Aston Martin close to £1bn in net debt
The struggling British sports car brand is on track to carry more net debt than its market valuation.
British sports car maker Aston Martin is approaching £1 billion in net debt, according to an earnings report released earlier this week.
Between January and March this year, the company recorded a net loss of £47.7m, with net debt of £956.8m, compared to £722.9m at the same time l ‘last year.
Net debt refers to the debt that would remain if all cash and assets were used to pay off what a company owes, meaning Aston Martin would be £1bn short if its obligations were due tomorrow.
Financial difficulties have plagued Aston Martin for some time.
According to Reuters news agency, Aston Martin has reported an operating loss for all but two years since 2010.
The company’s share price has fallen from 10,914.98 points to 902.60 on the GBX exchange since its IPO in 2018 – a staggering collapse of more than 90%.
Its market valuation has fallen from £4.33 billion to £1.08 billion, indicating that Aston Martin could potentially have more net debt than its total value in the not-too-distant future.
The news came as CEO Tobias Moers announced his departure earlier this week, reportedly over a row with executive chairman and controversial investor Lawrence Stroll over the brand’s allegiance to Mercedes-AMG.
Significant sums were spent on engine development and a unique vehicle platform under former CEO Andy Palmer, but sales have since fallen below expectations.
The Aston Martin DBX SUV (pictured above) has likely underperformed in its role as the company’s cash cow, with the Wales plant reportedly operating at 60 per cent capacity.
While Aston Martin has previously said the manufacturing plant can build 5,000 SUVs each year, in 2021 around 3,000 have been reported as sold globally.
Meanwhile, the Valkyrie hypercar faced numerous delays due to technical issues.
Conduct understands that deliveries to customers are not yet finalized.
Aston Martin pays an estimated £24m annual license fee to the Stroll-owned ‘Works’ Formula 1 team, although poor results have led some to question its return on investment.
However, shareholders don’t believe the situation is hopeless just yet – after yesterday’s announcements, shares rose slightly on hopes that new CEO Amedeo Felisa could turn the company around.
Aston Martin is one of many iconic British car brands to go through phases of spectacular financial failure, having declared bankruptcy seven times since its founding 109 years ago: in 1924, 1925, 1932, 1947, 1974, 1981 and 2007 .
Earlier this year Conduct announced that the company is preparing to launch an all-new electric car in 2025, potentially backed by the Mercedes-EQ platform.
However, it’s unclear how the recent departure of would-be Mercedes ally Tobias Moers – and rumors of plans to partner up with former Ferrari talent in Italy – may have impacted those plans.