Automobili Lamborghini has just completed the best half of its history: sales, turnover, operating profit and profitability are the highest ever recorded. A history of continued success and a positive response from the markets confirm the solidity of the company and its strong international appeal, despite the uncertainties and challenges of the geopolitical context and the persistence of the pandemic. The financial strategy behind these results and the future ambitions of Maison Sant’Agata are among the topics discussed in this interview with Paolo Poma, Chief Financial Officer and Managing Director of Automobili Lamborghini.
In 2021, Lamborghini made an impression with its exceptional growth, recording a level of performance more than doubled compared to 2018. Has this trend continued in the first six months of 2022, and will it to chase ? until the end of the year ?
I can say that in the first half of 2022, this trend has not only consolidated, but shows further acceleration. We are emerging from a two-year period of pandemic, during which, thanks to our responsiveness and our resilience, we have managed to continue on the path of growth, particularly in terms of operating margin, which has gradually reached a level online with the best brands in the luxury industry.
We have set ourselves a clear goal of being “best in class,” and we are well on our way to achieving that goal. The first half results reinforced our belief that we can end the year with strong earnings growth for 2021.
In the first six months of this year, worldwide deliveries amounted to 5,090 units (+4.9%), and in terms of financial indicators, turnover reached 1.332 billion euros, i.e. an increase of 30.6% compared to the first six months of 2021. the operating result increased by 69.6% compared to the previous year, from 251 to 425 million euros. The corresponding operating margin reached 31.9%, exceeding the 24.6% achieved in the same period of 2021.
Lamborghini is aiming for an even more ambitious financial objective for the coming years: to push annual profitability to a level between 22% and 25% in the medium term.
Lamborghini’s profitability is now in line with that of other major players in the luxury sector. What made this leap possible?
We are very proud to say that today we are a luxury brand for all intents and purposes.
However, we also have to deal with the complexities of our target segment, which is the automobile. This is very important to remember, because it is not trivial to have a profitability comparable to companies like those in general of the luxury which are much less intensive in capital.
In the luxury segment, the main factor of financial sustainability is the high margin of the products, on which we have worked hard over the last five years, with a clear objective: to replace the previous products with higher margin successors. We cannot deviate from it; we cannot compromise. We must continue on this path of growth with increasingly attractive products for the market but which at the same time also have higher margins.
What is the financial strategy that has pushed the jump in recent years?
Over the past five years, our growth has been primarily marked by a focus on three important factors.
The first is business development, through the expansion of our product range. We operate in an entirely product-driven industry, a fact we cannot ignore. Thanks to the allocation of resources, we developed and supported our super sports car derivative strategy, and in parallel introduced our third model, the Urus, which enabled a significant dimensional leap for the company.
The second factor, which however takes longer to develop, is the higher profitability of the products. As you can imagine, this doesn’t happen overnight, given the very long development cycles for new products that can take up to five years. It is a process developed over the years, while selectively evaluating the positioning of our products in the range and improving the opportunities offered in certain markets and segments.
The third factor is the orderly management of growth. This involves controlling investments and fixed overheads. It is clear that in a growing business, the fixed costs must also increase, but a careful size analysis must also be carried out on this, and it must always be in line with the expected growth. At a time when the business is on track for major dimensional growth, corresponding overhead growth is to be expected. At the same time, however, this growth must be controlled and maintained within parameters that ensure the sustainability of our financial objectives and allow us to maintain the margins we are currently achieving.
The most recent events have taught us that winning business strategies are those that can adapt very quickly to new contexts. Risk management has become one of the main responsibilities of the financial sphere, and Lamborghini has made it possible to face periods of geopolitical challenges and uncertainties with solidity and great flexibility. On the other hand, there are new technologies and the ever-increasing digitization, opportunities that Lamborghini itself, also in the financial field, constantly monitors: technological innovation has always been part of the DNA of the company and is the bridge to a future of new possibilities.
Speaking of the future, what will be the essential skills required for tomorrow’s CFO?
The role of the CFO has evolved significantly over the years, moving increasingly from controlling and managing transactions to creating value through oversight and resource allocation. The role is no longer just about finance, accounting, controlling and management, but the role of business partner has become increasingly important. This has placed the CFO in a position to help assess the options and alternatives of the various stakeholders and choose those with the greatest value, the greatest prospects, to which the available resources should be allocated.
The new CFO will be more and more attuned to megatrends, including two of them for us in the automotive industry: sustainability, through electrification, which is a real revolution for the industry; and digitization, which brings the concept of the car closer and closer to younger generations.
Thus, the CFO will be an increasingly integrated framework in the creation of 360 degree strategies.