Aston Martin CEO Woos Investors With Supercars at Goodwood Gala
Aston Martin CEO Woos Investors With Supercars at Goodwood Gala
(Bloomberg) -- After a share-price slump that’s wiped out close to half its value since a listing last October, Aston Martin Lagonda is hoping that the informal setting of the Goodwood motor-racing gala will help win over investors who thought they were buying into another Ferrari NV.
The Festival of Speed, a four-day celebration of sports and high-performance autos held in parkland near England’s south coast, offers a chance to lay out the group’s strategy in a less formal manner than the usual results presentations and slide shows, and with a lineup of the company’s supercars to illustrate the point, Chief Executive Officer Andy Palmer said in an interview.
“We have a number of important people in the financial community coming, including bankers and investors,” Palmer said, adding that the focus will be on explaining his so-called Second-Century Plan, which calls for a capital-intensive rollout of seven new models over seven years.
Aston Martin is struggling to convince the market that it can match the success of Ferrari in making the leap from niche player to successful listed company as its stock languishes 45% below the price of last year’s initial public offering. While the group aims to double output to 14,000 autos by 2023, growth is effectively on hold until the DBX sport utility vehicle debuts next year.
“The narrative of the plan, the DBX, de-risking and the luxury market is not a story you can tell through newspaper headlines, so we will take every opportunity, every touch point with investors,” Palmer said, adding that the task hasn’t been made any easier by the fact that the company is the first automaker to feature on Britain’s benchmark FTSE-100 index in 30 years.
With its focus on sports and racing models, the Goodwood festival also provides a unique opportunity to showcase Aston Martin in an environment where its autos can demonstrate their prowess on the site’s famous hill-climb track.
“It’s very useful to be able to deliver the narrative with props -- the actual cars on the track,” he said. “It’s better than a traditional motor show in that we can demonstrate the dynamic credentials of our cars.”
Palmer said the share price decline doesn’t mean investors have lost confidence, and that the bulk of backers from the company’s listing remain. Shorting of the stock has diminished and the share price should begin to benefit, he said, especially as the DBX moves toward its sales debut next year.
More Believers
“When we IPO-ed people bought in at 19 pounds and most of those are still here,” he said. “Clearly the Second Century plan is ambitious and up to a point you either believe it or you don’t. But the closer we get to the DBX the greater the proportion of people who will believe.”
Aston Martin was hit by its first new sell recommendation in eight months on June 20 as Panmure Gordon said the IPO had rewarded selling shareholders while leaving the company without the funds to match Ferrari. It gave the stock an 802 pence price target, 24% below the current level.
Aston Martin, based in Gaydon, England, aims to build between 7,100 to 7,300 cars this year. Palmer said the second quarter has been much like the first, with earnings to be weighted toward the end of the year.
The trade war between the U.S. and China has had no impact at all, the CEO said, with no evidence of the softness in sales in the Asia nation that has affected some producers in the premium and mass markets.
Should clashes between the U.S. and European Union escalate into auto tariffs, ultra-luxury carmakers are likely to be equally hit, since all are European, Palmer said, so that subsequent price hikes wouldn’t favor any one company.
Aston Martin is continuing to work on plans for coping with a no-deal Brexit, but Palmer said it gets only 17% of sales from mainland Europe and 25% from the U.K., giving it a comparative advantage over the likes of Ferrari if U.K.-EU tariffs were introduced. A collapse in the pound would also boost exports.
The former Brexit deadline of March 29 provided a dry run for addressing supply-chain disruption, with parts imported through Portsmouth and Immingham as well as Dover, and stocks built up to five days of production from two or three. The extra inventory hasn’t been fully run down but will need building up if an un-negotiated split looks likely, Palmer said.
To contact the reporter on this story: Christopher Jasper in Goodwood, England at cjasper@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Andrew Noël
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