Aston Martin shares hit skids after profits warning

The arrival of a new chief executive at Aston Martin Lagonda has prompted the luxury carmarker to rip up its financial plans for the year and cut production, sending shares in the company crashing.
An admission by Adrian Hallmark, the new Aston boss, headhunted from Bentley, that the Warwickshire-based business will miss its 2024 targets because the supply chain has been unable to deliver parts for the four models that have been upgraded over the last year, saw the stock plunge to a two year low, down 20 per cent, or 32p, at 127½p.
In what the company called “a strategic realignment” of its 2024 volume targets, it said it will now be producing 6,000 cars in the year, 1,000 fewer than previously guided, a cut of 14 per cent. It said that would “smooth the cadence” of the production run in future quarters.
It further admitted that contrary to previous pledges it would not be cashflow positive in the second half of 2024.
In a statement to investors, Aston Martin said production cuts had been ordered to “address disruption in its supply chain and continued macroeconomic weakness in China”.
It further explained: “Concurrent with the significant ramp-up in production for the second half of the year, following new model introductions, the company is experiencing a growing number of late component arrivals due to disruption at several of its suppliers. As a result, an increasing number of vehicles are taking longer to complete, with these issues impacting the efficiency of its operations and delaying the delivery of its vehicles.”
Not so long ago, the company was forecasting that by 2024 volumes would be 10,000.
While it had modified that because of its success of selling its cars at inflated prices – average selling prices were at £293,000 during the summer — it was still sticking to its promises of annual revenues would “substantially” be around £2 billion and underlying operating profits of £500 million.
Its stock broker, Goldman Sachs, is forecasting that Aston Martin’s revenues will actually come in 5 per cent lower in 2024 than last year at £1.54 billion.
Its underlying operating profits or ebitda — earnings before interest, tax, depreciation and amortisation — will also come in lower than 2023, down nearly 2 per cent at £269 million.
Goldmans expects bottom line losses to rise nearly 25 per cent to just shy of £300 million.
Henning Cosman, analyst at Aston’s joint broker Barclays, has long warned that the company’s expected hockey stick-shaped rise to profitability was based on heroic assumptions. In a note on Monday, Cosman said the plan has “proved too much in the end” and that the profit warning was “disappointing.”
It is understood that Aston Martin has been particularly hit by insolvencies at German car seat and dashboard suppliers, Recaro and Eissmann. Sales of the group’s bestselling Aston Martin DBX 4×4 have struggled in China.
Lawrence Stroll, 65, the billionaire Formula 1 enthusiast and Aston Martin Lagonda chairman since he rescued the company nearly five years ago, remained upbeat about the company’s prospects. He said his turnaround had always required “a long-term view of the necessary commitment” adding: “I remain steadfast in this view.”
Hallmark, 62, the fifth Aston chief executive in as many years and who has been in his new job for a month, was a little more sanguine. “Near perfect execution was required to meet the company’s ambitious 2024 plan. It has become clear that we need to take decisive action to adjust our production volumes for 2024 given a combination of supplier disruption [and] the weak macroeconomic environment in China.”
The company said it was confident of hitting its target of £2 billion sales and £500 million Ebitda in 2025. Goldman is forecasting the outturn will be £2.07 billion and £540 million. It is forecasting a 2025 pre-tax profit of £20 million.
Aston Martin has chosen the morning of the budget on October 30 to announce its third-quarter results.