Aston Martin Shares Rise 14% due to Welcome 2023 Profitability Forecast

UTC by Tolu Ajiboye · 3 min read
Aston Martin Shares Rise 14% due to Welcome 2023 Profitability Forecast
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English luxury automaker Aston Martin recently saw its shares surge following its optimistic 2023 forecast. 

The shares of English luxury automobile manufacturer Aston Martin (LON: AML) have surged 14% on the company’s 2023 profitability forecast. Aston Martin forecasts better profitability this year despite increased pretax losses in 2022 due to a weakened UK currency.

The automobile manufacturer also saw improved guidance on 2023 earnings before interest, taxes, depreciation, and amortization (EBITDA), which boosted shares. Furthermore, Aston Martin’s wholesale units received a positive outlook bump for the same period.

As it stands, the Warwickshire-based luxury automobile giant seeks to become “sustainably free cash flow positive” by next year.

Aston Martin 2022 Pretax & Adjusted Operating Losses

Aston Martin Lagonda Global Holdings PLC more than doubled its year-over-year pretax losses to £495 million ($598 million) in 2022. By comparison, the British luxury automaker sustained a pretax loss of £213.8 million in 2021. Aston Martin said its latest pretax figures resulted from “materially impacted” earnings from a US dollar-denominated debt reevaluation. This development directly references the significant weakening of the Pound Sterling against the greenback last year.

Aston Martin’s adjusted operating losses also swelled from £74 million in 2021 to £118 million last year. Meanwhile, the company’s revenue surged 26% on the year to £1.38 billion, while gross profit increased 31% YoY to £450.7 million. According to Aston Martin, wholesale volumes increased 4% YoY to 6,412 amid pervasive supply chain and logistics disruptions. These macroeconomic constraints resulted from the global shortages in semiconductor chips.

Aston Martin shares soared 10% in early London time following its optimistic 2023 forecast, which read that for 2023, they “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”.

Alluding to an activity ramp-up in the second half of the year, the automaker also added:

“In addition to the ramp-up of the already sold-out DBS 770 Ultimate, we expect deliveries of the first of our next generation of sports cars to commence in Q3.”

Aston Martin Executive Chairman Weighs in on 2023 Optimistic Forecast amid Company’s Shares Surge

Aston Martin projects that wholesale volumes will increase to 7,000 units in 2023, with EBITDA adding approximately 20%. Despite ongoing headwinds from a volatile operating environment and high inflation rates, the company’s Executive Chairman, Lawrence Stroll, said last month:

“Our order book has never been stronger; the future is fantastic, the cars are coming, fundamentals of the business are extremely strong. And demand has never been stronger.”

Today, Stroll doubled down on Aston Martin’s target to deliver 10,000 wholesale units in the coming years. In addition, the luxury automaker seeks to attain sustainable free cash flow positivity from 2024. Aston Martin’s cash flow positive agenda came about after the company generated £654 million in equity capital. That move also secured an anchor shareholder in Saudi Arabia’s Public Investment Fund.

Stroll pointed out that Aston Martin’s ASP and gross margin growth trajectory keep it on track to attaining its financial targets. However, the aforementioned macroeconomic constraints could see the company record significantly lower volumes than initially envisaged.

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