EX-99.1 2 ferrarinvinterimreport-093.htm EX-99.1 Document

Exhibit 99.1
Ferrari N.V.

Interim Report
At and for the three and nine months ended September 30, 2023
____________________________________________________________________________________________________








BOARD OF DIRECTORS

Executive Chairman

John Elkann

Vice Chairman

Piero Ferrari

Chief Executive Officer

Benedetto Vigna

Directors

Delphine Arnault
Francesca Bellettini
Eddy Cue
Sergio Duca
John Galantic
Maria Patrizia Grieco
Adam Keswick
Mike Volpi




INDEPENDENT AUDITORS

DELOITTE & TOUCHE S.p.A.

CERTAIN DEFINED TERMS

    In this report (the “Interim Report”), unless otherwise specified, the terms “we”, “our”, “us”, the “Group”, the “Company” and “Ferrari” refer to Ferrari N.V., individually or together with its subsidiaries, as the context may require.

1


INTRODUCTION

    The Interim Condensed Consolidated Financial Statements at and for the three and nine months ended September 30, 2023 (the “Interim Condensed Consolidated Financial Statements”) included in this Interim Report have been prepared in compliance with IAS 34 — Interim Financial Reporting (IAS 34). The accounting principles applied are consistent with those used for the preparation of the annual consolidated financial statements at and for the year ended December 31, 2022 (the “Annual Consolidated Financial Statements”), except as otherwise stated in “New standards and amendments effective from January 1, 2023” in the notes to the Interim Condensed Consolidated Financial Statements.

    The Group’s financial information in this Interim Report is presented in Euro except that, in some instances, information is presented in U.S. Dollars. All references in this report to “Euro” and “€” refer to the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty on the Functioning of the European Union, as amended, and all references to “U.S. Dollars” and “$” refer to the currency of the United States of America (the “United States”).

    Certain totals in the tables included in this Interim Report may not add due to rounding.

    The financial data in “Results of Operations” is presented in millions of Euro, while the percentages presented are calculated using the underlying figures in thousands of Euro.

This Interim Report is unaudited.




































2



FORWARD-LOOKING STATEMENTS
    Statements contained in this report, particularly those regarding our possible or assumed future performance, competitive strengths, costs, dividends, reserves and growth as well as industry growth and other trends and projections, are “forward-looking statements” that contain risks and uncertainties. In some cases, words such as “may”, “will”, “expect”, “could”, “should”, “intend”, “estimate”, “anticipate”, “believe”, “remain”, “continue”, “on track”, “successful”, “grow”, “design”, “target”, “objective”, “goal”, “forecast”, “projection”, “outlook”, “prospects”, “plan”, “guidance” and similar expressions are used to identify forward-looking statements. These forward-looking statements reflect the respective current views of Ferrari with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Such risks and uncertainties include, without limitation:

•our ability to preserve and enhance the value of the Ferrari brand;
•the performance of our racing teams, the expenses we incur for and the sponsorship and commercial revenues we generate from racing, as well as the popularity of motor sports more broadly;
•our ability to keep up with advances in high performance car technology, to meet the challenges and costs of integrating advanced technologies, including hybrid and electric, more broadly into our car portfolio over time and to make appealing designs for our new models;
•the impact of increasingly stringent fuel economy, emissions and safety standards, including the cost of compliance, and any required changes to our products, as well as possible future bans of combustion engine cars in cities and the potential advent of self-driving technology;
•increases in costs, disruptions of supply or shortages of components and raw materials;
•global economic conditions, macro events, pandemics, and conflicts, including the ongoing conflict between Russia and Ukraine and the more recent hostilities between Israel and Hamas;
•changes in the general economic environment (including changes in some of the markets in which we operate) and changes in demand for luxury goods, including high performance luxury cars, demand for which is highly volatile;
3


•our ability to successfully carry out our low volume/controlled growth strategy in the markets we are present;
•our ability to preserve our relationship with the automobile collector and enthusiast community;
•competition in the luxury performance automobile industry;
•changes in client preferences and automotive trends;
•disruptions at our manufacturing facilities in Maranello and Modena;
•climate change and other environmental impacts, as well as an increased focus of regulators and stakeholders on environmental matters;
•our ability to maintain the functional and efficient operation of our information technology systems and to defend from the risk of cyberattacks, including on our in-vehicle technology;
•reliance upon a number of key members of executive management and employees, and the ability of our current management team to operate and manage effectively;
•the performance of our dealer network on which we depend for sales and services;
•our ability to protect our intellectual property rights and to avoid infringing on the intellectual property rights of others;
•product warranties, product recalls and liability claims;
•the performance of our lifestyle activities;
•our continued compliance with customs regulations of various jurisdictions;
•changes in tax, tariff or fiscal policies and regulatory, political and labor conditions in the jurisdictions in which we operate;
•labor relations and collective bargaining agreements;
•our ability to ensure that our employees, agents and representatives comply with applicable law and regulations;
•our ability to service and refinance our debt;
•exchange rate fluctuations, interest rate changes, credit risk and other market risks;
•our ability to provide or arrange for adequate access to financing for our dealers and clients, and associated risks;
•the adequacy of our insurance coverage to protect us against potential losses;
•potential conflicts of interest due to director and officer overlaps with our largest shareholders; and
•other factors discussed elsewhere in this document.

We expressly disclaim and do not assume any liability in connection with any inaccuracies in any of the forward-looking statements in this document or in connection with any use by any third party of such forward-looking statements. Actual results could differ materially from those anticipated in such forward-looking statements. We do not undertake an obligation to update or revise publicly any forward-looking statements.

    
4


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Highlights
Consolidated Income Statement Data
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ million, except per share data)
Net revenues 1,544 1,250 4,447 3,727 
Operating profit (EBIT)423 299 1,245 929 
Profit before taxes 426 285 1,235 897 
Net profit332 228 963 718 
Net profit attributable to:
      Owners of the parent 330 226 959 713 
      Non-controlling interests 2 2 4 5 
Basic earnings per common share (in Euro) (1)
1.82 1.24 5.28 3.90 
Diluted earnings per common share (in Euro) (1)
1.82 1.23 5.28 3.88 
Dividend approved per common share (in Euro) (2) (3)
1.810 1.362 1.810 1.362 
Dividend approved per common share (in USD) (2) (3) (4)
1.98756 1.48158 1.98756 1.48158 
_____________________________
As explained in note 3 to the Interim Condensed Consolidated Financial Statements, the Group presents a subtotal for its operating profit before interest and taxes which is named Operating profit or Earnings Before Interest and Taxes (EBIT). The terms Operating profit and EBIT are used synonymously throughout this Interim Report in accordance with its definition.

(1)See Note 13 “Earnings per Share” to the Interim Condensed Consolidated Financial Statements for the calculation of basic and diluted earnings per common share for the three and nine months ended September 30, 2023 and 2022.
(2)Following approval of the annual accounts by the shareholders at the Annual General Meeting of the Shareholders on April 14, 2023, a dividend distribution of €1.810 per outstanding common share was approved, corresponding to a total distribution of approximately €329 million. This distribution was made from the retained earnings reserve. In May 2023 the Company paid €307 million of the distribution to owners of the parent and the remaining balance, which relates to withholding taxes, was paid in the third quarter of 2023.
(3)Following approval of the annual accounts by the shareholders at the Annual General Meeting of the Shareholders on April 13, 2022, a dividend distribution of €1.362 per outstanding common share was approved, corresponding to a total distribution of €250 million. This distribution was made from the retained earnings reserve. In May 2022 the Company paid €231 million of the distribution to owners of the parent and the remaining balance, which relates to withholding taxes, was paid in the third quarter of 2022.
(4)Translated into U.S. Dollars at the exchange rates in effect on the dates on which the distribution was declared in U.S. Dollars for common shares that are traded on the New York Stock Exchange. These translations are examples only, and should not be construed as a representation that the Euro amount represents, or has been or could be converted into, U.S. Dollars at that or any other rate.


5


Consolidated Statement of Financial Position Data
At September 30, 2023At December 31, 2022
(€ million)
Cash and cash equivalents1,012 1,389 
Receivables from financing activities1,496 1,400 
Total assets7,894 7,766 
Debt2,542 2,812 
Total equity2,843 2,602 
Equity attributable to owners of the parent2,834 2,593 
Non-controlling interests9 10 
Share capital3 3 
Common shares issued and outstanding (in thousands of shares)180,683 181,954 
Other Statistical Information
Shipments (1)
(Number of cars and % of total cars)For the three months ended September 30,For the nine months ended September 30,
2023%2022%2023%2022%
EMEA
Germany312 9.0 %304 9.5 %1,092 10.5 %1,068 10.8 %
UK229 6.6 %247 7.7 %731 7.0 %725 7.3 %
Italy170 4.9 %152 4.8 %575 5.5 %540 5.5 %
France140 4.1 %121 3.8 %391 3.8 %366 3.7 %
Switzerland105 3.0 %119 3.7 %365 3.5 %399 4.0 %
Middle East (2)
87 2.5 %91 2.9 %311 3.0 %291 2.9 %
Other EMEA (3)
355 10.3 %257 8.1 %1,105 10.6 %1,042 10.6 %
Total EMEA1,398 40.4 %1,291 40.5 %4,570 43.9 %4,431 44.8 %
Americas (4)
1,096 31.7 %905 28.4 %2,927 28.1 %2,616 26.4 %
of which United States of America935 27.0 %744 23.3 %2,497 24.0 %2,234 27.8 %
Mainland China, Hong Kong and Taiwan395 11.4 %431 13.5 %1,130 10.8 %1,074 10.9 %
of which Mainland China342 9.9 %386 12.1 %929 8.9 %891 9.0 %
Rest of APAC (5)
570 16.5 %561 17.6 %1,791 17.2 %1,773 17.9 %
Total3,459 100.0 %3,188 100.0 %10,418 100.0 %9,894 100.0 %
_____________________________
(1)    Excluding the XX Programme, racing cars, one-off and pre-owned cars.
(2)     Middle East mainly includes the United Arab Emirates, Saudi Arabia, Bahrain, Lebanon, Qatar, Oman and Kuwait.
(3)     Other EMEA includes Africa and the other European markets not separately identified.
(4)    Americas includes the United States of America, Canada, Mexico, the Caribbean and Central and South America.
(5)    Rest of APAC mainly includes Japan, Australia, Singapore, Indonesia, South Korea, Thailand, India and Malaysia.


Average number of employees for the period

For the three months ended September 30,For the nine months ended September 30,
2023202220232022
Average number of employees for the period4,951 4,659 4,953 4,636 
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Highlights for the three months ended September 30, 2023

Highlights for the three months ended September 30, 2023 included the following:

•Following a cash tender offer on the Group’s €650 million principal 1.500 percent notes due May 27, 2025 (2025 Bond), on July 14, 2023, the Group accepted for purchase valid tenders of the 2025 Bond for an aggregate nominal amount of €199 million at a purchase price of €191 million, and recognized gains of €8 million. The repurchases were settled on July 18, 2023.

•Scuderia Ferrari renewed its multi-year partnership with sports company PUMA, which will become its Premium Partner starting from next year. In the next years PUMA will also continue to be the licensing partner for Ferrari-branded products and the supplier of the Formula 1 team and race wear for Ferrari.

•The increasing hostilities between Israel and Hamas have driven management to carefully monitor the geopolitical environment and its potential implications on our business globally. Currently, there are no impacts on Ferrari's business.

7


Results of Operations
Three months ended September 30, 2023 compared to three months ended September 30, 2022
    The following is a discussion of the results of operations for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The presentation includes line items as a percentage of net revenues for the respective periods presented to facilitate period-to-period comparisons.

For the three months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs. 2022
(€ million, except percentages)
Net revenues
1,544 100.0 %1,250 100.0 %294 23.5 %
Cost of sales
779 50.4 %655 52.4 %124 18.8 %
Selling, general and administrative costs
119 7.7 %107 8.5 %12 11.6 %
Research and development costs
221 14.3 %182 14.6 %39 21.2 %
Other expenses/(income), net
4 0.3 %8 0.7 %(4)(55.4 %)
Result from investments
2 0.1 %1 0.1 %1 (15.4 %)
Operating profit (EBIT)
423 27.4 %299 23.9 %124 41.6 %
Financial income
26 1.6 %28 2.2 %(2)(8.1 %)
Financial expenses
23 1.5 %42 3.3 %(19)(44.3 %)
Financial expenses/(income), net
(3)(0.1 %)14 1.1 %(17)(114.6 %)
Profit before taxes
426 27.5 %285 22.8 %141 49.5 %
Income tax expense
94 6.0 %57 4.6 %37 64.4 %
Net profit
332 21.5 %228 18.2 %104 45.7 %


Net revenues
For the three months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs. 2022
(€ million, except percentages)
Cars and spare parts (1)
1,33086.2 %1,05384.2 %277 26.5 %
Sponsorship, commercial and brand (2)
1459.4 %12710.2 %18 13.8 %
Engines (3)
281.8 %413.3 %(13)(33.0 %)
Other (4)
412.6 %292.3 %12 40.1 %
Total net revenues1,544100.0 %1,250100.0 %294 23.5 %
_____________________________
(1)Includes net revenues generated from shipments of our cars, any personalization generated on these cars, as well as sales of spare parts.
(2)Includes net revenues earned by our racing teams (mainly in the Formula 1 World Championship and the World Endurance Championship) through sponsorship agreements, our share of the Formula 1 World Championship commercial revenues, and net revenues generated through the Ferrari brand, including fashion collection, merchandising, licensing and royalty income.
(3)Includes net revenues generated from the sale of engines to Maserati for use in their cars and from the rental of engines to other Formula 1 racing teams.
(4)Primarily relates to financial services activities and management of the Mugello racetrack and other sports-related activities.

    Net revenues for the three months ended September 30, 2023 were €1,544 million, an increase of €294 million or 23.5 percent (an increase of 25.8 percent on a constant currency basis), compared to €1,250 million for the three months ended September 30, 2022.
    The change in net revenues was attributable to the combination of (i) a €277 million increase in cars and spare parts, (ii) a €18 million increase in sponsorship, commercial and brand and (iii) a €12 million increase in other net revenues, partially offset by (iv) a €13 million decrease in engines.
8


Cars and spare parts
    Net revenues generated from cars and spare parts were €1,330 million for the three months ended September 30, 2023, an increase of €277 million or 26.5 percent, compared to €1,053 million for the three months ended September 30, 2022.
The increase in net revenues from cars and spare parts was primarily attributable to higher car volumes, richer product and country mix, personalizations and pricing. Foreign currency exchange impact, including hedging transactions, was negative, mainly driven by the Chinese Yuan, Japanese Yen and U.S. Dollar.
Total shipments increased by 271 cars, from 3,188 cars in the third quarter of 2022 to 3,459 cars in the third quarter of 2023, reflecting volume, geographic and product allocation plans by quarter. The product portfolio in the third quarter included 9 internal combustion engine (ICE) models and 4 hybrid engine models, which represented 48.7 percent and 51.3 percent of total shipments, respectively. Shipments during the quarter were driven by the 296 and SF90 families, as well as the 812 Competizione A and the Purosangue, which were in the ramp up phase, partially offset by lower shipments of the F8 Tributo, which phased out in the first quarter of the year, and the F8 Spider, which is approaching the end of its lifecycle. Shipments of the Daytona SP3 were in line with plans.
The €277 million increase in net revenues from cars and spare parts was composed of: (i) a €161 million increase in EMEA, (ii) a €111 million increase in Americas, (iii) a €27 million increase in APAC and (iv) a €22 million decrease in Mainland China, Hong Kong and Taiwan. The mix of net revenues by geography reflects the geographic allocations of shipments by quarter and the pace of introduction of new models.
Sponsorship, commercial and brand
    Net revenues generated from sponsorship, commercial agreements and brand management activities were €145 million for the three months ended September 30, 2023, an increase of €18 million or 13.8 percent, compared to €127 million for the three months ended September 30, 2022, mainly attributable to new racing sponsorships and a better prior year Formula 1 ranking.
Engines
    Net revenues generated from engines were €28 million for the three months ended September 30, 2023, a decrease of €13 million or 33.0 percent, compared to €41 million for the three months ended September 30, 2022, driven by a decrease in engines sold to Maserati, for which the contract will expire at the end of 2023.
Other
Other revenues were €41 million for the three months ended September 30, 2023, an increase of €12 million or 40.1 percent, compared to €29 million for the three months ended September 30, 2022, mainly driven by an increase of financial services activities.
Cost of sales
For the three months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs. 2022
(€ million, except percentages)
Cost of sales779 50.4 %655 52.4 %124 18.9 %

    Cost of sales for the three months ended September 30, 2023 was €779 million, an increase of €124 million or 18.9 percent, compared to €655 million for the three months ended September 30, 2022. As a percentage of net revenues, cost of sales was 50.4 percent for the three months ended September 30, 2023 compared to 52.4 percent for the three months ended September 30, 2022.
The increase in cost of sales was primarily attributable to the change in product mix, higher car volumes and higher industrial costs, reflecting raw materials cost inflation and depreciation.

9


Selling, general and administrative costs
For the three months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs. 2022
(€ million, except percentages)
Selling, general and administrative costs119 7.7 %107 8.5 %12 11.6 %

    Selling, general and administrative costs for the three months ended September 30, 2023 were €119 million, an increase of €12 million or 11.6 percent, compared to €107 million for the three months ended September 30, 2022. As a percentage of net revenues, selling, general and administrative costs were 7.7 percent for the three months ended September 30, 2023 compared to 8.5 percent for the three months ended September 30, 2022.
The increase of €12 million was mainly attributable to organizational development and digital infrastructure.
Research and development costs
For the three months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs. 2022
(€ million, except percentages)
Research and development costs expensed during the period129 8.3 %117 9.4 %12 10.0 %
Amortization of capitalized development costs92 6.0 %65 5.2 %27 41.2 %
Research and development costs221 14.3 %182 14.6 %39 21.2 %

    Research and development costs for the three months ended September 30, 2023 were €221 million, an increase of €39 million or 21.2 percent, compared to €182 million for the three months ended September 30, 2022. As a percentage of net revenues, research and development costs were 14.3 percent for the three months ended September 30, 2023 compared to 14.6 percent for the three months ended September 30, 2022.
The increase of €39 million was attributable to (i) higher amortization of capitalized development costs of €27 million driven by a general increase in capitalized development costs in recent years (from €320 million in 2020 to €363 million in 2021 and €416 million in 2022) in line with our strategy to innovate and broaden our product portfolio, and (ii) higher research and development costs expensed of €12 million.
Research and development costs for the three months ended September 30, 2023 and 2022 are recognized net of technology-related government incentives.


10


Operating profit (EBIT)
For the three months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs. 2022
(€ million, except percentages)
Operating profit (EBIT)423 27.4 %299 23.9 %124 41.6 %
    EBIT for the three months ended September 30, 2023 was €423 million, an increase of €124 million or 41.6 percent, compared to €299 million for the three months ended September 30, 2022. EBIT margin for the three months ended September 30, 2023 was 27.4 percent compared to 23.9 percent for the three months ended September 30, 2022.
The increase in EBIT was primarily attributable to the combined effects of (i) positive volume impact of €33 million, (ii) positive product and country mix impact of €170 million, sustained by the Daytona SP3, the 812 Competizione and the SF90 families, as well as the growth in the Americas and higher contribution from personalizations and pricing, (iii) negative contribution of €39 million from research and development costs, (iv) negative contribution of €12 million from selling, general and administrative costs, (v) negative contribution of €5 million from the combined effects of higher industrial costs, reflecting the effects of inflation and higher depreciation, partially offset by a better prior year Formula 1 ranking and new racing sponsorships, and (vi) negative foreign currency exchange impact of €23 million (including foreign currency hedging instruments).

Financial expenses/(income), net
For the three months ended September 30,Increase/(Decrease)
202320222023 vs. 2022
(€ million, except percentages)
Financial income26 28 (2)(8.1 %)
Financial expenses23 42 (19)(44.3 %)
Financial expenses/(income), net
(3)14 (17)(114.6 %)

    Financial income, net for the three months ended September 30, 2023 was €3 million compared to financial expenses, net of €14 million for the three months ended September 30, 2022, mainly driven by higher interest income on cash and cash equivalents, gains of €8 million realized on the partial cash tender executed during the third quarter of 2023 on a bond due in 2025 and foreign currency exchange impact (including the net costs of hedging).
Income tax expense
For the three months ended September 30,Increase/(Decrease)
202320222023 vs. 2022
(€ million, except percentages)
Income tax expense94 57 37 64.4 %

Income tax expense for the three months ended September 30, 2023 was €94 million, an increase of €37 million, or 64.4 percent, compared to €57 million for the three months ended September 30, 2022.
The increase in income tax expense was primarily attributable to an increase in profit before taxes. Income taxes for the three months ended September 30, 2023 and 2022 benefited from the application of the Patent Box tax regime.
The effective tax rate was 22.0 percent for the three months ended September 30, 2023 and 20.0 percent for the three months ended September 30, 2022. The effective tax rate was mainly impacted by the applicable regulatory changes to the aforementioned Patent Box tax regime.
11


Nine months ended September 30, 2023 compared to nine months ended September 30, 2023
    The following is a discussion of the results of operations for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The presentation includes line items as a percentage of net revenues for the respective periods presented to facilitate period-to-period comparisons.
For the nine months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs 2022
(€ million, except percentages)
Net revenues
4,447 100.0 %3,727 100.0 %720 19.3 %
Cost of sales
2,216 49.8 %1,922 51.6 %294 15.3 %
Selling, general and administrative costs
346 7.8 %300 8.0 %46 15.5 %
Research and development costs
629 14.1 %563 15.1 %66 11.6 %
Other expenses/(income), net
15 0.4 %18 0.5 %(3)18.0 %
Result from investments
4 0.1 %5 0.1 %(1)16.5 %
Operating profit (EBIT)
1,245 28.0 %929 24.9 %316 34.1 %
Financial income
105 2.4 %73 2.0 %32 44.0 %
Financial expenses
115 2.6 %105 2.8 %10 10.4 %
Financial expenses/(income), net
10 0.2 %32 0.8 %(22)67.0 %
Profit before taxes
1,235 27.8 %897 24.1 %338 37.6 %
Income tax expense
272 6.1 %179 4.8 %93 51.4 %
Net profit
963 21.7 %718 19.3 %245 34.2 %


Net revenues
For the nine months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs 2022
(€ million, except percentages)
Cars and spare parts (1)
3,83086.1 %3,15684.7 %674 21.4 %
Sponsorship, commercial and brand (2)
4229.5 %3629.7 %60 16.5 %
Engines (3)
882.0 %1193.2 %(31)(26.3 %)
Other (4)
1072.4 %902.4 %17 18.4 %
Total net revenues4,447100.0 %3,727100.0 %720 19.3 %
_____________________________
(1)Includes net revenues generated from shipments of our cars, any personalization generated on these cars, as well as sales of spare parts.
(2)Includes net revenues earned by our racing teams (mainly in the Formula 1 World Championship and the World Endurance Championship) through sponsorship agreements, our share of the Formula 1 World Championship commercial revenues, and net revenues generated through the Ferrari brand, including fashion collection, merchandising, licensing and royalty income.
(3)Includes net revenues generated from the sale of engines to Maserati for use in their cars and from the rental of engines to other Formula 1 racing teams.
(4)Primarily relates to financial services activities and management of the Mugello racetrack and other sports-related activities.

    Net revenues for the nine months ended September 30, 2023 were €4,447 million, an increase of €720 million or 19.3 percent (an increase of 18.8 percent on a constant currency basis), compared to €3,727 million for the nine months ended September 30, 2022.
    The change in net revenues was attributable to the combination of (i) a €674 million increase in cars and spare parts, (ii) a €60 million increase in sponsorship, commercial and brand and (iii) a €17 million increase in other net revenues, partially offset by (iv) a €31 million decrease in engines.
12


Cars and spare parts
    Net revenues generated from cars and spare parts were €3,830 million for the nine months ended September 30, 2023, an increase of €674 million or 21.4 percent, compared to €3,156 million for the nine months ended September 30, 2022.
    The increase in net revenues from cars and spare parts was primarily attributable to richer product and country mix, as well as the contribution from personalizations and pricing. Foreign currency exchange impact, including hedging transactions, was positive, mainly driven by the U.S. Dollar and partially offset by the Japanese Yen and Chinese Yuan.
Total shipments increased by 524 cars, or 5.3 percent, from 9,894 cars for the nine months ended September 30, 2022 to 10,418 cars for the nine months ended September 30, 2023. The product portfolio for the nine months ended September 30, 2023 included 10 internal combustion engine (ICE) models and 4 hybrid engine models, which represented 57.1 percent and 42.9 percent of shipments, respectively. The increase in shipments was mainly driven by the 296, SF90 and 812 Competizione families, as well as the Purosangue, which was in ramp up phase following the first deliveries in the second quarter of the year, partially offset by lower shipments of the F8 Tributo, which phased out in the first quarter of the year, and the F8 Spider, which is approaching the end of its lifecycle. Shipments of the Daytona SP3 were in line with plans.
    
The €674 million increase in net revenues from cars and spare parts was composed of: (i) a €340 million increase in EMEA, (ii) a €262 million increase in Americas, (iii) a €65 million increase in APAC and (iv) a 7 million increase in Mainland China, Hong Kong and Taiwan. The mix of net revenues by geography reflects the geographic allocations in line with the pace of introduction of new models.
Sponsorship, commercial and brand
    Net revenues generated from sponsorship, commercial agreements and brand management activities were €422 million for the nine months ended September 30, 2023, an increase of €60 million or 16.5, compared to €362 million for the nine months ended September 30, 2022, mainly attributable to new racing sponsorships, a better prior year Formula 1 ranking and lifestyle-related activities.
Engines
    Net revenues generated from engines were €88 million for the nine months ended September 30, 2023, a decrease of €31 million or 26.3 percent, compared to €119 million for the nine months ended September 30, 2022. The €31 million decrease was mainly attributable to a decrease in engines sold to Maserati, which is approaching contract expiration at the end of 2023.
Other
Other revenues were €107 million for the nine months ended September 30, 2023, an increase of €17 million or 18.4 percent, compared to €90 million for the nine months ended September 30, 2022, mainly driven by an increase of financial services activities.
Cost of sales
For the nine months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs 2022
(€ million, except percentages)
Cost of sales2,216 49.8 %1,922 51.6 %294 15.3 %

    Cost of sales for the nine months ended September 30, 2023 was €2,216 million, an increase of €294 million or 15.3 percent, compared to €1,922 million for the nine months ended September 30, 2022. As a percentage of net revenues, cost of sales was 49.8 percent for the nine months ended September 30, 2023 compared to 51.6 percent for the nine months ended September 30, 2022.
The increase in cost of sales was primarily attributable to the change in product mix, including personalizations, higher car volumes and higher industrial costs, reflecting raw materials cost inflation and depreciation.
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Selling, general and administrative costs
For the nine months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs 2022
(€ million, except percentages)
Selling, general and administrative costs346 7.8 %300 8.0 %46 15.5 %
    Selling, general and administrative costs for the nine months ended September 30, 2023 were €346 million, an increase of €46 million or 15.5 percent, compared to €300 million for the nine months ended September 30, 2022. As a percentage of net revenues, selling, general and administrative costs were 7.8 percent for the nine months ended September 30, 2023 compared to 8.0 percent for the nine months ended September 30, 2022.
The increase of €46 million was mainly attributable to organizational development and digital infrastructure, as well as marketing and lifestyle activities.
Research and development costs
For the nine months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs 2022
(€ million, except percentages)
Research and development costs expensed during the period381 8.5 %387 10.4 %(6)(1.6 %)
Amortization of capitalized development costs248 5.6 %176 4.7 %72 40.5 %
Research and development costs629 14.1 %563 15.1 %66 11.6 %

    Research and development costs for the nine months ended September 30, 2023 were €629 million, an increase of €66 million or 11.6 percent, compared to €563 million for the nine months ended September 30, 2022. As a percentage of net revenues, research and development costs were 14.1 percent for the nine months ended September 30, 2023 compared to 15.1 percent for the nine months ended September 30, 2022.
The increase of €66 million was attributable to higher amortization of capitalized development costs of €72 million driven by a general increase in capitalized development costs in recent years (from €320 million in 2020 to €363 million in 2021 and €416 million in 2022) in line with our strategy to innovate and broaden our product portfolio, partially offset by lower research and development costs expensed of €6 million.

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Operating profit (EBIT)
For the nine months ended September 30,Increase/(Decrease)
2023Percentage of net revenues2022Percentage of net revenues2023 vs 2022
(€ million, except percentages)
Operating profit (EBIT)1,24528.0%92924.9%31634.1%
    EBIT for the nine months ended September 30, 2023 was €1,245 million, an increase of €316 million or 34.1 percent, compared to €929 million for the nine months ended September 30, 2022. EBIT margin for the nine months ended September 30, 2023 was 28.0 percent compared to 24.9 percent for the nine months ended September 30, 2022.
    The increase in EBIT was primarily attributable to the combined effects of (i) positive volume impact of €58 million, (ii) positive product and country mix impact of €349 million, sustained by the Daytona SP3, the 812 Competizione and the SF90 families, as well as the growth in the Americas and Mainland China, Hong Kong and Taiwan, and higher contribution from personalizations and pricing, (iii) negative contribution of €66 million from research and development costs, (iv) negative contribution of €46 million from selling, general and administrative costs, (v) negative contribution of €4 million from the combined effects of higher industrial costs, reflecting the effects of inflation and higher depreciation, substantially offset by higher commercial revenues from a better prior year Formula 1 ranking, new racing sponsorships and a higher contribution from lifestyle activities, as well as a partial release of environmental provisions as a result of more favorable market conditions for car emissions credits, and (vi) positive foreign currency exchange impact of €25 million (including foreign currency hedging instruments).

Financial expenses/(income), net
For the nine months ended September 30,Increase/(Decrease)
202320222023 vs 2022
(€ million, except percentages)
Financial income105 73 32 44.0 %
Financial expenses115 105 10 10.4 %
Financial expenses/(income), net
10 32 (22)67.0 %

    Financial expenses, net for the nine months ended September 30, 2023 were €10 million, a decrease of €22 million, or 67.0 percent compared to €32 million for the nine months ended September 30, 2022, driven by higher interest income on cash and cash equivalents and gains of €8 million realized on the partial cash tender executed during the third quarter of 2023 on a bond due in 2025, partially offset by foreign currency exchange impact (including the net costs of hedging).

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Income tax expense
For the nine months ended September 30,Increase/(Decrease)
202320222023 vs. 2022
(€ million, except percentages)
Income tax expense272 179 93 51.4 %

    Income tax expense for the nine months ended September 30, 2023 was €272 million, an increase of €93 million, or 51.4 percent, compared to €179 million for the nine months ended September 30, 2022.
The increase in income tax expense was primarily attributable to an increase in profit before taxes. Income taxes for the nine months ended September 30, 2023 and 2022 benefited from the application of the Patent Box tax regime.
The effective tax rate was 22.0 percent and 20.0 percent for the nine months ended September 30, 2023 and for the nine months ended September 30, 2022, respectively. The effective tax rate was mainly impacted by the applicable regulatory changes to the aforementioned Patent Box tax regime.


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Liquidity and Capital Resources

Liquidity Overview

We require liquidity in order to fund our operations, meet our obligations, make capital investments and reward our shareholders. Short-term liquidity is required, among others, to purchase raw materials, parts, components and utilities for car production, as well as to for personnel and other operating costs. In addition to our general working capital and operational needs, we require cash for capital investments to support continuous product portfolio renewal and expansion, as well as for research and development activities aimed at continually innovating and improving our cars, including the transition of our product portfolio to hybrid and electric technology. We also make investments to enhance manufacturing efficiency, improve capacity, implement sustainability initiatives, ensure environmental and regulatory compliance and carry out maintenance activities, among others. We fund our capital expenditure primarily with cash generated from our operating activities. We also use liquidity to reward our shareholders through dividends and share repurchases. At our Capital Markets Day held on June 16, 2022, we announced a new multi-year share repurchase program of approximately €2 billion that is expected to be executed by 2026, as well as an increase in our expected dividend payout ratio from 30 percent to 35 percent of Adjusted Net profit starting in 2022.
    We centrally manage our operating cash management, liquidity and cash flow requirements with the objective of ensuring efficient and effective management of our funds. We believe that our cash generation together with our available liquidity, including committed credit lines granted from primary financial institutions, will be sufficient to meet our liquidity requirements. See also the “Net Debt and Net Industrial Debt” section below for additional details relating to our liquidity.
Cyclical Nature of Our Cash Flows
Our working capital is subject to month to month fluctuations due to, among other things, production and sales volumes, our financial services activities, the timing of capital expenditures and, to a lesser extent, tax payments. In particular, our inventory levels generally increase in the periods leading up to the launch of new models, and particularly at the end of the second quarter of the year when our inventory levels are generally higher to support the summer plant shutdown and as we deem necessary for agile supply chain management requirements.
We generally receive payment for cars between 30 and 40 days after the car is shipped (or earlier when sales financing arrangements are utilized by us or by our dealers), while we generally pay most suppliers between 60 and 90 days after we receive the raw materials, components or other goods and services. Additionally, we also receive advance payments from our customers, mainly for our Icona, limited edition and Special Series models and certain Range models in selected markets. We maintain sufficient inventory of raw materials and components to ensure continuity of our production lines, however delivery of most raw materials and components takes place monthly or more frequently in order to minimize inventories. The manufacture of one of our cars typically takes between 30 and 45 days, depending on the level of automation of the relevant production line, and the car is generally shipped to our dealers three to six days following the completion of production, although in certain regions we may warehouse cars for longer periods of time to ensure timely deliveries. As a result of the above, including the advances received from customers for certain car models, we tend to receive payment for cars shipped before or around the time we are required to make payments for the raw materials, components or other materials used in the manufacturing of our cars.
Our investments for capital expenditure and research and development are, among other factors, influenced by the timing and number of new models launches. Our development costs, as well as our other investments in capital expenditure, generally peak in periods when we develop a significant number of new models to renew or expand our product portfolio. Our investments in research and development are also influenced by the timing of research costs for our Formula 1 activities, for which expenditure in a normal season is generally higher in the first and last quarters of the year, and also depends on the evolution of the applicable Formula 1 technical regulations, as well as the number and cadence of races during the course of the racing season. We are currently undergoing a period of structurally higher capital spending as we broaden our car architectures, prioritize innovation and advanced technologies, and transition our product portfolio to hybrid and electric powertrains. We also continue to make significant capital investments in operating assets and infrastructure projects that are important for our continued growth and development, including for the ongoing construction of our new e-building, which will be used mainly for the production of BEVs and related components.
The payment of income taxes also affects our cash flows. We typically pay the first tax advance payment in the second quarter of the year, together with the remaining tax balance due for the previous year, and the remaining part of the advance payment in the third and/or fourth quarters. In addition to our income tax expense, our tax payments for the nine months ended September 30, 2023 and 2022 also benefited from applying the aforementioned Patent Box tax regime in Italy.
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Cash Flows
    The following table summarizes the cash flows from/(used in) operating, investing and financing activities for the nine months ended September 30, 2023 and 2022. For additional details of our cash flows, see our Interim Condensed Consolidated Financial Statements included elsewhere in this Interim Report.
 For the nine months ended September 30,
 20232022
 (€ million)
Cash and cash equivalents at beginning of the period1,389 1,344 
Cash flows from operating activities1,189 972 
Cash flows used in investing activities(551)(496)
Cash flows used in financing activities(1,010)(468)
Translation exchange differences(5)11 
Total change in cash and cash equivalents(377)19 
Cash and cash equivalents at end of the period1,012 1,363 

For the nine months ended September 30, 2023 cash and cash equivalents held by the Group decreased by €377 million compared to an increase of €19 million for nine months ended September 30, 2022, primarily attributable to the combined effects of:
(i)an increase in cash flows from operating activities of €217 million, driven by an increase in net profit excluding non-cash items, partially offset by higher absorption of cash for working capital, mainly due to an increase in inventories driven by yearly production planning and an enriched product mix, as well as by lower collection of advances for cars for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, which mainly benefited from the collection of advances for the Daytona SP3;
(ii)an increase in cash flows used in investing activities of €55 million, driven by higher investments in intangible assets and property, plant and equipment reflecting our initiatives for product and infrastructure development; and
(iii)an increase in cash flows used in financing activities of €542 million, driven by an increase in (i) repayments of debt of €591 million (€645 million for the nine months ended September 30, 2023 compared to €54 million for the nine months ended September 30, 2022), (ii) dividends paid of €81 million (€332 million for the nine months ended September 30, 2023 compared to €251 million for the nine months ended September 30, 2022) and (iii) share repurchases of €73 million (€374 million for the nine months ended September 30, 2023 compared to €301 million for the nine months ended September 30, 2022), partially offset by an increase in (iv) proceeds from debt of €203 million (€341 million for the nine months ended September 30, 2023 compared to €138 million for the nine months ended September 30, 2022).
Operating Activities - Nine Months Ended September 30, 2023
    Our cash flows from operating activities for the nine months ended September 30, 2023 were €1,189 million, primarily the result of:
(i)profit before taxes of €1,235 million adjusted for €476 million for depreciation and amortization expense, €10 million of net finance costs and net other non-cash expenses of €100 million (primarily including provisions accrued for €46 million and €17 million of share-based compensation expense); and
(ii)€53 million of cash generated from the change in other operating assets and liabilities, primarily driven by advances received for our cars.
These cash inflows were partially offset by:
(iii)€402 million of cash absorbed from the net change in inventories, trade receivables and trade payables, primarily attributable to inventories for €250 million driven by yearly production planning and an enriched product mix, trade
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receivables for €71 million driven by higher car volumes and racing sponsorship agreements, and a decrease in trade payables for €81 million;
(iv)€89 million related to cash absorbed by receivables from financing activities;
(v)€43 million of net finance costs paid; and
(vi)€151 million of income taxes paid.
Operating Activities - Nine Months Ended September 30, 2022
Our cash flows from operating activities for the nine months ended September 30, 2022 were €972 million, primarily the result of:
(i)profit before taxes of €897 million adjusted for €375 million for depreciation and amortization expense, €32 million of net finance costs and net other non-cash expenses of €77 million (including provisions accrued and result from investments); and
(ii)€154 million of cash generated from the change in other operating assets and liabilities which mainly benefited from the collection of advances for the Daytona SP3 and the 812 Competizione A.
These cash inflows were partially offset by:
(iii)€214 million of cash absorbed from the net change in inventories, higher trade receivables and lower trade payables, primarily attributable to inventories for €106 million driven by projected volume growth for the year, trade receivables for €54 million driven by higher volumes and sponsorship agreements, and trade payables for €54 million;
(iv)€141 million related to cash absorbed by receivables from financing activities driven by an increase in the portfolio;
(v)€14 million of net finance costs paid; and
(vi)€194 million of income taxes paid.
Investing Activities - Nine Months Ended September 30, 2023
    For the nine months ended September 30, 2023 our net cash used in investing activities was €551 million, primarily the result of capital expenditures of €342 million for intangible assets, mainly related to externally acquired and internally generated development costs and €212 million for property, plant and equipment. For a detailed analysis of additions to intangible assets and property, plant and equipment, see “Capital Expenditures”.
Investing Activities - Nine Months Ended September 30, 2022
For the nine months ended September 30, 2022 our net cash used in investing activities was €496 million, primarily the result of capital expenditures of €308 million for additions to intangible assets, mainly related to externally acquired and internally generated development costs, €187 million of additions to property, plant and equipment, and €1 million for investments in joint ventures. For a detailed analysis of additions to property, plant and equipment and intangible assets see “Capital Expenditures”.
Financing Activities - Nine Months Ended September 30, 2023
For the nine months ended September 30, 2023, net cash used in financing activities was €1,010 million, primarily the result of:
(i)€385 million for the full repayment upon maturity of a bond previously issued in 2016 and €191 million for the partial repayment of a bond due in 2025 following a tender offer by the Group;
(ii)€374 million to repurchase common shares under the Company’s share repurchase program (including the Sell to Cover practice under the equity incentive plans);
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(iii)€332 million of dividends paid (of which €5 million was to non-controlling interests); and
(iv)€18 million for repayments of lease liabilities and other debt.
These cash outflows were partially offset by:
(v)€198 million in net proceeds from borrowings from banks and other financial institutions; and
(vi)€92 million of proceeds net of repayments related to our revolving securitization programs in the United States.
Financing Activities - Nine Months Ended September 30, 2022
For the nine months ended September 30, 2022 net cash used in financing activities was €468 million, primarily the result of:
(i)€301 million to repurchase common shares under the Company’s share repurchase program (including the Sell to Cover practice under the equity incentive plans);
(ii)€251 million of dividends paid, of which €2 million was to non-controlling interests;
(iii) €34 million of net change in borrowings from banks and other financial institutions; and
(iv)€12 million in repayments of lease liabilities.
These cash outflows were partially offset by:
(v)€125 million of proceeds net of repayments related to our revolving securitization programs in the United States; and
(vi)€5 million related to the net change in other debt.
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Capital Expenditures
Capital expenditures are defined as additions to property, plant and equipment (including right-of-use assets recognized in accordance with IFRS 16 — Leases) and intangible assets. Capital expenditures for the nine months ended September 30, 2023 were €592 million and €510 million for the nine months ended September 30, 2022.
    The following table sets forth a breakdown of capital expenditures by category for each of the nine months ended September 30, 2023 and 2022:
For the nine months ended September 30,
20232022
(€ million)
Intangible assets
Externally acquired and internally generated development costs323 288 
Patents, concessions and licenses10 13 
Other intangible assets9 7 
Total intangible assets342 308 
Property, plant and equipment
Land and industrial buildings21 15 
Plant, machinery and equipment69 50 
Other assets28 22 
Advances and assets under construction132 115 
Total property, plant and equipment250 202 
Total capital expenditures592 510 

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Intangible assets    
Our total capital expenditures in intangible assets were €342 million for the nine months ended September 30, 2023 (€308 million for the nine months ended September 30, 2022).
The most significant investments in intangible assets relate to externally acquired and internally generated development costs. In particular, we make such investments to support the development of our current and future product offering. The capitalized development costs primarily include materials and personnel costs relating to the engineering, design and development activities focused on content enhancement of existing cars and new models, including to broaden and innovate our product portfolio and our ongoing investments in advanced technologies (including hybrid and electric), as well as the development of key components used in our cars, which are necessary to provide continuing performance upgrades to our customers and which we expect to continue to develop primarily in-house.
In recent periods, our capitalized developments costs have significantly increased for the aforementioned initiatives, from €288 million for nine months ended September 30, 2022 to €323 million nine months ended September 30, 2023, and, on an annual basis, from €320 million in 2020 to €363 million in 2021 and €416 million in 2022. This has contributed to an increase in the proportion of capitalized development costs compared to total research and development costs, including the effects of the advancement through the stages of development for many of the technologies we are creating, as well as the cap on certain costs we may incur for the chassis of our Formula 1 racing cars and the development of the power unit to be introduced in 2026 (in accordance with applicable FIA financial regulations). In particular, capitalized development costs as a proportion of total research and development costs increased to 39.5 percent for the nine months ended September 30, 2023 compared to 31.4 percent for the nine months ended September 30, 2022.
For the nine months ended September 30, 2023 we invested €323 million in externally acquired and internally generated development costs, of which €234 million related to the development of models to be launched in future years and €89 million primarily related to the development of our current product portfolio and components.
For the nine months ended September 30, 2022 we invested €288 million in externally acquired and internally generated development costs, of which €205 million related to the development of models to be launched in future years and €83 million primarily related to the development of our current product portfolio and components.
Property, plant and equipment
Our total capital expenditures in property, plant and equipment for the nine months ended September 30, 2023 and 2022, were €250 million and €202 million, respectively.
For the nine months ended September 30, 2023 and 2022, we made significant investments in infrastructure in line with our growth plans and our focus on the renewal and broadening of our product portfolio and supporting future model launches. In particular, we made investments:
•for the ongoing construction of our e-building, which will be used for the production of battery electric vehicles (BEVs) and related components and expected to be opened in mid 2024;
•for tracts of land adjacent to our facilities in Maranello as part of our expansion plans (with cumulative investments of €127 million since the start of 2019 to September 30, 2023);
•for industrial tools needed for the production of cars and investments in car production lines (including those for models to be launched in future years), as well as investments related to our personalization programs and engine assembly lines.
At September 30, 2023 the Group had contractual commitments for the purchase of property, plant and equipment amounting to €176 million (€201 million at December 31, 2022).
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Non-GAAP Financial Measures
    We monitor and evaluate our operating and financial performance using several non-GAAP financial measures including: EBITDA, Adjusted EBITDA, Adjusted EBIT, Adjusted Net Profit, Adjusted Basic Earnings per Common Share, Adjusted Diluted Earnings per Common Share, Net Debt, Net Industrial Debt, Free Cash Flow and Free Cash Flow from Industrial Activities, as well as a number of financial metrics measured on a constant currency basis. We believe that these non-GAAP financial measures provide useful and relevant information to management and investors regarding our performance and improve our ability to assess our financial performance and financial position. They also provide us with comparable measures that facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. While similar measures are widely used in the industry in which we operate, the financial measures we use may not be comparable to other similarly titled measures used by other companies nor are they intended to be substitutes for measures of financial performance or financial position as prepared in accordance with IFRS.
EBITDA and Adjusted EBITDA
    EBITDA is defined as net profit before income tax expense, financial expenses/(income), net and amortization and depreciation. Adjusted EBITDA is defined as EBITDA as adjusted for certain income and costs, which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities. EBITDA is presented by management to aid investors in their analysis of the performance of the Group and to assist investors in the comparison of the Group’s performance with that of other companies. Adjusted EBITDA is provided in order to present how the underlying business has performed prior to the impact of the adjusting items, which may obscure the underlying performance and impair comparability of results between periods.
    The following table sets forth the calculation of EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022, and provides a reconciliation of these non-GAAP measures to net profit. There were no adjustments impacting EBITDA, therefore Adjusted EBITDA was equal to EBITDA for the periods presented.
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ million)
Net profit332 228 963 718 
Income tax expense94 57 272 179 
Financial expenses/(income), net(3)14 10 32 
Operating profit (EBIT)423 299 1,245 929 
Amortization and depreciation172 136 476 375 
EBITDA595 435 1,721 1,304 
Adjustments— — — — 
Adjusted EBITDA595 435 1,721 1,304 

Adjusted Operating Profit (EBIT)
    Adjusted EBIT represents EBIT as adjusted for certain income and costs which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities. We provide Adjusted EBIT in order to present how the underlying business has performed prior to the impact of any adjusting items, which may obscure the underlying performance and impair comparability of results between the periods.
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    The following table presents EBIT and Adjusted EBIT for the three and nine months ended September 30, 2023 and 2022. There were no adjustments impacting EBIT, therefore Adjusted EBIT was equal to EBIT for the periods presented.
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ million)
Operating profit (EBIT)423 299 1,245 929 
Adjustments— — — — 
Adjusted Operating Profit (EBIT)423 299 1,245 929 

Adjusted Net Profit
    Adjusted Net profit represents net profit as adjusted for certain income and costs (net of tax effects) which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities. We provide Adjusted Net profit in order to present how the underlying business has performed prior to the impact of any adjusting items, which may obscure the underlying performance and impair comparability of results between the periods.
    The following table presents net profit and Adjusted Net profit for the three and nine months ended September 30, 2023 and 2022. There were no adjustments impacting net profit, therefore Adjusted Net profit was equal to net profit for the periods presented.
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ million)
Net profit332 228 963 718 
Adjustments— — — — 
Adjusted Net profit332 228 963 718 

Adjusted Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share
Adjusted Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share represent earnings per share, as adjusted for certain income and costs (net of tax effects) which are significant in nature, expected to occur infrequently, and that management considers not reflective of ongoing operational activities. We provide Adjusted Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share in order to present how the underlying business has performed prior to the impact of any adjusting items, which may obscure the underlying performance and impair comparability of results between the periods.
    The following table presents Adjusted Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share for the three and nine months ended September 30, 2023 and 2022. There were no adjustments impacting Basic Earnings per Common Share and Diluted Earnings per Common Share, therefore Adjusted Basic Earnings per Common Share and Adjusted Diluted Earnings per Common Share were equal to basic earnings per common share and diluted earnings per common share for the periods presented.
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For the three months ended September 30,For the nine months ended September 30,
2023202220232022
Net profit attributable to owners of the Company€ million330 226 959 713 
Weighted average number of common shares for basic earnings per sharethousand181,046 182,688 181,432 183,068 
Basic earnings per common share€1.82 1.24 5.28 3.90 
Adjustments€— — — — 
Adjusted Basic Earnings per Common Share€1.82 1.24 5.28 3.90 
Weighted average number of common shares(1) for diluted earnings per share
thousand181,315 182,992 181,701 183,372 
Diluted earnings per common share€1.82 1.23 5.28 3.88 
Adjustments€— — — — 
Adjusted Diluted Earnings per Common Share€1.82 1.23 5.28 3.88 

(1)    For the three and nine months ended September 30, 2023 and 2022, the weighted average number of common shares for diluted earnings per common share was increased to take into consideration the theoretical effect of the potential common shares that would be issued for outstanding share-based awards granted by the Group (assuming 100 percent of the target awards vested).

See Note 13 “Earnings per Share” to the Interim Condensed Consolidated Financial Statements, included elsewhere in this document, for the calculation of the basic and diluted earnings per common share.

Net Debt and Net Industrial Debt
Due to different sources of cash flows used for the repayment of debt between industrial activities and financial services activities, and the different business structure and leverage implications, Net Industrial Debt, together with Net Debt, are the primary measures used by us to analyze our capital structure and financial leverage. We believe the presentation of Net Industrial Debt aids management and investors in their analysis of the Group’s financial position and financial performance and to compare the Group’s financial position and financial performance with that of other companies. Net Industrial Debt is defined as total debt less cash and cash equivalents (Net Debt), further adjusted to exclude the debt and cash and cash equivalents related to our financial services activities (Net Debt of Financial Services Activities).
The following table sets forth a reconciliation of Net Debt and Net Industrial Debt at September 30, 2023 and December 31, 2022.
At September 30, 2023At December 31, 2022
(€ million)
Cash and cash equivalents1,012 1,389 
Asset-backed financing (Securitizations)(1,206)(1,105)
Bonds and notes(900)(1,490)
Borrowings from banks and other financial institutions(313)(114)
Lease liabilities(81)(57)
Other debt(42)(46)
Total debt(2,542)(2,812)
Net Debt (A)(1,530)(1,423)
Net Debt of Financial Services Activities (B)(1,297)(1,216)
Net Industrial Debt (A) - (B)(233)(207)
The Net Debt of Financial Services Activities, as defined above, mainly relates to our asset-backed financing (securitizations) of the receivables generated by our financial services activities in the United States, and amounted to €1,297 million at September 30, 2023 (€1,216 million at December 31, 2022), net of cash and cash equivalents available to our Financial Services Activities.
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The following table presents our receivables from financing activities and our Net Debt of Financial Services Activities at September 30, 2023 and December 31, 2022:
At September 30, 2023At December 31, 2022
(€ million)
Receivables from financing activities1,496 1,400 
Net Debt of Financial Services Activities(1,297)(1,216)

For further details of our receivables from financing activities and our asset-backed financing (securitizations), see Note 18 “Current Receivables and Other Current Assets” and Note 23 “Debt” to the Interim Consolidated Financial Statements included elsewhere in this document.
Cash and cash equivalents

    Cash and cash equivalents amounted to €1,012 million at September 30, 2023 compared to €1,389 million at December 31, 2022.

The Euro represented 80 percent of our cash and cash equivalents at September 30, 2023 (85 percent at December 31, 2022). Our cash and cash equivalents denominated in currencies other than the Euro are available mostly to Ferrari S.p.A. and certain subsidiaries which operate in areas other than Europe. Cash held in such countries may be subject to transfer restrictions depending on the jurisdictions in which these subsidiaries operate. In particular, cash held in China (including cash held in foreign currencies), which amounted to €69 million at September 30, 2023 (€97 million at December 31, 2022), is subject to certain repatriation restrictions and may only be repatriated as a repayment of payables or debt, or as dividends or capital distributions. We do not currently believe that such transfer restrictions have an adverse impact on our ability to meet our liquidity requirements.
    
    The following table sets forth an analysis of the currencies in which our cash and cash equivalents were denominated at the dates presented.
At September 30, 2023At December 31, 2022
(€ million)
Euro806 1,181 
U.S. Dollar95 70 
Chinese Yuan67 96 
Pound Sterling16 9 
Other currencies28 33 
Total1,012 1,389 

    Cash collected from the settlement of receivables under securitization programs is subject to certain restrictions regarding its use and is primarily applied to repay principal and interest of the related funding. Such cash amounted to €52 million at September 30, 2023 (€44 million at December 31, 2022).

    Total available liquidity
    
    Total available liquidity (defined as cash and cash equivalents plus undrawn committed credit lines) at September 30, 2023 was €1,612 million (€2,058 million at December 31, 2022).

    The following table summarizes our total available liquidity:
At September 30, 2023At December 31, 2022
(€ million)
Cash and cash equivalents1,012 1,389 
Undrawn committed credit lines600 669 
Total available liquidity1,612 2,058 
26


The undrawn committed credit lines at September 30, 2023 and December 31, 2022 relate to revolving credit facilities.
Debt
For further details relating to our debt, see Note 23 “Debt” in the Interim Condensed Consolidated Financial Statements included elsewhere in this document.
Free Cash Flow and Free Cash Flow from Industrial Activities

Free Cash Flow and Free Cash Flow from Industrial Activities are two of our primary key performance indicators to measure the Group’s performance. These measures are presented by management to aid investors in their analysis of the Group’s financial performance and to compare the Group’s financial performance with that of other companies. Free Cash Flow is defined as cash flows from operating activities less investments in property, plant and equipment (excluding right-of-use assets recognized during the period in accordance with IFRS 16 — Leases), intangible assets and joint ventures. Free Cash Flow from Industrial Activities is defined as Free Cash Flow adjusted to exclude the operating cash flow from our financial services activities (Free Cash Flow from Financial Services Activities).
    
    The following table sets forth our Free Cash Flow and Free Cash Flow from Industrial Activities for the nine months ended September 30, 2023 and 2022.
For the nine months ended September 30,
20232022
(€ million)
Cash flows from operating activities1,189 972 
Investments in property, plant and equipment, intangible assets and joint ventures(553)(496)
Free Cash Flow636 476 
Free Cash Flow from Financial Services Activities(71)(120)
Free Cash Flow from Industrial Activities707 596 

    Free Cash Flow for the nine months ended September 30, 2023 was €636 million, an increase of €160 million compared to €476 million for the nine months ended September 30, 2022. For an explanation of the drivers in Free Cash Flow see “Cash Flows” above.

    Free Cash Flow from Industrial Activities for the nine months ended September 30, 2023 was €707 million compared to €596 million for the nine months ended September 30, 2022. The increase in Free Cash Flow from Industrial Activities of €111 million was primarily attributable to an increase of €417 million in net profit before income tax expense, financial expenses/(income), net and amortization and depreciation, partially offset by higher working capital, mainly due to an increase in inventories driven by yearly production planning and an enriched product mix, lower collection of advances for cars for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 (which mainly benefited from the start of collection of advances for the Daytona SP3), and higher investments in intangible assets and property, plant and equipment reflecting our initiatives for product and infrastructure development.

Constant Currency Information
    The “Results of Operations” discussion below includes information about our net revenues on a constant currency basis, which excludes the effects of foreign currency translation from our subsidiaries with functional currencies other than Euro, as well as the effects of foreign currency transaction impact and foreign currency hedging. We use this information to assess how the underlying revenues changed independent of fluctuations in foreign currency exchange rates and hedging. We calculate constant currency by (i) applying the prior-period average foreign currency exchange rates to translate current period revenues of foreign subsidiaries expressed in local functional currency other than Euro, (ii) applying the prior-period average foreign currency exchange rates to current period revenues originated in a currency other than the functional currency of the applicable entity, and (iii) eliminating the variances of any foreign currency hedging (see Note 5 “Other Information” to the Interim Condensed Consolidated Financial Statements, included in this Interim Report, for information on the foreign currency exchange rates applied). Although we do not believe that these measures are a substitute for GAAP measures, we do believe that revenues excluding the impact of currency fluctuations and the impacts of hedging provide additional useful information to investors regarding the operating performance on a local currency basis.
27



Risk Factors

We face a variety of risks and uncertainties in our business. For a description of these risks and uncertainties please see “Risk Factors” in the Group’s Annual Report and Form 20-F for the year ended December 31, 2022 filed with the AFM and the SEC on February 24, 2023. All such risks factors should be read in conjunction with this Interim Report. Additional risks and uncertainties that we are unaware of, or that we currently believe to be immaterial, may also become important factors that affect us.

28


Outlook

Upward revised 2023 guidance, based on the following assumptions for the year:
•Strong product mix and personalizations higher than initially expected;
•Better revenues from racing activities;
•Continuing cost inflation;
•Increasing depreciation and amortization in line with the start of production of new models;
•Industrial free cash flow generation sustained by strong profitability, partially offset by disciplined capital expenditures and negative change in working capital.

(€B, unless otherwise stated)2022APREVIOUS 2023
GUIDANCE		UPWARD REVISED 2023 GUIDANCE
NET REVENUES5.1∼5.8∼5.9
ADJ. EBIT (margin %)1.23
24.1%		1.51-1.54
>26%		≥1.57
≥26.5%
ADJ. DILUTED EPS (€)
5.09(1)
6.25-6.40(1)
≥6.55(1)
ADJ. EBITDA (margin %)1.77
34.8%		2.19-2.22
∼38%		≥2.25
≥38%
INDUSTRIAL FCF0.76∼0.90>0.90
_____________________________
(1)Calculating using the weighted average diluted number of common shares for the year ended December 31, 2022 (183,072 thousand).
29


FERRARI N.V.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AT AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
(UNAUDITED)



CONTENTS
Page
Interim Consolidated Income Statement
       Interim Consolidated Statement of Comprehensive Income
Interim Consolidated Statement of Financial Position
Interim Consolidated Statement of Cash Flows
Interim Consolidated Statement of Changes in Equity
Notes to the Interim Condensed Consolidated Financial Statements










































FERRARI N.V.
INTERIM CONSOLIDATED INCOME STATEMENT
for the three and nine months ended September 30, 2023 and 2022
(Unaudited)

For the three months ended
September 30,		For the nine months ended 
 September 30,
Note2023202220232022
(€ thousand)
Net revenues
61,544,032 1,249,814 4,446,746 3,727,287 
Cost of sales
7778,749 655,264 2,216,097 1,922,360 
Selling, general and administrative costs
8118,632 106,292 346,068 299,739 
Research and development costs
9220,909 182,294 628,875 563,434 
Other expenses/(income), net
103,861 8,661 14,937 18,221 
Result from investments
1,235 1,459 4,273 5,118 
Operating profit (EBIT)
423,116 298,762 1,245,042 928,651 
Financial income
1125,456 27,700 104,940 72,876 
Financial expenses
1123,372 41,968 115,413 104,576 
Financial expenses/(income), net
11(2,084)14,268 10,473 31,700 
Profit before taxes
425,200 284,494 1,234,569 896,951 
Income tax expense
1293,544 56,899 271,605 179,391 
Net profit
331,656 227,595 962,964 717,560 
Net profit attributable to:
Owners of the parent
329,821 225,767 958,542 712,752 
Non-controlling interests
1,835 1,828 4,422 4,808 
Basic earnings per common share (in €)
131.82 1.24 5.28 3.90 
Diluted earnings per common share (in €)
131.82 1.23 5.28 3.88 











The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.
F-1


FERRARI N.V.
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the three and nine months ended September 30, 2023 and 2022
(Unaudited)

For the three months ended September 30,For the nine months ended September 30,
Note2023202220232022
(€ thousand)
Net profit
331,656 227,595 962,964 717,560 
Losses on cash flow hedging instruments
20(48,714)(24,509)(43,525)(18,069)
Exchange differences on translating foreign operations
204,699 15,410 872 30,422 
Related tax impact
2013,411 7,202 11,727 6,014 
Total other comprehensive income/(loss), net of tax (all of which may be reclassified to the consolidated income statement in subsequent periods)
(30,604)(1,897)(30,926)18,367 
Total comprehensive income
301,052 225,698 932,038 735,927 
Total comprehensive income attributable to:
Owners of the parent
299,056 223,851 927,898 730,919 
Non-controlling interests
1,996 1,847 4,140 5,008 

















The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.
F-2


FERRARI N.V.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at September 30, 2023 and at December 31, 2022
(Unaudited)

NoteAt September 30,
2023		At December 31,
2022
(€ thousand)
Assets
Goodwill785,182 785,182 
Intangible assets141,380,773 1,307,388 
Property, plant and equipment151,491,444 1,457,825 
Investments and other financial assets1665,648 59,534 
Deferred tax assets214,543 203,382 
Total non-current assets3,937,590 3,813,311 
Inventories17897,569 674,662 
Trade receivables18299,374 232,414 
Receivables from financing activities181,495,539 1,399,997 
Current tax receivables1816,519 16,054 
Other current assets18137,391 153,183 
Current financial assets1997,756 87,301 
Cash and cash equivalents1,012,444 1,388,901 
Total current assets3,956,592 3,952,512 
Total assets7,894,182 7,765,823 
Equity and liabilities
Equity attributable to owners of the parent2,834,516 2,592,857 
Non-controlling interests8,880 9,630 
Total equity202,843,396 2,602,487 
Employee benefits101,576 110,807 
Provisions22185,522 180,694 
Deferred tax liabilities107,929 126,507 
Debt232,541,969 2,811,779 
Other liabilities241,081,259 952,025 
Other financial liabilities1938,225 19,993 
Trade payables25812,800 902,968 
Current tax payables181,506 58,563 
Total equity and liabilities7,894,182 7,765,823 







The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.
F-3


FERRARI N.V.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine months ended September 30, 2023 and 2022
(Unaudited)
For the nine months ended September 30,
Note20232022
(€ thousand)
Cash and cash equivalents at beginning of the period 1,388,901 1,344,146 
Cash flows from operating activities:
Profit before taxes1,234,569 896,951 
Amortization and depreciation 476,248 375,219 
Provision accruals, net46,066 57,824 
Result from investments(4,273)(5,118)
Financial expenses, net
10,473 31,700 
Other non-cash expenses, net57,751 24,338 
Change in inventories(249,992)(105,813)
Change in trade receivables(70,364)(53,659)
Change in trade payables(81,396)(54,381)
Change in receivables from financing activities(88,567)(141,008)
Change in other operating assets and liabilities53,294 153,723 
Finance income received22,366 10,302 
Finance costs paid(65,397)(24,301)
Income tax paid(151,670)(193,661)
Total cash flows from operating activities1,189,108 972,116 
Cash flows used in investing activities:
Investments in property, plant and equipment(211,575)(186,928)
Investments in intangible assets(341,609)(308,322)
Investments in joint ventures— (1,367)
Proceeds from the sale of property, plant and equipment2,383 245 
Total cash flows used in investing activities(550,801)(496,372)
Cash flows used in financing activities:
Repayment of bonds and notes23(575,702)— 
Repayments of borrowings from banks and other financial institutions23(51,666)(42,495)
Proceeds from borrowings from banks and other financial institutions23250,000 8,909 
Proceeds from securitizations net of repayments2391,538 125,390 
Net change in other debt23(4,935)4,075 
Repayment of lease liabilities23(12,923)(11,775)
Dividends paid to owners of the parent(327,415)(248,488)
Dividends paid to non-controlling interests(4,890)(2,266)
Share repurchases(374,399)(301,202)
Total cash flows used in financing activities(1,010,392)(467,852)
Translation exchange differences (4,372)10,777 
Total change in cash and cash equivalents (376,457)18,669 
Cash and cash equivalents at end of the period 1,012,444 1,362,815 



The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.
F-4


FERRARI N.V.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the nine months ended September 30, 2023 and 2022
(Unaudited)
Share capitalRetained earnings and other reservesCash flow hedge reserveCurrency translation differencesRemeasurement of defined benefit plansEquity attributable to owners of the parent Non-controlling interestsTotal
(€ thousand)
At December 31, 20212,573 2,192,453 (22,006)42,518 (9,640)2,205,898 5,518 2,211,416 
Net profit— 712,752 — — — 712,752 4,808 717,560 
Other comprehensive (loss)/income— — (12,055)30,222 — 18,167 200 18,367 
Dividends to owners of the parent— (249,522)— — — (249,522)— (249,522)
Dividends to non-controlling interests— — — — — — (2,266)(2,266)
Share-based compensation— 16,079 — — — 16,079 — 16,079 
Share repurchases— (301,202)— — — (301,202)— (301,202)
At September 30, 20222,573 2,370,560 (34,061)72,740 (9,640)2,402,172 8,260 2,410,432 

Share capitalRetained earnings and other reservesCash flow hedge reserveCurrency translation differencesRemeasurement of defined benefit plansEquity attributable to owners of the parent Non-controlling interestsTotal
(€ thousand)
At December 31, 20222,573 2,499,771 46,233 52,618 (8,338)2,592,857 9,630 2,602,487 
Net profit— 958,542 — — — 958,542 4,422 962,964 
Other comprehensive (loss)/income— — (31,798)1,154 — (30,644)(282)(30,926)
Dividends to owners of the parent— (328,631)— — — (328,631)— (328,631)
Dividends to non-controlling interests— — — — — — (4,890)(4,890)
Share-based compensation— 16,791 — — — 16,791 — 16,791 
Share repurchases— (374,399)— — — (374,399)— (374,399)
At September 30, 20232,573 2,772,074 14,435 53,772 (8,338)2,834,516 8,880 2,843,396 
.







The accompanying notes are an integral part of the Interim Condensed Consolidated Financial Statements.
F-5



NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND AND BASIS OF PRESENTATION
    
Background

    Ferrari is among the world’s leading luxury brands. The activities of Ferrari N.V. (herein referred to as “Ferrari” or the “Company” and together with its subsidiaries the “Group”) and its subsidiaries are focused on the design, engineering, production and sale of luxury performance sports cars. The cars are designed, engineered and produced in Maranello and Modena, Italy and sold in more than 60 markets worldwide through a network of 178 authorized dealers operating 196 points of sale. The Ferrari brand is licensed to a selected number of producers and retailers of luxury and lifestyle goods, with Ferrari branded merchandise also sold through a network of 14 Ferrari-owned directly operated stores and 2 franchised stores, as well as on Ferrari’s website. To facilitate the sale of new and pre-owned cars, the Group provides various forms of financing to clients and dealers, including directly or through cooperation or other agreements with financial institutions. Ferrari also participates in the Formula 1 World Championship through its team Scuderia Ferrari and the World Endurance Championship through its Ferrari Endurance Teams. Ferrari’s racing activities are a core element of Ferrari marketing and promotional activities, as well as an important source of innovation to support the technological advancement of Ferrari’s product portfolio.

2. AUTHORIZATION OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
    
    These Interim Condensed Consolidated Financial Statements of Ferrari N.V. were authorized for issuance on November 2, 2023, and have been prepared in compliance with IAS 34 — Interim Financial Reporting. The Interim Condensed Consolidated Financial Statements should be read in conjunction with the Group’s consolidated financial statements at and for the year ended December 31, 2022 (the “Consolidated Financial Statements”), which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and IFRS as endorsed by the European Union. There are no material effects on these Interim Condensed Consolidated Financial Statements resulting from differences between IFRS as issued by the IASB and IFRS as endorsed by the European Union. The designation IFRS also includes International Accounting Standards (“IAS”) as well as the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC” and “SIC”). The accounting policies adopted are consistent with those used at December 31, 2022 except as described in the section “New standards and amendments effective from January 1, 2023”.

3. BASIS OF PREPARATION FOR INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    The preparation of the Interim Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities as well as the disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management’s best judgment at the date of these Interim Condensed Consolidated Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. Reference should be made to the section “Use of estimates” in the Consolidated Financial Statements for a detailed description of the more significant valuation procedures used by the Group.
    Moreover, in accordance with IAS 34, certain valuation procedures, in particular those of a more complex nature regarding matters such as any impairment of non-current assets, are only carried out in full during the preparation of the annual consolidated financial statements, when all the related information necessary is available, other than in the event that there are indications of impairment, in which case an immediate assessment is required. Similarly, the actuarial valuations that are required for the determination of employee benefit provisions are also usually carried out during the preparation of the annual consolidated financial statements, except in the event of significant market fluctuations, or significant plan amendments, curtailments, or settlements.
F-6


In the interim consolidated income statement, the Group presents a subtotal for its operating profit before interest and taxes which is named Operating profit Earnings Before Interest and Taxes (EBIT). The terms Operating profit and EBIT are used synonymously throughout these Interim Condensed Consolidated Financial Statements. Operating profit (EBIT) distinguishes between the profit before taxes arising from operating items and those arising from financing activities. Operating profit (EBIT) is one of the primary measures used by the Board of Directors (the Group’s “Chief Operating Decision Maker” as defined in IFRS 8 — Operating Segments) to assess performance and allocate resources.
New standards and amendments effective from January 1, 2023
The following new standards and amendments effective from January 1, 2023 were adopted by the Group.

In May 2017, the IASB issued IFRS 17 — Insurance Contracts, which establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued as well as guidance relating to reinsurance contracts held and investment contracts with discretionary participation features issued. In June 2020 the IASB issued amendments to IFRS 17 aimed at helping companies implement IFRS 17 and make it easier for companies to explain their financial performance. The new standard and amendments are effective on or after January 1, 2023. There was no effect from the adoption of these amendments.

In February 2021, the IASB issued amendments to IAS 1 — Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies which require companies to disclose their material accounting policy information rather than their significant accounting policies and provide guidance on how to apply the concept of materiality to accounting policy disclosures. These amendments are effective on or after January 1, 2023. There was no effect from the adoption of these amendments.

In February 2021, the IASB issued amendments to IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates which clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. These amendments are effective on or after January 1, 2023. There was no effect from the adoption of these amendments.

In May 2021, the IASB issued amendments to IAS 12 — Income Taxes: Deferred Tax related to Assets and Liabilities Arising From a Single Transaction that clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. These amendments are effective on or after January 1, 2023. There was no effect from the adoption of these amendments.

In December 2021, the IASB issued amendments to IFRS 17 — Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information, which provides a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements. The amendment is effective on or after January 1, 2023. There was no effect from the adoption of these amendments.

In June 2020, the IASB issued amendments to IFRS 4 — Insurance Contracts which defer the expiry date of the temporary exemption from applying IFRS 9 to annual periods beginning on or after January 1, 2023. There was no effect from the adoption of these amendments.

In May 2023, the IASB issued amendments to IAS 12 — Income taxes: International Tax Reform – Pillar Two Model Rules, to clarify the application of IAS 12 — Income taxes to income taxes arising from tax law enacted or substantively enacted to implement the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) Pillar Two model rules (Pillar Two income taxes). The amendments introduce: (i) a mandatory temporary exception to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules, which was effective immediately upon issuance of the amendment, and (ii) disclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before the effective date of the Pillar Two model rules, which apply for annual reporting periods beginning on or after January 1, 2023, but not for any interim periods ending on or before December 31, 2023. The Group is currently evaluating the impact of the disclosure requirements for the year end consolidated financial statements.
F-7


New standards, amendments and interpretations not yet effective

The standards, amendments and interpretations issued by the International Accounting Standards Board that will have mandatory application in 2024 or subsequent years are listed below:

In January 2020, the IASB issued amendments to IAS 1 — Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current to clarify how to classify debt and other liabilities as current or non-current, and in particular how to classify liabilities with an uncertain settlement date and liabilities that may be settled by converting to equity. These amendments are effective on or after January 1, 2024. The Group does not expect any material impact from the adoption of these amendments.

In September 2022, the IASB issued amendments to IFRS 16 — Leases: Liability in a Sale and Leaseback to improve the requirements for sale and leaseback transactions, which specify the measurement of the liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains. These amendments are effective on or after January 1, 2024. The Group does not expect any material impact from the adoption of these amendments.

In October 2022, the IASB issued amendments to IAS 1 — Presentation of Financial Statements: Non-current Liabilities with Covenants, that clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. These amendments are effective on or after January 1, 2024. The Group does not expect any material impact from the adoption of these amendments.

In May 2023, the IASB issued amendments to IAS 7 — Statement of Cash Flows and IFRS 7 — Financial Instruments: Disclosures: Supplier Finance Arrangements, that introduce new disclosure requirements to enhance the transparency and usefulness of the information provided by entities about supplier finance arrangements and are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities, cash flows and exposure to liquidity risk. The amendments are effective on or after January 1, 2024. The Group is evaluating the potential impact from the adoption of these amendments.

In August 2023, the IASB issued amendments to IAS 21 — The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, to clarify how an entity has to apply a consistent approach to assessing whether a currency is exchangeable into another currency and, when it is not, to determine the exchange rate to use and the disclosures to provide. These amendments are effective on or after January 1, 2025. The Group does not expect any material impact from the adoption of these amendments.

Scope of consolidation
There were no changes in the scope of consolidation for the periods presented in these Interim Condensed Consolidated Financial Statements.

4. FINANCIAL RISK FACTORS
    
The Group is exposed to various operational financial risks, including financial market risk (relating mainly to foreign currency exchange rates and, to a lesser extent, interest rates and commodity prices), credit risk and liquidity risk. The Interim Condensed Consolidated Financial Statements do not include all of the information and disclosures on financial risk management required in the annual consolidated financial statements. For a detailed description of the financial risk factors and financial risk management of the Group, reference should be made to Note 30 “Qualitative and Quantitative Information on Financial Risks” of the Consolidated Financial Statements at and for the year ended December 31, 2022.

F-8


5. OTHER INFORMATION
    The principal foreign currency exchange rates used to translate other currencies into Euro were as follows:
20232022
Average for the nine months ended September 30,At September 30,Average for the nine months ended September 30,At September 30,At December 31,
U.S. Dollar1.0831 1.0594 1.0638 0.9748 1.0666 
Pound Sterling0.8709 0.8646 0.8472 0.8830 0.8869 
Swiss Franc0.9777 0.9669 1.0118 0.9561 0.9847 
Japanese Yen149.4778 158.1000 135.9679 141.0100 140.6600 
Chinese Yuan7.6174 7.7352 7.0193 6.9368 7.3582 
Australian Dollar1.6202 1.6339 1.5044 1.5076 1.5693 
Canadian Dollar1.4578 1.4227 1.3643 1.3401 1.4440 
Singapore Dollar1.4519 1.4443 1.4631 1.4001 1.4300 
Hong Kong Dollar8.4852 8.2959 8.33267.65218.3163 


6. NET REVENUES
    Net revenues are as follows:
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ thousand)
Revenues from:
Cars and spare parts
1,330,652 1,052,212 3,830,110 3,155,595 
Sponsorship, commercial and brand
144,776 127,174 422,002 362,373 
Engines
27,583 41,157 87,910 119,202 
Other
41,021 29,271 106,724 90,117 
Total net revenues
1,544,032 1,249,814 4,446,746 3,727,287 
Other net revenues primarily relate to financial services activities, management of the Mugello racetrack and other sports-related activities.
Interest and other financial income from financial services activities included within net revenues for the three months ended September 30, 2023 and 2022 amounted to €25,796 thousand and €18,438 thousand, respectively, and for the nine months ended September 30, 2023 and 2022 amounted to €72,038 thousand and €48,618 thousand, respectively.

7. COST OF SALES
    Cost of sales for the three months ended September 30, 2023 and 2022 amounted to €778,749 thousand and €655,264 thousand, respectively, and for the nine months ended September 30, 2023 and 2022 amounted to €2,216,097 thousand and €1,922,360 thousand, respectively, consisting mainly of the cost of materials, components and labor related to the manufacturing and distribution of cars and spare parts. Cost of sales also include depreciation, insurance and transportation costs, warranty and product-related costs, as well as production costs for engines sold to Maserati and engines rented to other Formula 1 racing teams.
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Interest and other financial expenses from financial services activities included within cost of sales for the three months ended September 30, 2023 and 2022 amounted to €15,929 thousand and €7,299 thousand, respectively, and for the nine months ended September 30, 2023 and 2022 amounted to €43,540 thousand and €16,054 thousand, respectively.

8. SELLING, GENERAL AND ADMINISTRATIVE COSTS

Selling, general and administrative costs are as follows:

For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ thousand)
Selling costs62,641 63,058 182,606 169,395 
General and administrative costs55,991 43,234 163,462 130,344 
Total selling, general and administrative costs118,632 106,292 346,068 299,739 
    
Selling costs consist mainly of costs for sales personnel, marketing and events, and retail stores. Costs for marketing
and events primarily relate to corporate events, trade shows and media and client events for the launch of new models, lifestyle events, including the use of digital solutions, as well as sponsorship and indirect marketing costs incurred mainly through the Formula 1 racing team, Scuderia Ferrari.

General and administrative costs consist mainly of administration and other general expenses, including for personnel and digital infrastructure, that are not directly attributable to manufacturing, sales or research and development activities.

9. RESEARCH AND DEVELOPMENT COSTS
    Research and development costs are as follows:
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ thousand)
Research and development costs expensed during the period128,593 116,907 380,701 386,757 
Amortization of capitalized development costs92,316 65,387 248,174 176,677 
Total research and development costs 220,909 182,294 628,875 563,434 
    Research and development costs expensed during the period primarily relate to research and development activities for Formula 1 racing as well as development activities to support the innovation of our product portfolio and components, in particular, in relation to electric and other new technologies. Amortization of capitalized development costs have increased in recent years as a result of our strategy to update and broaden our product range and significantly increase our efforts relating to innovation and advanced technologies, including hybrid and electric.

Research and development costs for the three and nine months ended September 30, 2023 and 2022 are recognized net of technology-related government incentives.

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10. OTHER EXPENSES/(INCOME), NET
    Other expenses/(income), net are as follows:
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ thousand)
Other income3,094 2,247 6,668 6,153 
Other expenses6,955 10,908 21,605 24,374 
Total other expenses/(income), net3,861 8,661 14,937 18,221 


Other expenses mainly related to indirect taxes, provisions, and other miscellaneous expenses and other income mainly related to rental income, gains on the disposal of property, plant and equipment and other miscellaneous income.

11. FINANCIAL EXPENSES/(INCOME), NET
For the three months ended September 30,For the nine months ended September30,
2023202220232022
(€ thousand)
Financial income
Related to:
Industrial activities (A)25,456 27,700 104,940 72,876 
Financial services activities (reported within net revenues)25,796 18,438 72,038 48,618 
Financial expenses
Related to:
Industrial activities (B)23,372 41,968 115,413 104,576 
Financial services activities (reported within cost of sales)15,929 7,299 43,540 16,054 
Financial expenses/(income), net relating to industrial activities (B - A)
(2,084)14,268 10,473 31,700 
    Financial expenses/(income), net primarily relate to interest expenses on debt, net foreign exchange impact, including the net costs of hedging and gains of €7,940 thousand realized on the partial cash tender executed during the third quarter of 2023 on a bond due in 2025.
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12. INCOME TAX EXPENSE
    Income tax expense is as follows:
For the three months ended September 30,For the nine months ended September 30,
2023202220232022
(€ thousand)
Current tax expense85,183 49,036