Aston Martin Holdings (LSE: AML) is the third-worst-performer in the FTSE 250 in the past 12 months, down 56%. And over five years, we’re looking at a 92% plunge.
Things got worse on Wednesday (27 November) when the price fell to a new two-year low. The luxury car maker had posted a profit warning the previous day after market close. That’s its second in two months, and it came with a new funding package.
Profit downgrade
The company cited “a minor delay in the timing of a small number of deliveries.” And it now expects to make only half of the planned 38 deliveries of its exclusive Valiant models in 2024. It previously aimed to deliver the majority of them.
Aston Martin lowered its guidance again, to suggest adjusted EBITDA in the range of £270m to £280m for this year.
As recently as 30 September, the firm had lowered its EBITDA guidance to “slightly below FY 2023“, with an adjusted figure that year of £305.9m. We also heard that the board was “no longer expecting to achieve positive free cash flow” in the second half of 2024.
More cash needed
As a result of all this, a combination of a new equity issue plus a £100m debt placing has raised £210m to keep things ticking over. Or, in the words of the announcement, “to support future growth and enhance liquidity“.
This does all raise an interesting question for investors: who might want to risk getting in while the share price is so low?
Global vehicle markets are under pressure. But even with this latest setback, Aston Martin looks on track to deliver a decent EBITDA-level profit this year. Hmmm, unless profit warnings really do come in threes, possibly.
The next few years
Prior to this latest hiccup, analysts were predicting something close to breakeven in terms of earning per share (EPS) by 2026. If this new setback is really just a short-term delay until early in 2025, they still might stand by that.
And it could happen as the company still says it’s sticking with its FY 2025 targets. That includes adjusted EBITDA of about £500m, which is ahead of analyst forecasts.
Cash seems to be the crucial thing. And the firm is talking of “targeted free cash flow generation during 2025” and expects its “net leverage ratio to materially reduce by the end of FY 2025“.
Longer term
Looking further ahead, the board is aiming for a seriously healthy year in 2027-28. It’s talking about things like £2.5bn revenue, £800m EBITDA, leverage below one times and free cash flow “sustainably positive“.
That’s a long way out though. And the path since IPO has not exactly been free of unforseen hurdles so far.
If it can pull it off, I do think we might look back on 2025 as the year that turns things round. But I’m also aware that Aston Martin has gone bust seven times in the lengthy history of the marque. I’m not buying.
