Aston Martin still sluggish

There’s been a lot to celebrate at Aston Martin Lagonda (AML) in recent months – not least the success of the Formula 1 team that bears its name. It now stands third in the F1 Constructors’ Championship, and with the increased global coverage the sport has received through Netflix’s Formula 1: Drive to Survive series, the £20mn it paid in sponsorship last year looks like a bargain.

AML argues the tie-up “has driven significant brand visibility”, which increased by 345 per cent during the first five of the championship’s 22-race season. Harder to quantify is its assertion that it has also “heightened product consideration”, but a big part of the 25 per cent increase in first-half revenue was down to a 48 per cent increase in vehicles shipped to the Americas.

On top of this, there have been deals done with Lucid (US:LCID) for its battery technology and a renewal with Mercedes-Benz (DE:MBG) for powertrains and electronic architecture. China’s Geely also increased its stake in the company, becoming the third-biggest shareholder after buying £140mn-worth of shares from chair Lawrence Stroll’s Yew Tree Consortium and injecting £95mn into the company by subscribing to new shares.

This serves as a reminder, though, that the numbers in this business are uglier than the cars it produces. Although adjusted cash profit rose by 38 per cent to £80.6mn, once interest and non-cash charges are added it declared a pre-tax loss of £142mn. More importantly, it continues to bleed cash – its first half outflow was £214mn.  AML's shares have rallied from below 90p last October to 350p as prospects have improved but this is a 110-year-old carmaker, not a niche tech venture. Until it generates meaningful cash, it is best avoided. Sell. 

Last IC View: Sell, 227p, 01 Mar 2023