The high-end car manufacturer posted a first half operating loss of £159.3 million, which was an increase in the loss of £38.9 million posted last year.
Revenue fell by 64% to £146 million. The wholesale side of the business underperformed as sales fell by 63%, while the retail unit registered a 41% drop in sales. The poor numbers are hardly surprising in light of the disruption caused to logistics, manufacturing, and sales because of the pandemic.
Trading remains ‘challenging’ and the site at Gaydon, Warwickshire will resume manufacturing at the end of August – later than originally planned. Aston Martin (LON:AML) cautioned the re-opening of economies varies in different countries, which is making planning tricky. This morning it was announced that Tobias Moers will start as CEO on 1 August. Ken Gregor started as CFO in late June. In the months ahead, traders will be keen to see what plans the new management team has in store for the group. Even though the company has had a few rounds of financing, in today’s update, it still commented on additional liquidity pressure.
The company was under pressure for some time before the covid-19 crisis, so the pandemic really compounded the group’s problems. In mid-May, Aston Martin’s share price tumbled to a record low following the first quarter update. In the three month period, the operating loss was £76.7 million, which was a huge increase on the £3.2 million loss that was posted one year ago. Revenue tumbled by 60% to £78.6 million, while wholesale volumes dropped by 45%.
The UK business was the strongest division as revenue only fell by 3%. EMEA and the Americas saw revenue drop by 30% and 57% respectively. APAC was the underperformer as revenue slumped by 74%, and that was down to the dire trading conditions in China, which saw sales fall in excess of 85%.
In early June, the Aston Martin share price hit a two month high a couple of days after it announced plans to trim the workforce by 500. The move will cut costs by approximately £10 million. Capital expenditure is tipped to fall by £10 million too. The update was initially welcomed by traders as it showed the company was willing to tighten its belt amid a difficult environment.
For a while, the Aston Martin share price was motoring along, but it came under pressure again in late June when the company revealed that it planned to issue new shares – the offering equated to just shy of 20% of the existing share capital. The auto-maker raised £152 million form the move, and the funds were used to strengthen the balance sheet. Issuing new shares can be a great way to raise capital but if a group does it too often, it can chip away at confidence in the company as it suggests management is not in control of the capital.
The Aston Martin share price has been pushing lower lately and while its holds below the 100-day moving average at 59p, the bearish move should continue.
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