Aston Martin flags big second-half recovery in interim results

(Sharecast News) - Shares in Aston Martin Lagonda were in the green on Wednesday morning, after it reiterated its 2024 guidance in its half-year results, including positive free cash flow in the second half. The FTSE 250 luxury carmaker said its wholesale volumes were down 32% in the first half to 1,998 units, aligning with its planned transition to new Vantage and upgraded DBX707 models.

Despite that decline, its total average selling price rose 29% to £274,000, driven by increased Specials volumes and enhanced personalisation options.

Revenue for the period was 11% weaker at £603m, impacted by lower volumes and foreign exchange headwinds.

Gross profit remained relatively stable, with a slight decrease of 1% to £233m.

The company said its gross margin improved 370 basis points to 39%, supported by a strong mix of higher-margin Specials and personalisation options.

Adjusted EBITDA for the six months ended 30 June was £62m, a 23% decrease from the first half of 2023, reflecting lower core volumes during the transition period.

The company reported an operating loss before tax of £106m, a 14% increase compared to the prior year, due to the transitional phase of its portfolio.

Net cash outflow from operating activities was £72m, with a free cash outflow of £313m, primarily due to capital expenditure on future product development and increased inventories.

Aston Martin successfully refinanced in the first quarter, establishing a new upsized revolving credit facility.

As of 30 June, total liquidity stood at £247m, and net debt was £1.19bn, reflecting higher gross debt and a lower cash balance.

Looking ahead, the company said it anticipated significant growth in the second half, driven by the launch of new models, including the V12 flagship Vanquish and the ultra-exclusive Special Valiant.

Wholesale volumes were expected to ramp up significantly, leading to substantial growth in gross profit and EBITDA in the second half.

Third-quarter volumes were projected to improve materially compared to the second, with the fourth quarter being the most significant for volumes and financial performance.

Aston Martin said it remained confident in delivering its full-year financial targets, including enhanced profitability, gross margin improvement to around 40%, and EBITDA margin expansion into the low-20s.

The company said it expected free cash flow to turn positive in the second half, supported by continued improvement in working capital management and disciplined capital investment.

Its medium-term outlook for 2027-2028 remained unchanged, with targets including revenue of around £2.5bn, a mid-40s gross margin, adjusted EBITDA of around £800m, and a net leverage ratio below 1.0x.

Aston Martin said it was planning to invest around £2bn from 2023 to 2027 to support long-term growth and the transition to electrification.

"In line with prior guidance, our execution in the first half of the year focused on the successful delivery of our new Vantage and upgraded DBX707 and we remain on track to deliver a strong second half performance," said executive chairman Lawrence Stroll.

"This will be underpinned by a significant ramp up in wholesale volumes including both the new V12 flagship Vanquish and ultra-exclusive Valiant Special, which we recently unveiled at Goodwood with Fernando Alonso.

"Our high performance products and ultra-luxury brand positioning strategies are creating strong demand amongst a new audience and existing loyal customers."

Stroll said the Vantage's "extremely positive" media reception and reviews positioned it "at the very top" of the sports car segment, while the upgraded DBX707 with new interior and "state-of-the-art" infotainment and the "multi-award-winning" DB12 underpinned the strength of the company's next generation models.

"In tandem, Formula One continues to drive considerable excitement and reappraisal of our brand with new and existing audiences.

"Earlier this year we successfully completed our planned refinancing, securing improved five-year terms following credit rating agency upgrades, and enhancing our liquidity through a new increased revolving credit facility provided by our existing lenders.

"We were also delighted to announce that Adrian Hallmark will become our new chief executive officer."

Aston Martin confirmed on Wednesday that Hallmark's appointment would take effect on 1 September.

At 1035 BST, shares in Aston Martin Lagonda Global Holdings were up 10% at 165p.

Reporting by Josh White for Sharecast.com.