4th May 2022 14:45
(Alliance News) - Aston Martin Lagonda Global Holdings PLC switched drivers, opting for Italian sports car pedigree over German precision, but the UK company and its Canadian billionaire chair face an upward struggle, analysts said on Wednesday.
And if the Warwick, England-based luxury carmaker became an acquisition target, it would be the German peer, Mercedes-Benz Group AG, that would be in pole position to make an offer.
Aston Martin confirmed the appointment of Amedeo Felisa as chief executive officer, with immediate effect. He replaces Tobias Moers, who is stepping down after two years in the role since 2020. The announcement on Wednesday confirmed an earlier report by the Financial Times newspaper.
Felisa was CEO of Ferrari NV from 2008 and 2016. He joined the Aston Martin board as a non-executive director last summer.
Moers was brought into Aston Martin by Executive Chair Lawrence Stroll, having been CEO of the AMG sports car arm of Mercedes-Benz. Canadian billionaire Stroll has a 22% stake in Aston Martin after providing a cash injection to the company in 2020, while Mercedes-Benz has a 12% holding.
Aston Martin also has hired Roberto Fedeli as chief technical officer, taking on the second role held by Moers. Fedeli was at Ferrari for 26 years. Aston Martin said he is considered the creator of Ferrari LaFerrari, the Modena, Italy-based company's first hybrid supercar
Stroll explained on Wednesday, "there is a need for the business to enter a new phase of growth with a new leadership team and structure".
He added: "I am extremely pleased that Amedeo has agreed to take on the role of CEO. He has extensive knowledge of both Aston Martin's business and the wider automotive industry with an excellent track record and previous experience of leading a major ultra-luxury car manufacturer. His technical acumen and charisma will be inspirational for the entire company."
Aston Martin shares were 9.9% higher at 929.00 pence on Wednesday afternoon in London, the best performer in the FTSE 250. However, the stock remains down more than 50% in the past 12 months.
Also on Wednesday, Aston Martin reported a first-quarter operating performance in line with expectations, with growth in revenue on strong pricing but a widened loss through higher expenses.
For the three months ended March 31, Aston Martin posted a pretax loss of GBP111.6 million, widened from GBP42.2 million in the same period a year before, as a result of ballooning operating expenses.
More positively, revenue grew 3.7% to GBP232.7 million from GBP224.4 million a year prior, with the increase being driven by a rise in the core portfolio's average selling price to GBP151,000 from GBP149,000, and the Valkyrie programme making 14 deliveries.
The Valkyrie is a limited production hybrid sports car that comes with a price tag of GBP2.5 million.
Adjusted earnings interest, tax, depreciation, and amortisation rose 18% to GBP24.4 million from GBP20.7 million.
Looking ahead for 2022, Aston Martin still expects an 8% rise in core volumes and a 50% improvement in adjusted core Ebitda.
"We are poised to deliver good growth in 2022 and remain extremely confident in the medium and long-term prospects as we transform Aston Martin into the world's most desirable ultra-luxury British performance brand," Stroll said.
Aston Martin said a 14% drop in wholesale volumes to 1,168 in the first quarter from 1,353 a year ago was partly due to preparations for the start of production of the DBX707.
The DBX707, which Aston Martin touts as the world's most powerful luxury SUV, launched in February. The company said the DBX orderbook was up 60% on the prior year.
Not everyone is convinced Aston Martin has the right products to compete in the ultra luxury segment.
"Aston Martin is falling behind Ferrari and Lamborgini as their key models age in a premium sector where fresh design is especially valued," commented Harry Barnick, a senior analyst at research house Third Bridge.
"The DBX has aged and our experts suggest the 707 lacks the necessary upgrades to improve volumes. The core DB11 model is also in need of replacement."
Aston Martin suffers from high debt at a time when input costs are rising and significant investment is needed to shift to electric vehicle production, Barnick said.
Laura Hoy, equity analyst at Hargreaves Lansdown said: "Without an electric car on the menu, Aston Martin could be stuck at the back of the pack. The group's made great strides after being slow off the mark, but now that the energy transition's ramping up its lack of electrification is all the more glaring."
To Aston Martin's credit the British car marque will launch its first plug-in hybrid - the mid-engined Valhalla - in 2024 and its first electric vehicle in 2025, with a fully electrified core range by 2030, when it will have net-zero emissions in its manufacturing facilities.
Still, the 12% stake held by Mercedes "puts it in a strong position to acquire Aston Martin down the road", Third Bridge's Barnick noted.
By Dayo Laniyan; [email protected]; and Tom Waite; [email protected]
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