May 18, 2024

Brighton Journal

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Aston Martin shares rise based on 2023 profitability forecast

Aston Martin shares rise based on 2023 profitability forecast
  • Aston Martin Lagonda’s pre-tax losses swelled in 2022, but improved guidance on EBITDA and wholesale units for 2023 boosted the stock.
  • The company intends to become a “Sustainable Free Cash Flow Positive” starting in 2024.

The exterior of an Aston Martin store.

Jeremy Mueller | Getty Images News | Getty Images

LONDON – British luxury car maker Aston Martin Lagonda expects better profitability this year, after widening its pre-tax losses in 2022 on the back of a weak British currency.

The company more than doubled its year-on-year pre-tax loss to 495 million pounds ($598 million) in 2022, from 213.8 million pounds in 2021, saying profits were “materially affected” by a revaluation of some US dollar debt. , ” Sterling pound [U.K. currency] It weakened significantly against the US dollar during the year.”

Adjusted operating losses also swelled to £118m last year, from £74m in 2021. Revenue rose 26% yoy to £1.38bn, with gross profit up 31% yoy to £450.7m sterling.

Despite acknowledging disruptions in the supply chain and logistics — which have been rife in the auto industry, particularly as a result of semiconductor shortages — the company said its wholesale volumes increased 4% year-on-year to 6,412. The figure included more than 3,200 vehicles from the range. Aston Martin DBX, more than half of which was driven by the launch of the DX707 SUV that was revealed in February last year.

Shares of Aston Martin Laguna were up 14% at 10am London time, after Aston Martin Lagonda issued more optimistic guidance for the year.

“We expect to deliver significant profitability growth for 2023 compared to 2022, primarily driven by an increase in volumes and higher gross margin in both core and special vehicles,” he said on Wednesday, pointing to a pickup in activity in the second half of 2023.

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“In addition to increasing the sold-out DBS 770 Ultimate, we expect deliveries of our first generation sports car to begin in the third quarter.”

The company expects wholesale volumes to reach 7,000 units in 2023, and expects its adjusted EBITDA to add approximately 20%.

He cited the continuing pressures of a volatile operating environment, high inflation rates and “pockets of supply chain disruptions”.

“Our order book has never been stronger,” Aston Martin Lagonda CEO Lawrence Stroll told CNBC last month. “The future is great, the cars are coming, the fundamentals of the business are very strong. Demand has never been stronger.”

Stroll on Wednesday reiterated the company’s target of delivering 10,000 wholesale units over the coming years, as well as its aim to become a “sustainable free cash flow positive from 2024”, after raising £654m of capital in a move that also saw Saudi Arabia become a fund. Public investment is a major contributor.

“Over the past three years, I have consistently indicated our target of around £2 billion in revenue and £500 million in adjusted EBITDA by 2024/25,” said Stroll. “I’m extremely proud that given the strong progress we’ve made to transform Aston Martin into a truly ultra-luxury company, as evidenced by our ASP trajectory and gross margin, we’re on track to meet these financial targets, but at significantly lower volumes than I originally envisioned.”

“In line with the consensus is really positive news for AML,” Jeffrey analysts said in a note on Wednesday, pointing to the upside for the company’s unit guidance and EBITDA margin.