Aston Martin record $282m loss
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Luxury performance car company puts loss down to 'exceptional' circumstances
James Bond’s favourite car-maker Aston Martin said today that it is ‘on track’ to be back in profit by the end of next year, as it reported a near £163 million (NZ$284 million) loss.
The luxury performance car firm chalked up the pre-tax loss to exceptional circumstances and said that it had seen record underlying earnings in its fourth quarter – up 90 per cent to $119 million.
Aston boss Dr Andy Palmer said it had seen ‘extremely strong demand’ for its new DB11 and that it will push ahead with plans to launch one new model every nine months for the next seven years.
Aston Martin’s pre-tax losses represented a sharp 27 percent increase on last year and the sixth year in a row that the firm has failed to make a profit.
The luxury performance car firm which employs 1,470 people said it was ‘unaffected by Brexit’.
Its turnaround plan is ahead of schedule with the firm on track to be back in the black by the end of 2018, said chief executive Dr Palmer, as the firm launches a new product blitz.
He said the company based in Gaydon, Warwickshire, returned an underlying and ‘positive’ operating profit of $28 million for the year before ‘exceptional charges’ were counted. It sold 3,687 cars last year and expects to exceed 5,000 this year.
Demand for its new $365,000 DB11 model and continuing benefits of the firm’s ‘Second Century’ transformation programme to 2022 are driving the improvements and positively revised forecasts, said Dr Palmer as he reported the privately-owned company’s results to investors.
Overall, however, Aston Martin recorded a pre-tax loss of $282m for the full year which it put down to historic write-off costs and currency hedging.
It cited ‘exceptional items’ including depreciation, charges relating to asset write-downs of legacy tooling, IT equipment, financing costs, to and capital investment in modernisation and new model roll-outs.
The weaker pound will boost exports – 60 per cent of cars are exported beyond Europe – but pre-tax results were also hit by a currency hedging programme, set up before the recent depreciation in sterling, which fell 17 per cent at the end of 2016, forcing Aston Martin to book a loss of $45 million on foreign exchange.
As part of its ‘Second century’ turnaround plan the company founded in 1913 will launch one new model every nine months, including Aston Martin’s first crossover vehicle, the DBX (bellow), to be built at a new factory at St Athan in Wales from 2019.
Other future models include a new Vantage, Vanquish, a mid-engine sports car, the revival of Lagonda, a new 4 million dollar AM-RB 001 ‘hyper-car’ and increasingly bespoke sports cars from its ‘Q’ division.
Aston Martin president and chief executive officer Dr Andy Palmer said: ‘We have stabilised the company, strengthened the balance sheet and transformed our profitability. We’re turning a good company into a great one.’
Aston Martin said its underlying figures showed adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 90 per cent to $119 million in the three months to December 31.
Revenues for the final quarter rose 54 per cent to $493 million ‘reflecting strong inaugural sales of the DB11’.
Palmer said: ‘We have seen extremely strong demand for the DB11 in the fourth quarter and, together with our continued financial discipline and growth plans, this has enabled us to increase our 2017 forecasts meaningfully.’
Chief financial officer and executive vice-president Mark Wilson said: ‘We have taken significant steps to strengthen our balance sheet and to write off non-cash items.
'Nevertheless, our operating performance has been very strong. We have generated record revenues, delivered an underlying operating profit, and successfully launched the first model of our new product offensive.’
Aston Martin is owned by a consortium comprising Kuwait’s Adeem Investment and Tejara Capital, which together hold 60 per cent, and Italian private equity with 40 per cent. Daimler has a five per cent non-voting stake.
Aston Martin's product offensive
2016: DB11 (on sale now)
2017: New Vantage
2018: New Vanquish
2019: DBX – Aston’s first ’crossover’ to be built in Wales.
2020: New mid-engined Aston sports car
2021: New Lagonda.
2022: Another new Lagonda
Plus every year – two special edition variants.