Louis Camilleri - Chairman and Chief Executive Officer
Good afternoon or good morning to everyone joining Antonio and me on our inaugural earnings call and what can only be described as difficult emotional circumstances. We were all deeply saddened by the loss of Sergio Marchionne. He was a man of immense talent blessed with a razor-sharp brain, an unparallel level of energy and a generous heart; clearly an inspirational and formidable leader for all those who have the privilege to work with and alongside him.
On a personal note, Sergio was a dear friend. Beyond our friendship, he sat on the Philip Morris International board, where he served as an exemplary director for the last 10 years; and I sat on the Ferrari board since its ever so successful spinoff from the FCA Group. This allowed us to be in frequent contact and gave us ample opportunity to discuss and debate our respective business strategies in a fast moving world.
I can very humbly claim that we shared a deep mutual respect for each other, and I will pursue with vigor and discipline the ambitions the Board, he and the entire team here had for this legendary and great company. I had the privilege of interacting with this management for close to two decades as a lead sponsor and customer, and more recently board member. I can tell you that all Ive seen to-date has confirmed to me that we are blessed with a fabulously talented, committed and determined senior leadership team and organization at every level, all proud to be part of this company and all excited to bring it to ever greater heights with integrity and passion.
We have a product portfolio in place for the next few years that is quite frankly stunning from every perspective, one that truly gives me confidence in our future growth and expansion. It is a true privilege to serve as Chief Executive of this jewel of a company and I take this opportunity to thank our new Chairman, John Elkann, and the entire Ferrari Board for entrusting me with this responsibility to lead our company to the next level while mindful of the opportunities and risks that we will confront going forward, rest assured that I will give my all in the best interest of all our stakeholders - our clients, colleagues, business partners, and of course our shareholders. I look forward to meeting you at our forthcoming Capital Market days, when we will review the plans and initiatives we have in place to deliver our aspirations.
For now, we are pleased to report a very solid quarter and to confirm our previously disclosed projections for the year, underpinned by a very strong order book that takes us well into next year.
It is my pleasure to now hand over the call to Antonio, our Chief Financial Officer, with whom I have already established a great relationship and who will undoubtedly make an invaluable contribution to this great company as we move forward in the coming months and years. Antonio?
Antonio Picca Piccon - Chief Financial Officer
Thank you, Louis, for this kind introduction. Good afternoon to everyone, and thank you for listening the call. I am also among the once who owe to Sergio Marchionne for all those that he taught to us both as a CEO and as a man during the incredible days of CF and FCA. The simple fact of being here today, as to a number of reasons why I am grateful, his loss makes me feel even stronger to personal determination and commitment to contribute to the further development of Ferrari at the level this company, all of its stakeholders, our colleagues and you, Louis, deserves.
With that said, let me begin with Page 4. Our shipments reached approximately 2.5k units, which is plus 5.6% versus prior year. Results were driven by a 22.6% increase in V12 models, while the D81s grew 1%. 12-cylinder model’s strong performance was led by the A12 superfast, partially offset by the F12berlinetta phase-out as well as the F12tdf that completed lifecycle in 2017. LaFerrari Aperta is also finishing its limited series brand.
8-cylinders models were up versus prior year, mostly thank to the 488 family, along with the first deliveries of the newly launched Ferrari Portofino expected to ramp up over the next quarters. This was partially offset by the California T’s phase-out. Group net revenues for Q2 were €906 million, down a few million but up 1.4% at constant currency. Our adjusted EBITDA improved by 7% reaching $290 million and 31.9% margin. Adjusted EBIT for the group showed 7.5% increase, reaching €117 million quarterly record with the margin of sanction 200 basis points to 23.9%.
Industrial fleet has slowed for the quarter came in at €93 million. Net industrial debt at the end of June, after €30 million of share buyback and a €136 million dividend distribution, reached €472 million, substantially in line with the level of December 2017.
Moving to shipments on Page 5. The 812 Superfast as well as the 488 and the GTC4Lusso families performed solidly. Shipments for the group were up 5.6%. EMEA grew 7.2% with Middle East rebounding. Americas showed a 6.6% increase. And combined delivers in China, Hong Kong and Taiwan were up 26.4%. Rest of APAC decreased a few units due to designing of the newly launched Ferrari Portofino yet to arrive in the market.
Moving to Page 6 on Group net revenues. We see how they decreased from a €920 million in Q2 to a 906 -- sorry, in Q2 2017 to €906 million in Q2 ‘18. Therefore, down €14 million, but up 1.4% in constant currencies. Car and spare parts revenues totaling €670 million were slightly positive, thanks to higher volumes already commented, as well as mix and price. This was partially offset by negative effects.
Engines revenues were €80 million, forcing a decrease in the sales to Maserati due to lower engine volumes. Sponsorship commercial and brand were € 126 million. Thanks to an increasing sponsorship and higher championship ranking, partially offset by lower sales generated by brand related activities and by effects.
On Page 7, you can see the year-over-year changes in the main items of the adjusted EBIT, as mentioned, the LaFerrari was up 7.5% to €270 million, with adjusted EBIT margin of 200 basis points and adjusted EBITDA reaching 32.9% margin. Volume was up €12 million, thanks to the 812 Superfast, the 488 and the GTC4Lusso families as well as first deliveries of the Ferrari Portofino.
Mix and price were positively impacted by strong performance of V12 models. Pricing increases together with the first deliveries of the strictly limited edition Ferrari J50. This was partially offset by lower sales of LaFerrari Aperta that is finishing its limited series run.
Industrial costs and R&D decreased €2 million, mainly due to lower spending in F1 activities.
SG&A costs were almost in line with prior year and foreign exchange, including hedges, had a negative impact mainly due to the U.S. dollar, the yen and the British pound depreciation versus euro.
Other increase mainly to higher sponsorship revenues and higher championship ranking, partially offset by lower sales to Maserati and brand-related activities.
Moving to Page 8. Industrial free cash flow for the quarter was €93 million compared to $92 million in Q2 2017, driven by strong adjusted EBITDA. This was partially offset by CapEx to support broadening and hybridization of our product in line with expected volume growth over the 2019-2022 period. In addition, during the second quarter, we paid taxes which were lowered by the fact of increased capital deductions related to eligible research and development.
Net industrial debt at the end of June, after we already mentioned, share buyback and dividend, reached €472 million, substantially in line with the year end.
The last couple of slides finally show Formula 1 ranking as well as our client relationship activities.
Ferrari N.V. (RACE) CEO Louis Camilleri on Q2 2018 Results - Earnings Call Transcript | Seeking Alpha
