30th Sep 2024 10:26
(Alliance News) - Aston Martin Lagonda Global Holdings PLC shares plunged on Tuesday after the carmaker cut annual guidance, as it grapples with tepid demand in China and the late arrival of components from "several" of its suppliers.
Shares in the company tumbled 20% to 127.30 pence each in London on Monday morning.
Aston Martin cut its wholesale volume guidance by 1,000 units "to address disruption in its supply chain and continued macroeconomic weakness in China".
The company expects its 2024 adjusted earnings before interest, tax, depreciation and amortisation to be "slightly below" the GBP305.9 million it achieved last year. The Warwickshire, England-based firm no longer expects to be free cash flow positive for the second half of 2024.
An adjusted Ebitda margin in the high teens is now expected for the year, its outlook cut from the "low 20s". Its adjusted Ebitda margin in 2023 was 18.7%.
Wholesale volumes for 2024 are expected to fall by a "high single digit percentage" from 2023's 6,620 units. Aston Martin previously predicted "high single digit volume growth".
For the third-quarter alone, wholesale volumes and the adjusted Ebitda will be "below current market expectations".
"External factors within the global automotive industry, including supply chain disruption and weak demand in China, are now impacting Aston Martin's volume outlook for the remainder of 2024. Concurrent with the significant ramp-up in production for the second half of the year, following new model introductions, the company is experiencing a growing number of late component arrivals due to disruption at several of its suppliers. As a result, an increasing number of vehicles are taking longer to complete, with these issues impacting the efficiency of its operations and delaying the delivery of its vehicles," the sports car maker said.
"In addition, a decision has been taken to strategically re-align planned volumes, in line with the company's demand-led strategy, commitment to quality and optimised production processes. The company is addressing the supply chain challenges and continues to recognise the significant market opportunity that China represents as its macroeconomic environment improves."
Aston Martin announces third-quarter results on October 30.
Executive Chair Lawrence Stroll, who owns roughly a quarter of the company, said: "When the Yew Tree consortium made its significant investment in Aston Martin in 2020, we did this with a long-term view of the necessary commitment and turnaround required to unlock the enormous value potential of this iconic brand."
Adrian Hallmark, who became Aston Martin chief executive at the start of the month, backed the firm's outlook.
"Having been with the company for a month I am even more convinced than before in its growth potential. The team at Aston Martin has done an exceptional job in launching a fully reinvigorated core range of vehicles over the last 18 months," the CEO said.
"Near perfect execution was required to meet the company's ambitious 2024 plan. However, it has become clear that we need to take decisive action to adjust our production volumes for 2024 given a combination of supplier disruption, the weak macroeconomic environment in China and a proactive decision to strategically re-align our production plans to optimise efficiency and achieve a more balanced delivery cadence in the future."
Former Bentley boss Hallmark replaced Amedeo Felisa as CEO.
By Eric Cunha, Alliance News news editor
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