Aston Martin will continue to have Ford-made engines under the hood

06-Jul-2011 • Bond Style

Press Release
Luxury car maker Aston Martin has extended a deal with Ford Motor Co. (F) for the U.S. auto giant to continue supplying its engines, the chief executive of the U.K. company said Wednesday, even as it is looking to buy out Ford's remaining holding.

The engine-supply agreement had been due to expire in 2012, but Chief Executive Ulrich Bez told reporters that Aston Martin had exercised an option to extend it for four years until 2016.

The pact for the supply of engines from a plant in Cologne, Germany, guarantees continuity for Aston Martin, which was sold by Ford in 2007 to a consortium led by two Kuwait-based investment companies, Investment Dar and Adeem Investment Co., for $848 million.

Ford retained a $77 million stake, but Aston Martin last month raised GBP304 million in a bond issue, and part of the proceeds will be used to buy the Dearborn, Mich., auto maker's 40 million preference shares, or preferred stock.

Bez indicated that Aston Martin, whose cars have been featured in 10 James Bond movies, still was considering a initial public offering although it had no time frame.

"We will be ready when the time is right," he said. Speculation has swirled about an IPO for the past three years.

"There is a long-term desire" among shareholders for an IPO and such a move would follow the strategy of private-equity investors, said Bez, but he added that the existing shareholders wouldn't "disappear" following a flotation. Advisers for an IPO hadn't been appointed, he said.

"We do not need any additional equity to deliver what we have set out," added Chief Financial Officer Hanno Kirner.

The executives wouldn't be drawn on where an eventual listing would take place but Kirner noted that the current trend of luxury listings in Hong Kong. Italian fashion house Prada SpA (1913.HK) listed shares in Hong Kong only last month.

Aston Martin built 4,156 cars in 2010, up from 3,131 in 2009 but still below its peak of 7,281 in 2007. It remained profitable during the downturn and reported earnings before interest, tax, depreciation and amortization of GBP93 million last year.

That, said Kirner, was largely due to its ability to contain costs and to its pricing power, as the average sticker price for Aston Martins has climbed 50% from GBP70,000 in 2007 to GBP104,000 in 2010.

Aston Martin sees plenty of opportunities for growth, particularly in emerging markets like China. "We are very late to the market in China," said Bez, but the company expects to receive an import license imminently and will ramp up the number of its dealerships there in the next two years.

Bez, who is in his 60s, doesn't plan to retire anytime soon. He said he had signed a contract extension last year that will keep him at the Gaydon, England-based company until 2015.