24th Jul 2024 13:07
(Alliance News) - Aston Martin Lagonda Global Holdings PLC is showing signs of improving fortunes but the pressure to hit a key cash flow target will keep the heat on management, analysts on Wednesday said.
On Wednesday, the Gaydon, England-based luxury sports car maker said it is set for a "strong second half performance", despite a widened first half loss.
It also confirmed Adrian Hallmark will take over as chief executive officer from September 1, with Amedeo Felisa stepping down on the same date.
Shares in Aston Martin were up 10% to 165.00 pence each in London on Wednesday afternoon.
The carmaker's revenue in the first-half of 2024 declined 11% to GBP603.0 million from GBP677.4 million a year prior, causing its pretax loss to widen to GBP216.7 million from GBP142.2 million.
Executive Chair Lawrence Stroll said: "In line with prior guidance, our execution in the first half of the year focused on the successful delivery of our new Vantage and upgraded DBX707, and we remain on track to deliver a strong second half performance. This will be underpinned by a significant ramp up in wholesale volumes including both the new V12 flagship Vanquish and ultra-exclusive Valiant Special, which we recently unveiled at Goodwood with Fernando Alonso."
Looking ahead, the firm expects its third-quarter volume performance to "materially improve sequentially" compared with the second.
The final quarter is to be the "most material" for volumes and its financial performance. In the first half, wholesale volumes were 1,998 vehicles, down 32% from 2,954 a year before. They were 1,053 in the second quarter alone, down 38% from 1,685 a year before.
AJ Bell's Investment Director Russ Mould thinks Aston Martin might finally be "kicking into gear" despite remaining heavily in the red.
"Investors were able to look past news of lower sales and higher losses as the company reiterated its second-half guidance," he pointed out.
Mould said the company says it remains on track for a substantial uplift in production in the remainder of 2024 which has "helped win the market over to some extent".
But Mould thinks the company "needs to deliver now if it is to eradicate the scepticism built up over a disastrous showing in the wake of its 2018 [initial public offering]."
"Focus now shifts to the company's ability to hit a target of positive free cash flow for the second half. Failure to hit this target will leave Aston Martin’s credibility in tatters again and lead to renewed concern about its borrowing pile," Mould suggested.
By Jeremy Cutler, Alliance News reporter
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