Aston Martin Lagonda – Free Cashflow Should Be Around The Corner

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Aston Martin Lagonda Global Holdings PLC (LON:AML)’s wholesale volumes rose 4% to 6,412 vehicles last year, in-line with revised guidance. This included 89 higher-margin Specials, down from 98. Volumes remained flat in all regions apart from Europe, Middle East and Africa, excluding UK, where there was a 19% uplift.

An 18% increase in average selling prices, excluding Specials, to £177,000 helped overall revenue rise 26% to £1.4bn.

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The group said it was unable to meet demand in the earlier parts of the year because of supply chain and logistics disruption. Performance increased significantly in the fourth quarter.

Costs continue to outpace revenue, and underlying operating losses widened to £141.8m from £76.5m.

Despite turning free cash flow positive in the final quarter, there was a £298.8m outflow for the full year. Net debt stood at £765.5m.

Aston Martin Lagonda expects 7,000 wholesales in the new financial year, and believes these higher volumes will feed into improved profitability.

The shares rose 7.1% following the announcement.

Aston Martin Lagonda's Earnings

Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown:

“Aston Martin has been held back by logistics and supply issues, like many of its automotive peers. That’s kept a lid on volumes, but the engines are now firing. Fourth quarter wholesales have jumped, which shows that underlying demand is still strong.

An average selling price well above £150,000 also shows how untouched Aston Martin’s core customer base is from income pressures and tough inflationary conditions. This is a marker of the power of Aston Martin’s brand, which also feeds into its ability to sell personalised Specials – and inflate margins in the process.


Now that supply pressure’s easing, the group’s confident that free cash flow is around the corner in the new financial year. While the operating leverage dynamics mean that profits and free cash should flow if the orders come rolling in, there are some potential blockers.

Capital expenditure is still expected to rise because of inflation, and without a clear marker as to when this will come down meaningfully, this could prove to be a challenge to some of the specifics around this target.

Further progress on the working capital headaches is needed too. The bulk of cash only comes in when cars are delivered. That should start unwinding at speed, but it’s something to keep an eye on.

Ultimately, Aston Martin has a revered product offering but there are plenty of financial plugs that need filling. Until that happens further capital raises can’t be entirely ruled out, despite the £654m equity capital raise undertaken last year.”