Aston Martin Faces Sharp Decline in Profits, Despite Upcoming Model Launches

Despite upcoming launches of new versions of the Vantage sports car and the DBX707 SUV, Aston Martin experienced a significant drop in vehicle deliveries in the first quarter, declining over a quarter year-on-year to 945 vehicles, the company reported from its headquarters in Gaydon, UK. Both revenue and operating profit fell considerably, missing analysts’ expectations. However, the management remains committed to its annual targets. The stock market responded negatively to these developments.

In the first quarter, revenue decreased by ten percent to 267.7 million British pounds ($313.5 million), while the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) plummeted by more than a third to just under 19.9 million pounds. According to CEO Lawrence Stroll, this downturn reflects the end of production and delivery for some of Aston Martin’s core models. Stroll has been working to steer the luxury carmaker back on track after several years of financial instability that necessitated multiple cash infusions.

Investors were clearly unimpressed with the news: At the opening of trading, Aston Martin’s shares dropped by 14 percent on the London Stock Exchange, although losses were slightly contained later in the day, with the shares occasionally down by 5.20 percent to 1.41 pounds. Analyst Philippe Houchois from Jefferies described the first quarter as a “painful” transition but expects the company to perform better in the second half of the year given the confirmed annual targets.

The company anticipates that the results for the second quarter will mirror those at the start of the year, with improvements expected in the latter half. For the full year, the management aims for an adjusted operating margin in the low 20-percent range, whereas the first quarter saw a margin of just 7.4 percent. Notably, Mercedes-Benz holds approximately a nine percent stake in the British automaker.

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