Aston Martin pulls guidance as Q1 losses widen

Luxury car maker Aston Martin pulled its guidance on Wednesday as it posted a widening of its losses in the first quarter due to the coronavirus outbreak.

In the three months to the end of March, pre-tax losses widened to £118.9m from £17.3m in the first quarter of 2019, with revenue down 60% to £78.6m. The company said the Covid-19 outbreak dented dealer demand for cars, adding to the planned wholesales unit decline as it decreased dealer inventory towards a luxury norm. It also noted lower average selling prices.

Total wholesale volumes fell 45% to 578 units, with core wholesale volumes down 44% and all regions negatively impacted by the virus "to varying degrees".

Aston Martin said China was the weakest market, with no wholesales in January and February, while the UK was the best performing market as the region started the year with comparatively lower dealer inventory levels.

The company withdrew its previous guidance for the full year as it said uncertainty about the duration of the pandemic and its impact on the global economy made it impossible "to provide a clear view" on the outlook. It also hinted at the possibility of more fundraising following its £536m cash injection in April, "given the ongoing uncertainties", saying it was reviewing all future funding and refinancing options to increase liquidity.

President and chief executive officer Dr Andy Palmer said: "Covid-19 and the resulting global economic shutdown has had a material impact on our performance this quarter but during this unprecedented time we completed a £536m capital raise and continued to implement our exciting strategy to reset and safeguard the long-term future of the business.

"Part of the reset includes reducing our global dealer inventory to a luxury norm to rebalance supply and demand, to build resilience and profitability for the future. We have made significant progress on this with dealer inventory reducing by 428 units compared to the start of the year."

At 0935 BST, the shares were down 14.4% at 32.58p.

CMC Markets analyst David Madden pointed out that the shares have come under "serious pressure" on account of the Covid-19 crisis.

"In March, the firm suspended operations, but operations resumed in St Athan last week. It is worth noting the car manufacturer had problems before the health crisis, and that’s why Aston Martin’s share price was hit so hard amid the Covid-19-related sell-off. The group issued profit warnings in January 2020 and in July 2019."