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Italy’s Ferrari raced to record profits in 2017

Ferrari said on Thursday that 2017 was "another record year" for the Italian luxury car maker, as it is raced into the pole position for increased profitability and output again this year and a further reduction in its debt.

Italy's Ferrari raced to record profits in 2017
Ferrari enjoyed another record year of profit in 2017. Photo: Giuseppe Cacace/AFP

Ferrari said in a statement that its net profit jumped by 34 percent to €537 million last year, outpacing analysts' expectations.

Underlying or adjusted operating profit sped ahead by 18 percent to €1.036 billion and revenues grew by 10 percent to €3.417 billion as the number of cars delivered rose by 4.8 percent to 8,398.

Investors feted the numbers, with Ferrari's shares shifting up 4.8 percent to €100.70 on the Milan stock exchange.

Previously part of the Italian-American Fiat Chrysler (FCA) group, Ferrari – which celebrated its 70th anniversary last year – went independent two years ago and has been listed in New York Stock since October 2015 and in Milan since January 2016.

Ferrari's cars usually sell for around €150,000, but the price tag can be higher than €1 million for limited-series models.

The Europe, Middle East and Africa region is the biggest market for Ferrari cars and shipments to this region increased by 4 percent to 3,737 vehicles. Unit sales in the Americas rose by 5 percent to 2,811. Sales to China, Hong Kong and Taiwan were stable at 617 cars, and shipments to the rest of the Asia-Pacific region jumped by 12 percent to 1,233.

Looking ahead to the current year, Ferrari is forecasting producing more than 9,000 vehicles and revenues in excess of €3.4 billion.

Adjusted operating profit is projected to come out at €1.1 billion or higher, and the carmaker is planning to bring down its debt to below €400 million from €473 million euros at the end of December and €653 million the year before.

Further ahead, Ferrari is planning to lift adjusted operating profit to €2 billion by 2022 at latest and to cut its debt to zero by 2021.

BUSINESS

EU finds Italy’s Alitalia loans ‘illegal’ but airline free to keep money

The EU's antitrust authorities ruled Friday that Italy's 900 million euro loans to long-struggling airline Alitalia were "illegal", but cleared the country's new carrier to get state funding and avoid paying back the money. 

Ahmad AL-RUBAYE / AFP
Ahmad AL-RUBAYE / AFP

“Following our in-depth investigation, we reached the conclusion that two public loans worth EUR 900 million granted by Italy to Alitalia gave the company an unfair advantage over its competitors, in breach of EU State aid rules,” said EU competition chief Margrethe Vestager said in a statement.

“They must now be recovered by Italy from Alitalia to help restore a level playing field in the European aviation industry.”

But the authorities in Brussels simultaneously said new flag airline ITA – set to start flying next month – was not liable to reimburse the money and that 1.35 billion euros being injected into the firm by Rome did not breach state aid rules.

“Italy has demonstrated that there is a clear break between Alitalia and the new airline ITA, and that its investment in ITA is in line with terms that a private investor would have accepted,” Vestager said.

“Once ITA takes off, it is for Italy and ITA’s management to make use of this opportunity once and for all. And we will continue to do our part to ensure fair competition in the European aviation sector.”

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Loss-making Alitalia was placed under state administration in 2017 but Italy has struggled to find an investor to take it over. The situation was only exacerbated by the coronavirus pandemic that grounded airlines worldwide.

The Italian government gave the company two loans for the amount of EUR 600 million and EUR 300 million in 2017, as Alitalia scrambled for liquidity without access to the debt market.

Earlier this year Italy said it had reached an agreement with the European Union for a bailout that creates a new debt-free company to take over some of Alitalia’s assets – ITA.

The board of directors of ITA last month approved a binding offer for 52 of Alitalia’s aircraft, related airport slots and other assets.

The Italian government has created a 100-million-euro ($117-million) fund to reimburse Alitalia customers.

Italy provided state loans to Alitalia totalling 1.3 billion euros between 2017 and 2019.

In July, it approved another 700 million euros for ITA.

Further sums are expected in 2022 and 2023, bringing the total to 1.35 billion euros.

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