In the last two weeks, both Aston Martin and Ferrari have reported their respective Q2 2020 results (McLaren does not report until the end of August so we will come back to them later). Normally in these types of articles I spend quite a bit of time going through the financial results and highlighting key numbers. This time I thought I would try something a bit different, instead of focusing on the numbers, which were in line with what I expected (Aston is still a train wreck and Ferrari turned in a very solid quarter given the circumstances), I would instead take a look at what the two executive teams said in their presentations and the question and answer sessions that followed. I have sat though more quarterly earnings calls than I care to remember, I always find it interesting what CEO’s say and even more so, what they don’t.
As Aston Martin reported first, we will start with them. This was Lawrence Stroll’s first earnings call since assuming the position of Executive Chairman. If you had no background on Aston’s most recent series of challenges, based on Stroll’s opening remarks, you would probably take away that this was a company in good shape with a bright well defined future (Aston Martin 1st Half Earnings Call Transcript). While management teams normally do try to put the best possible face on situations, I did expect a bit of balance to give it an aura of credibility. In this case it came across as a bit delusional given the depth of the mess Aston Martin is in today.
In terms of specific comments that were (or were not) made:
To say Stroll, Moers, and their teams have their work cut out for them is the understatement of the century. The current line up is a major challenge, the new complete lack of transparency on the DBX order book is highly concerning, and the Valkyrie program is still badly behind schedule. It’s going to take roughly another year of destocking before Aston can fully move to a model of building to demand.
The Ferrari Q2 2020 Earnings Report was a completely different tone and atmosphere from Aston Martin. Louis Camilleri comes off as both understated and completely in control. The earning’s call webcast, including the Q&A session, is posted: Ferrari Q2 2020 Earnings Call. My net takeaway from the call was that this was a company completely on top of both their business and the current situation.
In terms of specific comments that I found quite interesting:
Overall, Ferrari has, and continues to be, very well managed. The confidence of the management team in their business and its direction comes across clearly. The few challenges they are facing are more long term and strategic in nature than necessarily Covid-19 generated. In fact, the few current issues Ferrari does have, a waitlist that is too long and a manufacturing backlog, other companies would kill for.
Aston Martin and Ferrari might as well be in two completely different universes. Ferrari is a highly successful company doing a great job navigating in a challenging environment. The only area of concern I can see is related to mix dependency and portfolio fragmentation. Neither of these are Covid-19 related and are questions of long-term strategy. Aston Martin is trying very hard to project confidence and clarity of direction under new management while standing in the middle of a massive turd of a situation. While the confidence and vision maybe inspiring with the future bright, the present is still one big odious mess.
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