Aston Martin shares plunge on volume target cut and lingering debt

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Aston Martin shares fell 11% at 10:01 a. m. London time on Wednesday morning, trimming losses suffered after the British luxury carmaker cut its volume target due to production issues of its new DB12 style and reported a bigger-than-expected quarter. loss.

The company’s shares had plummeted up to 20% in previous trading.

Aston Martin reported an adjusted operating loss of £48. 4 million ($58. 8 million) for the three months to the end of September and a profit of £362. 1 million, according to the company’s consensus of £370 million.

Deliveries of the next-generation DB12 sports car began last quarter and the company now expects volumes for 2023 to be 6,700 units, up from a previous forecast of around 7,000 units.

“The DB12’s production ramp-up has been impacted as supplier readiness and integration of the new EE platform supporting the completely revamped infotainment formula has been delayed,” Aston Martin said in its earnings report on Wednesday.

The company added that those issues are now resolved, but they affected third-quarter volumes and full-year production capacity.

Lawrence Stroll, Aston Martin’s chief executive, said the launch of the DB12 had generated “extraordinary demand” and attracted new customers, with 55 per cent of the original DB12 buyers new to the brand. The company will launch a second new sports car in the first quarter of 2024 and expects an “equally forceful response. “

“The start of deliveries of our next generation of sports cars is an important milestone that marks the start of an entirely new diversity of front-engined sports cars that will reposition Aston Martin as an ultra-luxurious, high-performance brand. , our expansion and take to higher levels of profitability,” Stroll added.

The company maintained its outlook for 2023 and cited this strong demand for next-generation sports cars as fuel for its money-making and margin plans.

The well-known British call aimed to raise more than £200 million from investors over the summer in a bid to pay off its mammoth debt.

Shareholders, along with Stroll’s investment consortium Yew Tree and Saudi Arabia’s Public Investment Fund, acquired new percentages in a bid to ease the debt burden. By the end of July 2023, the company’s percentage value had more than tripled from the all-time low. It was noticed in November 2022, but has since fallen back into a steady decline.

Russ Mould, chief investment officer at British brokerage AJ Bell, said the disappointing effects came at a bad time for Aston Martin’s hopes of a percentage value recovery.

“The company is experiencing strong demand but, with losses exceeding expectations, there is little explanation for why the market gives Aston Martin the advantages of doubt, even with the slightest misstep,” he said.

“At the moment, little credence is being given to a forecast of £2 billion in cash and £500 million in adjusted profit for 2024. “

Aston Martin recorded £750 million in debt in the third quarter, up from £766 million at the end of 2022, and said it remained focused on reducing debt and paying it off, as reported in July.

“The company still has a large amount of debt and continues painful efforts to deleverage on a strained balance sheet. Undoubtedly, progress has been made to address some of the problems facing the company, but it all comes down to too little. , too late,” Mould added.

“With shares trading at a tenth of the point at which they traded in 2018, the positive comparisons Aston Martin has made with Italian rival Ferrari are more fanciful than ever. “

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