Cycle News

Ducati In Financial Crisis?! It has been almost 10 years since CVe's American rival Texas Pacific GroupfTPG first purchased a controlling interest in the prestigious Italian manufacturer Ducati back in 1996 from its then-owner Cagiva (since renamed MY Agusta), and TPG floated it on the stock exchange three years later. The Texasbased investment fund has so far opted to hold on to a significant proportion of its equity in Ducati. But although the 33.15-percent controlling interest it presently retains in Ducati represents small change for the giant American financial house, TPG boss David Bonderman will likely regret not cashing in that investment sooner, in the wake of the steep downturn in Ducati's fortunes revealed on November I I by the latest trading statement from the Bologna-based company, covering the first nine months of 2005 - a period accounting for the vast majority of new bike sales in any model year. During this time, Ducat;'s turnover of Euro 240.3 million [about $282.8 million) represented a 10-percent overall decline compared to the same period in 2()(}1, thanks to a 5.3-percent drop in worldwide registrations of new Ducatis. An encouraging 2 I-percent sales increase in the crucial U.S. market over 2()(}1, and a 4-percent hike in France, was offset by steep declines in Ducat;'s other key markets: 18 percent in Germany, 17 percent in Benelux. 16 percent in Great Britain, 15 percent in Italy, and 9 percent in Japan. This resulted in an operating loss of Euro 6.9 million [$8.1 million) for the first nine months, compared to a profit of 2.5 million [$2.9 million) the year before, attributed (according to Ducati CFO Enrico d'Onofrio) to a combination of reduced bike sales, a poor product mix. and adverse exchange rates. "Market trends and company results force us to rethink our cost structure and product mix through a restructuring and relaunch plan, whose details and expected results will be presented soon," d'Onofrio said. As in: Expect a rethink of Ducati's costs of manufacture and presumably also pricing, as well as the company's mix-'n'match approach of combining different engines and frames to produce a varied range of models, a practice that has long been termed "parts-bin engineering." One ray of light, though, was the encouraging 3 I-percent third-quarter Ouly-September) increase in bike sales over 2004, resulting in a 12.2-percent increase in revenues, which was, however, insufficient to balance out an otherwise dreadful first six months of the year and especially a catastrophic first quarter for Ducati in 2005, with a massive drop in sales of 16 percent over the year before. With net losses now totaling Euro 16.6 million [$19.5 million) so far in 2005, contrasting to an already negative Euro 9.0 million [$10.5 million) balance sheet in the first nine months of 2004, Ducati appears to be on a downward slide that will take some turning around. Its wholly-owned Ducati UK British affiliate's two flagship London showrooms both closed in October - bad timing, with a buoyant City of London stock market about to deliver record year-end bonuses - and there's concern in the industry that the prestigious ItaJian manufacturer is in a state of crisis. "Despite a recovery in terms of sales, thlrd-quarter results vvere unsatisfactory," Ducati president/CEO Federico Minoli said. "While the third quarter helped reduce the gap on last year in terms of sales, the unfavorable mix and the delay in the production of the SportClassics bikes had a negative impact on the company's profitability. Our aim is to reverse this trend in the last quarter by the shipment of approximately 3500 presold SponClassics bikes." Ducati is evidently pinning hopes of a turnaround on its well-received new retro range. which will be extended in January with the debut of the two-seater GT model, as well as the new 54R Testastretta version of its core Monster range launched at the Milan 5how four days after the publication of these results. But with sales of the 999 sportbike and its 749 sister still MDK, Motosport.com Link Up for 2006 With the 2006 Supercross and Motocross seasons on the horizon, and as the team moves into a brand-new ing the first two races of the season and sitting out the final round. The team will be receiving a higher level of support from Honda for the 2006 season as well. I 1,5OO-sqare-foot race shop, the MDK Motorsports team has been renamed the MDK/ MotoSport.com/MSR Honda team after securing title sponsorship from MotoSport.com. "We're very happy that MotoSport has come on as a new title sponsor," team owner Mark Kvamme lineup for the 2006 race season," team managing director Mark Johnson said. "Combining forces with industry leaders Honda, Pro Circuit Racing, RG3 said. "We will be introducing several new perform- Suspension, and our other technical partners will pro- ance products in 2006 and working with Mot05port, vide a solid platform from which the team can build from for both the 2006 Supercross and Motocross the premier retailer of parts and accessories to the motocross enthusiast, is very exciting." Bill Butcher, president of MotoSport.com, echoed the sentiment. "Mot05port is a company known for carrying high-quality, high-performance, brand-name products," Butcher said, "and the knowledge that MDK is developing a line of performance products made this sponsorship a natural fit for MotoSport." The MDK/MotoSport.com/MSR Honda made its debut on December 3 in Toronto, "We are extremely happy with our entire sponsor series. Each of our partners' long-term commitments to the industry and proven results on and off the track were an absolute factor in our decision of whom to involve ourselves with. The MDK/MotoSport group is committed to providing our athletes the best equipment possible, allowing them to achieve top-level results," -. Canada, at the opening round of the Amp'd World Supercross GP Series, with rider Nick Wey finishing fifth (the highest-placing privateer) aboard his MDK/MotoSport.com/MSR Honda CRF450R. Wey was also the highestplacing privateer in the 2005 Supercross Series before a knee injury put him out of the series. He scored a season-best second-place finish at round two in Vancouver last year. He went on to finish ninth overall in the 2005 AMA 250cc National Motocross Championship after miss- 12 DECEMBER 14, 2005 • CYCLE NEWS very disappointing in many countries, produet-development boss Claudio Domenicali will be seeking to fast-forward a new range of sporting Ducatis with the larger-capacity desmo Ytwin engines known to be under development. He'll also be eager to find a way of qUickly putting into production the outrageous-looking Hypemnotard, which was the star of Milan 2005, representing the latest example of the innovative flair of designer Pierre Terblanche - who has nonetheless been demoted from his role as Ducat;'s design director. Though many still feel he bombed with the radically styled 999/749, there's no disputing that Terblanche Is now on a roll, with the Multistrada, the trio of SportClassics, and now the Hypermotard all hitting the target dead center in their chosen market niches, each time throwing Ducati a much-needed commercial lifeline. Minoli & Co. must be hoping he can corne up with a couple more equally innovative and well-received ideas - and soon. The dismal trading figures are thought likely to be the reason behind a slow progress in the takeover negotiations that have been ongoing since July for TPG to sell its remaining 33.15 percent stake in Ducati to Italian investor Andrea Bonomi, president of his family's private equity company Investindustrial (see related news item). Bonomi's move is supported by Giorgio Seragnoni, who currently holds 7.5 percent of Ducati's equity and, as the second-largest shareholder in the company, also has a seat on the board as administration director of Ducati. Investlndustrial has reportedly been undertaking due diligence for almost six months prior to tabling a final offer, in a move that had been publicly welcomed by Ducati president Minoli. Whether the sellout will still happen is now considered questionable - unless TPG decides to wash its hands of the motorcycle business and sells out to Bonomi (or perhaps somebody else - such as Italian star Investor Roberto Colaninno, who is presently engaged in turning Piaggio, and now Aprilia, around) at a knocked-down price. Keep watching this space! Aldn Cdthcdrt Rossi: Rally More Fun that F I Valentino Rossi says his stunning display behind the wheel of Subaru's world rally car was more fun than driving Michael Schumacher's 900hp ~ Valentino Rossi Formula One Ferrari. Rossi will try to rub his rally hero Colin McRae's nose in it again when he jumps behind the wheel of Subaru's factory Impreza in Italy. He will clash with 5cot McRae again after he defeated the Skoda driver recently in a super-special stage shootout at the Monza Rally. Rossi will also face former World Champion Markus Gronholm in the rally event in Italy. "The Subaru is a lot different to the Ferrari," Rossi said. "From the fun side, maybe rally is better. Formula One is more similar to MotoGP. You need to use the whole track and the last meters of braking to make a good lap time. Rally is more sliding, and it was fun," Rossi admitted in Sepang that Scot McRae is his rallying idol, and that when he beat him last month in Monza, it was one of the best moments of his career. "Colin said f--k; he came to me and he was a little bit sad," Rossi reported. "The Monza rally is not a real rally. It is special stages, but on the track. The master show that I beat him in is more rally-style with hairpins, so Colin was sure he would win. Subaru is a little bit faster than Skoda, but when we arrived at the end, he looked at me and was very sad. Colin is my rally hero. I foliowed him for a long, long time. I think he is more or less the Kevin Schwantz of rallying, and Kevin is my motorcycling hero. He is very fast, he wins a lot, but he aiso crashes a lot," Matthew Birr

• Cover