Troubled Aston Martin loses over £100m in 2019

Aston Martin revealed yesterday that it lost over £100 million in 2019, news that saw its shares drop to their lowest value since its 2018 floatation, as the storied carmaker continues to struggle amid disappointing sales.

The company had planned to sell 7,300 cars last year, but managed only 5,862, underlining why the the company had been in such dire need of rescue when Canadian Formula 1 billionaire Lawrence Stroll led an equity injection of £182 million last month in exchange for a 16.7% stake.

The deal - under which Stroll becomes executive chairman - included plans to raise a further £318 million from existing investors - a total of £500 million - and was necessary to prevent Aston declaring bankruptcy for the eighth time in its 108-year history.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

"The rescue aims to ease Aston’s near-£900m debt pile," reports The Telegraph.

The company also said yesterday that Mark Wilson, the chief financial officer, will be leaving by the end of April by mutual consent.

Aston’s pre-tax losses totalled £104 million, an increase on the £68 million the year before, while its revenues plunged 9% to £997 million.

The James Bond car builder floated on the stock market in October 2018, and its shares have been on a steady decline since, but yesterday’s announcement saw them plunge 14% to 328 pence - 80% lower than their initial flotation price.

Despite the bad news, Chief Executive Andy Palmer was keen to assure investors that the January rescue had brought some stability. “The big difference between last year and this year is the strength of the balance sheet,” he said. “We’re in a very different place and have therefore an ability to properly... destock and that means get the balance right between supply and demand.”

Nevertheless, 2020 was expected to be another tough year, as the company “expects sales to dealers to be ‘materially lower’ again as it refocuses sales efforts on the level of customers and lowers dealership inventories,” The Financial Times reports.

“I’m not expecting 2020 to be an easy ride,” said Palmer. “We’re going to be taking some heavy medicine.”

–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Get your first six issues free–––––––––––––––––––––––––––––––

The company also cautioned that the coronavirus outbreak could add to its troubles, as consumer demand from China - which grew 28% in 2019 - drops, and supply chains are affected, although it hopes for a boost in sales from the release of the new Bond film, “No Time to Die”.

“Covid-19 has the potential to impact both the supply chain and customer demand in China and other markets. China was the company’s fastest-growing market in 2019 and represented 9% of total wholesales,” the company said.

The drop in demand is particularly worrying to Aston, says The Guardian, “particularly as it launches its new, make-or-break SUV, the DBX.” The company is building a new factory to produce the DBX.

Component supply was secure for now, Palmer said. “Bizarrely the planning for Brexit has allowed us to keep stock around us. It will be at least until the end of March before we see any kind of impact on the supply chain.”