Will Ferrari NV achieves its 2022 profitability targets after its CEO abruptly resignation?

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Ferrari NV is facing its second leadership crisis in a little over two years as Chief Executive Officer Louis Camilleri abruptly resigned, complicating the Italian supercar maker’s transition toward electric mobility.

Chairman John Elkann will take the CEO role on an interim basis. He has to find a new leader just 30 months after he picked Camilleri to succeed Sergio Marchionne, who died in July 2018 from complications after a surgery.

Camilleri, 65, is leaving after he had to be temporarily hospitalized for Covid-19. He’s now recovering at home and the infection wasn’t the main reason for his resignation, a company spokesman said, without elaborating. Camilleri also stepped down as chairman of Philip Morris International Inc.

His surprise resignation comes at a difficult time. The coronavirus pandemic has depressed auto sales just as the industry is shifting away from the internal combustion engine  a key feature of the high-powered Ferrari cars.

Camilleri’s exit is expected to put pressure on Ferrari’s shares, which have gained about a fifth this year, for the best performance in the Stoxx 600 Automobiles & Parts Index, said Angus Tweedie, an analyst at Citigroup.

Whoever becomes new CEO will have “big shoes to fill,” Tweedie said in a note to clients today. Issues at Ferrari include questions whether the company can achieve its 2022 profitability targets, rolling out new models including the PuroSangue SUV and shifting the supercar maker toward an emissions-free fleet, he said.

Ferrari fell 1% at 9:10 a.m. in Milan, valuing the company at about 34 billion euros ($41 billion).

Camilleri was a Ferrari board member when he took over as CEO for Marchionne, who died within days of being replaced. Marchionne orchestrated Ferrari’s 2016 spin-off from Fiat Chrysler Automobiles NV, where he also served as CEO.

In two-and-a-half years as CEO, Camilleri oversaw the transformation of Ferrari into a fully fledged luxury brand. He revamped Ferrari’s lineup so it could keep boosting prices. The company introduced five new models in 2019, which helped increase annual sales to more than 10,000 units for the first time.

“As a longstanding member of the Ferrari board, Louis showed an unswerving sense of responsibility ensuring continuity for our organization, while guiding Ferrari into the future with an ambitious and far-sighted strategic plan,” Elkann said in a letter to workers.

Exor NV, the investment company for the Agnelli family, controls Ferrari with 36% of its voting rights and a direct 23% stake. The supercar maker was listed in New York in 2015.

Elkann, the scion of the Agnelli family, is set to become chairman of Stellantis, the company which will start its operations next year following the combination of Fiat Chrysler with Peugeot-maker PSA Group. Last year, it joined forces with another iconic Italian name, Giorgio Armani SpA, to help push the supercar maker’s handbag and clothing lines into the premium-price space.

One looming question for his successor is how Ferrari will cope with more stringent emissions regulations in the European Union and other markets. While the company has said that 60% of its models will have a hybrid powertrain by 2022, Camilleri has expressed doubts the brand would go fully electric.

He recently criticized European environmental regulations that aim to cut transport emissions by penalizing the sale of vehicles with particularly inefficient engines, saying they fail to take into account how infrequently some are driven.

“If you take a V-12 Ferrari that only runs 3,000 kilometers a year, probably it has less emissions than a very small car that runs every day,” he said during an investor call last month.

At Philip Morris, his exit triggered an orderly succession plan that’s been in place for some time, the company said. The tobacco company’s CEO Andre Calantzopoulos will become executive chairman right before the annual shareholders meeting in May, it said.

Lucio Noto, the company’s independent presiding director, will serve as interim chair in the meantime. Chief Operating Officer Jacek Olczak will succeed Calantzopoulos as CEO when he takes the chairman spot.

The tobacco giant has long been a sponsor of Ferrari’s Formula One racing teams, but Camilleri had no direct automotive experience, which made him a somewhat controversial pick to run one of the world’s pre-eminent car brands.