Luke Wilkinson 2019-07-31 11:43
Aston Martin’s financial report for the first half of 2019 confirms a £78.8 million loss, due to sales slump and development costs
Aston Martin has confirmed a pre-tax loss of £78.8 million for the first six months of 2019, as a result of the brand’s recent slump in sales across the UK and Europe. Net losses stand at £35.2 million, while the British brand’s market value has more than halved to £1.8 billion.
The news follows Aston Martin’s recent drop in market value, which saw the company’s share prices fall by more than 20 per cent. The price is currently down to around £5 per share, against a value of £19 when the firm was originally floated on the London Stock Exchange in October 2018.
Aston Martin’s sales in the UK plunged by 22 per cent during the second quarter of 2019, while sales in the rest of Europe, the Middle East and Africa have seen a slump of 28 per cent. As such, Aston Martin has readjusted its sales targets for the year, with plans to sell between 6,300 and 6,500 vehicles by the end of 2019.
Despite the drop in sales for UK and Europe, sales are on the increase in the Americas and throughout the Asia Pacific region, with the former climbing by 83 per cent and the latter by 17 pe rcent. The brand is also keen to stress that its bank balance has increased by £55 million in comparison to the second half of last year, with a sum of £127 million.
However Mark Wilson, Aston Martin’s Chief Financial Officer, remains open to the prospect of attracting money from outside investment. He said: “We recognise there are headwinds and continuing uncertainties, and we keep our financing arrangements under regular review to ensure that we have the appropriate resources around us.
“We’re used to running this business in a lean fashion, but if we require some additional financing from sources with which we’re familiar (in particular in the debt market) to maintain that capacity, then that’s what we’ll go out and do.”
When quizzed about the impact Brexit could have on the company’s finances, Aston Martin’s President and Group CEO, Dr. Andy Palmer, said: “In the case of a deal, we are prepared and relatively well insulated – not immune – but relatively well insulated. I’ve made it very clear that we do not want a no deal Brexit because of the disruption it would cause.
“At a March Brexit, we were coming from a position of very low stock, both at the factory and on the shelves, so building stock and inventory to build resilience was very important. The factory has since built stock and we expect as we go through to an October Brexit, we’re in a position of elevated stock already, so there isn’t that same emphasis on building resilience.”
Aston Martin anticipates that the forthcoming DBX SUV will be the company’s saving grace, becoming the most popular Aston Martin model and doubling production in the process. It will play on the current market trend for premium performance SUVs, currently dominated by the Bentley Bentayga and Lamborghini Urus, with a starting price of around £140,000.
Palmer said: “The DBX is important. Our plan is to widen our portfolio and deepen our geographical coverage in order to be better able to withstand economic downturns. From that point of view, having an SUV in a segment of the market that is clearly important, and growing, and global are all proofs of that we made the right choice.
“Our initial investigations have shown a high degree of acceptance for the [DBX], even after disclosure of the price, so we think the price is in a good place. In the United States, 64 per cent of the people who viewed the DBX showed a very strong interest, and in China that number is 68 per cent, which are some of the strongest results I’ve ever seen.”
Aston Martin’s financial recession will not affect any future product releases, and the company remains confident in its ability to weather the slump. It expects that both sales and profits will increase towards the end of 2019 and into the first half of 2020, alongside the release of the DBX.
Dr. Palmer closed with: “This has been a difficult period, and clearly we’ve seen the market reaction, but I’m confident that we are taking the right actions and that we can successfully deliver our strategy.”
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