Analysts have suggested Aston Martin Lagonda Global Holdings PLC (LON:AML) needs to change who’s in the driving seat or go private again as the luxury car-maker unveiled a second profit warning in six months on the same day that rivals Rolls-Royce and Bentley reported record sales.
Aston Martin said that while retail sales rose 12%, core wholesales tumbled 7% and discounting and customer finance needs will mean that profits will be £130-140mln versus £247mln last year.
Orders for its new SUV have topped 1,800 since the model was launched in December for delivery next summer.
Equally, while the year ended with a cash balance of £107mln, expected net debt could be as high as £885mln or almost seven times earnings.
Meanwhile, BMW-owned Rolls-Royce Motor Cars’ own new SUV, the Cullinan, was launched in 2018 and has helped sales accelerate 25% to 5,152 last year.
On the back of this, Rolls said it was investing a “significant” amount in staff at its Goodwood factory.
Over at a third British luxury marque, Bentley, the annual numbers showed a return to profitability as revenues rose 5%.
The Volkswagen-owned carmaker recorded sales of 11,006 last year as its new Continental GT Convertible model proved popular.
(James) Bond market
Aston Martin’s numbers are “pretty horrid”, said analyst Neil Wilson at Markets.com, and the net debt figure is a “major concern”.
Wilson felt the only good news in the update was the DBX order book rising to a level that means Aston can unlock an additional US$100m in 2022 bonds.
“This is a drop in the ocean though and for sure Aston needs to raise cash in some way. The bond market looks unpalatable but even an equity raise could prove tricky.
“The rationale to go private is impossible to resist – the brand still has the cache to make it appealing.”
Recoiling in horror at the 15% interest rate at which the new debt is about to be accessed, Russ Mould at AJ Bell said this was “not really a good reason for celebration”.
New CEO needed?
Pondering the big question of why wealthy people aren’t buying its luxury cars – although Aston Martin’s absolute number of sales are higher than those from Rolls – Mould says: “Working for this company should be a marketeer’s dream but the team responsible for attracting customers clearly haven’t got the formula right,
“Aston Martin has previously talked about relying too heavily on its ties to the James Bond franchise.
“Once the latest film had been released, the hype died down and so did the number of people talking about the brand. Efforts to refresh the brand with more of an emotional angle don’t appear to have had the desired effect.”
“There is plenty of competition for luxury cars and it seems that Aston Martin is being left behind,” Mould says, noting Rolls-Royce’s highest annual sales in its 116-year history.
With the shares down three quarters from their 1,900p IPO price from October 2018, Aston Martin is “one of the biggest flops on the stock market in living memory” Mould adds.
“Perhaps it is time to get someone new in the driving seat of Aston Martin?”