Aston Martin is facing yet more pain and questions about its future after a first-half loss added to a difficult week in which the British luxury carmaker revised downward planned vehicle sales.
Since its stock listing in October, the manufacturer has struggled to find its footing as a publicly-traded company. Aston Martin shares are now worth less than a quarter of what they were when it went public 10 months ago. The stock plunged as much as 22 per cent on Wednesday after the company reported a first-half operating loss. The shares were trading at 4.52 pounds as of 9:24 a.m. in London, compared with 19 pounds at their debut in October. Aston Martin is now the third-worst performing stock in the UK mid-cap FTSE 250 benchmark this year.
The challenges and a share price in free fall have prompted speculation about the carmaker raising more funds and becoming a takeover target.
“It’s been a tough time for all of us, but we still believe that what we’ve done is the right thing for the brand,” Aston Martin CEO Andy Palmer said Wednesday on a call with reporters.
Last week, Aston Martin cut its outlook on sales to dealers by more than 10 per cent, pushing shares sharply lower. The automaker reported a first-half adjusted operating loss of 35.2 million pounds ($43 million), compared with a 64.4 million pound profit last year.
Shares halve
The results compounded the sense of malaise with the company citing lower vehicle pricing and higher costs of expansion. Since the day before its July 24 warning, its shares have more than halved.
The developments have put Aston Martin’s market valuation of 1 billion pounds close to converging with its debt level of 723 million pounds. To fix its issues, the company should consider a cut to its midterm outlook or increase funding with a rights issue of as much as 500 million pounds, Bank of America Merrill Lynch said Tuesday.
The challenges may also see the company be approached by a strategic buyer, such as InvestIndustrial, one of two of Aston Martin’s largest shareholders, the bank said. Daimler AG also holds a small stake.
“If we require some additional financing from sources with which we’re familiar, particularly in the debt market to maintain that capacity, then that’s what we’ll go out and do,” Chief Financial Officer Mark Wilson said Wednesday on a call.
The results are another blow in the automaker’s struggle to convince investors that it can make the transformation from niche player to a successful listed company, and deliver on a promise to take on supercar maker Ferrari. Aston Martin listed in October at 19 pounds.
Much of Aston Martin’s future will depend on the successful launch of the manufacturer’s first SUV model, the DBX, next year. The car will be built at a new plant in St. Athan, Wales, and is crucial to reach a goal of lifting annual production to 14,000 vehicles by 2023. Last year, sales to dealers amounted to 6,441 cars.
AutoNews contributed to this report.
