London — Aston Martin said on Wednesday it may raise more funds and will take further steps to cut costs and control cash as the coronavirus pandemic complicates the sports-carmaker’s comeback plan.
The British manufacturer reported a wider first-quarter loss and a 60% drop in revenue. Its first-quarter loss was £119m after sales dropped by nearly a third.
The carmaker recently got a £536m capital injection from investors including its new chair, billionaire Lawrence Stroll.
Aston Martin has struggled with cash flow and dealer-inventory growth since going public in 2018, and had hoped that the fundraising approved by shareholders in March would eliminate the need to seek additional money. But the coronavirus crisis has added a level of difficulty to the turnaround plan put in place with Stroll’s arrival.
“Aston is still a cash-burn story,” said James Congdon, head of Canaccord’s research division Quest. “The market is concerned about the outlook and whether Aston will have enough cash to carry out the restructuring plan that they had outlined.”
The shares fell as much as 15% to a record low, and were down 11% at 33.78p before the close in London trading. The stock has plunged 80% in 2020.
‘Uncertain times’
“Obviously we live in uncertain times,” CEO Andy Palmer said in an interview. “You can imagine that we’re not taking off the table any opportunity that would allow us to to bring cash onto the balance sheet if we think it’s necessary.”
Aston Martin initially rose after the manufacturer said orders for its pivotal DBX model have continued to grow even with most of its showrooms closed because of the coronavirus. Deliveries of the DBX, a $189,000 sport-utility vehicle at the heart of Aston Martin’s comeback strategy, are on track to begin in summer, the company said Wednesday.
Retail orders for the SUV continued to increase during the first quarter, even with most dealerships closed in April and May. That has given the James Bond carmaker some momentum at a time when the automotive market faces big challenges.
China traffic
“We haven’t seen any evidence of cancellations, only one of growth,” Palmer said. “As we come out the other side we’re starting to see significant showroom traffic back to pre-Covid levels in China.”
Palmer said the company needs to invest in new products so Aston Martin can come out of the coronavirus crisis in a position of strength. The company plans to launch derivative models to the DBX in 2021, he said.
Aston Martin reported a £76.6m operating loss in the three months ended in March, and said it was not possible to give a clear view on the full-year outlook. Despite the drop in revenue, Palmer said Aston Martin is making progress working down its dealer inventory.
Bloomberg
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