Aston Martin issues fresh profit warning as car sales drop
Luxury automaker to draw down $100m of debt as it cautions over deterioration in trading
Aston Martin has warned on profits again and will draw down $100m of debt as it weighs options to raise further finance to steady the crisis-stricken luxury carmaker.
Its earnings margin for 2019 will be 12.5-13.5 per cent, below the already-lowered 20 per cent it said last summer, while adjusted earnings before interest tax depreciation and amortisation will be £130-140m, below analyst expectations of £200m.
“The challenging trading conditions highlighted in November continued through the peak delivery period of December resulting in lower sales, higher selling costs and lower margins,” said chief executive Andy Palmer.
Aston blamed higher marketing costs, lower than expected sales and a drop in its average selling price, as well as foreign exchange headwinds, for the latest deterioration in its trading. Car sales fell 7 per cent to 5,809.
The company has struggled since its initial public offering in late 2018, with shares losing three quarters of their value.
On Tuesday, Aston said it plans to draw down $100m in high-interest debt over the next four weeks, in addition to the $150m it raised in a September bond sale.
The debt, which attracts 15 per cent interest, was attached to the first raise and was conditional on the group booking 1,400 orders for its DBX sport utility vehicle.
Orders since the vehicle was unveiled in November have reached 1,800, Aston said.
In late December the FT reported that Aston is in talks with several investors about raising additional financing, including a potential equity injection. The company subsequently confirmed the reports, and on Tuesday said it is still “in discussions with potential strategic investors which may or may not involve an equity investment into the company”.
Mr Palmer added: “Whilst we are disappointed with trading performance in 2019, our focus is now on revitalising the business, launching DBX and ensuring profitable growth in the medium-term.”