Aston Martin shares higher profitability forecast for 2023

  • Aston Martin Lagonda’s pre-tax losses ballooned in 2022, but an improvement in EBITDA and wholesale unit guidance for 2023 boosted shares.
  • The company aims to become “sustainably positive free cash flow” from 2024.

The exterior of an Aston Martin store.

Jeremy Moeller | Getty Images News | Getty Images

LONDON — British luxury carmaker Aston Martin Lagonda expects better profitability this year, after widening its pre-tax losses in 2022 due to the weakening British currency.

The company more than doubled pre-tax losses year-on-year to £495m ($598m) in 2022 from £213.8m in 2021, saying profits had been “significant” by a revaluation of some US dollar-denominated debt, “as the pound sterling (UK currency) weakened significantly against the US dollar during the year.”

Adjusted operating losses also increased to £118m last year, from £74m in 2021. Revenue was up 26% on the year to £1.38bn, with gross profit up 31% year-on-year to £450.7m.

Despite acknowledging supply chain and logistics disruptions – which have been pervasive in the auto industry, particularly due to semiconductor shortages – the company said its wholesale volumes were up 4% year-on-year to 6,412. The figure included more than 3,200 vehicles from the Aston Martin DBX range, more than half of which were driven by the launch of the DX707 SUV model unveiled in February last year.

Shares of Aston Martin Lagona soared 14% at 10am London time after Aston Martin Lagonda issued a more optimistic outlook for this year.

“For 2023, we expect significant growth in profitability compared to 2022, mainly driven by higher volumes and higher gross margin in main and special vehicles,” he said on Wednesday, signaling a recovery. activity in the second half. 2023.

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

The company expects wholesale volumes to reach 7,000 units in 2023, anticipating that its adjusted earnings before interest, taxes, depreciation and amortization will add around 20%.

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

“Our order book has never been stronger,” Lawrence Stroll, executive chairman of Aston Martin Lagonda, told CNBC last month. “The future is fantastic, the cars are coming, the fundamentals of the business are extremely strong. And the demand has never been greater.”

Stroll on Wednesday reiterated the company’s goal of delivering 10,000 wholesale units over the next few years, as well as a goal of becoming “sustainably positive free cash flow from 2024,” after raising $654 million. pounds of equity in a move that also saw Saudi Arabia. The Public Investment Fund becomes a reference shareholder.

“Over the past three years I have consistently referred to our target of generating around £2bn in revenue and £500m in adjusted EBITDA by 2024/25,” said Stroll. “I am extremely proud that given the tremendous progress we have made in transforming Aston Martin into a truly ultra-luxury business, demonstrated by the trajectory of our ASP and gross margin, we are on track to achieve these financial objectives, but with a significant drop in volumes than I initially envisaged.”

“Consensus-consistent 2022 is already good news for AML,” Jeffrey analysts said in a Wednesday note, pointing to the company’s guidance advantage on units and EBITDA margin.

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