Investor Meetings Presentation
“Premium Performance and
Timeless Italian Style…”
[DRAFT]
Management Presentation Team
Name
Position
Years with Ducati
Chairman and CEO
[]
Insert
picture
Federico Minoli
Insert
picture
Enrico D’Onofrio
CFO
[]
Insert
picture
Gianluca Crudeli
Finance Director
[]
[DRAFT]
Company Overview
[DRAFT]
Ducati at a Glance
One of the world’s leading manufacturers and distributors of high-performance sport
motorcycles since 1926 with products sold in 66 countries
Positioned as premium priced motorcycles within the “sport” sub-segment of the
large-displacement motorcycle market
[5.7%] worldwide market share in the Sport segment of the >500cc Road
Market(1)
Extensive racing pedigree with 13 Manufacturer’s titles since 1990 in the World
Superbike Championship
38,417 motorbikes sold in 2003: net sales of €388.2m and EBITDA of €45.0m
Products through 140 Ducati stores and 732 independent multi-brand stores
One 125,000 sqm centralized production plant in Bologna (Italy)
1,149 employees at 30 September 2004
1
____________________
(1) Source: Ducati; As of 30 Sep 2004
[DRAFT]
A History of Sustained Product Innovation
[Picture to come]
[Picture to come]
[Picture to come]
[Picture to come]
[Picture to come]
1926
1946
1972
1985
1993
Ducati is founded in
Bologna by the Ducati
family and other Bolognese
investors
Ducati family begins
production and distribution
of motorcycles introducing
“Cucciolo”, a small auxiliary
motor for bicycles
Victory in the Imola 200
Race establish the
reputation of the “L-Twins”
engine for highperformance and racing
success
Cagiva acquired the Ducati
brand and related
businesses
The Argentine Miguel
Galluzzi conceives the idea
of the naked bike: ”Monster”
[Picture to come]
[Picture to come]
[Picture to come]
[Picture to come]
[Picture to come]
1996
1999
2000
2001
2003
TPG and Deutsche Morgan
Grenfell acquire the Ducati
brand name, trademark
and related intellectual
property rights from Cagiva
Ducati Motor Holding goes
public at the New York and
Milan Stock Exchange
The MH900e becomes the
first motorcycle ever to be
sold exclusively over the
Internet
Ducati starts trading on the
“STAR” segment of the
Milan Stock Exchange
After 30 years, Ducati Corse
participates again in the Moto
GP Championship, winning
nd
2 place
2
[DRAFT]
2004 Product Offering
Superbike
•
•
•
•
•
•
•
749 Dark
749
749s
749r
999
999s
999r
$11,995-29,995
Monster
•
•
•
•
•
•
•
620 Dark
620
1000
1000s
S2R Dark
S2R
S4R
$6,595-13,495
Multistrada
•
•
•
•
620 Dark
620
1000 DS
1000s DS
$7,695-13,495
Sport Touring
• ST3
• ST4s
• ST4s ABS
Super Sport
• 1000 DS
$11,995-15,995
$7,995-10,995
[Insert Pictures]
3
[DRAFT]
Worldwide Presence
2003 Net Sales Breakdown by Country
Rest of
World
14.4%
2003 Net Sales Breakdown by Channel
Italy
29.1%
[Germany
Japan
to be
9.9%
inserted]
[Company to provide
data]
US/Canada
13.1%
Rest of
Europe
33.5%
2003 Net Sales Breakdown by Product
€388.2m
Sport Supersport
6%
Touring
7%
Other
1%
Accessories
& Apparel
7%
Spare Parts
11%
Motorcycles
81%
Multistrada
12%
Superbike
39%
Monster
36%
4
[DRAFT]
Ownership Structure
Overview
Listed on the Milan Stock Exchange in the
“STAR” segment and New York Stock
Exchange through ADSs since 1999
Companies traded on “STAR” meet strict
requirements relating to transparency,
liquidity and corporate governance
Texas Pacific Group (“TPG”) has been a
controlling shareholder since 1996
Shareholder Base
Treasury
Shares
2.0%
Texas Pacific
Group
33.2%
Giorgio (2)
Seragnoli
7.5%
Free Float
52.3%
Harris
Associates LP
5.0%
Broad public shareholder base
TPG Shareholder Interest
TPG acquired 100% of Ducati from Cagiva
in 1996 in two steps for ca. [€260m]
Turnaround focused on operational
efficiencies and strict costs control
TPG sold [x%] of its stake in the 1999 IPO
TPG fully support current top management
without being heavily involved
Unclear commitment to Ducati if capital
increase required
____________________
Source: Consob and Thomson as of November 2004
(1) The segment of Equity with high standards
(2) Vice Chairman of the Board of Directors of DMH since 1998
Columbia Wanger A.M.
Cambiar Investors LLC
Pioneer Investment Management Ltd.
Leonardo SGR S.p.A.
Arca SGR S.p.A.
J.P. Morgan Fleming A.M. (UK) Limited
Dimensional Fund Advisors, Inc.
SanpaoloIMI W. M. Luxembourg S.A.
Lemanik Asset Management
Optima S.p.A SGR
Pictet Asset Management UK Ltd.
WestAM
BIM Intermobiliare SGR S.p.A.
Credit Suisse A. M. Funds S.p.A.
SINOPIA Asset Management
Gespastor S.A.,S.G.I.I.C.
Sub Total
Other
Total
[DRAFT]
1.80%
0.45%
0.32%
0.20%
0.15%
0.10%
0.08%
0.08%
0.08%
0.07%
0.06%
0.04%
0.02%
0.02%
0.01%
0.01%
3.49%
48.81%
52.30%
5
Key Highlights
Powerful
Brand Equity
Focused
Market Niche
Flexible
Manufacturing
Operations
Technical and
Design
Excellence
Loyal
Customer Base
Performance
Superiority
6
[DRAFT]
Leading Market Position among Non-Japanese Players
Ducati Positioning in Relevant Market(1)
Brand Positioning
% of units
[registered]
Performance
30%
25%
Superbike
25%
Sport Classic
23%
Monster
20%
20%
Multistrada
Sport Touring
Function
15%
Lifestyle
[Update]
14%
10%
6%
5%
5%
3%
2%
2%
0%
0%
Comfort
[To be
discussed]
7
____________________
(1) As of 30 Sep 2004; Ducati Relevant Market is defined as Sport, Naked and Sport Touring above 398cc bikes.
In 2004, the full year after the introduction of Multistrada, DRM has been widened to include Dual bikes
[DRAFT]
Technical and Design Excellence
Traditionally Ducati has developed unique solutions for its
motorbikes:
Desmodromic valves
90° L-Twin engine
Tubular trellis frame
Sound
[Insert Pictures]
Racing successes further boost excellence:
Possibility to test new technical innovations and design
features leveraging up racing activities
Focus on cutting – edge solutions
Italian style with the most advanced technology
8
[DRAFT]
2004 Product Innovation
[ To Come]
9
[DRAFT]
Performance Superiority
Research & Development
Key competitive tool to maintain Ducati
reputation for technical excellence and
innovative design
Ducati Corse
MOTO GP
Re-joined in 2003 after over 30 years
Ducati Desmosedici: Racing motorcycle powered
by a 4 stroke “Double Twin” cylinder engine
2nd place in the 2003 Constructors’ Standing with
Loris Capirossi and Troy Bayliss as official riders
Networked unit:
Ducati R&D strategically coordinates
multiple external sources of technical
and engineering skills
SUPERBIKE
13 times World Champion in the Superbike
Championship since 1990
More single race victories than all other
manufacturers combined
2 Teams: Ducati Fila and Ducati Breil
Strategic partnership with IDEA institute
Ducati Design Center:
Strict control of the design process
Reduced “time-to-market” and design
costs
Possibility to test new technical innovations
and design features leveraging up racing
activities
2003 R&D expenditures at €21.4m (5.5% of
sales) with 206 employees fully dedicated
Innovative projects partially financed by soft
loans granted by the Government
Racing Economics
€m
30
25.0
21.2
20
10
9.0
3.4
0
1998
[DRAFT]
2003
Costs
10
Sales
Loyal Customer Base
Ducati Monobrand Stores
Ducati brand loyalty is determined by
satisfaction in the Ducati experience
Design, sound and image emerge as
the distinctive requirements to satisfy
Ducati customers
Repurchase intention is 84% among Ducati
owners(1)
Weighted average actual loyalty of Ducati
owners was 66% in 2002(2)
Overall Loyalty Level(2)
80%
70%
60%
50%
40%
30%
20%
10%
0%
75.0%
71.0%
Italy
66.0%
USA
48
16
12
8
14
8
4
4
26
140
Independent Multi Brand Stores
51.0%
Germany
Italy
Germany
France
Benelux
Japan
UK
South Africa
USA
Other
Total
Weighted
Average
USA
Germany
Italy
Japan
France
Spain
Australia
UK
Switzerland
Benelux
Other
Total
158
83
81
64
61
32
30
29
24
19
151
732
11
____________________
(1) Source: CSM customer research 2002 based on a sample of 300 Ducati owners
(2) Source: CSM customer research 2002 and JDPowers database 2001
[DRAFT]
Flexible Manufacturing Operations
125,000 sqm production facility located outside Bologna (Italy)
Focus on engines and motorcycles assembly and testing
Direct production of two strategic components:
Crank cases
Cylinder heads
[insert picture]
Manufacturing outsourced to a network of sophisticated third-party
suppliers
[ ] workers employed
[company to provide additional data]
12
[DRAFT]
Powerful Brand Equity
Globally recognised brand [Company to provide data
to support]
Marketing effort focused on:
Superior performance & technical excellence
Prestige and uniqueness
Italian style design
[Insert Pictures]
Racing successes to boost brand image
Ducati Stores to further improve visibility
Widespread media attention
World Ducati Weekend
[ ] employees fully dedicated to marketing efforts
13
[DRAFT]
Financial Information
[DRAFT]
[Financials]
Net Sales and EBITDA Margin
Key Drivers
Revenue
€m
EBITDA Margin (%)
450
30%
407.8
400
412.9
388.2
379.5
25%
350
300
267.966
20%
[ Commentary
to come]
250
15.8%
16.2%
15%
200
12.7%
150
11.6%
10%
9.7%
100
5%
50
0
0%
2000A
2001A
2002A
2003A
YTD
Net Sales
EBITDA Margin
Volumes
Units Sold
45,000
40,000
39,087
40,016
39,534
3,081
3,638
3,481
6,025
35,000
2,275
30,000
25,000
19,659
20,125
17,991
4,058
5,676
3,812
2394
2,164
12,958
2,818
10,000
5,000
25,240
19,600
20,000
15,000
38,417
12,289
10,577
12,641
1,020
9,308
6,704
0
2000A
2001A
2002A
Superbike
Super Sport
2003A
Sport Naked
14
YTD
Sport Touring
MTS
[DRAFT]
Untapped Potential to Grow
Vertical Expansion
Strategic Pillars
Opening two additional entry
doors in the sport and dual
segments to attract new bikers
Repositioning current and future
product development
[Insert Pictures]
Develop products targeted
towards new bikers
Horizontal Expansion
Gain market share from
competitors
Enter fast growth off road and
sportster segment
Upgrade loyal customers
Developed a focused range of
premium price products
15
[DRAFT]
1996 – 2003: An Historical Perspective
[Company to comment]
TPG
ACQUISITION
Phase 1
RESUME GROWTH
IPO
1996
1997
1998
Lean production model
“Just in time” inventory
Total Quality Management
Lead time reduction
1999
2000
Net Sales
€m
400
388.2
€m
50
45.0
30
1996
2003
2003
2004
Working Capital / Net Sales
0.5x
0.21x
10
0.1x
0
0.0x
1996
0.24x
0.23x
0.25x
2001A
2002A
2003A
16
0.2x
11.8
0
2002
0.3x
20
100
Phase 3
INNOVATION
0.4x
200
105.8
2001
EBITDA
40
300
Reduction of new models
development time
Concurrent Engineering
Design for Assembly
Phase 2
EFFICIENCY
Revamp brand image
Strict cost saving policy
Reduction of material
wastes
2003
2000A
[DRAFT]
Historical Capitalisation Ratio
Net Debt(1) / EBITDA
3.0x
2.8x
2.6x
2.5x
2.0x
EBITDA / Net Interest
5.5x
6.0x
2.1x
1.6x
6.6x
7.0x
1.7x
4.0x
1.5x
4.8x
3.1x
3.0x
1.0x
2.0x
0.5x
1.0x
0.0x
0.0x
2000A
2001A
2002A
2003A
LTM
2000A
Net Debt(1) / Net Capitalization
42.99%
43.0%
42.5%
2001A
2003A
LTM
0.5x
0.4x
42.0%
2002A
FFO / Net Debt(1)
0.4x
42.2%
0.36x
0.33x
0.31x
2003A
LTM
0.3x
41.3%
41.0%
5.2x
5.0x
0.2x
40.5%
0.1x
40.0%
0.0x
2000A
2001A
____________________
(1) Excludes effect of securitisation
2002A
2003A
9 M 2004A
2000A
2001A
2002A
17
[DRAFT]
Debt Analysis
(€m)
9 M 2004
Cash & Cash Equivalents
29.4
Credit Linked Notes
15.0
Bought Back Eurobonds
3.0
Total Current Assets
(1)
Class B Notes
10.0
Total Non Current Assets
10.0
Total Assets
57.4
Short Term Borrowings
83.4
(2)
Current Portion of Long Term Debt
Total Current Liabilities
Long Term Debt
69.8
153.2
3.9
Other Long Term Liabilities (3)
12.6
Total Non Current Liabilities
16.6
Total Liabilities
Net Financial Position
Bank
47.4
169.8
Total Line of Credit (‘000)
Available
Utilised
13,500
20,250
20,500
28,836
11,000
20,000
14,000
20,000
10,000
10,000
10,000
6,800
184,886
184,886
7,504.9
4,002.3
12,396.7
14,185.8
6,622.1
13,884.7
6,190.1
5,233.3
10,000.0
3,106.7
83,126.6
241.0
72.0
83,439.6
DMH - INTESA
DMH - UNICREDIT
DMH - CAPITALIA
DMH - BNL
DMH - SAN PAOLO
DMH - CARIFIRENZE
DMH - CREDEM
DMH - POP BERGAMO
DMH - MPS
DMH - POP VERONA
DMH - COMMERZBANK
DMH - BBVA
TOTAL DMH
DNA - Bank of America
DUK - Lloyd
Group Total
112.4
____________________
(1) Junior notes related to the securitisation program
(2) Includes €60.7m of outstanding Eurobonds, €5.8m of securitized receivables not yet transferred to the SPV and €3.3m of short term leasing
(3) Soft loans granted by the Government
[DRAFT]
18
Asset Backed Securitisation
In December 2002 Ducati signed a five-year contract for the disposal of €60m eligible
trade receivables under revolving securitisation arrangements
Business rationale:
Achieve savings of ca. €1m per year and strengthen the relationship with the
dealers through the internalisation of the servicing activity
Support the distribution network through a financing tool with longer term nature
than factoring contracts
Receivables are sold, without recourse, to a Law 130 SPV called Ducati Desmo Finance
1
Ducati Desmo Finance 1 finances itself through the issuance of two classes of notes
Class A Notes, underwritten by the US-based Romulus Finance conduit (which in
terms issues A1/P1 rated commercial paper)
Class B Notes, for an amount of €10m and underwritten by Ducati itself
S&P and Moody’s certify that the eligibility criteria adopted for Ducati’s receivables are
consistent with the A1/P1 rating of Romulus Finance
Interest on Class A notes is Euribor + 40 bps
The programme is drawn for €33m, and will be drawn by an additional €12m in 2005
19
[DRAFT]
Current Capitalisation
(€m)
31 Dec 2003
30 Sep 2004
Cash & Investments
49.0
57.4
Total Short Term Debt
65.6
153.2
Total Long Term Debt
100.5
16.6
Total Debt
166.1
169.8
Shareholders’ Equity
158.4
149.1
Gross Capitalisation
324.5
318.9
20
[DRAFT]
Conclusion
[DRAFT]
Appendix
[DRAFT]
Monster – The Original “Naked” Motorcycle
Introduced in 1993
11,500 units sold in the first two years of production
Essential style with fully exposed engine and bodywork
Evolution on a continuous basis:
Upgrading of the 750cc and 900cc engines to 800cc and 1000cc dual spark
(2002)
Fuel injected Monster 620 ie (2004)
Successful S4R launch
Client Target:

Price Range:

$6,595 – 13,495
Engine Range:

600 – 1000cc
Units sold in 2003

17,994
Units Sold Since Launch:

[company to provide data]
[DRAFT]
21
Multistrada – Rational Design, Unmistakable Style
Prototype launched in September 2001
Multipurpose sportbike offering superbike performance and a more upright position
70% of the units sold in 2003 immediately registered
Model year 2005 new launches:
Agile 620 entry-level model
High-performance 1000s DS
Client Target:

Price Range:

$7,695 – 13,495
Engine Range:

600 – 1000cc
Units sold in 2003

[more than 6,000]
Units Sold Since Launch:

[company to provide data]
[DRAFT]
22
Sport Touring – The Ideal Gran Turismo Choice
Introduced in [ ]
Inspired by the classic European Gran Turismo tradition
Comfortable ergonomic configuration for longer rides
Complete family re-styling [company to provide timing]
Height adjustable exhaust system
Anti-block Brake System (ABS) added in 2003
Successful 3-valve ST3 Launch for model year 2004
Client Target:

Price Range:

$11,995 – 15,995
Engine Range:

800 – 1000cc
Units sold in 2003

2,275
Units Sold Since Launch:

[company to provide data]
[DRAFT]
23
Superbike – The Best Twin ever Produced
Introduced in 1987
Closely derived from the motorcycles competing in the World Superbike
Championship
Most advanced and highest performance motorcycles within the product mix
Constant and evolutionary development of engine and chassis technologies
Twin-cylinder Testastretta engine
Innovative aluminium alloy two-sided box-section rear swing-arm
5 “Motorcycle of the Year” awards from Motor Cycle News and Motorrad
Client Target:

Price Range:

$11,995 – 29,995
Engine Range:

750 – 1000cc
Units sold in 2003

9,308
Units Sold Since Launch:

[company to provide data]
[DRAFT]
24
Super Sport – An Icon in Modern Motorcycling
Launched in 1973
Entry point for the aspiring Superbike owner
Classic design, lightweight, superior handling and tight cornering ability
Signature Ducati trellis frame, advanced suspension and 992cc Dual Spark engine
[Company to provide strategy and improvements on Super Sport]
[company to provide data]
Client Target:

Price Range:

$ 7,995 – 10,995
Engine Range:

1000cc
Units sold in 2003

2,818
Units Sold Since Launch:

25
[DRAFT]