Ferrari (RACE) Q1 2026 earnings review
Less Is More: Pricing Power Masks Margin Pinch
Ferrari executed a classic luxury playbook in Q1: intentionally ship fewer cars, yet make more money. Despite a 4.4% drop in total shipments, revenue grew 3.2% (6.0% constant currency) driven by a hyper-rich mix including the F80 ramp-up and heavy personalizations. However, the top-line beat didn't flow cleanly to the bottom line. Operating (EBIT) margin contracted 60 bps to 29.7% as the company swallowed a sharp step-up in D&A from its massive model changeover, alongside US tariff hits. With the highly anticipated 'Ferrari Luce' EV weeks away from reveal, the 2026 guidance is reiterated, but the margin profile requires tight monitoring as new models ramp.
🐂 Bull Case
Fewer units shipped (-157 YoY) still resulted in €81M of positive EBIT contribution strictly from Mix/Price. The order book extends late into 2027, proving macro-immunity.
Industrial Free Cash Flow hit €653M (+5% YoY), boasting >90% cash conversion. This funded a €226M buyback in the quarter alone while leaving the balance sheet in a €388M net cash position.
🐻 Bear Case
EBIT margins fell 60 bps YoY. Record model changeovers mean higher D&A expenses (€174M vs €151M), which are finally outpacing the mix benefits.
A negative currency impact clipped €56M off the top line, while US import tariffs and elevated marketing spend compressed operating leverage.
⚖️ Verdict: ⚪
Neutral. The business model remains the best in the automotive world, but 2026 is a transition year. The combination of falling volumes, surging depreciation from new product launches, and FX/tariff headwinds will keep earnings growth relatively flat despite revenue gains.
Key Themes
Mix and Personalization Offset Volume Declines
Accelerating. Ferrari's strategy to "ease the execution of the planned model change-over" by deliberately lowering Q1 deliveries by 4.4% paid off financially. In the EBIT bridge, the volume decline created a €17M headwind, but this was obliterated by an €81M tailwind from Mix/Price. Personalizations and the ramp-up of the F80, 12Cilindri, and Special Series vehicles are driving intense unit-level profitability.
Rising D&A and Tariffs Bite Margins
Decelerating. Operating profit (EBIT) margin slipped 60 bps YoY from 30.3% to 29.7%. The primary culprit is a steep increase in Depreciation & Amortization (€174M vs €151M) linked to the start of production for new models like the Amalfi and 849 Testarossa. This structural step-up, combined with US import tariffs and higher marketing expenses, indicates that margin expansion will be much harder to achieve this year.
The Dawn of the 'Ferrari Luce'
Management is heavily hyping the "Ferrari Luce"—the brand's first fully electric sports car. With the world premiere scheduled for May 25, 2026, in Rome, Ferrari claims anticipation "has never been so high." This launch is critical for proving Ferrari can transfer its ICE/Hybrid pricing power and emotional brand equity into the EV space without diluting margins.
EMEA Shipments Reversing
Reversing. While total shipments were deliberately constrained, the geographic mix shift is stark. EMEA—Ferrari's largest market—saw shipments plunge 14.3% YoY (1,458 units vs 1,701). In contrast, the Americas held flat, and APAC/China grew. Even with intentional pacing, a 240+ unit drop in the home region warrants investor monitoring to ensure it is purely supply-driven and not masking regional demand softness.
Persistent FX Headwinds
Stable concern. Currency impacts remain a persistent drag on the top line. Unfavorable exchange rates, primarily the US Dollar and Japanese Yen, shaved €56M off reported Q1 revenues. While constant currency revenue grew 6.0%, reported revenue grew only 3.2%. Management had previously flagged a ~€200M EBIT headwind for the full year 2026 from FX, and Q1 confirms this pressure is materializing.
Other KPIs
Up 5% YoY. Cash conversion remains spectacular at >90%. This liquidity enabled €226M in Q1 share repurchases, with the balance sheet swinging to a Net Industrial Cash position of €388M (vs Net Debt of €32M at year-end 2025).
Up 14% YoY. A notable bright spot driven by higher sponsorships and expanded lifestyle activities, including licensing and the new flagship store in London. This high-margin revenue stream helps buffer industrial cost inflation.
Guidance
Stable. Implies roughly 4.9% growth over FY25's €7.15 billion. Top-line expansion will be entirely driven by pricing, product mix, and personalizations, given the planned flat/lower volumes associated with the model changeover.
Stable. The minimum target is exactly flat with the 29.5% achieved in FY25. Achieving this will require H2 mix enrichment (specifically F80 deliveries) to outrun the elevated D&A run-rate and FX headwinds seen in Q1.
Accelerating slightly. Represents a minimum 5.5% growth vs FY25's €8.96. The shrinking share count, fueled by the ongoing €3.5 billion buyback program, is doing the heavy lifting here.
Key Questions
D&A Trajectory
Depreciation and amortization jumped significantly this quarter as new models entered production. Is €174M the new quarterly baseline, or will this step up further as the F80 and Luce ramp up later this year?
EMEA Volume Weakness
EMEA shipments dropped over 14% YoY. How much of this was a deliberate allocation choice to favor other regions versus specific timing gaps in homologations for the home market?
Tariff Mitigation Updates
With US import tariffs actively pressuring margins in Q1, how much of this cost is being successfully passed through via the updated commercial policy, and are you seeing any pushback on options/personalization as a result?