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Ferrari shares slump despite beating Q2 EPS expectations; outlook affirmed

Shares in Ferrari sank despite the carmaker confirming full-year earnings guidance toward the higher end of its forecast range and posting a 14% increase in second-quarter earnings per share, beating analysts' forecasts.

The Italian sports car brand said Aug. 1 it posted adjusted diluted EPS of 96 euro cents in the April 1 to June 30 period, up from 84 cents in the same period of 2018 and exceeding the mean consensus normalized EPS estimate of 94 cents forecast by four analysts polled by S&P Global Market Intelligence.

Revenue was €984 million, up 9% from the prior year, reflecting an 8% increase in shipments to 2,671 cars. Growth in shipments was helped by an 11% increase in sales in the EMEA region, its largest market, as well as a 63% increase in Mainland China, Hong Kong and Taiwan. There was a 6% downturn in sales in the Americas, the company's second-biggest market.

Operating profit or EBIT rose 9% to €239 million compared with €218 million in the year-ago period with a €17 million positive contribution from favorable foreign currency fluctuations. The company spent €16 million on research and development in the period.

Industrial free cash flow for the three months was €139 million. The company said it bought back 1,520,936 shares by July 30 under its common share repurchase program for 2019. Upon completing the €150 million first tranche of the share repurchase program, the company embarked on a €200 million tranche to be completed by Dec. 27.

The company expects full-year 2019 earnings to exceed €3.5 billion in revenue with an adjusted EBIT of €850 million to €900 million and adjusted diluted EPS of €3.50 to €3.70. Market Intelligence consensus normalized EPS estimate for the year is €3.68.

The company's Milan-traded shares were trading 4.1% lower at €143.30 in early afternoon trading following the publication of results.