Aston Martin Profit Fall May Weaken Flotation Cash Raising.
But Revenue Per Car Closes In On Ferrari.
British luxury sports car maker Aston Martin’s expected flotation on the stock market looks a little less attractive after it reported profits were hit by a combination of the weak dollar and spending on new models.
In the first quarter Aston Martin’s pre-tax profit fell to the equivalent of $3.8 million, from $7.4 million in the same period of 2017.
Investment researcher Jefferies, in a report earlier this year, said Aston Martin would lead a string of spin-offs including Volvo Cars, Porsche, Alfa Romeo-Maserati, and VW and Daimler’s trucks. Jefferies said Aston Martin could fetch up to $6.2 billion. Reuters has reported that Aston Martin was closing in on a flotation deal that would raise between $5.6 and $7 billion.
In a report after the profit fall news, Jefferies talked about a mixed start to the year for Aston Martin as it sought to match Ferrari levels of profitability. The company night have to delay the flotation if it wanted to raise the amount of money projected earlier.
Jefferies pointed to some plus points in Aston Martin’s first quarter, including an 11 per cent increase in average prices for its cars to the equivalent of $210,000.
“We calculate Aston Martin shipped 48 special editions – up from 2 in Q1 2017 – accounting for about $32 million or $640,000 per unit, including special editions of the Vanquish Zagato and DB4GT, average revenue works out at ($280,000) per unit, vs Ferrari at ($380,000) per unit, with the revenue gap with Ferrari substantially improved versus a year ago,” said Jefferies analyst Philippe Houchois.
When not if
Aston Martin CEO Andy Palmer has confirmed the company is committed to the flotation, with the only question being just when it would happen.
“We are making a company that can survive on 7,000 to 14,000 very highly priced, very profitable cars a year, but it can survive because of its partnerships. It can be very profitable, but only by having a big brother that can help it out,” CEO Andy Palmer told Bloomberg.
Daimler has as 5 per cent stake in Aston Martin.
Aston Martin is also owned 37.5% by Italian private equity firm Investindustrial, along with Kuwaiti companies Investment Dar and Adeem Investment.
Investment researcher Evercore ISI wasn’t perturbed by the results and said they would point to a valuation of between $4.9 billion and $8 billion, and expected the flotation at some point this year.
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 include the revival of the Lagonda name plate for an electric luxury brand. The Lagonda electric SUV will arrive in 2021.