Ducati earnings and motorcycle revenue slide in 2005
March 13, 2006
Filed under Features
Ducati Motor Holding SpA (NYSE: DMH, Borsa Italiana S.p.A: DMH) ended 2005 with a loss of Euro 41.5 million ($49.4 million), down from a loss of Euro 3.5 million ($4.1 million) in 2004.
The company continues to seek a new strategy to increase margins, generate cash flow and reduce structural costs.
Ducati revenues for 2005 were Euro 320.8 million ($382 million), down 11.7 percent compared to 2004. Revenues from motorcycles decreased 13.1 percent to Euro 247.2 million ($294 million) and accounted for 77.1 percent of total revenues. Sales of motorcycle-related products, including spare parts, accessories and apparel, were Euro 70.4 million ($83.9 million), down 3.8 percent compared to 2004.
Gross margin for 2005 amounted to Euro 58.5 million (69.7 million), or 18.2 percent of revenues, down from Euro 86.7 million ($103 million), or 23.8 percent of revenues last year.
Earnings before interest and taxes (EBIT) amounted to a loss of Euro 33.6 million ($40 million) versus a profit of Euro 9.2 million ($10.9 million) in 2004. At EBIT level, the result was a loss of Euro 41.0 million ($49 million) versus a profit of Euro 5.4 million ($6.4 million.)
Ducati net debt at Dec. 31 was Euro 137 million ($163 million), down from Euro 154 million ($183 million) at Dec. 31, 2004.
Unofficial Ducati registrations in 2005 were down 3.5 percent compared to 2004. Registrations in the United States were up 25.7 percent, up 4.5 percent in non-subsidiary countries, and up 1.5 percent in France. Registrations were down 17.2 percent in Benelux, 16.2 percent in the United Kingdom, 15.2 percent in Germany, 14.7 percent in Italy and 5.5 percent in Japan
New Corporate Strategy
In December, Texas Pacific Group, majority shareholder of Ducati Motor Holding S.p.A., agreed to sell its 30 percent controlling stake in the motorcycle manufacturer to Italian private equity firm Investindustrial Holdings S.A.
At the time, Federico Minoli, president and CEO of Ducati Motor Holding, said the board of directors would begin working with its main banks to finalize the agreement as efficiently and quickly as possible.
Since then, participating banks, including Unicredito Banca Mobiliare (UBM), have offered approval of the deal.
In announcing the deal’s approval, Ducati officials said they hoped associated refinancing would allow the company to “increase margins, generate cash flow and reduce structural costs.”
Strong January in U.S.
While it did not reveal actual unit sales numbers, Ducati North America said it achieved an 80 percent sales increase in January. The company said increases were based largely on sales of motorcycles in the 501-750cc sport bike category, which were up 140 percent compared to January 2005.
Ducati said the spike in sales has allowed the brand to eclipse fellow European brands BMW and Triumph in on-highway sales and market share for the month.
The Italian manufacturer’s U.S. subsidiary, based in Cupertino, Calif., says sales during the past six months are 56 percent higher than they were for the comparable period of the previous year.
Ducati’s 2006 model line includes 25 bikes in six families — Monster, Multistrada, Sport Touring, Supersport, SportClassic and Superbike.
Ducati’s Monster family includes the 620, 620 Dark, S2R, S2R Dark, S4R, and new S2R1000 and S4Rs Testastretta; the Multistrada’s 620 620 Dark, 1000 DS and 1000s DS; Sport Touring features the ST3 and ST3s ABS; the Supersport line with the 1000 DS; and the exotic SportClassic range, with its GT1000, Paul Smart 1000LE and Sport 1000. The company’s bread-and-butter product, the Superbike family includes the 749, 749 Dark, 749s, 999, 999s, 749R and 999R race models, and a limited 999R Xerox.