Luxury carmaker Aston Martin swings to Q3 loss as volumes drop

Aston Martin CEO Andy Palmer is upbeat on the DBX model. (Reuters)
Updated 07 November 2019

Luxury carmaker Aston Martin swings to Q3 loss as volumes drop

LONDON: Luxury British carmaker Aston Martin swung to a third quarter loss on Thursday, saying its full-year wholesale volumes would be lower than previously guided after slumping demand in Europe and Asia.

Volumes to dealers fell 16 percent to 1,497 cars in the three months to the end of September as demand in Europe, the Middle East and Africa area dropped 17 percent and Asia was down by a third, hit by weak demand for the company’s Vantage model.

The 106-year company, famed for being fictional agent James Bond’s brand of choice, is taking action to cut costs and hopes the launch of its first sport utility vehicle, the DBX, at a new factory in Wales, will boost performance next year.

“We’re essentially holding the cost of a complete factory right now without the benefit of the revenues coming in ... so from that point of view of course it’s a really important model,” said Chief Executive Andy Palmer.

Aston, based in Gaydon near Birmingham, posted a £13.5 million loss in the three months to the end of September, but said it still expects to meet market expectations of core earnings at around £203 million ($261 million). 


• The 106-year firm, famed for being fictional agent James Bond’s brand of choice, hopes the launch of its first sport utility vehicle, the DBX, will boost performance next year.

The global automotive industry has undergone a torrid year, hit by declining sales in China, trade war worries between the world’s two biggest economies, a slump in diesel sales in Europe and the need to invest heavily in electrification. 

But Aston has also suffered since its flotation in October last year when shares launched at £19 ($24.50) before dropping for months and languishing at between £4 and £5 for the last few weeks. 

Earlier this year, the company announced it was raising $150 million in debt at a 12 percent interest rate to bolster its balance sheet ahead of the launch of the DBX.  

On Thursday, Aston said its net interest expense guidance for 2019 now stood at around £83 million, also affected by the impact of unhedged expenses in US dollars, with prior guidance at roughly £70 million. 

Aston said it could thrive on its own alongside its work with German carmaker Daimler, which has a small stake in the firm.

World Bank chief tells China it needs ‘vital’ reforms

Updated 59 min 45 sec ago

World Bank chief tells China it needs ‘vital’ reforms

BEIJING: World Bank chief David Malpass urged China on Thursday to further open up its economy and reduce state subsidies, echoing key demands made by the United States in protracted trade war negotiations.

Malpass made the remarks after a roundtable meeting with Chinese Premier Li Keqiang and the heads of other global institutions, including the International Monetary Fund and the World Trade Organization.

“I encouraged new reforms and liberalization,” he said.

Beijing is struggling to kickstart the economy, which expanded at its slowest pace for nearly three decades in the third quarter amid cooling global demand for its exports and a looming debt crisis at home.

Malpass said Beijing must resolve bilateral trade disputes and improve transparency in lending to avoid a sharp downturn on growth over the coming decades.

“China could improve the rule of law, allow the market to play a more decisive role in allocating resources including debt and investment, reduce subsidies for state-owned enterprises... and remove barriers to competition,” he said.

“It is hard to achieve but it is vital for reducing any inequality and building higher living standard,” Malpass said.

State-owned behemoths dominate lucrative sectors of China’s economy — including energy, aviation and telecommunications — where access to private players is restricted.

China’s trade partners have also long complained about the lack of an equal playing field and theft of intellectual property.

The country’s rubber-stamp parliament in March passed a foreign investment law that promises to address these issues, but local governments are still working on detailed rules needed to implement it.

Li said both domestic and foreign companies registered in China will be treated equally.

“They will have equal access to investment opportunities, equitable access to resources, legal protection in accordance with the law,” he said.

Beijing has also announced a timetable to open up its financial sector to foreign investors next year, as it attempts to woo outside capital to shore up an economy battered by the trade war with the United States.

China and the US have slapped tariffs on over $360 billion worth of goods in two-way trade.

Negotiators from both sides have been working toward a partial deal, but US President Donald Trump on Wednesday said Beijing has not made sufficient concessions, making him reluctant to conclude a bargain.

Economic data shows the uncertainty created by the trade spat between the world’s two biggest economies is undermining global growth.

IMF chief Kristalina Georgieva warned that implementing all the announced tariffs would cut $700 billion out of the world economy next year.

“What should be our priorities? First, to move from trade truce to trade peace,” she said.