Aston Martin blamed supply chain woes as it cut sales and profit forecasts for the year, after debt payments and costs from unfinished vehicles more than doubled losses in the third quarter.
The luxury sports car maker had expected to sell 6,600 cars in the year and increase its adjusted profit margin by 350 to 450 basis points.
On Wednesday it said it would only sell 6,200 to 6,600 cars, and margins would increase by 100 to 300 basis points during the year.
The carmaker’s shares dropped more than 13 per cent in early London trading on Wednesday. They have had more than 80 per cent of their value wiped off this year.
Revenues in the third quarter rose a third to £315.5mn as average prices increased by 28 per cent to £189,000.
But pre-tax losses mounted, rising to £225.9mn, from £97.9mn in the same quarter a year earlier, after costs for new investments and a non-cash revaluation of some of its debt that is priced in US dollars.
Aston took a £245mn accounting hit on the value of its debt because of the falling pound in the first nine months of the year, and paid out £65mn in debt interest payments.
The company raised £654mn through a funding deal that included a heavily discounted rights issue, and by bringing in Saudi Arabia’s Public Investment Fund as a shareholder to shore up its finances and help it pay down some of its debt.
In October the company bought back about $200mn of its bonds, which chief financial officer Doug Lafferty said would lead to “quite significant interest savings”.
Aston said it had 400 unfinished vehicles that were waiting on parts, costing it £106mn in inventory costs, at the end of September. This echoes a problem the company faced in the previous quarter, when it said it had 350 models waiting for parts.
Chief executive Amedeo Felisa said the company was putting “pressure and attention” on fixing its supply issues, and had embedded staff at supplier companies in order to rebuild the relationship and avoid future snares.
“This will for sure help us not to have the same problem in the future,” he said.
During the quarter the carmaker wrote off £71mn from past investments into its current line-up of cars and spent £213mn on the upcoming sports car range that is due to come out next year.
“Over the last two quarters we have encountered specific supply chain challenges that have delayed our ability to meet customer demand,” said chair Lawrence Stroll.
The “headwinds” are improving in the fourth quarter but have “modestly” hit the company’s full-year guidance, he said, adding that the medium and long-term outlook was “robust”.
Source: Economy - ft.com
