# Aston Martin lower sales, higher selling costs and lower margins

- Link: https://www.directorstalkinterviews.com/aston-martin-ower-sales-higher-selling-costs-and-lower-margins/412802021
- Published: 2020-01-07T07:33:49+00:00
- Author: Giles Arbor

**Aston Martin Lagonda Global Holdings plc** (LON: AML) has today provided its Full
Year Trading Update.

**Highlights:**

· The challenging trading conditions highlighted in November continued through the
peak delivery period of December resulting in lower sales, higher selling costs 
and lower margins

· Core wholesales declined 7% year-on-year to 5,809

o Americas, UK and APAC performed broadly in-line with our volume expectations, 
while Europe underperformed

o Vantage performance improved in the fourth quarter, supported by retail financing
particularly in the UK and the US

· All planned Specials (65) including the remaining 13 DB4 GT Zagato Continuations
were delivered

· Core retail sales increased by 12% year-on-year and exceeded wholesale volumes
leading to reduced dealer inventory and reversing the trend of the prior year

· For FY 2019, we now expect adjusted EBITDA to be £130m-£140m with an associated
margin of 12.5-13.5% principally reflecting:

o Higher than anticipated retail and customer financing support;

o Weaker core model mix weighing on average selling price, with a shift towards 
Vantage;

o Lower than expected wholesale volumes as noted above;

o Incremental fixed marketing spend to support retail campaigns, particularly in
the US, leading to lower cost savings than originally planned and;

o The late December rally in Sterling resulting in an incremental FX headwind due
to retranslation of non-Sterling balances. At net income level, translational exposure
on the USD denominated debt will be significantly positive

· Year-end cash balance was £107m, giving expected net debt and leverage ranges 
of
£875m-£885m and 6.2-6.8x* respectively

· DBX order book has built rapidly to c.1,800 since it opened on 20 November 2019,
c.1,200 of which are customer-specified

· As a result, we have now exceeded the various conditions to be able to draw the
additional $100m of April 2022 notes and currently anticipate drawing these down
within the next four weeks

· Consistent with our announcement on 13 December 2019, we continue to review our
funding requirements and the various funding options

· We also remain in discussions with potential strategic investors which may or 
may not involve an equity investment into the Company

· We are reviewing our planning for FY 2020 and will provide an update on our expectations
in due course. Preliminary Results for the twelve months to 31 December 2019 will
be announced on 27 February 2020.

 * Note leverage is Net Debt/last 12 months adjusted EBITDA

> **Dr Andy Palmer, Aston Martin Lagonda President and Group CEO, said:**
> “From a trading perspective, 2019 has been a very disappointing year. Whilst retails
> have grown by 12%, our best result since 2007, our underlying performance will
> fail to deliver the profits we planned, despite a reduction in dealer stock levels.
> We are taking a series of actions to manage the business through this difficult
> period. This will include a cost saving programme alongside a focus on returning
> dealer stock levels to those more normally associated with a luxury company; winning
> back our strong price positioning is a key focus.
> The signs from the launch of the DBX are very encouraging and the order rate seen
> to date is materially better than for any of our previous models. Launch plans
> are progressing well and we are achieving all of our key operational milestones.
> Start of production remains on track for Q2 2020.
> Whilst we are disappointed with trading performance in 2019, our focus is now 
> on revitalising the business, launching DBX and ensuring profitable growth in 
> the medium-term.”

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