Aston Martin sank to a loss in its third quarter as demand for its luxury cars dried up, it revealed today, but shares still rose 10 per cent as it looked ahead to sales-boosting new models.
James Bond’s favourite car maker found little love from other buyers as it swung to a loss before tax of £13.5m in the three months to the end of September. That compared with a £3.1m profit this time last year.
It came as buyer demand stagnated, with revenue falling 11 per cent year on year to £250.1m.
Aston Martin only built 1,497 cars over the quarter, a 16 per cent fall from last year’s 1,776 units.
Net debt stood at £800m, up significantly from December 2018’s £560m but marginally down from £811m a year ago.
Why it’s interesting
Aston Martin cited softness in the UK and EMEA markets, where sales fell 22 per cent and 17 respectively, but said they performed better in the second quarter.
It also warned that total wholesale volumes for the year will now be lower than guided to, but “within the range” of market expectations.
The car manufacturer, whose shares have fallen 77 per cent since its public market debut a year ago, added that it is taking action to control costs by implementing an efficiency programme.
Shares picked up 9.3 per cent to 456.4p in early trading as Aston Martin said its first production trial of the DBX is now complete. Orders for the car have already being placed at “confidential” customer events and a second trial is set to begin later this month.
Aston Martin raised $150m last month to help pay for the car’s development, with market watchers balking at the extremely high 12 per cent interest rate.
The DBX launch is part of an ambitious plan to release seven cars inside seven years, with Aston Martin warning today that demand for its Vantage model is waning.
“The segment of the market in which Vantage competes is declining, and notwithstanding a growing market-share, Vantage demand remains weaker than our original targets,” the firm said.
What Aston Martin said
CEO Andy Palmer said:
Tough trading conditions, particularly in the UK and Europe, persist and whilst retail sales have grown 13% year-to-date, wholesale volumes remain under pressure.
We remain pleased with the performance of DB11 and DBS Superleggera, however, the segment of the market in which Vantage competes is declining, and notwithstanding a growing market-share, Vantage demand remains weaker than our original plans.
As a consequence, total wholesale volumes are down year-on-year as we balance growth, brand positioning and dealer inventories. Additionally, we are taking actions to control our costs through an efficiency programme.
DBX development is progressing well, with the global launch in Beijing on 20 November. The first production trial build has been completed, and St Athan commissioned, with start of production due in Q2 2020 as planned.
We are delighted with the early reception the car has received from customers and initial orders are being placed at the confidential events.
The launch of Vantage AMR and Roadster are also on track, and all 19 DB4 GT Zagato Continuations are planned to be delivered by the end of this year. We are working hard to deliver the year as we head into our peak trading season.