29th Jul 2019 19:00
(Alliance News) - Moody's Investors Service on Monday downgraded Aston Martin Lagonda Global Holdings PLC's corporate family rating and probability of default rating, citing a "lack of progress" on profitability and volume growth.
Moody's downgraded the luxury car maker's corporate family rating to B3 from B2 and is probability of default rating to B3-PD from B2-PD. At the same time, the ratings agency also downgraded the instrument ratings on Aston Martin Capital Holdings Ltd's senior secured bonds to B3 from B2.
Moody's Senior Analyst Tobias Wagner said: "The downgrade of Aston Martin Lagonda's ratings reflects the lack of progress in terms of volume growth and profitability for 2019, following the company's trading statement, and hence continued high negative free cash flow and high leverage."
Wagner added: "AML's weaker performance in 2019 raises the stakes for a successful execution of the upcoming SUV DBX launch. Also given the ongoing weak and competitive market environment, Moody's now considers it unlikely that leverage and free cash flow will be in line with a B2 rating by 2020."
Moody's said the rating change follows Aston Martin's Wednesday profit warning, in which the company reduced its annual guidance due to weak UK and European markets. Aston Martin now sees 2019 wholesale sales at 6,300 to 6,500 vehicles, having previously guided for 2019 sales of 7,100 vehicles to 7,300 vehicles.
Aston Martin slashed its expected adjusted earnings before interest, depreciation, taxation, and amortisation margin down to 20% from 24%.
The ratings outlook is stable, as Moody's is expecting a "return to visible growth in 2020" due to the SUV DBX launch.
Shares in Aston Martin closed down 1.4% at 595.60 pence on Monday.
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