Abu Dhabi, UAEWednesday 19 June 2019

Aston Martin says Brexit delay would be a 'further annoyance'

UK luxury car maker's chief criticises continued uncertainty as company posts rise in revenues but fall in pre-tax profits for last year

Andy Palmer, CEO of Aston Martin. Pawan Singh / The National 
Andy Palmer, CEO of Aston Martin. Pawan Singh / The National 

A delay to Brexit would be a “further annoyance” which would prolong uncertainty, the boss of luxury car maker Aston Martin said after Prime Minister Theresa May promised to give policymakers a vote on extending the date for Britain to leave the EU.

Many firms have been triggering contingency plans on the assumption Britain will leave the European Union on March 29, so a delay could scupper the timing of those preparations.

Aston Martin, which has authorised up to £30 million (Dh146.5m) worth of contingencies, is stocking more components and could fly in parts if ports are clogged up.

Policymakers will vote on whether to delay Brexit on March 14, just over two weeks before the scheduled departure date.

“I would categorise it as a further annoyance,” chief executive Andy Palmer told Reuters. “You’re holding that contingency stock for longer which means that your working capital is tied up for longer.”

“More importantly, what you’re doing is you’re creating continued uncertainty,” he added.

Shares are down a third since the company’s October flotation, falling 12 per cent to £12.05 at 08.43GMT on Thursday.

Aston Martin, which is boosting volumes, posted on Thursday a 25 per cent increase in revenues for last year.

But adjusted pre-tax profits fell 7 per cent to £68m before one-off costs related to its initial public offering, which totalled £136m.

The company said that if some one-time pension-related credits were stripped out of 2017’s figures, adjusted pre-tax profit would have risen in 2018.

Volumes rose in each of its regions with demand rising 31 per cent in China, where other car makers, such as Jaguar Land Rover, have reported plunging demand.

Aston Martin said it was confident it would deliver another year of growth in 2019 but Brexit remained a major uncertainty for the industry.

The Gaydon, England-based firm sold 6,441 vehicles last year, a gain of 26 per cent and above the top end of the forecast range, according to Bloomberg. It reiterated a target of 7,100 to 7,300 car sales for 2019.

Aston Martin’s new plant at St Athan, Wales - set to produce the DBX, the company’s first 4x4 and a vital part of its expansion plans - is complete with the first production trial set to begin next quarter and full production due in the second half.

Britain’s once-soaring car industry is now recording falling sales, investment and production. Honda delivered the most serious blow, with this month’s announcement it was closing its British factory.

Industry output fell 18 per cent last month, according to data released on Thursday.

“That’s about consumer confidence,” said Mr Palmer. “We know there are other factors there as well but, fundamentally, why would you buy a car in the current circumstances? We’re insulated from that but we’re not immune to it.”

Updated: February 28, 2019 01:23 PM