Aston Martin’s share price is firmly lower this morning on the back of poor full-year results. 

Revenue slipped by 9% to £997.3 million, and the group swung to an operating loss of £36.7 million, from a profit of £72.8 million last year. Its loss before tax surged by 53% to £104.3 million, and to add insult to injury, the net debt position jumped by 57% to £876.2 million.

Aston Martin share price woes

The CFO, Mark Wilson, will step down from his role before the end of April, and the search for his replacement has begun. The departure of such a senior executive is likely to be a contributing factor in the decline of the Aston Martin share price, as it is not a good look for the group, especially in light of the worsening financial position. 

The high-end car manufacturer only registered sales growth in the Americas last year, where they grew by 16%. EMEA and the UK fell by 28% and 21% respectively, while the Asia-Pacific region as a whole saw sales fall by 6%. China, however, posted an impressive 28% jump in sales growth, with the country representing 9% of total wholesales. Aston Martin cautioned that the coronavirus crisis has the potential to impact demand as well as supply chains in China and other countries. This is very worrying as the firm’s star performer is right in the firing line of the health crisis. 

Aston Martin's share price has had a rough ride since it floated on the stock market in October 2018. The company targets very wealthy clients, who have the means to afford Aston Martin's high-end cars. Luxury brands tend to hold up better than middle-to-lower brands during an economic slowdown, as the exceptionally wealthy can withstand the change better than most; but Aston Martin is feeling the pain nonetheless. 

July profit warning

The Aston Martin share price tumbled in July last year when the firm issued a profit warning, and the experience was repeated when the group issued another profit warning in early January. Aston Martin seem to have been late to the party in terms of listing on the stock market. The economic big hitters like China and India are cooling down and have contributed to the "very disappointing year". A mixture of falling sales and higher costs have weighed on the company.

Cash injection fails to halt shares slide

Late last month there was some much need positive news for the company as it was announced that it will receive a cash injection of £182 million from a group headed up by Lawrence Stroll. The investment will give the consortium a 16.7% stake in the car manufacturer. Aston Martin will raise an additional £318 million via a rights issue, so the balance sheet should be strengthened. The news lifted investment sentiment, but the rally did not long as the fears surrounding the coronavirus crisis drove the Aston Martin share price to a record low last week.

 

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination. CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information. CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.

CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.