Sunday, March 26, 2023

Aston Martin cuts full-year forecasts as losses mount

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Aston Martin blamed supply chain woes as it cut sales and profitability forecasts for the year, after debt payments and costs from unfinished vehicles more than doubled losses in the third quarter.

The luxury sports car maker had expected to sell 6,600 cars in the year, and increase its adjusted profit margin by 350-450 basis points.

On Wednesday the company said it would only sell 6,200-6,600 cars, and margins would increase by 100-300 basis points during the year.

The carmaker’s shares dropped more than 13 per cent in early London trading on Wednesday. They have had more than 80 per cent of their value wiped off this year.

Revenues in the third quarter rose by a third to £315.5mn as average prices increased by 28 per cent to £189,000.

But pre-tax losses mounted, rising to £225.9mn from £97.9mn in the same quarter a year earlier, after costs for new investments and a non-cash revaluation of some of its debt that is priced in US dollars.

It took a £245mn accounting hit on the value of its debt because of the falling pound in the first nine months of the year, and paid out £65mn in debt interest payments.

The company raised £654mn through a funding deal that included a heavily discounted rights issue, and by bringing in Saudi Arabia’s Public Investment Fund as a shareholder to shore up its finances and help it pay down some of its debt.

Aston said it had 400 unfinished vehicles that were waiting on parts, costing it £106mn in inventory costs, at the end of September. This echoes a problem the company faced in the previous quarter, when it said that it had 350 models waiting for parts.

During the quarter the carmaker wrote off £71mn from past investments into its current line-up of cars and spent £213mn on the upcoming sports car range that are due to come out next year.

“Over the last two quarters we have encountered specific supply chain challenges that have delayed our ability to meet customer demand,” said chair Lawrence Stroll.

The “headwinds” are improving in the fourth quarter but have “modestly” hit its full-year guidance, he said, adding that the medium and long-term outlook is “robust”.



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