Aston Martin set for IPO
BY RON HAMMERTON | 30th Aug 2018
ASTON Martin has announced plans to float on the London stock exchange later this year after being buoyed by record profits and growing demand for its new models, especially in Asia.
Ironically, the announcement by the privately-owned British luxury sportscar-maker came as the investment rating of its former owner, Ford Motor Company, was downgraded by Moody’s Investor Service to one step above junk bond status after the credit agency took a negative view towards Ford’s medium-term prospects.
In January, Ford announced plans to restructure, saying it would slash costs by more than $US25 billion ($A34b), axe most of Ford’s sedans in North America and invest $US11 billion ($A15b) in electrified vehicles.
Ford – the only one of the United States’ Big Three motor companies to come through the global financial crisis without government bail-out – has pooh-poohed the downgrade, pointing to its strong financial results over the past decade.
Ford once owned Aston Martin as part of its Premier Automotive Group, selling it in 2007 to a consortium headed by Prodrive chairman David Richards backed by several investors, including Kuwaiti investment fund Investment Dar.
In 2012, Italy’s private equity firm Investindustrial bought a 37.5 per cent slice of Aston, while Germany’s Daimler acquired a 5.0 per cent stake as part of a technology supply deal a year later.
Aston has suffered seven bankruptcies since it was founded in 1913, but now under former Nissan product development chief Andy Palmer – CEO since 2014 – it has forged into the black.
When Ford owned the brand, it produced about 900 cars a year, but Aston expects it to sell up to 6400 vehicles globally this year, rising to 9800 in 2020. Ultimately, it wants to make 14,000 cars a year, with some of that volume generated by its planned Lagonda brand that will spearhead Aston’s electric vehicle thrust.
New models including the DB11 Volante, the DB11 AMR and Vantage are already on stream, with the new high-end DBS entering production soon.
Mr Palmer has told British journalists that at least 25 per cent of the company will be offered in the IPO, with Investindustrial and Investment Dar both selling part of their holdings. Daimler is expected to retain its chunk.
Britain’s Financial Times speculates that the IPO could value the company at £5 billion ($A8.9b).
Meanwhile, across the Atlantic, Moody’s sent a chill through the United States automotive industry by downgrading Ford stock from Baa3 from Baa2 with a negative outlook, placing it one step above junk status.
The credit agency cited the erosion in the company’s global business position and “the challenges it will face implementing its Fitness Redesign program”.
The Fitness Program is the restructuring regime introduced by Ford CEO Jim Hackett to bring America’s second biggest motor company up to speed against rivals that are rapidly rolling out vehicles with modern technologies such as electric motors and autonomous driving controls.
Moody’s said the restructuring was necessary, but it questioned how long it would take to achieve, and how Ford could invest in restructuring its business while simultaneously spending billions of dollars on new technologies.
“Ford’s negative outlook recognises the significant challenges of effectively executing the full scope of the Fitness program, and the extended time period over which material benefits might be achieved,” it said
“In addition, the considerable financial and managerial resources devoted to the Fitness program will reduce Ford’s ability to contend with any unexpected cyclical downturn.”
Ford said in a statement that the company had delivered strong financial results for nearly a decade, and had a strong balance sheet that provides financial flexibility.
“We know we can capitalise on our strengths, bolster under-performing products and regions and disposition where we cannot make an appropriate return,” it said. “We’re confident that as we do, the market will recognise our progress.”
