AutoBeta(AutoBeta.net)11/09 Report--

According to domestic media reports, Aston Martin released results for the first three quarters of 2019 on November 7, showing a pre-tax loss of £13.5 million in the third quarter, compared with a profit of £3.1 million in the same period last year. Revenue fell 11 per cent to £250 million.

Adjusted operating profit fell 51 per cent year-on-year to 13.4 million in the third quarter. The company has recorded a loss of £79 million in the second quarter, bringing its pre-tax loss for the first nine months of this year to £92.3 million, compared with a profit of £23.9 million in the same period last year.

Palmer, the company's chief executive, said that while the car industry was slowing, the company's sales were up 13 per cent so far this year. The company is cutting costs, reducing expected investment spending this year from £345 million to £300m and hiring fewer contract workers. The company has also reduced employee travel and closed smaller locations for storing parts or cars.

Demand for Aston Martin's traditional sports model fell due to Brexit, a weak economy and the uncertainty of a global trade war, with car sales falling 16 per cent to 1497 in the quarter. Among them, dealer sales in the UK fell by 22 per cent. Sales in the rest of Europe, the Middle East and Africa fell 17 per cent, while sales in Asia fell 1/3, mainly due to weak demand for Vantage models.

This year has been a difficult year for the global auto industry, hit by falling sales in China, fears of a trade war between the world's two largest economies, falling diesel sales in Europe and the need to invest heavily in electrification. The coming DBX is the main driver of growth. Sources show that DBX will be built at its new plant in Aston Martin in St. Asen, southern Wales.

DBX will compete with Bentley Tim Yue and Lamborghini Urus, and Aston Martin said earlier this week that prices start at £158000 in the UK, 193500 euros in Germany and $189900 in the US. The car will be launched in Beijing on November 20 and delivery will begin next year.

Bentayga retails for between £136900 and £182200 in the UK, while the Lamborghini Urus sells for £159925, according to market researchers. Ferrari's entry into Purosangue, the SUV segment, is scheduled for around 2022.

The company said it still expects to meet market expectations of core earnings of about 203 million pounds ($261 million) and will be able to repay debt, with leverage falling over time. It is expected to produce 6200-6500 cars this year, down from 7100 at the beginning of the year, but hopes to increase annual production to 14000 by 2023, driven by new models such as the SUV.

Two months ago, in order to successfully sell $150 million of senior covered bonds, Aston Martin had to pay a high interest rate of 12.5%. The interest generated by this and other loans will far exceed Aston Martin's current meagre operating profit. By 2022, Aston Martin will face a crisis of debt concentration, when the company will have to repay £900m of maturing debt.

Aston Martin still has to wait for Brexit to end and the trading environment to improve in order to refinance at more favourable rates before the debt concentration erupts. However, before the new model DBX generates cash flow, Aston Martin is still in difficult times, and something needs to be done to reverse the situation!

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