4th Jun 2020 11:41
(Alliance News) - Aston Martin Lagonda Global Holdings PLC on Thursday said it plans to cut up to 500 jobs as part of a massive cost-cutting programme in the wake of the coronavirus crisis.
The FTSE 250 luxury car manufacturer confirmed its planned reduction in front-engined sports car production to rebalance supply to demand, but noted that its first sports utility vehicle, the DBX, remains on track for deliveries in the summer and has a strong order book.
Front-engined vehicles under Aston Martin's banner include the DBS Superleggera.
The move comes after a testing year for the car marque, as it was blighted with numerous profit warnings and the departure of Andy Palmer as chief executive at the end of May as part of an overhaul of the leadership and board by Canadian billionaire Lawrence Stroll.
In May, the company posted a GBP118.9 million pretax loss for the three months ended March 31, many times wider than the prior year's GBP17.3 million loss. Revenue plunged to GBP78.6 million from GBP196.0 million as the pandemic dragged down dealer demand.
The number of vehicles sold by Aston Martin almost halved in the first three months of the year, as it was hit by the beginning of the coronavirus crisis.
Turning back to the job cuts, Aston Martin said it will launch a consultation process of proposals to reduce the workforce, reflecting lower than originally-planned production volumes and improved productivity across the business.
"Aston Martin continues to take decisive action in other areas to reduce cost and remove non-critical expenditure from the business at every level including in areas such as contractor numbers, site footprint, marketing and travel," the company said.
The restructuring is expected to result in annualised incremental operating cost savings of around GBP10 million, reduced direct manufacturing costs in line with volumes of around GBP8 million, and reduced capital expenditure of GBP10 million. Costs in relation to the restructuring are expected to amount to GBP12 million in 2020.
Separately, the Warwickshire-based company said it has hired William Tame as a non-executive director, as a representative of shareholder Prestige/Strategic European Investment Group SARL.
Strategic European Investment is a subsidiary of Investindustrial VI LP, a fund managed by Investindustrial Advisors Ltd. Investindustrial Advisors also manages Prestige Motor Holdings SA and Preferred Prestige Motor Holdings SA, which combined own 31% of Aston Martin.
Tame was chair of Southern Water Services Ltd from 2015 to 2019, and senior independent director of Carclo PLC from 2006 to 2015. He was previously group finance director of Scapa Group PLC.
"I am very pleased to be announcing the appointment of Bill Tame to the board. He is a strong addition where his expertise and experience will be of great value to us. This is a very important time for the company as we manage through the current uncertainties and start to execute our plans to enable Aston Martin to become one of the preeminent luxury car brands in the world, delivering value for our customers, staff, partners and shareholders alike," said Chair Lawrence Stroll.
The stock was trading 5.0% lower at 65.38 pence each on Thursday morning in London.
By Ife Taiwo; [email protected]
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