Luxury sports car maker Aston Martin Lagonda (AML) has ditched its chief executive Andy Palmer after dire operating and share price performance.
Palmer was stood down as president and chief executive over the weekend, with the company moving swiftly to appoint Mercedes AMG man Tobias Moers as the new boss.
SHARES LEAP AS PALMER GOES
Aston Martin shares jumped more than 30% to 46.16p in morning trade on Monday as investors welcomed change at the top after dismal performance since the company joined the stock market in October 2018. Aston Martin has been one of the worst stock listings, certainly in recent memory.
Even after leaping today the stock is still worth barely a tenth of the IPO price, equivalent to about of about £5.50.
‘It’s a pretty damning indictment of Palmer’s tenure that the shares jumped this much after news of his sacking,’ said one market observer.
LONG RUN POOR PERFORMANCE
Things had already been pretty horrendous long before the Covid-19 pandemic, but the outbreak has been something of a coup de grace.
Earlier this month Aston Martin reported a sharp fall in first quarter sales, ballooning losses and pricing pressure. That saw the company pull full year guidance that already anticipated huge losses, with previous consensus forecasts pitched at £168m of pre-tax losses despite predicting sales of more than £1bn.
DEBTS PILE UP
Aston Martin has also faced huge cash flow challenges and soaring debt. The firm’s net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) remains dangerously high at 10.4-times EBITDA over the last 12 months. Lenders typically get nervous at multiples beyond three.
New Aston Martin boss Tobias Moers had previously run Mercedes AMG, part of Germany’s Daimler AG. It owns a 5% stake in the British firm and supplies the car maker with Mercedes AMG engines.
