Aston Martin shares surge as annual core profit beats estimates

By Scott Kanowsky

Investing.com -- Shares in Aston Martin Lagonda Global Holdings PLC (LON:AML) rallied by more than a sixth after the British sportscar maker reported better-than-expected full-year core earnings and predicted continued improvement this year.

Adjusted earnings before interest, taxes, depreciation and amortization climbed by 38% compared to the previous year to £190.2 million (£1 = $1.2072) in 2022, beating Bloomberg consensus estimates of £186.8M.

Wholesale volumes rose by 4% annually to 6,412, also ahead of analysts' projections, as strong demand for Aston Martin's DBX707 luxury sport utility vehicle helped overcome months of supply chain and logistics disruptions. Revenue increased by 26% as well, due in part to elevated pricing that offset an inflation-driven uptick in input costs and higher marketing expenses.

"For 2023 we expect to deliver significant growth in profitability compared to 2022, primarily driven by an increase in volumes and higher gross margin in both Core and Special vehicles," the Gaydon-based company said in a statement.

"More specifically, we expect significant year-on-year growth and positive free cash flow in the second half of the year."

Adjusted core income margin is seen expanding to around 20% this year, while wholesale volumes are projected to move up to approximately 7,000 units. Executive Chairman Lawrence Stroll added that Aston Martin will achieve its stated goal of delivering 10,000 cars over the coming years, along with "enhanced financial performance."

Analysts at Oddo noted that the results and outlook show good commercial momentum, although some executive risks remain and the financial position of the business is "precarious."

On a pre-tax basis, losses at Aston Martin more than doubled in 2022 to £495M, mainly due to deliveries of its Valkyrie hypercar. The group faces expenses from depreciation and amortization with each delivery of the £2.5M vehicle. Net outflows from deposits related to the Valkyrie came in at £18M during the year.

Aston Martin has moved to recapitalize itself several times in a bid to tackle a debt pile that stood at £765.5 at the end of December. Last year, a rights issue led to the addition of Saudi Arabia's Public Investment Fund as a shareholder. China's Geely (HK:0175) has also taken a stake in the company.

Shares in Aston Martin touched their highest mark since mid-July on Wednesday and are now up about 36% in 2023. However, the stock has slipped by more than 80% over the last one-year period.

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