Aston Martin Profit Drops Before Vital SUV Launch
Aston Martin Profit Drops Before Vital SUV Launch
(Bloomberg) --
Aston Martin Lagonda Global Holdings Plc reported lower third-quarter earnings as the luxury carmaker, battered by Brexit uncertainty and weaker economies, pins a sales revival to the launch of its first sport-utility vehicle later this month.
The company, whose shares have fallen 75% since an October 2018 initial public offering, reported a 51% drop in adjusted operating profit, according to a statement Thursday. The shares rose as the company cut its delivery targets for this year, which will help to lower inventory levels.
“The industry is in the midst of a slowdown and I’m happy that we’ve seen 13% sales growth year to date,” Chief Executive Officer Andy Palmer said in an interview. “We can see the next critical stage.”
Palmer is betting on the coming DBX SUV as the main driver of growth, as demand for some of its traditional sports models has stumbled. The DBX, priced at $190,000, will be launched in Beijing this month with production will starting in the second quarter of next year.
In the meantime, analysts have said the company may need to sell new stock to shore up its balance sheet -- a path obstructed by a shareholder resolution in June that restricted management’s power to issue stock without approval. In a separate hurdle, a further $100 million of financing depends on the company securing 1,400 orders for the DBX by June.
The company can service its debt and leverage will come down over time, Chief Financial Officer Mark Wilson said in the joint interview with Palmer.
Aston Martin shares advanced 6.8% to 446 pence as of 8:24 a.m. in London.
“All year, we have been working on reducing inventories,” Palmer said, adding that wholesale volumes have fallen even as retail sales advanced. Aston Martin had previously targeted range of 6,300 to 6,500 autos, as it seeks to lift annual output to 14,000 by 2023.
Aston Martin remains the worst performer among Britain’s top 350 stocks in the past year. Adjusted operating profit totaled 13.4 million pounds ($14.8 million) in the third quarter, down 51% from a year earlier, it said.
To contact the reporter on this story: Siddharth Philip in London at sphilip3@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper
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