Luxury British car maker Aston Martin slumped to a half-year loss as profits were hit by a nearly 20 per cent drop in European demand, the latest blow to the automotive sector.
On Wednesday, it posted a pretax loss of £78.8 million(Dh352.1m) compared with a £20.8m profit in the first half of 2018.
Aston Martin, best known as James Bond's favourite marque, has been undergoing a turnaround plan since chief executive Andy Palmer took over in 2014, designed to renew and boost its model line-up and move into new segments, Resuter reported.
The plan culminated in an autumn 2018 stock market flotation.
But its share price has since fallen by more than two-thirds from £19 in October to below £6, hit by a weakening performance in Europe, Middle East and Africa, where demand fell by nearly a fifth in the first six months of the year.
The stock dropped 19 per cent in early trading on Wednesday.
The results are another blow in the car maker’s struggle to convince investors that it can make the transformation from niche player to successful listed company, and deliver on a promise to take on supercar maker Ferrari, according to Bloomberg.
"We are disappointed that our projections for wholesales have fallen short or our original targets, impacted by weakness in two of our key markets as well as continued macro-economic uncertainty," Mr Palmer said.
Overall wholesale demand grew by 6 per cent in the first six months as the group posted strong increases in the Americas and Asia, but the slump in Britain and the rest of the region prompted the carmaker to cut its full-year forecast.
Aston has also been hit by expansion costs as it builds a new factory to make its first sport utility vehicle, and a lower average selling price.
The global car sector has been hit by weakening demand in China and a slump in demand for diesel vehicles in Europe, as well as the cost of electrification.
The challenges may turn the car maker into a takeover target, Bank of America Merrill Lynch said on Tuesday, downgrading the stock. A potential buyer could be largest holder InvestIndustrial, by itself or with a partner, or another strategic buyer, the bank said.
Much will depend on the successful launch of the manufacturer’s first 4x4 model, the DBX, next year. The car will be built at a new plant in St Athan in Wales and is crucial to reach a goal of lifting annual production to 14,000 vehicles by 2023. Last year, sales to dealers amounted to 6,441 cars.
The company’s net debt stood at £732m. Chief financial officer Mark Wilson said more funds could be raised if required.
"If we require some additional financing from sources with which we’re familiar, particularly in the debt market to maintain that capacity, then that’s what we’ll go out and do,” he said.
