Picture supply: Getty Pictures
In my view, Aston Martin Lagonda (LSE:AML), the FTSE 250 luxurious sports activities automobile maker, is a little bit of a legend. It makes a number of the most lovely automobiles round and has received quite a few awards for its cool model.
Since 1982, it’s held a Royal Warrant and its automobiles have featured in over half the movies made underneath the James Bond film franchise. Its automobiles had been as soon as described as “genuine items of artwork”.
Even the group’s annual studies look fashionable with some eye-catching pictures and enticing typeset. What’s to not like about Aston Martin?
Persistent losses
Effectively, if I used to be a long-standing shareholder, I’d be fairly upset. That’s as a result of, since its IPO in October 2018, its share worth has fallen 96%. And one other revenue warning issued right now (6 October) is unlikely to assist shareholders’ temper. Gross sales in 2025 are actually anticipated to be a “mid-high single-digit proportion” decrease than in 2024.
In 2017, simply earlier than the group listed, it recorded a post-tax revenue of £77m. Yearly since, it’s reported a loss.
Some may desire that I’d used adjusted figures within the desk under — I’ve taken every interval’s statutory end result from the group’s annual report and accounts – however it’s nonetheless loss-making even when one-off non-recurring gadgets are eliminated. Essentially, it doesn’t actually change something.
Since 2017, it’s collected losses of £1.93bn. It means it’s misplaced almost £200,000 for each automobile its offered. In comparison with 2017, its common promoting worth (ASP) is roughly £86,000 extra. However its gross revenue margin has fallen from 43.4% to 27.9%.
In impact, it’s having to do extra to face nonetheless.
Difficult instances
Tariffs have contributed to the group’s issues. Aston Martin euphemistically describes them as “unhelpful”. To offer some reduction, the UK now has an settlement the place 100,000 automobiles could be imported into the US at a tariff of 10% (beforehand it was 25%). Though disappointing, no less than there’s some readability.
Nevertheless, the group stays hopeful that issues will enhance over the medium time period (2027-28). It has a income goal of £2.5bn which, primarily based on its present ASP, is equal to roughly 10,500 automobiles. It’s aiming for an working margin of round 15%.
However the group has a historical past of lacking its targets. When it offered its 2018 outcomes, it mentioned its medium-term intention was to provide 14,000 automobiles a yr and have an adjusted working revenue margin better than 20%. In 2024, it offered 6,030 models and its margin was detrimental.
I believe Aston Martin has all of the hallmarks of an organization that may ultimately be taken personal. I’m positive its administrators would argue {that a} inventory market valuation of £870m doesn’t really replicate the worth of the group. They may level to Ferrari — which has a market cap of €82.6bn (£71.9bn) – to assist their argument. However that agency’s 2024 accounts reveal that it offered 13,752 automobiles, achieved a gross revenue margin of fifty.1% and made a post-tax revenue of €1.53bn. Though I don’t suppose its market cap is justified, it does present how a premium model can appeal to an above-average valuation from enthusiastic traders.
I stay a fan of the Aston Martin model. However it hasn’t but discovered a method of creating automobiles profitably. Till it does, there’s no level being in enterprise. As an funding, it’s not for me.
