British luxury carmaker Aston Martin had a rough 2022. As inflation and supply chain issues wreak havoc across markets, the automaker was forced to make peace with a less-than-stellar performance. However, the London-listed carmaker expects things to improve in 2023, and said as much in its profitability forecast, giving its stock a much-needed boost.
On March 1, the company forecast that it expects wholesale volumes of about 7,000 units for 2023, slightly below average market expectations of 7,134. The revelation helped shares jump by around 7% as it reiterated Aston Martin’s plan to deliver £2 billion ($2.40 billion) in annual revenue and £500 million ($600.25 million) of adjusted Ebitda by 2024/2025.
The carmaker is riding high on the hopes that it will see better tomorrows when it begins delivering the next generation sports car in Q3.
The Aston Martin Profitability Forecast
The profitability forecast helped Aston Martin shares jump by nearly 7%, its highest since July last year. While the delivery target for 2023 is slightly short of analyst estimates, the company appears confident that it will hit the target it has set for itself.
The carmaker has also had to contend with rising costs and inflation, while dealing with supply chain issues.
Overall, the core average selling price for the cars favored by James Bond rose from £150,000 ($180,075.75) in 2021 to £177,000 ($212,489.38) in 2022. The selling price has now crossed the £200,000-mark, with higher-priced models and a more robust supply chain.
The British company is currently working on achieving a positive cash flow by 2024.
The company also more than doubled its year-on-year pre tax losses from £213.8 million ($256.6 million) in 2021 to £495 million ($594 million) in 2022. The carmaker’s profits were heavily impacted by US dollar-dominated debt as the GBP weakened significantly in comparison last year.
“Although the operating environment remains volatile, including ongoing inflationary pressures and pockets of supply chain disruptions, our teams continue to work in partnership with our suppliers to mitigate any impact on our performance in 2023,” the group said.
The company also saw a marked improvement in Q4 of 2022, as it delivered a nearly 22% rise in wholesale sales to 2,352 vehicles year-on-year. Aston Martin sold 6,400 cars in 2022.
The British company reported a bigger adjusted operating loss of £118 million ($141.6 million) for the year ended December 31, compared with a loss of £74.3 million ($89.20 million) for the same period a year earlier, because of supply chain issues that delayed deliveries of its cars. Supply chain issues continue to be one of the top three concerns for CEOs in 2023.
A Smoother Drive: Electrifying the Future
Recognizing the problem, Amedeo Felisa, Aston Martin Lagonda’s CEO, 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.” Last year, in May, Aston Martin appointed the former Ferrari boss to the top job, in hopes that he will be able to replicate the same level of success with its cars.
As the future turns to EVs, the London-based company earlier informed stakeholders that all its models will be available in an electrified version by 2026. It will launch the first EV in the company’s history in 2025. Before debuting the EV, it will test waters by launching the first plug-in hybrid Valhalla.
For 2023, Aston Martin has plans to roll out a series of new vehicles including the DBS 770 Ultimate, the Valkyrie Spider hypercar, and the DBR22. Felisa acknowledged that he expects “significant improvements in profitability in the second half of the year” for 2023 as the company unveils its next generation of sports cars.
