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Aston Martin’s losses mount on delayed deliveries and a weak pound sterling, but the automaker’s shares rise on positive cash flow in 2023
- Losses more than double to £527.7m in 2022 from £189.3m last year
- Automakers struggled to find microchips as Covid rules eased
- Aston Martin vehicles bought in 2022 for a record average of £201,000
Losses at embattled carmaker Aston Martin Lagonda mounted in 2022 amid a devalued pound and supply chain disruption that delayed the delivery of some vehicles.
Pre-tax operating losses more than doubled to £527.7 million in 2022, from £189.3 million the previous year, as the group was hit by currency movements that increased the cost of its US dollar-denominated debt.
Losses were exacerbated by brand investments and product launches, with new vehicles such as the V12 Vantage and Valhalla, and increased inventory costs to minimize logistical issues.
Results: Embattled carmaker Aston Martin Lagonda has reported a bigger annual loss amid a devalued pound and supply chain disruption delaying delivery of some vehicles
The luxury car company was unable to complete production and shipment of hundreds of DBX vehicles to America midway through the year due to parts shortages, resulting in lower sales prospects.
Auto purchases started to recover as Covid-related restrictions eased, but manufacturers are struggling to meet demand due to the difficulty of sourcing semiconductors and other vital components.
Despite these issues, solid fourth quarter performance and rising orders from the Europe, Middle East and Africa region helped Aston Martin increase annual wholesale volumes by 4 percent to 6,412, within the revised forecast.
Total sales also increased by more than a quarter to £1.38 billion, thanks to average vehicle sales prices hitting a record £201,000 and increased demand for its Valkyrie hybrid sports car model.
The group, which aims to be sustainably cash flow positive from 2024, swung to positive free cash flow of £37m in the fourth quarter.
And investors cheered the news that the company expects “significant” year-over-year growth and will become cash flow positive from the second half of 2023.
Aston Martin Lagonda Shares shot up 13.7 per cent to 228.6 pence on Wednesday morning, though they have plummeted by around 88 per cent from their £19 initial public offering price.
Amedeo Felisa, the company’s CEO, said: ‘Having navigated a challenging work environment in 2022, I am pleased with how we finished the year.
“We performed in line with expectations, took actions to address the near-term effects of supply chain issues, and continued to make progress in a number of key areas that will support our ability to meet strong customer demand and our growth ambitions. to live up to.’
Following the IPO, the company struggled with poor sales, a temporary closure of production facilities and the removal of excess inventory from dealer inventory.
It was saved from collapse three years ago when a consortium led by Canadian billionaire Lawrence Stroll bought a 16.7 per cent stake in the company, raising a further £382 million through a rights issue.
The company launched a further £653 million capital raise in 2022 that attracted Saudi Arabia’s sovereign wealth fund – the Public Investment Fund – and Chinese carmaker Geely, owner of the Volvo and Lotus motorcycle brands.
About half of the money is intended to be invested in the range, such as electric and hybrid vehicle offerings, while the other half is aimed at reducing debt and interest costs.
Aston Martin cut its net debt to £765.5m by the end of 2022 and said it is on track to deliver ‘significant growth’ in profitability this year, largely thanks to increasing volumes and gross margins from sales of its core and specialty vehicles.
It also believes it is on track to meet its goal of 10,000 wholesale volumes while cementing its status as an “ultra-luxury” brand.
All of the group’s Valkyrie Spider, DBR22, DBS 770 Ultimate cars and approximately 80 percent of the GT/Sport range are sold out for 2023, while the DBX order book extends into the third quarter.
Mark Crouch, an analyst at eToro, commented: “A focus on more expensive, higher value models may be a smart strategy more than ever as wealthier consumers remain more resilient than those lower down the economic ladders.
“Luxury as an investment segment is holding up demand, even in times of economic stress. We saw this during the pandemic when trends like “buying revenge” emerged, boosting luxury goods sales.”