Aston Martin Expects ‘Significant’ Growth With Improved Profitability in 2023

Aston Martin Lagonda Global Holdings Plc surged after the loss-making manufacturer said it’ll boost deliveries of lucrative models like the £190,000 ($229,349) DBX707 sport utility vehicle.

(Bloomberg) — Aston Martin Lagonda Global Holdings Plc surged after the loss-making manufacturer said it’ll boost deliveries of lucrative models like the £190,000 ($229,349) DBX707 sport utility vehicle.

The British automaker sees a 9% increase in shipments to around 7,000 cars this year as parts shortages that have curbed the industry’s output ease.

“I remain highly confident that we will achieve our target to deliver 10,000 wholesales over the coming years, and with it, significantly enhanced financial performance,” Aston Chairman Lawrence Stroll said in a statement.

The comments suggest the worst may be over for Aston, which has been struggling to lower debt and bolster output since its 2018 initial public offering. Carmakers including Mercedes-Benz AG, Renault SA and Stellantis NV reported healthy profits in the past weeks on high prices and pent-up demand.

The shares soared as much as 22%, the steepest intraday gain since July 18. They’re still down roughly 34% over the past year. 

Read more: Aston Martin Rises as Results Show Good Momentum: Street Wrap

While supply chain snarls remain a headache, Aston said it’s working with parts makers to help stave off disruptions. The company sees deliveries taking off in the second half of 2023, when revamped models including new iterations of the Vantage, DB11 and DBS sports cars are expected to hit showrooms.

Aston’s fourth-quarter results “beat on volumes and revenues,” Bernstein analysts led by Daniel Roeska said in a note. “The company looks more in control of its destiny today than in a long time.”

Some issues remain. Last July — five months after Stroll declared Aston had plenty of cash — the carmaker announced plans to raise £653 million and invited in Saudi Arabia’s Public Investment Fund as a new investor. HSBC analysts in January downgraded the stock, saying the carmaker may have to return to the market for another cash injection.

Analysts have in the past said Aston’s lack of scale and precarious cash balance made the carmaker vulnerable as it struggled to deliver the £2.4 million Valkyrie model on time. Its pretax loss more than doubled to £495 million in 2022, with the company citing the impact of a weaker pound to the dollar.

On Wednesday, Aston said it expects 2023 to be the final year of significant capital investments on combustion-engine technology as it pivots to battery-powered cars.

Shifting to EVs will require a sound battery strategy, especially given that the UK still lacks the cell-making capability critical to manufacturers churning out electric models in volume. Britain’s shrinking car manufacturing base — production has slumped to the lowest in 66 years — is cutting against the business case for battery suppliers to set up factories.

Last May, Aston replaced its Chief Executive Officer Tobias Moers with Amedeo Felisa, a former Ferrari executive born in 1946. Stroll rescued the carmaker in 2020 with a cash injection and has since forged closer ties with Mercedes Benz AG to potentially use the German company’s technology for its EV push.

Read more: Aston Martin Hires Ferrari Veteran as CEO to Aid Turnaround

(Updates with analyst comment in sixth paragraph.)

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