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Abu Dhabi, UAEThursday 13 December 2018

Aston Martin could go public in wake of Ferrari's listing success

Strong results have fuelled speculation that the luxury British car maker is revving up for a stock market listing as early as next year

Healthy demand for the Aston Martin DB11 has increased speculation the UK car maker might follow Ferrari with an IPO. Arnd Wiegmann / Reuters
Healthy demand for the Aston Martin DB11 has increased speculation the UK car maker might follow Ferrari with an IPO. Arnd Wiegmann / Reuters

Aston Martin is eyeing the success of Ferrari’s listing as speculation grows that the British maker of some of James Bond’s cars could be considering its own initial public offering as early as next year.

“Clearly Ferrari have IPO’d, they’ve made a great success of it,” Mark Wilson, the finance director of Aston Martin, told The National. “We are very, very similar to Ferrari in how we’re constructed in our heritage and brand and history in cars, so people always naturally make that leap.”

Strong results have fuelled the IPO speculation, with the luxury motor maker roaring back into profit this year after seven years of losses, helped by healthy demand for its DB11 sports car.

Last month the company, which has two showrooms in the UAE, reported record nine-month results on revenues up 84 per cent to £567 million (Dh2.77 billion) for the period ending September 30 and raised its full-year outlook. Aston Martin posted a near fourfold increase in Ebitda to £121m, while it generated pre-tax profits of £22m, reversing losses of £124m in the same period last year.

Mr Wilson said there was no denying the “great success” of Ferrari’s October 2015 listing – with the stock having doubled since then.

“In reality," he added, "you would have to ask my shareholders what they thought of [a flotation],” referring to the Kuwaiti and Italian private equity funds that control the business.

He said Aston Martin was “not planning on an IPO shortly but that doesn’t mean it might not happen”.

“What we concentrate on as management is delivering on the ‘Second Century Plan’, in fact, outperforming it, which is exactly what we’ve done in the last three years.”

The Second Century Plan is the brainchild of the chief executive Andy Palmer, who joined the firm in October 2014 after a 23-year career at Nissan. In it, he outlined how he intended to transform the famous British brand, which has come close to bankruptcy seven times in its 104-year history, into a genuine rival to the likes of Bentley and Ferrari.

That turnaround plan, which is due to complete in 2022, has already delivered fruit. Last month, Aston Martin said it was on course to post its first annual pre-tax profit since 2010. “It’s also the first time ever in a financial year where we’ve had four consecutive quarters of profitability – we’ve never done that before,” Mr Wilson said.

The success is largely attributable to rising demand for its latest sports cars, including its flagship DB11, which was launched last year. “We really saw that car kick off very strongly,” Mr Wilson said.

Aston Martin exports 80 per cent of its vehicles sales overseas, including to the UAE, where the new cars have been extremely well received.

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“The DB11 has done very well [in the UAE],” he said. “We see ourselves consolidated into a retail market share in the UAE higher than we’ve ever achieved before.

“That car speaks very strongly not just to the UAE but also to the wider GCC market – it does very well in Saudi Arabia, Kuwait ... and Bahrain as well.”

“What the Middle East market likes the most is new products … and with all the new cars we’ve got coming on, it stands us in great stead to give what is a very important market to us a very good service.”

Special-edition cars also do extremely well in the Middle East, Mr Wilson added. “Particularly in the UAE, they play really well into how that market looks at purchasing cars in our segment.”

The success of those special editions – such as the Vanquish Zagato, which was created through Aston Martin’s long-standing partnership with the prestigious Italian design-house Zagato – is another reason for the company’s recent improvement in fortunes.

In addition, success can be attributed to the strength with which the existing car range has held up, including the Vantage.

The group aims to sell 7,000 cars a year – which would put Aston Martin on a par with Ferrari.

Last year, the company sold 3,500 units, while it is set for sales of 5,000 this year, Mr Wilson said. “You can extrapolate from that to see where we’re potentially going”.

The firm has firmly committed its future to green vehicles, with the announcement that it will offer hybrid or full-battery car options across its range by the mid-2020s.

In 2019, it will debut the RapidE, which will be the firm's first pure battery-powered car, Mr Wilson said. “That shows you a statement of our intent, that we’re serious about investing in this space”.

Finally on Brexit, Mr Wilson welcomed the breakthrough in the UK's talks with the EU last week and said that Aston Martin, like all other British manufacturers, is keeping a close eye on further developments.

“What we’re concerned about is that we understand where the country is heading, so we can plan for that,” he said. “The key is getting enough information early enough to be able to develop plans for a transition period.

“Look, Aston’s been around 104 years, we’ve been through some fairly turbulent times in those years, including a couple of world wars," Mr Wilson said.

“We see Brexit as part of the fabric of that particular journey.”