Aston Martin issues profit warning following ‘very disappointing’ year
Luxury carmaker Aston Martin this morning issued a fresh profit warning after what its chief executive called a “very disappointing” year.
The Gaydon-based car manufacturer, which has endured a number of problems after it listed on the London Stock Exchange in October 2018, said the challenging trading conditions highlighted in November continued through the peak delivery period of December resulting in lower sales, higher selling costs and lower margins.
Core wholesales declined 7% year-on-year to 5,809 while core retail sales increased by 12% year-on-year and exceeded wholesale volumes leading to reduced dealer inventory and reversing the trend of the prior year.
Aston Martin said that for 2019, it now expects adjusted EBITDA to be £130m-£140m, below analyst expectations of £200m. The company’s shares opened down more than 10% this morning following the news.
The manufacturer said it plans to draw down $100m in high-interest debt over the next four weeks, in addition to the $150m it raised in a September bond sale.
The company said it continues to review its funding requirements and various funding options while also remaining in discussions with potential strategic investors which “may or may not” involve an equity investment into the company.
Last month, the company’s share price received a welcome boost after reports that the owner of a Formula One racing team, Lawrence Stroll, the owner of Racing Point is set to snap up a signficant stake in the company.
Aston has faced a number of challenges since it made its stock market debut at 1900p per share which valued it at £4.3bn but the company has lost more than three-quarters of its value since then.
In November, it unveiled the first SUV in the company’s 106-year history, pinning its hopes on the vehicle reviving its fortunes.
It said the DBX order book has built rapidly to c.1,800 since it opened, around 1,200 of which are customer-specified.
Dr Andy Palmer, Aston Martin Lagonda president and group CEO, said: “From a trading perspective, 2019 has been a very disappointing year. Whilst retails have grown by 12%, our best result since 2007, our underlying performance will fail to deliver the profits we planned, despite a reduction in dealer stock levels.
“We are taking a series of actions to manage the business through this difficult period. This will include a cost saving programme alongside a focus on returning dealer stock levels to those more normally associated with a luxury company; winning back our strong price positioning is a key focus.
“The signs from the launch of the DBX are very encouraging and the order rate seen to date is materially better than for any of our previous models. Launch plans are progressing well and we are achieving all of our key operational milestones. Start of production remains on track for Q2 2020.
“Whilst we are disappointed with trading performance in 2019, our focus is now on revitalising the business, launching DBX and ensuring profitable growth in the medium-term.”
