Car manufacturer changes gear on profit forecasts
Aston Martin has accelerated its expectations about its financial performance this year after achieving “sharply improved” results in the first half of the year.
The luxury sports car manufacturer now expects revenues of £830m – £15m above the top end of its February estimate – which would show 77% growth over three years.
It also now forecasts underlying earnings will be around £175m, up from earlier estimates of £160m-£165 and significantly above the £101m achieved in 2016.
Dr Andy Palmer, Aston Martin’s president and chief executive, said: “Aston Martin is accelerating financially with our third successive quarter of pre-tax profit. Our improving performance reflects rising demand for our new DB11 model, as well as for special edition vehicles and the ongoing benefits from our Second Century transformation plan.”
The Warwickshire manufacturer was founded in 1913 and launched its Second Century plan in response to a £50m sales fall and big losses in 2014.
The first phase of the strategy, business stabilisation, was focused on stopping the dramatic sales fall.
The second and third phases of its plans are focused on strengthening its core offer and expanding its portfolio. It has the ambition of bringing one new model to market every nine months until 2020.
Its ambitions are being boosted by its current sales performance. For the six months to June, volumes rose by 67% to 2,439 vehicles as orders continued to rise in the UK, mainland Europe, the Americas and China. The average selling price per model, excluding special editions, increased by 25% to £149,000 – principally driven by the DB11 – and a higher option take rate across the range.
In that period, the company reported pre-tax profits of £21.1m – reversing a loss of £82.3m in the same period of 2016 – on revenues that increased to £410.4m from £211.8m in the first half of 2016.
In the second quarter, pre-tax profits reached £15.2m on revenues of £222.0m, compared with a pre-tax loss of £52.6m on revenues of £119.2m in the prior-year quarter.
Mark Wilson, chief financial officer at Aston Martin, said: “The strength of our first-half results prove that our strategy is on track. We exceeded our budget for the tenth consecutive quarter, giving us confidence that we will deliver a step-change in full-year performance.”