Ferrari to issue $713 million bond to boost liquidity

MILAN — Ferrari will improve its available liquidity by raising 650 million euros ($713 million) through a bond issue, with net proceeds to be used for “general corporate purposes.”

The five-year unsecured bond will pay a 1.5 percent annual interest rate, Ferrari said in a news release. 
 
Ferrari has been less affected by the coronavirus pandemic than most automakers. Its deliveries actually rose by 4.9 percent in the first quarter of 2020; net revenues declined 0.8 percent on lower engine sales to Maserati and lower sponsorship income due to the suspension of Formula 1 races. 

Adjusted earnings before interest and tax were down 5.2 percent to 220 million euros and cash flow more than halved to 73 million euros.
 
In a May 5 call with financial analysts, Ferrari said there were some order cancellations during the quarter and warned that the impact of the COVID-19 pandemic would mostly be felt in its second-quarter results.

Ferrari cut its revenue and profit forecast for 2020, but said it assumes a “V-shaped” recovery with the second half of the year generating an increase in revenues of some 10 percent and a growth in gross operating profit of 15 percent compared with the second half of 2019.

The company had a total available liquidity of 1.23 billion euros at the end of March. On May 5 Ferrari paid out a total amount of 210 million euros as a dividend on 2019 results; it later beefed up its liquidity to 1.37 billion euros by doubling available undrawn committed credit lines.

The bond issue will improve Ferrari’s liquidity to approximately 2 billion euros.

During the May 5 call, Ferrari CFO Antonio Picca Piccon said the liquidity cushion “was a key factor in the decision to dispense our dividend last month. This is also very tangible evidence of our confidence in the future.”