The Board of Directors of Ducati Motor Holding SpA met last week to examine the preliminary 2006 results and approve the 4th quarter 2006 financial results. The preliminary full year 2006 results show a significant reversal of the 2005 trend with a return to a positive operating result and a substantial improvement of the net financial position. The results are due to a successful relaunch strategy implemented at the end of 2005 which focused on the improvement of gross margin, reduction of dealer stock, reduction of fixed costs and working capital.

Revenues for 2006 are Euro 304.8 million, down 1.2% compared to 2005 with a decrease in the number of bikes sold and revenues partially offset by an improvement in bike mix and by an increase in sales of accessories and apparel. 32,312 bikes were sold in 2006 yielding revenues of Euro 239.7 million (bike units -6.4% with revenues down 3% versus 2005) while sales of spare parts, accessories and apparel and reached revenues of Euro 60.1 million (up 3.4% on 2005) The decrease in the number of bikes sold, and the increase in the number of registrations (35.286 units, up by 2.1% over 2005), generated a network stock reduction of 3,000 bikes equivalent to approximately 1 month of sales and in line with the relaunch strategy.

Registrations increased notably in the USA (+16.3%), in the non-subsidiary countries (+9.4%), in France (+1.5%), and in Japan (+0.5%) whilst they decreased in the UK (-16.5%), Benelux (-12.5%), Germany (-8.8%) and Italy (-3.9%). It is important to consider that the new Superbike 1098 has had very little impact on the 2006 registrations due to being distributed only during the last months of the year.

Gross margin for 2006 amounted to Euro 72.7 million or 23.9% of revenues versus Euro 47.3 million or 15.3% in 2005. The consistent increase is due to an improved product mix, fewer amortizations and the extraordinary devaluation in 2005. EBITDA was Euro 27 million or 8.9% of revenues compared to a negative EBITDA in 2005 of Euro 0.3 million. The increase is due to the improved bike mix and to extraordinary accruals in 2005. The operating result (EBIT) was positive at Euro 4.8 million versus a loss of euro 33.6 million the previous year, thanks to the improved EBITDA and lower accruals. EBT was negative at Euro 1.6 million versus a loss of Euro 41 million the previous year, thanks to the improved operating result and reduced financial charges. Net result was negative at Euro 8.5 million compared to a loss of Euro 41.5 million the previous year and includes the accrual of deferred taxes.
 

Federico Minoli, Ducati's President and CEO commented on the 2006 results: "I am extremely satisfied with the results brought by Ducati's relaunch plan which is living up to our expectations and is producing results earlier than anticipated. In particular the decrease of dealer inventory is a
good preparation for the sale of new products in 2007. The new Superbike 1098, Hypermotard, and Desmosedici are creating high expectations in the market and a significant number of orders. These products will further increase the gross margin. On the race track 2006 was a year of unprecedented successes: World Champions of Superbike, and 4 victories and 9 podium places in the MotoGP Championship; a result that no other European manufacturer has ever achieved.

"2006 marks a return to operating profit after some difficult years. As for the future, the next few fiscal years will prove the effectiveness of the investments in the product area that have been made in previous years, especially in terms of increased sales and a return to profit," added Enrico D'Onofrio, CFO, "in particular 2007 will see a double-digit increase over 2006 revenues, EBITDA of around 12% of revenues and return to net profit, one year earlier than predicted in the relaunch plan. Net debt at the end of 2006 - in substantial decline versus 2005 thanks to the capital increase and improvement of working capital -- will stabilise in 2007 maintaining a 30% ratio on equity.

In the fourth quarter sales revenues were Euro 80.1 million, a decrease of 9.3% versus previous year, due mainly to the reduced sales of bikes. Gross margin was 18.2% of revenues, an improvement on the same period of 2005 as a result of a better bike mix and extraordinary accruals in 2005. EBITDA was Euro 2.9 million compared to a negative EBITDA of Euro 14.7 million in the fourth quarter of 2005. The increase is due to accruals and extraordinary devaluations, in addition to the other factors stated previously. In the fourth quarter 2006 the operating result (EBIT) was negative for Euro 4.2 million compared to a negative result in the same period in 2005 of Euro 26.7 million. The improvement is due to the higher gross margin, as stated above, and the restructuring reserve of Euro 13 million that was put aside in 2005. Results before tax were negative by Euro 5.5 million versus a loss of Euro 27.9 million the previous year.

Founded in 1926, Ducati builds racing-inspired motorcycles characterised by unique engine features, innovative design, advanced engineering and overall technical excellence. The Company produces motorcycles in seven market segments which vary in their technical and design features and intended customers: Superbike, Supersport, Monster, Sport Touring, Multistrada SportClassic and the new Hypermotard. The Company's motorcycles are sold in more than 60 countries worldwide, with a primary focus in the Western European, Japan and North American markets.