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Aston Martin Falls as Brexit Hurts U.K. Sales After Pricey IPO

An Aston Martin DB11 automobile sits in the final inspection area at the Aston Martin Lagonda Ltd. manufacturing and assembly plant in Gaydon, U.K., on Tuesday, Sept. 4, 2018. Aston Martin is preparing to list its shares in London after the brand synonymous with U.K. spymaster James Bond pulled off a multi-year turnaround. Photographer: Chris Ratcliffe/Bloomberg

Aston Martin fell the most since its controversial initial public offering last year as the luxury carmaker said some U.K. and European buyers are delaying purchases amid uncertainty around Brexit.

The stock dropped as much as 18 percent and was trading 17 percent lower at 1,138.6 pence as of 10:45 a.m. in London. That’s less than two-thirds of the 19-pound price at which the Gaydon, England-based company sold shares.

Aston Martin is struggling to gain traction with investors after an IPO that valued its stock on a par with Italian supercar leader Ferrari NV, which in turn trades at multiples more in line with those of luxury goods companies than other automakers.

Chief Executive Officer Andy Palmer says October’s valuation was justified by plans to double output to 14,000 vehicles by 2023, yet the company won’t be able to significantly lift production until a new plant begins deliveries of the DBX SUV model next year.

Adding to concerns that the IPO was overpriced are misgivings linked to Brexit, trade tensions and slowing global auto markets.

While 30 million pounds ($40 million) of working capital set aside to deal with the worst outcomes from leaving European Union may not be needed as Prime Minister Theresa May moves toward ruling out a no deal split, warnings from Palmer about would-be buyers putting off purchases represent a new risk.

“I don’t think we’re going to lose actual sales but there is an impact,” he said in an interview. “Presidents of their own companies, for example, are asking themselves ‘do I buy in March, or do I delay?’” Though the group has been building U.S. and Asian sales, the U.K. remains its biggest market.

IPO costs pushed Aston Martin to a pretax loss of 68 million pounds in 2018 and the company said that earnings before interest, tax, depreciation and amortization will be lower this half, mainly in the absence of year-earlier gains from disposals.

At the same time, the company beat its 2018 car-sales target and predicted 7,300 sales this year, the effective limit of current capacity. The new plant at St Athan in Wales, which will build both the DXB and a lineup of electric models, is now complete and on track to enter production in the second half.

The company was also positive about sales in China, saying its vehicle range is better suited to market trends there than offerings from other luxury carmakers such as Jaguar Land Rover, which has reported a slump in demand.

“We said at the time of the IPO not to buy us if you are not going long-term,” Palmer said. “It’s all about growth through 2023.” DM

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