Aston Martin Shares Plunge On Guidance Cut

Aston Martin Lagonda (LON: AML) saw its shares tumble by around 11.3% in early Monday trading. The luxury automaker announced a strategic realignment of its 2024 wholesale volumes and lowered its third-quarter and FY2024 guidance.

The company cited supply chain disruptions and a weak macroeconomic environment in China as key factors behind the decision.

“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,” said the company.

Alongside Aston Martin's significant ramp-up in production for the second half of the year, following new model introductions, the company said it is experiencing a growing number of late component arrivals due to disruption at several of its suppliers

In the update, Aston Martin revealed it is reducing its annual production by approximately 1,000 units. The company also lowered its full-year 2024 guidance for adjusted EBITDA and free cash flow.

Q3 2024 wholesale volumes and adjusted EBITDA are now expected to be below current market expectations,. In addition, FY 2024 wholesale volumes are now expected to decline by high single-digit percentage compared with FY 2023, below the previous forecast of high single-digit volume growth.

Meanwhile, FY2024 gross margin is now expected to be modestly below 40%. Adjusted EBITDA margin is now seen in the high teen percentage, down from the previously forecast low 20s%.

AML said that its second half of 2024 free cash flow, while improved, will remain negative.

“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,” said Adrian Hallmark, Aston Martin's Chief Executive Officer.

Despite the setback, the company remains optimistic about its long-term growth prospects. Aston Martin is focused on hitting its previously communicated targets for FY 2025, including a fully reinvigorated portfolio of ultra-luxury high performance models.