- Start date
- 14 may 2024
- 12 days
Per ampliare la propria visione attraverso soluzioni ad ampio spettro in grado di generare valore.
Sustainability isn't the constraint that many think it is, but is rather a way to make sure the business thrives in the short run and survives in the long run. Running a business requires broad economic and financial knowledge, including that of macroeconomics and Game Theory. And above all, to best manage a company and one's professional career, one needs to be inquisitive and responsible: to manage corporate money as if it were one's own. These are some of the important messages that emerged from the CFO Series by Antonio Picca Piccon, CFO of the Ferrari Group, who met with the participants of EMF - Executive Master in Finance, led by by Andrea Beltratti, EMF Academic Director and Alessia Bezzecchi, EMF Program Director on the occasion of the EMF CFO Series.
Professional background. "What are the highlights of your professional career?" asks the Academic Director. "After a degree in Economics in Turin and an MPhil in Economics in Cambridge, I started working at Sanpaolo IMI dealing with activities not only related to treasury but also to equity capital markets, such as corporate listings and mergers. After a few years, the Fiat Group gave me the opportunity to apply the financial techniques I had learned in the bank and during my studies to a corporate environment. They asked me to create risk management for financial services and to deal with securitizations. The latter activity in particular was very formative for the rest of my career, as securitizations allow a comprehensive examination of many fundamental processes of the underlying companies. The rest of my career has been influenced by Sergio Marchionne, thanks to the positions of increasing responsibility that he entrusted to me over a number of years, including CFO of Iveco Group and then Head of Treasury and Financial Services at Fiat Chrysler Automobiles Group. At the end of 2014, immediately after FCA's listing on the NYSE, I enthusiastically chose to test myself within the private business world, as CFO of the Ariston Group (which was wholly owned by the Merloni family at the time), where I remained until 2018 when I landed at Ferrari, to once again answer Dr. Marchionne's call." ""Which methodologies that you learned during your studies turned out to be particularly useful to your work?" "everything related to the study of the company, of course, especially corporate finance, but I would like to give a special mention to the concepts of macroeconomics, which is always indispensable for reading the scenario, and those of game theory, which have been useful to me in the context of negotiations with strategic implications."
International context. "You just talked about the macroeconomy. What are the relevant elements of the current environment?" "The key word is uncertainty. Since 2008 monetary policies have created preconditions for the current inflationary phase, and today we are forced to run for cover with the sharp rise in interest rates and the cancellation of unconventional monetary policy instruments. Incidentally, China is also suffering from problems related to excess money production and the associated increase in speculative transactions, especially in real estate. Europe in turn is suffering from the weakening of the international economic framework, and Germany is currently the focus of these difficulties."
The Ferrari Group. "What are the distinctive elements of the Ferrari Group's business model?" "Almost jokingly, we could define Ferrari as a company in the luxury sector that produces objects with four wheels. The real corporate assets are the approximately 80,000 active customers worldwide. That's just 0. 3% of the estimated high net worth individuals globally. Ferrari is aiming for an offering that is as personalized as possible to their needs, and with ongoing experiential involvement, in partnership with a very limited number of dealers (about 200). With these characteristics, the company has limited its sensitivity to economic downturns." "But how do you decide on the quantities to be produced, so as to maintain the exclusivity of the experience of driving a Ferrari?" asks the Academic Director. In response to this question, and to the solicitations of EMF participants, the CFO says that "there are no equations. We look at a set of indicators including the size and development of the order book and the trend of residual values of pre-owned cars in the secondary market. Just as with decisions on quantities, decisions on selling prices are not simple. This is sometimes due to the absence of comparable benchmarks, and must take into account an increasing number of elements, including the market's focus on sustainability."
Sustainability and stakeholders: "Sustainability is an increasingly relevant factor for any company and therefore also for Ferrari. In 2025, Ferrari is planning to present their first model with an electric engine with the ambition of further expanding the range of driving emotions that Ferrari can offer, without forgetting the sound. The Group is pursuing this path not only in response to incentives or regulatory constraints (also given the considerable disparity of regulations governing transportation globally), but out of a strategic conviction of the importance of proposing new opportunities to a customer base that is increasingly interested in the environmental impact of goods and services. We therefore agree with Michael Porter's analysis when he argued that sustainability is an essential element of the overall value creation proposition, shared between the corporation and all stakeholders and the community in which the company is embedded. For Ferrari, the focus is not limited to what takes place internally within the company, or the emissions of its cars in use. It extends to the entire production chain and product life, in order to achieve neutrality of Ferrari's carbon footprint in 2030. Sustainability is an even more strategic element in light of changing demographics and the evolution of customers, who are increasingly aware of environmental impacts: suffice it to say that in the last five years the average age of first-time Ferrari buyers has dropped by about eight years and is now often in their forties."
The Italian system: “what do you make of the Italian system, especially from the point of view of its ability to attract international investment?" "I am very fond of our country, to the point that some past professional choices have been dictated by the desire to contribute directly to Italian growth through working in companies based in Italy. The Ferrari Group believes in the country's prospects and demonstrates this with the production carried out in Italy, with a particular focus on the Motor Valley: take the production of batteries, electric motors and other components for the electric powertrain that will be carried out inside our new E-Building, for example. At the same time, I think that the country could achieve much better results overall, more systematically harnessing important ideas brought forth by our entrepreneurs and researchers, with greater investment in infrastructure and leveraging greater development of financial markets, with opportunities for income generation that would end up having positive spillovers on our public debt as well."
The stock market listing: "You just mentioned the Italian financial markets. The Ferrari Group capitalizes over 50 billion euros and is the second-largest listed company by capitalization after ENEL. What is your privileged experience as CFO in terms of interacting with the stock market?" "My experience is very positive. It is true, as many people note, that being listed adds constraints and increases costs to a certain extent. However, what fewer realize is that it is also true that these constraints help to improve business management, for example in terms of processes, planning and scheduling, which has to be forcibly stretched from a time perspective in order to better interact with institutional investors who have a long-term view. From the financial point of view, we pay great attention to the remuneration of our shareholders through the return of an important share of the large cash flow generated, through dividends and buyback programs, more or less in equal measure, while maintaining a healthy balance of the net financial position."
The role of the chief financial officer: "An essential ingredient for the CFO is business knowledge, which enables them to perform a strategic role within the management team in both short-term and long-term decisions, in parallel with the technical role normally associated with managing numbers and processes. The CFO can tackle both tasks not only by applying economic rationality to problems that arise, but also through communication skills with other business departments. Finance does not speak the same language as other departments, and technical skills are not the same; therefore, efforts must be made to understand and communicate in terms that other players can understand."
Tips for EMF participants: the EMF CFO Series closes with the ritual question, which while being very general has a rather precise answer in this case: "I would like to mention curiosity and individual responsibility. For me, curiosity has been an important driver of deepening my understanding of the different tasks that were gradually assigned to me, and it has sometimes led me to change jobs and companies in important ways, precisely because of the challenge associated with learning and the desire to test myself in different contexts. Individual responsibility is equally important-I have always tried to administer the resources of the companies I worked for as if they were my own-I am convinced that this is a valuable guideline."
SDA Bocconi School of Management
Per ampliare la propria visione attraverso soluzioni ad ampio spettro in grado di generare valore.