Lawrence GashAston Martin Lagonda losses snowballed in the first quarter of 2020, with the Covid-19 crisis severely affecting both sales and production.
The company suffered a pre-tax loss of £118.9m ($146m, €135m) in the first three months of the year, with revenue falling 60 per cent year-on-year. With only 578 cars sold, sales plunged by almost 50 per cent on the year before.
Aston Martin’s net debt ballooned from £701.7m to £956.1m, while adjusted earnings fell from £28.3m to a £46.9m loss. Falling sales accounted for much of this plunge.
In China, the Americas and Europe, sales fell by 86, 57 and 30 per cent respectively.
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After such results and the announcement that it is pulling its guidance for the rest of the year, Aston Martin’s share price had fallen 10.46 per cent by early-afternoon Wednesday trading. At 34.06 pence, the company’s stock is a shadow of the 545 pence it first traded at under its current form in 2018.
The fact that Aston Martin’s net debt is now 16 times higher than a year’s adjusted operating earnings will further put off investors.
Even before the full onslaught of the coronavirus crisis, Aston Martin was in turmoil. In March, a consortium led by Canadian billionaire Lawrence Stroll rescued the company with an injection of £536m. Stroll, who is now executive chairman, has affirmed his enthusiasm and confidence that Aston Martin will pull through from the short-term pressures.
Survival in the long term will depend on the success of the new Aston Martin DBX, a luxury £158,000 SUV the company has pinned its hopes on. Aston Martin was one of the first carmakers in Britain to reopen its factories following the initial Covid-19 lockdown.
Deliveries to pre-order customers are expected to start in the summer, regardless of the recent disturbance. However, wider sales could still be affected. Vikram Bhatia, Aston Martin’s interim CFO stated: “We are planning on the assumption that trading remains challenging.”
