Ducati Reports Lower Third-quarter Net Earnings

Ducati Reports Lower Third-quarter Net Earnings

© 2002, Roadracing World Publishing, Inc.

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From a press release issued by Ducati Motor Holding S.p.A.:

DUCATI MOTOR HOLDING ANNOUNCES RESULTS FOR FIRST NINE MONTHS OF 2002

Gives guidance for Full Year 2002.
New 999 Superbike voted 2002 Motorcycle of the Year

Bologna, Italy – Ducati Motor Holding S.p.A. (NYSE: DMH and Borsa Italiana S.p.A: DMH), a leading manufacturer of high performance motorcycles, today announced results for the nine month period ended September 30, 2002.

As previously reported, the Company announced consolidated revenues for the first nine months of 2002, of Euro 298.9 million, up 5.5% from Euro 283.4 million during the same period in the previous year. Revenues from Ducati motorcycles for the period increased 2.4% to Euro 242.1 million and represented 81.0% of revenues. Motorcycle-related products reached Euro 55.8 million, up 20.2% over the same period last year.

For the first nine months of 2002, gross margin was 40.8% versus 41.1% in the previous year, mainly due to a positive product mix effect from related products and production efficiencies which were more than offset by a negative country mix and foreign exchange effects.

EBITDA (earnings before interest, tax, depreciation and amortization) for the first nine months of 2002 was Euro 38.8 million and represented 13.0% of sales, down from Euro 48.6 million, or 17.2% of revenues, in the comparable period last year. This is mostly due to costs related to investments for the development of the Ducati Desmosedici GP motorcycle, the restructuring of Ducati’s US distribution network, promotional activities such as the biennial World Ducati Week and the negative impact of foreign exchange rates.

Net earnings for the first nine months were Euro 2.0 million compared to Euro 9.0 million in the prior year period. This is mainly due to factors mentioned above, along with increased depreciation, amortization and foreign exchange losses.

“The nine month period has been characterised by the combination of a slower-than-expected recovery of our US operations, an adverse foreign exchange rate effect and a notable contraction of the Ducati Relevant Market – after a decade of steady growth – exacerbated by a generally weak macroeconomic environment,” said Enrico D’Onofrio, Ducati Chief Financial Officer. “We therefore think it prudent to reduce our expectations for the 2002 full year to revenue growth between 2 and 3%, with an EBITDA margin around 14%.

“We are confident that our new targets are reasonable and will be met by the Company,” said Carlo Di Biagio, Ducati Chief Executive Officer. “Our visibility for the last quarter of 2002 is clear. In the US, we have seen rising registrations which are driving a de-stocking of the dealer network, in line with our strategy. Worldwide, we currently have sufficient orders in hand to meet our new estimates for the full year, particularly driven by great demand for the 999. As a consequence the improved product mix will help to counterbalance negative foreign exchange rate effects.

“Despite the challenging selling environment in 2002, we are continuing to invest in innovative products and brand-building activities to lay the ground for strong and sustained future growth,” added Carlo Di Biagio. “I am pleased to report that on November 7th, Ducati swept the board at the UK-based Motorcycle News awards in Birmingham, winning three major prizes, including Manufacturer of the Year for the company deemed to have the best relationship with its customers. Our new 999 Testastretta Superbike was chosen as Overall Machine of the Year across all categories. And just yesterday, the 999 was voted overall winner of the 2002 Motorcycle Design Trophy by the members of the prestigious Motorcycle Design Association. We could not ask for greater recognition. The 999 has been the result of a huge amount of effort and determination from the whole company – congratulations to everyone involved.”

Ducati’s net debt at September 30, 2002 was €Euro 100.4 million in line with €Euro 101.6 million at September 30, 2001, improving versus the indebtedness of €Euro 113.9 million at June 30, 2002, mainly thanks to a reduction in working capital. The company’s net debt to total capitalization ratio was 39.0% at September 30, 2002 versus 40.0% at September 30, 2001, and 41.1% at June 30, 2002.

These results have been approved by the Ducati Board of Directors, pending limited review by Company auditors.

A conference call with management will take place today at 16:00 Italian time, 15:00 GMT or 10:00 EST. To access the call, please go to www.ducati.com, and click on Ducati Investor Relations in the Ducati News section. All historic Company data are available at the Ducati Investor Relations page.

Founded in 1926, Ducati builds racing-inspired motorcycles characterized by unique engine features, innovative design, advanced engineering and overall technical excellence. Ducati has won eleven of the last thirteen World Superbike Championship titles and more individual victories than the competition put together. The Company produces motorcycles in four market segments which vary in their technical and design features and intended customers: Superbike, Supersport, Monster and SportTouring. The company’s motorcycles are sold in more than 40 countries worldwide, with a primary focus in the Western European and North American markets. For more information about the Company, please visit our web site at http://www.Ducati.com.

This press release contains statements that are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, as described in documents previously filed by the Company with CONSOB and with the U.S. Securities and Exchange Commission.

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