Ferrari’s Road to Lower Emissions May Be Bumpy
Investors may not be able to put the Italian supercar manufacturer in the same league as handbag makers Hermès and LVMH forever
The big challenge for the next boss of Ferrari RACE -4.24% will be managing the racing-car brand’s strategy for cutting tailpipe emissions.
The pandemic halted the car manufacturer’s production lines for seven weeks—with a 10% knock-on reduction in sales last year, the company reported Tuesday. Otherwise, Ferrari has cruised through the crisis with few scratches. It projects a rebound in revenue this year to roughly 13% more than its pre-pandemic 2019 total, underpinned by strong orders since last summer. The shares fell 5% in morning trading, perhaps because some investors were hoping for an even stronger outlook from a company that has routinely beat expectations in recent years.
Since its 2015 initial public offering, investors have gradually come to treat Ferrari as an exception to the general rule that car makers are capital-intensive, low-margin businesses whose shares are better suited to hedge-fund trades than long-term money. Given its small production volumes and big backlog of orders from ultrarich clients, they see the Italian company as a luxury-goods maker, not a metal basher.
But in one respect Ferrari is like other car makers: It needs to reinvent its powertrains. Environmental rules are tightening everywhere, punishing supercars, which produce disproportionate carbon emissions per mile. Consumer attitudes also are greener among younger generations that Ferrari needs to cultivate as future clients.
Former Chief Executive Louis Camilleri, who stepped down unexpectedly in December following a bad case of Covid-19, didn’t dodge the problem, investing in hybrid technology and decarbonizing production. The company delivered its first hybrid model, the SF90 Stradale, in the fourth quarter.
But his successor will need to go much further. On a call with analysts, Chairman and acting CEO John Elkann, the scion of the Agnelli family that founded the Fiat empire and still controls Ferrari, said the company would be carbon-neutral by 2030, but would still be making hybrid models as well as all-electric ones. On the CEO succession, he said only he needed the “necessary time” to find the right candidate
Investors will need much more clarity from the new boss on what carbon-neutrality means for Ferrari: what it will cost and to what extent hybrids can future-proof the company against, for example, proposed bans on combustion engines in the wealthiest global megacities. Ferrari will hold an investor day in the first half of 2022 to lay out a long-term road map, Mr. Elkann said.
Going fully electric must be a daunting prospect for a brand so known for its eight- and 12-cylinder engines and the growling noises they produce. Yet surely it isn’t impossible. Ferrari’s heritage is as much in racing and design as in engines, and consumers like high-end electric vehicles for characteristics such as rapid acceleration.
Ferrari shares currently change hands for 44 times forward earnings, somewhere between the multiples of French luxury giants LVMH Moët Hennessy Louis Vuitton SE and Hermès. But benchmarking the stock against the handbag sector may start to look like a mistake as the risks inherent in the company’s road to lower emissions become clearer. There are some automotive trends that not even Ferrari can speed past.
Gapping down
In reaction to earnings/guidance:
- SMCI -9% (also names new CFO; announces new $200 mln stock repurchase program), TENB -7.2%, SPOT -7.1%, GSK -4.9%, MTCH -4.6%, HWM -4.2%, BIIB -3.8%, EA -3.5%, CMG -3%, AMGN -2.1%, BSX -2%, SANM -1.8%, ALB -1.5% (sees Q4 EPS and revs above consensus; also announces stock offering)
M&A news:
- JAZZ -4.7% (GW Pharma agrees to be acquired by Jazz Pharmaceuticals (JAZZ) for $220.00 per ADS in cash and shares)
Other news:
- VYGR -12.6% (VYGR and NBIX terminate Parkinson's disease portion of collaboration agreement)
- KRYS -6.7% (prices offering of 1,923,077 shares of its common stock at $65.00 per share)
- X -6.4% (upsizes offering by 2 mln shares and prices 42 mln shares of common stock at for gross proceeds of approximately $699 million)
- TMDI -5.3% (announces $15 mln bought deal offering)
- OPEN -4.9% (commences public offering of 24 mln shares)
- PBR -1% (reports Q4 production and sales)
- MKTX -0.9% (reports Jan volume statistics)
Analyst comments:
- HYLN -3.9% (downgraded to Sell from Neutral at Goldman
- RACE -2.6% (downgraded to Sell from Neutral at Citigroup)
- BYND -1.5% (downgraded to Underperform from Neutral at DA Davidson)
- CDEV -0.7% (downgraded to Underweight from Neutral at JP Morgan)
Vivino raises $155 million for wine recommendation and marketplace app
If you’re at all interested in wine, chances are you’ve turned to Vivino at least a few times for recommendations. The app and the company behind it have been helping people enjoy better wine since 2010, and now the startup has raised $155 million with its Series D round – a sum over twice as large as all of its previous funding to date. Spurred by rapid growth that has seen its user base grow from 29 million in 2018, to 50 million currently, Vivino wants to use the large cash injection to significantly boost its core tech and personalized recommendation engine, while also expanding its presence in key growth markets globally.
Vivino is an interesting company for many reasons, but chief among them might be just how similar its vision today is to the one it started out with. Founder and CEO Heini Zachariassen told me in an interview that the app has been remarkably immune to the pivot – something as natural as breathing in the fast-flowing startup world.
“I can look at my slide, from when I pitched this 10 years ago,” he told me. “It says, ‘Hey, you scan a bottle of wine, then you can buy it.’ That just makes a lot of sense to anybody, so it really hasn’t changed much.”
“It’s been very, very difficult to build much – much harder to build than building that slide,” he joked. But it’s always been the same – we always knew that was going to be the model.”
That core value proposition is what leads to a lot of Vivino’s initial downloads and subsequent usage. The scenario is likely familiar: You’re sitting in a restaurant and browsing the wine menu, or staring at a crowded shelf in a wine store. For myself, I think I likely searched for something like ‘wine recommendation app’ and found Vivino via the App Store, installed it and was snapping photos of labels or menus within minutes. The recommendations provided somewhere to start, and since then the app has grown more personalized as I’ve provided input about my tastes.
Vivino’s marketplace component means you can often buy the wines you find and enjoy directly from the app, via partnerships the company fosters and maintains with merchants large and small around the world. Zachariassen explained that they strive to maintain high standards when it comes to these partners, since the experience a user has with them is largely a reflection on Vivino itself because the app provides the means for the purchase.
Building more relationships with more merchants in more geographies is one part of their expansion goal for addressing their primary growth markets, but the company is also going to put a lot more capital behind improving and extending its recommendation engine. A lot of the building blocks are in place to make big improvements there, not least of which is the wine database that Vivino spent a decade building essentially from zero.
“Stage one of the hurdles we faced, even before we got commercial, was really building the data,” Zachariassen told me. “There is no aggregated data anywhere. So we’ve basically built this data totally from scratch. So it means taking a picture of bottle of wine, then having people just entering info every single day to fill it. We have 1.5 billion pictures of wine labels right now, so building that mass of data in a good and structured way really is 10 years of work.”
He adds that wine is a particularly long-tail marketplace, with highly individual tastes and very little indication in the company’s history that that’s likely to change in any significant way. Vivino’s marketplace approach, which is highly local on both the supply and the demand side, is particularly well-suited to addressing the sector’s needs, and Zachariassen believes Vivino has only really begun to scratch the surface on that thus far. I asked him why now was the right time to take on this sizeable round, given they’ve been very modest with prior funding amounts.
“I think we we’ve reached sort of a critical mass,” he said. “We saw last year massive growth, and actually reaching […] like a quarter of a billion dollars in sales, and we’ve really seen that the unit economics are healthy for us. At the same time, unlike other marketplaces – you know, the order of things when you have a marketplace might be if you’re like Uber, is that you go into market, you spend money, do marketing, a lot of money to build up the demand, and then you build the supply on top. We’re a little bit different in the way that demand is already there, because we have 50 million users around the world. So we just follow our demand.”
“But the hardest thing about that is that we’re now a 200 person company that sells wine in 17 countries,” he continued. “Which means we’re relatively thin in all these markets. So so one of the big things here, is actually to go much deeper in each market and say, okay, we now know it works here, let’s put more resources in every single market.”
Zachariassen also added that the company spends very little on marketing to date, so it’s going to begin spending more on that to extend its organic growth. Finally, it wants to really build out product engineering, since he says that while users love the existing app, they really “want to do so much more with it.”
Vivino has worked to modernize a product category that has long relied on local expertise and individual storehouses of highly-specific information, with an approach that provides all the benefits of a connected and global marketplace, while retaining regional and particular appeal at the granola level of the individual user. Now, the company is read to tap the rest of the massive submerged demand it has identified, and this fresh fundings would help it do just that.
The $155 million series D round was led by Sweden’s Kinnevik, and also includes participation by Sprints Capital, GP BullHound, and existing investor Creandum which led its Series A. This brings the company’s total funding to $221 million to date.
Gapping up
In reaction to earnings/guidance:
- SHEN +20.8% (guidance; will issue a special dividend of $18.75/share), MTOR +18.9% (also awarded new business to produce electric powertrains), EVR +11.6%, ATGE +8.5%, AMCR +8.4%, GOOG +7.4%, SNE +6.9%, CPRI +6.7%, VCYT +6.3% (also acquires Decipher Biosciences), VIAV +6.2%, VNE +5.4%, VOD +4.8%, INGR +4.3%, LU +4.2%, WNC +4.2%, ICHR +3.6%, SCSC +3.5%, DT +3.5%, NMR +3.2%, APO +3.1%, BDN +3%, APAM +3% (also announces $0.31/sh special dividend), NVO +3%, LGND +2.8%, TCS +2.7%, DOX +2.7% (also announces service agreements with various partners), AVY +2.6%, AMZN +2.5% (also Jeff Bezos will transition to Exec Chair in Q3; Andy Jassy will then become CEO), SMG +2.3%, SLAB +2.3%, POWI +2.2%, CHKP +1.8%, GL +1.5%, ABBV +1.5%, MANH +1.4%, HUM +1.4%, TGI +1.3%, LFUS +1%, .
M&A news:
- VCVC +39.9% (10X Capital Venture Acquisition Corp: REE Automotive to list on NASDAQ through merger with 10X Capital Venture Acquisition Corp)
- RUHN +9.2% (enters into merger agreement with RUNION in transaction with equity value of ~$296.4 mln)
- INFU +4.1% (has acquired FilAMed, a privately held biomedical services company)
- GWPH +2.6% (GW Pharma agrees to be acquired by Jazz Pharmaceuticals (JAZZ) for $220.00 per ADS in cash and shares) .
Other news:
- LIZI +26% (releases letter to shareholders from CEO Jinnan Lai)
- CLIR +17.5% (receives purchase order from global refining co)
- ISBC +10.6% (to be added to S&P SmallCap 600)
- BCRX +8.5% (announces that the U.S. Food and Drug Administration has approved a supplemental new drug application for RAPIVAB expanding the patient population of RAPIVAB for the treatment of acute uncomplicated influenza to include patients six months and older who have been symptomatic for no more than two days)
- CDMO +7.6% (Avid Bioservices and Humanigen (HGEN) entered into manufacturing agreement to expand production capacity for lenzilumab, Humanigen's therapeutic candidate in development for COVID-19)
- SNE +7% (promotes Neal Manowitz to COO of Sony Electronics Inc North America)
- ARGX +6.3% (prices offering of 1,608,000 ADSs at a price of $320.00 per ADS and the sale of 1,517,000 ordinary shares at a price of €265.69 per ordinary share)
- CVAC +6.1% (CureVac and GlaxoSmithKline to develop next generation mRNA COVID-19 vaccines)
- AFMD +3.9% (entered into a clinical research collaboration with Roche (RHHBY) to explore the combination of Affimed's innate cell engager AFM24 with Roche's PD-L1 checkpoint inhibitor atezolizumab)
- BZUN +3.1% (entered into a share purchase agreement with all the shareholders of Full Jet Limited to acquire a 100% equity interest in Full Jet)
- TCON +2.9% (new CFO)
- ARQT +1.9% (prices 5.5 mln shares of common stock at $35.00 per share)
- VUZI +1.6% (files for $300 mln mixed securities shelf offering)
- CX +1.4% (announces efforts to optimize supply chain)
- UGI +1.4% (announces partnership with Ekobenz)
- FCX +1.4% (reinstates dividend)
Analyst comments:
- TTI +5.7% (upgraded to Buy from Hold at Stifel)
- KSS +1.7% (upgraded to Outperform from Market Perform at Cowen)
- NUE +1.6% (upgraded to Outperform from Neutral at Credit Suisse)
- NXPI +1.6% (upgraded to Outperform from Perform at Oppenheimer)
- ATHM +1.1% (upgraded to Buy from Hold at The Benchmark Company)
Symrise Shifts Executives, Merges Business Groups
Achim Daub and Heinrich Schaper will leave the German fragrance and flavors supplier, which is combining its Flavor and Nutrition segments.
PARIS – There are changes afoot in the executive board of Symrise AG, which is merging two of its divisions.
The German fragrance and flavors supplier said on Wednesday that Achim Daub, who heads up the group’s Scent and Care division, and has served on Symrise’s board since 2006, is leaving the company effective March 31 to pursue other professional prospects, on mutual agreement and best terms.
Symrise said succession planning for the division is under way, and that in the meantime, Heinz-Jürgen Bertram, chief executive office of Symrise, will steer the segment.
Heinrich Schaper, an executive board member and head of the Flavors segment, is to retire and leave Symrise on March 31.
In an interim move, during a succession-planning phase, Jean-Yves Parisot will take over the global leadership of the Flavor segment in addition to his oversight of the Nutrition division.
Concurrently, Symrise will combine its Flavor and Nutrition activities
Olaf Klinger, another executive board member, is to continue heading the finance, legal and IT department of Symrise.
In a research note, Jeffries analysts Ryan Tomkins and Martin Deboo wrote that key issues now relate to Daub’s replacement, plus whether there will be further executive changes, most notably regarding the ceo, who has been in place for approximately 12 years.
“And how the division merge will affect the potential for asset integration, as well as reporting disclosures, especially for the pet food business,” the note said.
Michael König, chairman of Symrise’s supervisory board, said in a statement that the group “will be able to leverage the strengths of the new Flavor and Nutrition segment even more effectively, increase customer penetration and further differentiate itself in the market.”
König also recognized the outgoing executives’ contributions.
“With Heinrich Schaper and Achim Daub, we are saying goodbye to two very committed leaders, who have significantly shaped Symrise’s strong position,” said König. “Heinrich Schaper served Symrise and its predecessor companies for more than four decades. Today’s global presence of the Flavor segment and the excellent relationships with major customers are due to a far-sighted strategy.”
König thanked Daub, as well. “He has consistently driven forward the growth and expansion of the fragrances business over the past 15 years and very successfully developed new application areas,” the executive said.
Holzminden, Germany-based Symrise registered sales of 3.5 billion euros in 2020.
Early premarket gappers
- Gapping up:
- CLIR +15.9%, ISBC +12%, ATGE +10%, SNE +7.9%, SNE +7.9%, AMCR +7.5%, GOOG +7.4%, ARGX +5.7%, CVAC +5.6%, VIAV +5.5%, LU +5.3%, TGI +5%, VOD +4.4%, NVO +4.2%, INGR +4.1%, BZUN +3.7%, SCSC +3.5%, NMR +3.2%, SHEN +3%, DOX +2.5%, TCON +2.4%, POWI +2.4%, BRKS +1.7%, OCFT +1.7%, CB +1.7%, ICHR +1.7%, CHKP +1.7%, VUZI +1.6%, FCX +1.5%, APAM +1.5%, GL +1.5%, CX +1.4%, MANH +1.4%, BDN +1.4%, TAK +1.2%, GNUS +1.1%
- Gapping down:
- VYGR -11.1%, SMCI -9%, TMDI -7.2%, MTCH -6.7%, X -6.5%, ALGM -6.3%, SPOT -6.1%, TENB -5.8%, KRYS -4%, EA -4%, OPEN -3.8%, CMG -2.8%, ALB -2.5%, TCS -2.1%, SANM -1.8%, AMGN -1.6%, EPD -1.2%, MKTX -0.9%