Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Aston Martin has trimmed its delivery forecasts for the year after production delays to its latest flagship sports car, leading to a wider than expected loss in the three months to September.
The British carmaker said production of its DB12 had been hit by supplier issues and the integration of the car’s new infotainment system, meaning it now expects to sell 6,700 models this year, down from previous guidance of 7,000.
“Given the slight delays in the initial production ramp up we have marginally updated our volume expectations for the year,” said chief executive Amedeo Felisa.
Changes in the value of the company’s dollar-based debt as well as higher sales of sports cars helped the company to increase its core profitability, although it remained lossmaking in the third quarter.
Pre-tax losses almost halved year on year to £117.6mn, down from £225.9mn a year earlier, while revenues were 15 per cent higher at £362.1mn. However, adjusted operating losses stood at £48.4mn, higher than analysts’ estimates of £38mn. The company also missed expectations on cash flow and deliveries.
Barclays analyst Henning Cosman said the results were “unconvincing”, adding there were “question marks on execution and demand” in the business.
Shares fell by more than 15 per cent in early trading on Wednesday.
Aston Martin is in the process of renewing its core sports cars in order to drive higher demand and increase profitability, led by the DB12, which replaces the DB11.
Finance chief Doug Lafferty said all of Aston’s other forecasts for the year remain the same. He said issues with the DB12 were “now resolved” and that production was “now running at the rate required” to meet targets for the year.
More than half of pre-orders for the car were from customers who are new to the brand, said executive chair Lawrence Stroll, who said the model was “driving a reappraisal of Aston Martin amongst new audiences”.
Stroll, who led a bailout of the business in 2020, has been trying to lead a turnaround of the company, aiming to restore its luxury credentials among investors.
Average selling prices of Aston’s core models, which exclude its high-price special cars, fell 3 per cent to £183,000 due to “adverse geographic mix and the planned ramp-down of certain models” ahead of new launches.
Philippe Houchois, an auto analyst at Jefferies, said the 37.1 per cent gross margin on its cars was “stronger than expected”, helped by improved sales of its higher-priced “specials” models such as the £2.5mn Valkyrie hypercar.
The group’s debt pile stood at £750mn, a hangover of past emergency fundraisings. The group has raised money several times to try and reassure investors over its liquidity, and to try and begin paying down some of the debt.
On Wednesday, the business said “we intend to undertake a fulsome refinancing exercise during the first half of 2024”.
As part of its drive to restore Aston’s luxury credentials, the company has also been working to cut use of inventory, such as unsold cars in dealerships, to realign supply with demand. In the third quarter, Aston said it had a working capital outflow of £69mn “driven by increase in inventory to support the launch of next generation sports car models”, and that it expects this partly to change next quarter.
