By Svetlana Kovalyova
MILAN, Feb 13 (Reuters) - Italian motorbike maker Ducati said on Friday it expected revenues and core profit margins to improve this year by widening the range of its products to appeal to more consumers.
Bologna-based Ducati, maker of the Monster bike, also pledged to cut net debt swiftly.
The impact of the strong euro dented Ducati's sales and its core profit margin last year because consumers in its key market of the United States were put off paying thousands of euros for its big-ticket motorbikes.
But Ducati Chief Financial Officer Enrico D'Onofrio told a conference call that the launch of cheaper bikes, together with its more luxury brands, would help bring back fans this year.
"As for the top-line guidance, our expectation (in 2004) is a low single-digit growth since we expect a better (product) mix to offset continued strengthening of euro," D'Onofrio said in a conference call.
Last year, revenues at the maker of high-performance motorcycles fell 6 percent to 388.2 million euros ($497.4 million).
EBITDA margin, a ratio of earnings before interest, taxation, depreciation and amortisation to sales and a key indicator of profitability, slipped to 11.6 percent from 12.7 percent in 2002.
D'Onofrio said the company expected EBITDA margin to be 12 percent to 14 percent this year, depending on exchange-rate fluctuations. He said it would be 13 percent at the current exchange rate.
Together with new models launched in September and a string of cost cuts, Ducati had previously forecast a rise in profitability and a return to full-year net profit after a very slow start to 2003.
PLANS TO CUT DEBT BY 20 PERCENT
Ducati Chairman and Chief Executive Federico Minoli said U.S. new registration, a measure of retail sales, picked up in January as consumer spirit was recovering: "We finally see the light at the end of a tunnel."
D'Onofrio said the group would slash its net debt by 20 percent. At the end of December, Ducati's net debt stood at 117.2 million euros, he noted.
"In 2004, we will be very much focused on improving our cash position," he said. "We are expecting to improve net debt by almost 20 percent by reducing inventories and improving costs."
Ducati is revamping its U.S unit through a plan to cut inventories to six months from nine and to cut 50 jobs in 2003.
D'Onofrio said the company would continue buying back its 100-million-euro bond, issued in 2000 and due in 2005, but also would look at different ways to refinance the remaining part, including possible private placement or syndicated debt.
He said about 50 million euros worth of bond were currently outstanding.