Aston Martin Hopes To Float On The Stock Market By Year End.
“Aston Martin lags significantly behind Ferrari on nearly every quality metric”
Storied luxury sports car maker Aston Martin unveiled its long-awaited intention to float up to 25% of the company on the stock market, and investors will need to be convinced that any attempt to seek a Ferrari-like valuation is justified.
Speculation in the media has suggested the sale of a stake in Aston Martin could value the overall company at upwards of $8 billion.
Aston Martin CEO Andy Palmer also announced that in the first half of 2018 sales rose 14% to 445 million pounds ($574 million) while adjusted EBITDA (earnings before interest, tax, depreciation and amortization) advanced to 106 million pounds ($137 million) from 93 million ($120 million) in the same period last year. The latest figures represent an EBITDA profit margin of 24%.
Palmer didn’t announce details of the terms of the flotation, which will be published close to September 20. The shares should float on the London Stock Exchange by the end of the year.
Aston Martin said it sold 2,299 cars in the first half compared with 2,439 in the first half of 2017 and expects to deliver between 6,200 and 6,400 in all of 2018 with an adjusted EBITDA margin of about 23%.
The production target is between 9,600 and 9,800 vehicles by 2021, and 14,000 in what it called the medium term, with an adjusted EBITDA margin of more than 30%.
“Under the Second Century Plan, (Aston Martin) is transitioning to a three-pillar, dual-brand product strategy: high-performance sports and GT cars, sports utility vehicles and luxury sedans. Under the plan, Aston Martin Lagonda’s future growth trajectory is underpinned by a sustainable strategy to launch seven new models, one each year through to 2022, with each model having a seven-year lifecycle (the “7 x 7 x 7” strategy),” Aston Martin said in a statement
Aston Martin was founded in 1913.
In a recent report, Berenberg Bank of Hamburg said Aston Martin’s worth isn’t close to Ferrari.
“Aston Martin lags significantly behind Ferrari on nearly every quality metric, particularly on critical measures like capital intensity, cash generation and contribution margin,” Berenberg Bank analyst Fei Teng said in the report.
Teng described Aston Martin’s business model as flawed, spending too much capital developing cars that are priced too low, while not creating enough scale.
Aston Martin is expected to lead a string of stock market flotations which could include Volvo Cars, Porsche, Alfa Romeo-Maserati, and VW and Daimler’s trucks.
Aston Martin is owned 37.5% by Italian private equity firm Investindustrial, along with Kuwaiti companies Investment Dar and Adeem Investment. Daimler has a 5% stake.
A stock market quote for Aston Martin also would be another step towards a luxury automaker sector, and create an investment rival for Ferrari.
Aston Martin is pushing ahead with plans for hybrid and electric models to meet more stringent emissions rules including the revival of the Lagonda name plate for an electric luxury brand. The Lagonda electric SUV will arrive in 2021.
Aston Martin’s biggest market is the U.K. with about 30% of its sales, followed by the U.S. with 25% and Asia Pacific (16%).