Aston Martin skids to new lows despite cutting its losses

Car manufacture

Aston Martin Lagonda saw its shares skid to fresh 16-month lows in spite of the London stock market’s only listed carmaker insisting that better efficiency at its factories in Warwickshire and south Wales will lead to higher margins and put the company on the road to profitability.

For last year, Aston reported a loss before tax of £213.8 million, which was worse than it hoped, because of delays in delivering its high-margin special edition £2.5 million-a-time Valkyrie, the hypercar which the company says is as close to a Formula 1 car that can legally be driven on the road.

The losses are half the £466 million chalked up in 2020, the year in which the Canadian tycoon Lawrence Stroll took control, engineered the pumping in of hundreds of millions of pounds and installed himself as executive chairman.

However, that did not stop the ongoing crash in Aston Martin stock, which has more than halved in price since a £22 peak last summer.

Yesterday the shares fell a further 6 per cent, down 69p at £10.29, valuing the company at £1.2 billion compared to the £4 billion at the time of its 2018 float.

Last year, Aston sold 6,178 cars, up from 3,394 in 2020, with nearly half those 2021 volumes coming from the marque’s first 4×4, the £150,000 DBX built in St Athan next to Cardiff airport. That took group revenues just above £1 billion in the year, up from £611 million. The company is projecting sales volumes in 2022, rising about 8 per cent to more than 6,600.

While Aston Martin does not expect to get into profit on the bottom line this year, it is forecasting that its underlying “ebitda” earnings, which are struck before hefty financing bills and accounting for depreciation, will rise to about £205 million.

The company’s heavy borrowing, and the high interest rates it had to sign up to during a company crisis that almost pushed the company to insolvency, a routine situation for the company over the century of its existence, continues to weigh heavily.

With its net debt worsening by 22 per cent to £891 million and its cash pile expecting to dwindle from £420 million to £125 million, it admits its annual interest bill will leap from £137 million to £170 million.

Aston knows its needs to refinance that, but finance director Ken Gregor said uncertainties in capital markets means that is an issue that will not be fixed until 2023. Stroll insisted the situation would not mean having to raise more money on the stock market.

With a line-up of four new sportscars due in 2023, its plug-in £700,000 Valhalla coming in 2024, and the promise of a first all-electric vehicle in 2025, Stroll said: “We have a strong pipeline of extraordinary products.”

The market appears not yet to be buying the story. “I don’t understand,” said Stroll when asked what the market is not getting. “We have cleaned up the inventory, we are fully financed and we are selling more cars. You tell me.”