. Is that still roughly the right number to think about? And in order to get back, presumably you’d have to add shifts. What’s the kind of lead time from a trading perspective to add incremental shifts?

The second question I had was with respect to the carbon neutrality by 2030. Do you still expect e-fuels to play a prominent role in reaching that target. And then finally, obviously, we have significant management changes and some exciting promotions and external hires during the quarter. Perhaps you could give some insight into the skillset that you were looking to promote as part of those management changes. Thank you.

Benedetto Vigna — Chief Executive Officer

Thank you. I’ll start from the last one, the management change. And the carbon neutrality and the first one, Antonio will take it. So, let’s start from the management change. Yes, we did a big change at the beginning — end of last year, beginning of this change — beginning of this year, and we did along with two direction if you have seen. On one side that we promoted our internal talents that I had the pleasure to see because I talk to a lot of people in the company. And also we’ve externalized. I think what the common threat that we wanted and I wanted to push these new organization are the four following ones.

Number one, the strong willingness to cooperate. Number two is about attention to innovation and number three is the focus to bring these things, especially in a transition area, to make the right choice, the right decision with the right timing and to move forward. And number four is very important, especially nowadays this is becoming very important for all the companies is this continuous learning approach because we have to be open to listen at other point of view, other people point of view and also the supplier point of view, the partner point of view. So these are the features that they want to boost with the new organization, again organize the homegrown talents and those external hires.

These gives for grant let me say competencies that are all these people are bringing in the game. Coming to the second question, the carbon neutrality. As we said, the carbon neutrality we will show you a clear plan in when we meet here in Maranello. The target is to become carbon neutral by 2030. We want to do it looking at all the carbon emission we generate directly we want to do it to looking at all the carbon emission we generate directly, as well as the carbon emission that get generated along the value chain and we want to do in a scientific way.

And so this reason why we are also proud, if you want this ISO certification, we got in Q4 because it testifies that we are substantiating these numbers with scientific approach. I think that if we want to tackle this properly, we need to be — to do it scientifically and that’s what we will do and that’s what we will show you in June. Now the first question, Antonio, you can take.

Antonio Picca Piccon — Chief Financial Officer

Yes. George, on the first one. Yes, 15,000 units is the level of capacity that we have. There has been no change in that respect. And the second one, we are working on two shifts and we predict to be there and even for 2022. Hope this helps.

George Galliers — Goldman Sachs International — Analyst

Great. Thank you. Yes, very helpful. Thank you very much and looking forward to the CMD.

Benedetto Vigna — Chief Executive Officer

Likewise.

Operator

Thank you. The next question comes from the line of Monica Bosio from Intesa Sanpaolo. Please ask your question.

Monica Bosio — Intesa Sanpaolo SpA — Analyst

Good afternoon, everyone. I hope you can hear me. My first question is on the volume growth in 2022. On the back of the stronger order book, the ramp up of the new entry model since 2022. The volumes impact would be significant over the current year. I was wondering if this could bring to some phase out of some orders, such as the F8? And as for the price mix, I was wondering if you can elaborate on what do you expect in terms of personalization for 2022?

And my second question is — are housekeeping questions. As for the advances from Daytona, should we assume an impact mostly in the first part of the year? Is it correct? And in terms of taxes. You mentioned that the taxes would be higher at the cash impact level in 2022. Can you give us some highlights at the P&L level? Thank you very much.

Benedetto Vigna — Chief Executive Officer

I think the part of the phase out of the model is, I said in Q4, we stopped the — we did not take order anymore on some model and this is done for the sake of brand exclusivity. The personalization gives a good contribution to our top line. And for the Daytona the taxes maybe Antonio you can take it.

Antonio Picca Piccon — Chief Financial Officer

Sure. Daytona is significantly contributing in terms of cash flow with the advances in Q1. Maybe you remember what happened back in 2019 with the Monza. And in terms of taxes, yes we are currently projecting something like the approximately EUR200 million additional cash out for taxes during the course of 2022.

Monica Bosio — Intesa Sanpaolo SpA — Analyst

EUR200 million. Thank you very much.

Benedetto Vigna — Chief Executive Officer

Welcome.

Antonio Picca Piccon — Chief Financial Officer

Thank you.

Operator

Thank you very much. Dear participants, thank you very much for all your questions. And now I would like to hand the conference over to our main speaker today, Mr. Benedetto Vigna for closing remarks. Please go ahead.

Benedetto Vigna — Chief Executive Officer

Thank you. Thank you so much. And thanks all for your time this afternoon and also for all your questions. Let me close by underscoring three things. One, our excellent 2021 financial result with an exceptional EBITDA margin. Two, our record order book covering well into 2023; and three, our broad, innovative and beautiful product range with two new launches to come in this year in 2022. Today, I realize that we I mean, we provided a little taste of what’s happening in our company. I realize that you want to hear more and we are as eager as ever to seize these opportunities ahead of us and to share with all of you the full picture on June 16 in Maranello at Capital Market Day. So good afternoon, everyone. Thanks again for your attention and talk you in the next quarter. Thank you.

Operator

[Operator Closing Remarks]

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