Aston Martin revenue plummets amid ‘challenging period’ for luxury car firm
Aston Martin more than quadrupled its operating loss for the first six months of 2020 as the luxury car firm reported a steep plunge in sales and revenue during the pandemic.
The results
Total retail sales sank 41 per cent to £1.77bn in the six months to June, down from £3bn in the same period last year. The car sold just 1,770 cars over the period.
Total wholesales plummeted 63 per cent year on year to £895m, after Aston Martin cut the inventory at its dealers by 869 cars. The firm sold just one car from its Special range over the half-year — a DB5 Goldfinger Continuation — compared with 36 from the range in the first half of 2019.
Revenue plunged 64 per cent to £146m, down from £406m in 2019. The company said this was largely due to volume decline.
Aston Martin’s operating loss swelled from 38.9m to £159.3m, as the pandemic ate into sales during the first half of 2020.
It also identified ccounting errors at its US business that led the luxury carmaker to understate the scale of last year’s losses.
Pre-tax losses in 2019 were understated by £15.3m due to the accounting errors. The revision means Aston Martin made a loss last year of £70.9m compared with the £55.6m initially reported.
Net debt at 30 June dipped to £751m, down from £988m in December.
The company received an injection of £688m of new equity from Yew Tree Consortium and other investors to shore up its balance sheet.
Why it’s interesting
Aston Martin is undergoing a complete reset this year “to enable it to operate as a true luxury company”. The firm said the overhaul will involve reducing core wholesales to rebalance supply to demand, which will result in a negative impact to its financial results.
This morning, the company announced that former AMG boss Tobias Moers will start as new chief executive on 1 August.
Earlier this year a consortium backed by Stroll led a £536m bid for the luxury carmaker, which has struggled since listing in October 2018. The raise, which gave Stroll 25 per cent of the company, was part of Aston Martin’s reset strategy over the coming financial year.
The firm said trading remains “challenging”, with its site at Gaydon, Warwickshire set to resume manufacturing at the end of August — later than originally planned.
David Madden, market analyst at CMC markets said: “The poor numbers are hardly surprising in light of the disruption caused to logistics, manufacturing and sales because of the pandemic.
“The company was under pressure for some time before the Covid-19 crisis, so the pandemic really compounded the group’s problems.”
Shares were up 7.8 per cent to 53.9p in morning trading despite the news.
What Aston Martin said
Lawrence Stroll, Aston Martin executive chairman, said:
“This has been a very intense and challenging six months… Obviously, it has been a challenging period with our dealers and factories closed due to Covid-19, in addition to aligning our sales with inventory with the associated impact on financial performance as we reposition for future success.
However, I have been most impressed that through this most challenging of times we have been able to reduce our dealers’ sports car inventory by 869 units.
We have also taken action to right-size the cost base in alignment with our plans and raised £688m of new equity from my consortium and other investors, to strengthen the balance sheet and improve liquidity. Throughout this time our primary concern has been the safety of our colleagues and I am full of admiration for how they have responded to the many challenges Covid-19 has presented.
“Our ambition for the company is significant, clear and only matched by our determination to succeed, to transform Aston Martin and capture the huge and exciting opportunity ahead of us.
“We have already made great progress in the first 90 days I’ve been in the business. There is still much to be done.”