Aston Martin shares go into reverse amid mounting losses and coronavirus worries
27 February 2020, 11:34
The luxury car firm makes 9% of its wholesales in China.
Aston Martin Lagonda has seen shares tumble amid a warning over possible disruption from coronavirus and as it revealed another senior exit as annual losses mounted.
Shares in the luxury carmaker dropped 14% after it said chief financial officer Mark Wilson will step down by the end of April following a dire year that left it nursing widening losses of £104.3 million in 2019.
This compared with losses of £68.2 million the previous year.
It said sports car wholesales are expected to be “materially lower” in 2020, which will affect first-half sales.
Aston Martin – known for making James Bond’s cars of choice – also cautioned that the coronavirus outbreak could hit demand and supply in China – its fastest-growing market, which accounts for 9% of total wholesales.
The group confirmed it has seen some disruption to supply of components from China, but said it had secured supply until at least the end of March and had not yet seen any impact on production.
Automotive expert Christian Stadler, professor of strategic leadership at Warwick Business School, said Aston Martin was right to flag potential coronavirus woes and said the outbreak could see the sector “grind to a halt”.
He said every car contains around 30,000 different parts, many of which come from China or contain components that do.
He said: “The Chinese market for new cars had already started to slow along with the economy and since the coronavirus outbreak we have seen empty show rooms in China. People are not going out to buy cars.
“If that carries on much longer growth within the global car industry could grind to a halt.
He added: “If factory shutdowns continue, pressure will grow to find parts from elsewhere – with a third of all car parts being manufactured in China, finding the capacity to make them elsewhere will be no easy task.”
Aston is overhauling the firm and cutting costs to turn around its performance, while also selling a £182 million stake to a consortium led by a Canadian billionaire as part of a major fundraiser.
It will raise a total of £500 million through the group’s investment as well as a £317 million rights issue supported by major shareholders.
A consortium led by Lawrence Stroll, owner of Formula One team Racing Point, has purchased a 16.7% stake, with the option of increasing to 20% once the rights issue takes place.
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.”
The group has been forced to seek an equity injection less than 18 months after making its stock market debut.
Investor Mr Stroll is taking on the role of executive chairman, replacing Penny Hughes, as part of the deal.
Aston has been knocked by weak sales of its Vantage model, as well as a poor performance across its vehicles in Europe and the UK.
Revenues dropped 9% overall in 2019, to £997.3 million.