Discussion
Pre-tax profits up to £21.1m for the first half of the year, mainly attributed to the DB11. AM PR link
Andy Palmer said:
Today we announce record first half profit; revenues doubling yoy to £410.4m. W/sale up 67%. LTM revenues now exceed $1B. Pretax profit £21m
Pleased to see the cashflow too (I'm not overly keen on the capitalising of development spend (and then subsequent write-down a few years later)). So stakeholders in various forms should be happy
FT talking about an IPO again within 2 years, which seems realistic if we can get a decent Brexit transition arrangement. With the new Vantage launch coming soon, it's onwards and upwards!
FT talking about an IPO again within 2 years, which seems realistic if we can get a decent Brexit transition arrangement. With the new Vantage launch coming soon, it's onwards and upwards!
Considering the long history that we are all aware of, it is very good news to announce a pre-tax profit.
£21·1m Pre-tax from Revenue of £750m. Only a 2.8% margin though, but you could say that is better than TESLA.
I do hope that AML does not go for a stock exchange listing. It would provide an opportunity for the present investors to get out (is that where the IPO pressure might be coming from?), and give a chunk of fees to the City. It might even be an easy sell, because of the glamour aspect and also the high recent sales of new models. Longer term though, when economic conditions change, there is always nowhere for public companies to hide. Then there is that enormous debt, although I suppose a float could swap some of that into equity.
In the car business, if a new model is well received, it will sell well first of all, but then the level of sales always begin to fall (ref chart below showing the DB9 (UK only), which created enormous excitement when launched). The present big seller DB11, is of course enjoying the honeymoon sales phase. The present plan is to have a flow of models, introduced at stages to keep the total sales up, as earlier models begin to tail off. Certainly a good strategy providing that all introductions are hits, but being realistic about this, it will be the next recession that will be the real tester. Just look back to what happened to AML's total sales after 2007. Outside circumstances.
We all wish the Company every success.
Edited by Jon39 on Friday 25th August 17:58
I'd work on the basis that the primary purpose of the listing would be to provide access to further capital to invest in the business, cashing in from the current owners wouldn't go down too well
Should also be a secondary benefit in that by having access to equity capital markets bondholders are in a stronger position so debt costs could fall further
Yes it puts the company in the public eye, but then Aston Martin always has been. And I can't believe the current "professional" management team will want to remain as a capital/cash constrained business if they see real opportunities to develop the brand further
Should also be a secondary benefit in that by having access to equity capital markets bondholders are in a stronger position so debt costs could fall further
Yes it puts the company in the public eye, but then Aston Martin always has been. And I can't believe the current "professional" management team will want to remain as a capital/cash constrained business if they see real opportunities to develop the brand further
RobDown said:
1. I'd work on the basis that the primary purpose of the listing would be to provide access to further capital to invest in the business, cashing in from the current owners wouldn't go down too well
2. Should also be a secondary benefit in that by having access to equity capital markets bondholders are in a stronger position so debt costs could fall further
3. Yes it puts the company in the public eye, but then Aston Martin always has been. And I can't believe the current "professional" management team will want to remain as a capital/cash constrained business if they see real opportunities to develop the brand further
2. Should also be a secondary benefit in that by having access to equity capital markets bondholders are in a stronger position so debt costs could fall further
3. Yes it puts the company in the public eye, but then Aston Martin always has been. And I can't believe the current "professional" management team will want to remain as a capital/cash constrained business if they see real opportunities to develop the brand further
A listing is an interesting topic for us to discuss, but we had better not go much further, because car talk is more fun here.
'Ref 1. The present debt is so high in relation to profits, that if equity capital could replace some of that, it would seem preferable.
I just fear that if a recession caused orders to plummet, as in 2008, having a £500m debt could spell big trouble, for what then would be loss making company again.
No names but one big investor works on the private equity basis, and they usually make acquisitions to hold for a fairly limited number of years. To get the profits up, establish a (short in terms of history) track record, then float at a favourable price, would be ideal for a private equity exit. We have seen it so often before. I can remember one quoted company (very well known name), which was bought by a private equity business, then a while later, floated once again. It was floated with (of course) glowing praise for the future prospects. You don't have to be an investment genius, to wonder why anyone would sell such a supposedly wonderful business. Sure enough after the float, profit warnings followed and the IPO investors were not at all happy. I think it is now valued at only half the flotation price.
Ref 3. When I say a quoted company is very visible, I am referring to the SE obligations, not being in the public eye. We saw this week Provident issue a (another I think) profits warning and instantly the company had 60% taken off it's value. As you know, investors put their money into quoted businesses and expect growth. I am just thinking a few years after a float. If AML later on had difficulties, and the share price plunges, then there is a big risk of someone / anyone turning up and buying a cheap trophy company. They might have the money to do that, but would they be able to run the business.
As you see, my concerns are for the longer term continuation of AML, and I just fear that a quote poses risks for smallish companies, which cannot produce steady and continuing growth. The luxury car business has tended historically, to have both good and bad times. Ferrari is a very different business when considering their financials.
I would be interested in your reply Rob, but we had better stop then.
Agent57 said:
That chart does not make sense even seeing behind the thumb snap logo. Is that just DB9s or all AMs?
Hmm, yup seemed a bit off to me - must be just one model.This is the lastest graph from howmanyleft for ALL Aston New Registrations - its a little flatter, and hopefully 2017 will prove to be the best year in a decade for them.
I'm not really sure public listing is a good idea for AM, but then what do I know...
A listing is an interesting topic for us to discuss, but we had better not go much further, because car talk is more fun here.
'Ref 1. The present debt is so high in relation to profits, that if equity capital could replace some of that, it would seem preferable.
I just fear that if a recession caused orders to plummet, as in 2008, having a £500m debt could spell big trouble, for what then would be loss making company again.
No names but one big investor works on the private equity basis, and they usually make acquisitions to hold for a fairly limited number of years. To get the profits up, establish a (short in terms of history) track record, then float at a favourable price, would be ideal for a private equity exit. We have seen it so often before. I can remember one quoted company (very well known name), which was bought by a private equity business, then a while later, floated once again. It was floated with (of course) glowing praise for the future prospects. You don't have to be an investment genius, to wonder why anyone would sell such a supposedly wonderful business. Sure enough after the float, profit warnings followed and the IPO investors were not at all happy. I think it is now valued at only half the flotation price.
Ref 3. When I say a quoted company is very visible, I am referring to the SE obligations, not being in the public eye. We saw this week Provident issue a (another I think) profits warning and instantly the company had 60% taken off it's value. As you know, investors put their money into quoted businesses and expect growth. I am just thinking a few years after a float. If AML later on had difficulties, and the share price plunges, then there is a big risk of someone / anyone turning up and buying a cheap trophy company. They might have the money to do that, but would they be able to run the business.
As you see, my concerns are for the longer term continuation of AML, and I just fear that a quote poses risks for smallish companies, which cannot produce steady and continuing growth. The luxury car business has tended historically, to have both good and bad times. Ferrari is a very different business when considering their financials.
I would be interested in your reply Rob, but we had better stop then.
[/quote]
Totally agree, we don't want to spend too much time on the financials. But my thoughts would be
1. In a previous life/career we worked on the basis of PE having a 7-8 year life cycle. But there's more flexibility than that and if Palmer has the plan I would expect them to stick with him. Certainly Investors will cry foul if they see the two big existing players cash in at what is supposed to be the beginnings of a growth cycle.
2. Proceeds could in part be used to pay down debt. But it doesn't make for an exciting equity story. Raising money to launch an electric vehicle or the SUV is far more interesting (no pun intended). I note the press release from AML quotes EBITDA coverage ratios improving, so the company itself is trying to demonstrate current debt is manageable
3. I hear you on public disclosure (poor old Provis, only time I went to meet management to be offered fish and chips for lunch in the boardroom!). But AML are as I said in the public eye already, both of because of who they are and because of he public bond issues that require certain disclosures. Of course we can all worry about the impact of a recession (it's Aston Martin after all!) but if the listing is a minority one only (guessing it will be) then there's no danger of a take-over on the cheap
My sense is your real concern (and one I share) is that this is Aston Martin. The good times never seem to last long and the wolves are always at the door. But I'd be minded to think that a partial IPO and a longer term investment plan (plus the geographic diversification Andy Palmer is pushing for) is the best defence against a future downturn. But of course purely a personal view
Now back to the cars
IanV12VR said:
Don't understand the graphs at all. In 2006 Aston sold 7k cars so they make no sense whatsoever. What are they meant to show?
I did state with my chart Ian, ' chart below showing the DB9 (UK only) '.
What it is meant to show, is the usual sales trend during the lifetime of a car.
ie. in the case of DB9, it was greatly admired at launch and so there was instantly strong demand from buyers.
Once that extra initial demand is satisfied, then the point comes when sales numbers begin to decline.
You could look at different models, and see a similar trend.
I suppose in the case of these cars, a proportion of initial buyers just want the latest, then move on when another car catches their attention.
I used this sales trend illustration, because the present AML financial figures are boosted by this pattern of strong initial demand for the DB11. At some particular point though, the DB11 graph will follow a similar pattern to that shown in the DB9 chart.
This is of course why Dr. Palmer wants new model introductions to be staggered. When one graph peak may start to go down, another new main model introduction should create its own peak. As you know, it does need demand. There probably isn't much of a graph peak for the Cygnet.
Edited by Jon39 on Friday 25th August 22:57
Well it's nice to know that having bought 2 new vanuish's in the last 12 months I've contriuted, but should have held out for a better deal 
It's great to see I think Andy Palmer is doing wonders for the company despite some questionable capitalisations. Having emailed previously and him replying within minutes and sorting my "questions" this sort of personal touch and care goes a long way! Let us hope it continues!
Ummm..... although ti does occur to me if AM collapse then my Vanbquish S will probably appreciate quicker
It's great to see I think Andy Palmer is doing wonders for the company despite some questionable capitalisations. Having emailed previously and him replying within minutes and sorting my "questions" this sort of personal touch and care goes a long way! Let us hope it continues! Ummm..... although ti does occur to me if AM collapse then my Vanbquish S will probably appreciate quicker
Gassing Station | Aston Martin | Top of Page | What's New | My Stuff