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Dec. 6, 2004 – Finance Digest

December 6, 2004
Filed under Features

Ducati Motor Holdings SpA posted a loss of Euro 9.8 million ($12.7 million) for the nine-month period ended Sept. 30, 2004. This compares to a Euro 7 million ($9.04 million) loss for the January–September period of 2003.
Revenue was Euro 268 million ($346.3 million) for the first nine months of 2004, a decrease of 4.5% compared to the same period last year at constant exchange rates.
Revenues from motorcycles for the period decreased 11.1% to Euro 204.2 million ($266.4 million)and represented 76.2% of revenues. Motorcycle-related products, including spare parts, technical accessories and apparel, increased 9.6% to Euro 58.9 million ($76.8 million) over the comparable period in the previous year.
Ducati said earnings before interest, tax, depreciation and amortization (EBITDA) was Euro 26.1 million ($33.7 million) for the period compared to Euro 30.9 million ($39.9 million) for the first nine months of 2003.
The company’s net debt was Euro 112.4 million ($145.2 million) at the end of September 2004 compared to Euro 112.2 million ($145 million) on September 30, 2003 and Euro 117.2 million ($151.4 million) at the end of 2003.
Unofficial Ducati worldwide registrations for the first nine months of 2004 were down 4.4% versus the same period last year. Sales in Italy down 3%, France down 4%, UK down 13%, Germany down 16%, Japan down 17% and Benelux down 18%. Ducati said registrations in the U.S. were up 20%.
“After reporting a positive first half of 2004, Ducati business reversed over the summer, due to a difficult market situation and the delayed introduction of our high volume new model Monster S2R and high margin new 999,” said Federico Minoli, president and CEO of Ducati Motor Holding.” “Market environment and the continuous devaluation of the dollar turned 2004 into a more difficult year than anticipated.”
The acceptance of Ducati’s new products and the production start up in November of the new models is expected to help recover part of the losses before year end, he said.
“Despite our forecast of a better fourth quarter, full year results are now expected to be lower than 2003 with unit sales decline of 5%, flat revenues at costant (foreign exchange rates) and a post-tax loss in the range of 6 million Euro ($7.8 million),” said Enrico D’Onofrio, chief financial officer of Ducati. “However we expect a recovery in sales in 2005 with a good EBITDA level, a return to profit and a lower net debt, fueled by the new entry level S2R, the Multistrada 620 and the already pre-sold Sport Classic line.”

Giant Motorsports Posts sales gain
Powersports retailer Giant Motorsports, Inc. (BULLETIN BOARD: GMOS) said revenues for its third quarter of 2004, ended Sept. 30, were $26.3 million, up $13.6 million, or 107%, from the $12.7 million reported for the quarter ending Sept. 30, 2003.
Net income for the three months ended Sept. 30, 2004, was $289,136, up from $199,204 for the same period in 2003. Gross margin for the quarter was $3.2 million, or 12.3% of sales, compared to $1.2 million, or 10.0% of sales, for the comparable quarter in 2003.
Giant Motorsports has two wholly-owned subsidiaries, W.W. Cycles (operating as Andrews Cycles) in Salem, Ohio, and Chicago Cycles, which it purchased on April 30, 2004.
Giant Motorsports’ revenues for the first nine months of 2004 were $60.3 million, an increase of 62% compared to the $37.3 million reported for the nine months ended Sept. 30, 2003. Operating margin for the nine months was $1.7 million, or 2.8% of sales, compared to $590,776, or 1.0% of sales, for the same period last year.
Net income for the nine-month period ended Sept. 30, 2004, was$682,514, up from $398,560 reported in the same period last year.
The company said 2004 sales and earnings were substantially affected by the acquisition of Chicago Cycle on April 30, 2004. The company did not break out revenues and expenses for the two operations, but did note that earnings were affected by $304,632 in additional expenses as a result of the company becoming a public company in January 2004.
Earnings before interest, taxes, depreciation and amortization (EBITDA) also increased in both the third quarter and nine-month periods of 2004. For the quarter ended Sept. 30, 2004, EBITDA reached $529,236 compared to $199,204 for the quarter ended Sept. 30, 2003, an increase of 166%.
The company reported EBITDA of $1.3 million for the nine months ended Sept. 30, 2004, as compared to $454,483 for the same period last year, an increase of 181%.

Suzuki’s 2Q Sales Up, Income Down
Japan’s Suzuki Motor Corp. posted net income of 12.12 billion yen ($114.4 million) in its second quarter ended Sept. 30, down from last year’s 12.43 billion yen ($119.5) because of rising costs and a stronger yen eroding overseas earnings, the company said. Suzuki’s second quarter sales rose 12% to 572 billion yen ($5.5 billion) from almost 511 billion yen ($4.9 billion) during the same period last year.
Suzuki’s first half net income in the six months ended Sept. 30 rose 15% to 28.7 billion yen ($275.9 million) while first half sales rose 7.1% to 1.16 trillion yen ($11.2 billion).
Suzuki is the world’s third-largest maker of motorcycles, after Honda Motor Co. and Yamaha Motor Co. The company’s first-half North American motorcycle sales rose 5.5% to 95,000 units. In Europe, sales fell 1.2% to 80,000 units; fell 23% in Japan to 64,000 units; and surged 34% to 582,000 units in Asia outside of Japan.

Piaggio Rebounds from Loss
Piaggio & C. SpA says net profit for the first nine months of 2004 was Euro 19.9 million, compared to a Euro 34.3 million loss for the same period last year. Cost cutting, lower interest payments and a new, more flexible agreement with unions combined to guide Piaggio back into the black, the company said.
Sales were Euro 863.4 million, up 7.8% compared to the prior year period. Earnings before interest, taxes, depreciation and amortization (EBITDA) were Euro 111.5 million, up 15.9% from last year. Earnings before interest and taxes, or EBIT, were Euro 64.2 million, up 37.2%.
Net debt was Euro 249.5 million, compared with Euro 234.8 million at the end of June 2004.
In other Piaggio news, the Italian anti-trust authorities are expected to make a decision regarding Piaggio’s acquisition of Aprilia by Nov. 25, according to Italian press reports.
Commissioners reportedly have concerns that the merger would create a dominant position in the 50cc scooter market.
In view of Aprilia’s urgent financial situation, Piaggio is cooperating with EU officials and has proposed a series of steps to diminish the commission’s concerns, the paper said.

KTM SALES, PROFITS UP FOR YEAR
KTM posted after-tax profit of Euro 26.8 million ($34.56 million) for fiscal 2003, which ended Aug. 31, 2004 — 52% higher than profit from fiscal 2002. The Austrian company sold 76,815 motorcycles worldwide compared to 70,514 in the previous year. Total revenue increased by 7% over 2002 to Euro 402.4 million ($518.94 million). As with most powersports OEMs, the U.S. is KTM’s largest market. The company’s earnings before interest and tax (EBIT) rose by 5% to Euro 2.1 million ($2.71 million).

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