Ducati Posts Record Earnings

Brent Avis
by Brent Avis
From a Ducati press release:
Bologna, Italy --- Ducati Motor Holding S.p.A. (NYSE: DMH, Borsa Italiana S.p.A: DMH), a leading manufacturer of highperformance motorcycles, announced record results in terms of registrations, revenues, EBITDA and net income for the firstquarter ended March 31, 2002.

The Company's first quarter 2002 revenues were Euro 106.3 million, up 5.7 percent over the same period in2001. The growth was mainly driven by a positive product mix effect...

Revenues from Ducati motorcycles for the periodincreased 4.4 percent to Euro 89.3 million and represented 84.0 percent of revenues. Motorcycle-related products, including spare parts,technical accessories and apparel, rose 14.6% to Euro 16.8 million over the comparable period in the previous year. Unit saleswere down 3.5 percent worldwide. Excluding the US, unit sales rose 2.4 percent.

Gross margin was 42.8 percent of revenues versus 39.2 percent in the period, mainly reflecting production efficiencies and a positiveproduct mix. Sales costs represented 20.0 percent of sales versus 18.1 percent in the period last year, mainly due to costs related to tailoredpromotional activities to support sell-out.

EBITDA was a record Euro 20.1 million, or 18.9 percent of revenues, versus 18.0 percent in theperiod of the previous year. R&D costs for the Moto GP were Euro 1.3 million, equivalent to 1.2 percent of sales.

Net income improved by 12.0 percent, posting a record high for the first quarter of Euro 5.5 million versus Euro 4.9 million in the periodin 2001. The resulting net income margin for the period was 5.2 percent of sales up versus the 4.9 percent in 2001, mainly thanks tooperational gains out-weighing GP and higher commercial costs.

Ducati worldwide registrations, a measure of retail sales, increased 19 percent in the three month period compared to a 3 percent growth inthe Ducati Relevant Market, in particular driven by strong results in Japan (+32 percent) in the US (+30 percent), in the importer network(+30 percent) and in Italy (+23 percent).

"Ducati's record first quarter results for 2002 underline the strength of our 2002 Model Year and show continuing improvementsin our ability to increase the efficiency of our supply chain and production processes," said Carlo Di Biagio, Ducati ChiefExecutive Officer.

"In addition, the re-organization of our US operations is progressing well. Registrations are strong thanks tothe combination of our retail initiatives and healthy demand for our new products in that market. Our main objectives in the USare to continue reducing current dealer inventory, to close under-performing points-of-sale, and to open strong new ones. Weexpect US sales to pick up in the coming months.

"The year has started well with Ducati in the lead of the World Superbike Championships thanks to incredible results from TroyBayliss, and we look forward to the races on our home turf in Monza this weekend," added Di Biagio. Preparations for WorldDucati Week in June are going well, too--attendance is set to be well over that of the last event in 2000."We are glad to announce the launch of Ducati Desmo Finance, a pioneering marketing tool, unique in the two-wheeled Italianmarket," said Enrico D'Onofrio, Ducati Chief Financial Officer. "The aim is to increase motorcycle sales by improving the easeand convenience of purchasing a new or used Ducati and related products. The program provides financing, insurance and abranded credit card in an integrated, personalized and 'hassle-free' package for our fans and friends."

Ducati's net debt at March 31, 2002 was Euro 132.0 million, increasing versus the Euro 107.6 million at the same date a yearearlier, and Euro 112.9 million at December 31, 2001. The company's net debt to total capitalization ratio was 45.2 percent at March31, 2002 versus 42.0 percent at the same date a year earlier and 42.2 percent at December 31, 2001. The increase versus year-end 2001was mainly due to the roll out in Italy of our new commercial credit policy, which is changing from factoring to insurance.

The Company also announced that, at its Annual Shareholder Meeting held on May 7, 2002, approval was given to buy back upto 3.8 percent of its outstanding share capital. This facility will be used to satisfy stock option plans and gives management flexibilityto support the Company's stock price. Finally, the shareholders re-appointed the Board of Directors for another three-yearterm.

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