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Supply chain issues see Aston Martin shares drop

4 November 2022
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Shares in Warwickshire-based luxury car manufacturer Aston Martin dropped 17 per cent on Wednesday after it said it will deliver fewer vehicles than expected this year.

In its third quarter results, the firm said supply chain issues and logistics disruptions have led to a four per cent year-on-year decrease in wholesale volumes, particularly impacting its DBX model.

This has led the company to revise its expected sales target for the year to 6,200, down from its earlier prediction of 6,600.

Furthermore, despite seeing a year-on-year revenue increase of 16 per cent to £857 million, Aston Martin has reported a pre-tax loss in quarter three of £226 million, more than double the nearly £98 million it reported last year. This has bought losses for the year to date up to £511 million.

Because most of the firm’s £833 million debt is priced in dollars, sterling’s weakening against the dollar means its interest payments are increasing. This led to a negative revaluation of £245m, materially impacting Aston Martin’s losses.

The company’s operating losses have also risen, reaching £148 million for the year-to-date. However, £71 million of this is due to depreciation and amortisation, having accelerated the amortisation of the development costs of its GT and sports vehicles which launch next year.

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Aston Martin stocks
Shares in the Warwickshire-based firm dropped 17 per cent on Wednesday. Source: Google Finance.

More positively, in an effort to cut interest payments Aston Martin bought back $185 million of its debt, supported by £654 million of fundraising in September through selling discounted shares to existing shareholders and new investors including Chinese car maker Geely.

The firm’s finance chief, Doug Lafferty, told The Telegraph this will “result in quite significant interest savings as we move into 2023”, also noting the company has no current plans to use more of this money to cut debt.

Revenues have been boosted this quarter by deliveries of 17 Valkyrie hypercars, bringing the total number delivered this year so far to 44.

In summary, the report states: We remain on our pathway to achieving our medium-term targets […] by 2024/25. For 2022, we continue to expect to deliver growth on 2021.

“Driven by sustained demand, we continue to expect a significant increase in volumes, profitability and cashflows in Q4, supported by the continued ramp up of deliveries of the DBX707 and V12 Vantage. In addition, 75-90 Aston Martin Valkyrie programme vehicles remain on track for shipment in 2022.

“The Group is updating its outlook for 2022 to reflect impacts of new supply chain and logistical disruption we have encountered in the second half which we expect to be short-term in nature following active management of the relevant issues.

“Given the new supply chain disruptions experienced in Q3, and the more prolonged impact on working capital than previously assumed, we now expect the cash inflows from more normalised working capital dynamics to only become visible towards the end of Q4 2022 and into early 2023.”

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Sam is the Regional Editor of Biz News, responsible for both Hampshire and Dorset.

A new recruit to journalism, Sam started writing for the Business Magazine as a freelancer in May of 2022 after completing his degree in English at University College London. His passion for local businesses and ability to tell a story soon caught the attention of the publication’s management team and have led to his meteoric rise.

Sam, who lives in central Reading, takes a particular interest in technology, gaming and food and drink, having been a chef before starting his degree.

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