Aston Martin losses mount on delayed deliveries and weaker sterling

Aston Martin losses mount on delayed deliveries and sterling weakness but carmaker’s shares soar as it eyes positive cash flow in 2023

  • Losses more than doubled to £527.7m in 2022 from £189.3m the previous year 
  • Automakers struggled with sourcing microchips as Covid rules were relaxed
  • Aston Martin vehicles were bought for a record average £201,000 in 2022

Embattled carmaker Aston Martin Lagonda losses mounted in 2022 amid a devalued pound and supply chain disruption delaying deliveries of some vehicles.

Pre-tax operating losses more than doubled to £527.7million in 2022, from £189.3million the previous year, as the group was hit by currency fluctuations increasing the cost of its US dollar-denominated debt.

Losses were compounded by brand investment and product launches, with new vehicles like the V12 Vantage and Valhalla, and higher inventory costs incurred to minimise logistics snags.

Results: Embattled carmaker Aston Martin Lagonda has reported a larger annual loss amid a devalued pound and supply chain disruption delaying deliveries of some vehicles

The luxury car company could not finish making and transporting hundreds of DBX vehicles to the Americas during the middle of the year because of parts shortages, resulting in a reduced sales outlook.

Automotive purchases began rebounding as Covid-related restrictions were relaxed, but difficulty sourcing semiconductors and other vital components have manufacturers struggling to satisfy demand.

Despite these problems, a solid fourth-quarter performance and rising orders from the Europe, Middle East and Africa region helped Aston Martin boost wholesale yearly volumes by 4 per cent to 6,412, within its revised forecast range.

Total revenue also jumped by over a quarter to £1.38billion, thanks to the average selling price of vehicles reaching a record £201,000 and higher 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 in fourth quarter at £37million. 

And investors cheered news that the firm expects ‘significant’ year-on-year growth and to become cash flow positive from the second half of 2023. 

Aston Martin Lagonda shares shot up 13.7 per cent to 228.6p on Wednesday morning, although they have plummeted by about 88 per cent from their £19 initial public offering price.

Amedeo Felisa, the firm’s chief executive, said: ‘Having navigated a challenging operating environment throughout 2022, I am pleased with how we ended the year.

‘We delivered in line with expectations, took actions to address the short-term impacts 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 deliver our growth ambitions.’

After going public, the business contended with poor sales, a temporary closure of its production facilities and the removal of excess stock from its 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 and raised another £382million through a rights issue.

The firm launched a further £653million capital raising in 2022 that attracted Saudi Arabia’s sovereign wealth fund – the Public Investment Fund – and Chinese automaker Geely, which owns the Volvo and Lotus motor brands.

Around half the money is intended to be invested in its ranges, such as its electric and hybrid vehicle offering, with the other half focused on reducing debts and interest costs.

Aston Martin slashed its net debts to £765.5million at the end of 2022 and said it is on track to achieve a ‘significant growth’ in profitability this year, thanks largely to increasing volumes and gross margins from selling its core and special vehicles. 

It also believes it is on track to reach its 10,000 wholesale sale volumes target while enhancing its status as an ‘ultra-luxury’ brand.

All of the group’s Valkyrie Spider, DBR22, DBS 770 Ultimate cars and approximately 80 per cent of its GT/Sport range are sold out for 2023 while the DBX order book runs into the third quarter. 

Mark Crouch, an analyst at eToro, remarked: ‘A focus on higher end, higher value models is perhaps a smart strategy now more than ever as wealthier consumers remain more resilient than lower down the economic rungs.

‘Luxury as an investment segment tends to maintain firmer demand even in times of economic stress. We saw this during the pandemic when trends such as ‘revenge buying’ emerged, which put rocket boosters under luxury goods sales.’