Aston Martin
LONDON: Aston Martin, a luxury vehicle manufacturer
reported increasing losses in the first quarter on Wednesday, citing the company’s decision to halt manufacturing of its main models in preparation for the later this year launch of a new line of automobiles.
In early trading in London, shares fell more than 12%, but by 2:25 p.m., losses had been reduced to 6.4%.
Compared to the previous year’s loss of £57.3 million, the adjusted loss before tax nearly doubled to £110.5 million ($137.8 million). Reuters reports that analysts had predicted a first-quarter loss of £93 million.
Revenue dropped 10% to £267.7 million, while net debt rose 20% to £1.04 billion. Aston Martin’s enormous debt pile has long been a source of anxiety for investors, contributing to a significant drop in the company’s share price since its listing in 2018.
Analysts at Jefferies noted the “big miss across metrics,” including a 26% reduction in volumes.
Aston Martin announced Wednesday that the introduction of four new models in 2024 will drive “significant growth” in the second half of the year and beyond.
“Our first quarter performance reflects this expected period of transition, as we ceased production and delivery of our outgoing core models ahead of the ramp up in production of the new Vantage, upgraded DBX707 and our upcoming V12 flagship sports car which we’ve confirmed today,” the chairman of the board, Lawrence Stroll, said.
Stroll noted that Aston Martin took a “significant step” toward strengthening its balance sheet in the quarter, completing a refinancing with improved terms on five-year senior secured notes following a credit rating upgrade.
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“Aston Martin will be uniquely positioned with a fully reinvigorated core range of models by the end of the year,” according to a company statement.
Wholesale volumes fell 35% in the Americas, 30% in the United Kingdom, and 17% across Europe, the Middle East, and Africa. Asia-Pacific volumes fell 14%.
SUV wholesale sales fell 63% due to a “transitional ramp down in volumes ahead of the recently announced launch of the new model DBX707,” according to the business.
The casualty of interest rates
Hargreaves Lansdown’s head of money and markets, Susannah Streeter, described the company as “a casualty of the onerous effect of high interest rates.”
“Elevated car financing costs has dented demand for the luxury vehicles, showing that even rich aspirational shoppers aren’t immune to current economic headwinds. But the timing of new car launches has also left something to be desired,” Streeter said by email.
Aston Martin reiterated its full-year target for high single-digit percentage wholesale volume growth, and for gross margins to improve towards its longstanding 40% target.
The company is preparing to welcome new chief executive officer Adrian Hallmark, current leader of Bentley, in the fall. Hallmark will be its third new CEO since 2020.
Aston Martin’s results follow those of global automaker Stellantis on Tuesday, which also reported a sales slowdown as it prepares to launch a slew of new models this year.
by Wealthymilestone