Aston Martin has warned that it is selling fewer of its special edition higher-priced cars, prompting a further sell-off of the company’s shares.
The British carmaker, which only last week issued a shock profit warning that sparked a share price fall of more than a quarter, on Wednesday reported a pretax loss of £78.8m in the six months to the end of June. That compares to a £20.8m profit in the same period a year earlier.
Aston Martin shares, which floated on the stock market at £19 a share last October, fell a further 12% on Wednesday to a new low of £4.98. The 106-year-old company behind James Bond’s favourite car has lost almost three-quarters of its stock market value since flotation – falling from £4.3bn to £1.1bn.
Sales to dealers in the UK slumped by 17% in the first six months of 2019, and by 19% in the rest of the Europe, Middle East and Africa. Aston Martin slashed its annual sales forecast from an expectation of 7,100-7,300, to 6,500, reflecting low orders from car dealers concerned that they would not be able to sell them. However, sales to dealers in the US and Asia Pacific rose 6% in the first half.
Retail sales rose by a quarter.
“We are disappointed that our projections for wholesales have fallen short or our original targets, impacted by weakness in two of our key markets as well as continued macro-economic uncertainty,” Andy Palmer, Aston Martin’s chief executive, said. “Accordingly, we have taken action to reduce wholesale guidance for 2019.
“We are also improving efficiency across the business, whilst protecting the brand.
“We are keeping a profile where demand exceeds supply, which is key for a luxury company. In order to protect the position of the brand we thought it right and proper to cut wholesale [forecasts] and don’t end up making the mistakes of history and discounting cars to get them away.”
Michael Hewson, chief market analyst at CMC Markets, said Aston Martin’s figures were “nothing short of a disaster”.
“The first half as the pre-IPO optimism of late last year, has become a distant memory, with investors undergoing a significant reality check,” Hewson said. “The share price has lost over 75% of its IPO valuation, and while we knew that this week’s results would be bad, the loss of confidence in the management of the business from investors has been startling.”
Palmer, who survived a revolt against his £1.2m pay, said that the company has so far only had to spend a “negligible” amount on Brexit preparations.
Palmer, who previously described the government’s Brexit strategy as “laughable”, insisted that the industry needed certainty. “We do not want a no-deal Brexit because of the disruption that causes with issues at the border,” he said. “We will live with it if that is what it is. The car industry is pretty resilient once it knows what it is dealing with. We need certainty.”
On Wednesday the UK’s car industry body, SMMT, said that investment in Britain’s car industry slumped to a “pitiful” £90m in the first half because of fears over Brexit. Over the last seven years average annual investment in research and development has been £2.5bn to £2.7bn.
Palmer joined Aston Martin in 2014 and took it from a loss-making business on the edge of bankruptcy to a stock market listing last October. After disappointing investors he is hoping the launch of the company’s first sports utility vehicle – called DBX – later this year will revive sales.
