Aston Martin warns profits to almost halve after grim December

Aston Martin warned its annual profit would almost halve as tough trading conditions continued through its peak month of December.
The automaker’s wholesale volumes fell 7 percent in 2019 as the automaker sought to reduce dealer stocks, with Europe underperforming the rest of its markets.
Aston Martin expects 2019 adjusted earnings before interest, tax, depreciation and amortization of between 130 million pounds and 140 million pounds, compared with 247.3 million pounds ($325 million) a year earlier.
“From a trading perspective, 2019 has been a very disappointing year,” CEO Andy Palmer said.
The company now expected an adjusted EBITDA margin of 12.5 percent to 13.5 percent in 2019, down from 22.6 percent in 2018, Palmer said.
Aston Martin said it was reviewing its planning for 2020, which includes a cost-cutting program, and added that it was still in talks with investors for a potential equity investment.
Last month, industry magazine Autocar reported that Canadian billionaire Lawrence Stroll is planning a bid for the company.
Aston Martin’s retail sales grew 12 percent in 2019, helped by a reasonably good performance in the U.K.
“Since the election, we have a great degree of certainty, which is certainly welcome,” Palmer said, referring to a sweeping victory by British Prime Minister Boris Johnson’s Conservatives in a national election on Dec. 12.
The company has made progress reducing inventory, which is still “a bit higher than we would like,” Palmer said.
Aston Martin said in 2019 it had to boost customer financing support and increase marketing, especially in the U.S., which undermined its cost-savings plan.
The rally in the pound in December has also become an obstacle as it reduces the value of sales from abroad.
Aston Martin has turned out to be frustrating investment for shareholders who bought into the initial public offering in late 2018. The shares fell 57 percent in the course of 2019. By contrast, Ferrari’s stock returned 70 percent last year, highlighting the diverging fortunes between the two supercar brands.
Aston Martin cut its forecast for wholesale volumes and profit margins in July, and reduced its volume forecast again in November, citing weak U.K. and European markets and subdued demand for its Vantage model.
SUV focus
Aston Martin has focused its efforts on the DBX SUV, which it unveiled last year to break into a lucrative yet increasingly crowded market.
The DBX sits at the heart of plans to more than double annual output to 14,000 autos by 2023.
About 1,800 orders have been booked for the DBX since its launch in November, the company said, meeting a condition it had to obtain a follow-on loan for $100 million.
“The DBX is the one bright spot,” Palmer said. “The order rate is materially better than any other car that we have ever launched before,” he told Reuters.
Bloomberg contributed to this report
Source: autonewscom