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Aston Martin Silent On Investor Bailout Reports

Aston Martin Silent On Investor Bailout Reports.

“Aston Martin has a challenging future, and we believe that operational issues will mean the rally is short-lived”

Aston Martin declined comment on reports China’s Geely Automobile Holdings, which owns the Lotus sports car company, wants to take a stake in the financially troubled luxury car and SUV maker.

Cash-strapped Aston Martin’s stock price jumped 15% Friday after the reports of Geely’s interest were published, and was close to another 3% higher Monday.

Aston Martin, which cut its profit forecast for 2019 for the third time last week, wouldn’t confirm or deny the reports, and pointed to a statement made after the profit warning.

“We remain in discussion with potential strategic investors in relation to building longer term relationships which may or may not involve an equity investment,” Aston Martin said at the time.

That was thought to refer to unconfirmed reports Canadian billionaire and Formula 1 team owner Lawrence Stroll wanted to take control of the storied British brand and star of various James Bond spy movies.

But the Geely story, published in the Financial Times, raised the possibility that Lotus and Aston Martin could save money by combining technology and vehicle engineering.

Investment researcher Evercore ISI believes Aston Martin won’t make its sales forecasts, and didn’t get overly excited about the various investor reports.

“We stick to our view that on a standalone basis, Aston Martin has a challenging future, and we believe that operational issues will mean the rally is short-lived,” Evercore ISI said in a research note.

Aston Martin has been in financial trouble as sales slipped, and spending advanced on its new SUV, the DBX, ahead of its launch in the Spring.   

Aston Martin shares had risen to about 4.8 pounds by early afternoon Monday. They were floated on the stock market just over a year ago at 19 pounds a share. The company cut its production forecast for 2019 to between 6,200 and 6,500 vehicles from 7,100.

1,800 DBX orders have been booked since the November reveal.

CEO Andy Palmer said last week 2019 Aston Martin adjusted earnings before interest, tax, depreciation and amortization (EBITDA) will fall to between 130 and 140 million pounds ($170 to $185 million).

Aston Martin is owned 33% by private equity firm Investindustrial, Kuwait Investor Group 28% and Daimler 4%.   


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