Aston Martin's share price has taken another hit after the firm announced a pre-tax loss of £78.8 million in the first half of this year.
The price is now below £5 a share for the first time, hitting a low of £4.40 as trading opened this morning before rebounding to £4.88 after Aston held a press conference.
The losses were blamed on lower-than-expected sales in Europe and expansion costs – but company boss Andy Palmer insists the firm’s ambitious growth plan remains on track.
The publication of Aston Martin Lagonda’s latest results came a week after the firm issued a profit warning in which it cut its wholesale forecasts. That first caused shares in the company to dive to less than £6 per share, compared to £19 when the firm first floated in October 2018.
Aston’s retails sales in the first half of 2019 were up 26% year-on-year, with growth in the USA and China off-setting a steep decline in the UK and Europe. Wholesale volumes – cars being distributed to dealers – were up 6% year-on-year.
Aston boss Palmer admitted that “this has been a difficult period and we’ve clearly seen the market reaction”. But he noted that the firm's sales were up year-on-year, and added: “I’m confident we are taking the right actions and that we can successfully deliver our strategy.”
While sales were up, driven largely by demand for the Aston Martin Vantage and DBS Superleggera, Aston’s revenues dipped in part because it sold fewer high-price Special models, reducing the average selling price of its cars. The firm anticipates sales of its Specials will increase later this year, particularly with the ultra-limited run DB4 GT Zagato Continuation due in the fourth quarter.
In its profit warning last week, Aston Martin revised planned wholesale volumes for the full year. From 7100 to 7300 units originally forecast when it published its annual results in February, the target has now dropped to 6300 to 6500 units.
Palmer said that reduction was a result of the firm being “responsible and disciplined in the approach to our balance sheet”, and was designed to ensure that supply of the firm’s cars did not exceed demand, which could force dealers to offer discounts.
He added: “Retails are up, wholesales are up, market share is up – we’re just not as up in wholesale as we’d like. In order to protect the market position of the brand we thought it right and proper to cut the wholesale [numbers] to ensure that we don’t simply make the mistakes of history and have to discount cars to get them away.”
Aston’s profits were hit by a one-off £19 million provision for a ‘doubtful debt’ charge, relating to the planned sale of some intellectual property rights in the previous year.
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There's an odd bit missing from all this bad news. I get that sales are up, etc, etc but to issue a profit warning against future sales indicates that they likely discounted to get there. That in part explains the reduced selling price rather than "less special versions" as reported I'd venture.
What vexes me is why the ever-too-chatty Palmer and henchman Simon Sproule are not saying is the Welsh factory investment and product R&D must me goggling up cash. That's odd, for although it must be budgeted for, it could be used to explain a little of these disastrous results. If that's not the reason at all, because it's a budgeted expense, then the market has rightly bitten them.
They IPO'd for raising investment cash and their investors have next-to-no confidence in their ability to deliver it. This has been a shambles - Aston buyers are savvy, informed and often C-Suite - like the dark days of weak 70s Jaguar mismanagement there's an implicit risk that they won't want to buy a product from a brand led by Palmer & Co.
The visual horror of Cullinan and Bentayger might allow some enthusiast goodwill if DBX looks OK but if the product isn't best-in-class I fear they are screwed. The problem is RR and Bentley have experience of heavy luxurious cars and Aston doesn't. It's a worry.
Superb post.
Excellent post.
Thing about the RR and Bentley is they're not an absolute horror on the outside, just very much their own respective brand looks. But on the inside? Wow, both look absolutely luxurious. An interior of the quality that Aston have never done before.
I think the DBX will be more in keeping with the Porsche, Lamborghini and Range Rover offering a high quality but fairly standard interior. My worry is that the mess of an interior we see in the current cars is carried over. Aston needs better than the current designer is designing.
Share price.
Currently their shares are under £5 per share. On launch they were £19. Not even a year later and their nearly worth a quarter of launch. In fact, at times today they have been less than a quarter of their launch price!
DB11 is borderline, but the DBS seriously missed the mark. V8 Vantage is a mess of a design, inside and out. They can't even get round steering wheels but have an awkward shape instead. Like a bent 50p!
Aston needs to rethink the designer they currently have as he's not delivering. And if Palmer can't see that then he too needs to go.
Why? Because they're betting the farm on the DBX and if it follows the mistakes of the DBS and Vantage it won't get the sales it deserves. Or Aston needs.
Symanski wrote:
What are you, an arse hole?
Insults?
How very childish of you.