Coronavirus could dent demand for 007 luxury car maker Aston Martin: reaction

Aston Martin Lagonda has warned that the coronavirus outbreak could hit demand and supply in its key Chinese market as the luxury sports car maker posted widening annual losses.

Aston Martin recently displayed its latest model, the all-important DBX SUV, in front of Edinburgh Castle. Picture: Contributed

The group confirmed it has seen some disruption to supply of components from China, and warned of a possible impact on the overall supply chain and customer demand.

China was its fastest-growing market last year and accounted for about 9 per cent of the total wholesale sales supply.

But the group – known for making James Bond’s cars of choice – gave assurances that it has secured supply until at least the end of March and had not yet seen any impact on production.

Full-year results showed pre-tax losses widened to £104.3 million in 2019, against losses of £68.2m the previous year, while the group also confirmed plans for a £500m investor cash call as it seeks to secure its future.

Aston Martin said sports car wholesales are expected to be “materially lower” in 2020, which will affect first-half sales. It added that underlying earnings will be “almost entirely” weighted to the final six months due to deliveries of its all-important DBX SUV and special models.

The group is overhauling the business and cutting costs to turn around its performance, while also selling a £182m stake to a consortium led by a Canadian billionaire as part of a major fundraiser.

It will raise a total of £500m through the group’s investment as well as a £317m rights issue supported by major shareholders.

A consortium led by Lawrence Stroll, owner of Formula One team Racing Point, has purchased a 16.7 per cent stake, with the option of increasing that to 20 per cent once the rights issue takes place.

Challenging

Andy Palmer, Aston Martin Lagonda president and group chief executive, said: “2019 was an extremely challenging period for the company.”

But he added: “We have revised our business plan to reset, stabilise and de-risk the business, positioning it for controlled, long-term profitable growth.

“We are focused on turning around performance, restoring price positioning by operating a pull versus push model, reducing dealer inventories to a luxury norm and delivering a more efficient operational footprint.”

Meanwhile, the group announced that Mark Wilson was stepping down as chief financial officer “no later than 30 April”. He will remain available to the group to assist with transition in the period through to the end of June.

Aston said the board had initiated a process to appoint a replacement CFO and would provide an update once that had concluded.

CMC Markets UK analyst David Madden said: “Aston Martin cautioned the coronavirus crisis has the potential to impact demand as well as supply chains in China as well as other countries. This is very worrying as the firm’s star performer is right in the firing line of the health crisis.

“The Aston share price has had a rough ride since it floated on the stock market in October 2018. Luxury brands tend to hold up better than other middle-to-lower brands during an economic slowdown… but Aston Martin is feeling the pain nonetheless.”