Aston Martin has posted a larger third-quarter loss than last year because of high borrowing costs, despite sales more than doubling due to demand for its DBX sport utility vehicle.
The business took on £1.1bn of high-interest debt last October as part of a refinancing to provide much-needed cash to the business while it executes a turnround plan.
Financing costs hit £133m between August and October this year because of interest on the debt, much higher than the £79m Aston spent in the same period the previous year.
As a result, the company’s pre-tax loss for the quarter was £97.9m compared with a loss of £80.5m in the same period last year, despite improving conditions at the underlying business.
“The cost of it is higher than we would have wished,” finance chief Ken Gregor told the Financial Times. He said the business was likely to have significant interest payments until “probably 2023”, when it hoped to refinance the debt again.
“It’s locked in until we’re in a position to refinance,” he said, adding it would take longer for the business to achieve bottom-line profit, something the new management team had hoped to do this year.
Once financing costs were stripped out, Aston’s operating loss was £30.2m, compared with £69.8m in the same quarter of 2020.
It sold 1,349 cars in the quarter, compared with 660 a year earlier. Revenues rose to £237.6m from £124m as a result, while the average selling price of its core models was £148,000, up from £130,000 a year earlier.
Whether the company makes a profit in the final quarter of the year depends on shipments of the Aston Martin Valkyrie, its £2.5m ‘hypercar’.
The project has been plagued by delays, and the group has now pushed first expected deliveries into the final months of 2021.
“It slipped, we were really, really ambitious,” chief executive Tobias Moers told the FT, adding that it was a very complicated model, with just the roof taking six weeks to build. He said production was already “up and running”, with the company expecting to deliver double-digit numbers this year.
Moers said demand for its sports cars was “very solid”, with stock levels at dealerships at the lowest level in the company’s history.
Interest in the DBX, the SUV that Aston builds in its second factory in Wales, is “bang on expectations”, he added, saying that a new derivative of the model would drive orders.
The company had four cars in the latest James Bond film No Time To Die, of which only the DBS is currently manufactured.
Moers said that the impact of the film on sales was hard to judge, but that a new website that allows users to configure a car virtually had led to a tripling of referrals to dealerships.
The number of customers paying for additional features they tried out on the system also rose by 15 per cent, he said.
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