Autos

Aston Martin swings to third-quarter loss as volumes drop

Key Points
  • Luxury British carmaker Aston Martin swung to a third-quarter loss, warning full-year wholesale volumes would be lower than previously guided.
  • Volumes to dealers fell 16% to 1,497 cars in the three months to the end of September.
Exhibition of Aston Martin DB11 during the Turin Motor Show 2018.
Stefano Guidi | LightRocket | Getty Images

Luxury British carmaker Aston Martin swung to a third-quarter loss on Thursday, saying its full-year wholesale volumes would be lower than previously guided after slumping demand in Europe and Asia.

Volumes to dealers fell 16% to 1,497 cars in the three months to the end of September as demand in Europe, the Middle East and Africa area dropped 17% and Asia was down by a third, hit by weak demand for the company's Vantage model.

The 106-year firm, famed for being fictional agent James Bond's brand of choice, is taking action to cut costs and hopes the launch of its first sport utility vehicle, the DBX, at a new factory in Wales, will boost performance next year.

"We're essentially holding the cost of a complete factory right now without the benefit of the revenues coming in... so from that point of view of course it's a really important model," Chief Executive Andy Palmer told Reuters.

Aston, based in Gaydon near Birmingham, posted a £13.5 million loss in the three months to the end of September, but said it still expects to meet market expectations of core earnings at around £203 million ($261 million).

The global automotive industry has undergone a torrid year, hit by declining sales in China, trade war worries between the world's two biggest economies, a slump in diesel sales in Europe and the need to invest heavily in electrification.

But Aston has also suffered since its flotation in October last year when shares launched at £19 ($24.50) before dropping for months and languishing at between £4 and £5 for the last few weeks.

On Thursday, however, shares recovered slightly, up 7% to 446p at 0903 GMT.

Earlier this year, the company announced it was raising $150 million in debt at a 12% interest rate to bolster its balance sheet ahead of the launch of the DBX.

On Thursday, Aston said its net interest expense guidance for 2019 now stood at around £83 million, also affected by the impact of unhedged expenses in U.S. dollars, with prior guidance at roughly £70 million.

Aston, which is primarily owned by Italian and Kuwaiti private equity groups, and not part of a wider automotive group, said it could thrive on its own alongside its work with German carmaker Daimler, which has a small stake in the firm.

"Our relationship with Daimler is also important so we're not completely alone. We obviously have their technology to fall back on," said Palmer.