Aston Martin plunged to a loss of more than £100m last year as sales fell and it warned of possible disruption from the coronavirus outbreak, underlining the struggling carmaker’s need for a bailout led by the fashion mogul Lawrence Stroll.
The luxury sports car manufacturer also announced on Thursday that its chief financial officer, Mark Wilson, would step down by the end of April, after a year that left the company facing a cash crunch threatening to push it into bankruptcy for the eighth time in its 107-year history.
Aston Martin crashed £104m into the red in 2019, a 53% increase year on year and equal to a loss of nearly £18,000 on every car sold during the year.
Revenues slumped by 9%, to £997m, while the carmaker’s debt pile rose to £876m.
Its shares fell 14% to hit a record low of 328p after the announcement. That left the company worth less than a fifth of its value at the time of its stock market float in October 2018, when shares were priced at £19.
Shortly after the float, Aston Martin had forecast 2019 sales of 7,300 cars, but it actually achieved only 5,862.
And the company warned that this year’s sales would be even lower as it tries to cut the number of cars held by dealers. It also warned that the Covid-19 outbreak could hit its supply chain and sales.
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The UN agency advises people to:
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The carmaker said it had already suffered disruption to some components from China but that it had secured supplies until the end of March. However, some analysts said the bigger worry is the effect on sales in the key Chinese market, particularly as it launches its new, make-or-break SUV, the DBX.
Aston Martin’s Chinese sales rose by 28% during 2019 – while sales in the UK and Europe fell – indicating that the quarantine conditions in place in many parts of China will weigh heavily on the carmaker’s revenues. Jaguar Land Rover recently said it was making “zero” sales in China and official Chinese car sales data showed a 92% decline in sales in the first two weeks of February.
Aston Martin said: “Covid-19 has the potential to impact both the supply chain and customer demand in China and other markets. China was the company’s fastest-growing market in 2019 and represented 9% of total wholesales.”
The turmoil in the Chinese market comes as Aston Martin had anticipated a sales and marketing boost from the new James Bond film, which features three of its cars.
The rescue share issue led by Stroll, the Canadian billionaire who made his fortune from backing fashion brands such as Michael Kors, was “fully committed and underwritten” at £4 per share, the carmaker also announced, even though Aston Martin’s share price has fallen rapidly since the bailout was announced at the end of January. The share issue and a £182m cash injection from Stroll aim to raise £500m in total.
However, analysts questioned whether the new funds would be enough to sustain the company, particularly with the increase in debt levels.
James Congdon, an analyst at Quest, said the company was “burning cash, generating an operating loss, with possible restructuring costs ahead of it.”
He added: “The rights issue has not drawn a line under the uncertainty in this business.”
Andy Palmer, Aston Martin’s chief executive, said 2019 had been “an extremely challenging period for the company.” He added: “ We were unable to generate the revenue and profits we had originally planned.
“We have revised our business plan to reset, stabilise and de-risk the business, positioning it for controlled, long-term profitable growth.”
Aston Martin also took a £39m impairment after pausing work on the Rapide E, its first all-electric car. It said that while work on the new model is “substantially complete” and the launch had been due this year, the company had put the project on hold until 2025 to conserve cash.
