Aston Martin issues profit warning after “very disappointing year”

aston_martin

Luxury UK auto brand Aston Martin Lagonda has warned that its full year profits are likely to be lower following a tough trading period.

The maker of James Bond’s favourite car, now expects adjusted earnings before tax and other costs to be £130m-£140m. That’s far lower than the £190m – £200m analysts had been expecting.

The company’s shares, which trade on the London Stock Exchange, were 13% lower at £4.51 following the latest trading statement.

Aston_martin_bond25
No Time To Die: A range of Aston Martins will appear in the latest Bond film in 2020.

Core sales rose

Core retail sales increased by 12% year-on-year and exceeded wholesale volumes leading to reduced dealer inventory, reversing last year’s trend.

However, core wholesales declined 7% year-on-year to 5,809. Aston Martin said the challenging trading conditions highlighted in November continued through the peak delivery period of December. This resulted in lower sales, higher selling costs and lower margins.

Marketing costs increased

Aston Marin also said it was affected by higher than anticipated retail and customer financing support. A weaker core model mix weighed on average selling price, with a shift towards its Vantage model.

It also reported higher marketing spend to support retail campaigns, particularly in the US.

“From a trading perspective, 2019 has been a very disappointing year”, Dr Andy Palmer, Aston Martin Lagonda President and Group CEO, said.

“Whilst retails have grown by 12%, our best result since 2007, our underlying performance will fail to deliver the profits we planned, despite a reduction in dealer stock levels.

“We are taking a series of actions to manage the business through this difficult period.

Cost savings planned

“This will include a cost saving programme alongside a focus on returning dealer stock levels to those more normally associated with a luxury company; winning back our strong price positioning is a key focus.

dbx_suv
Shifting gear: Aston Martin is pinning its hopes on its first ever SUV with the 2020 launch of the DBX.

SUV hope

“The signs from the launch of the DBX are very encouraging and the order rate seen to date is materially better than for any of our previous models. Launch plans are progressing well and we are achieving all of our key operational milestones. Start of production remains on track for Q2 2020.

“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.”