Aston Martin Lagonda Global Holdings PLC (LSE:AML) seemed to be hit by production delays at the worst time.
Following the luxury car maker’s disappointing third-quarter results, analysts flocked to point out that patience was running out with Aston Martin and its promises of cash flow positivity next year.
The market was even less sympathetic, with shares in the British icon falling over 13% following news of worse-than-expected losses and supplier-linked production delays.
Debt sat just shy of £750 million at the end of September, Aston Martin reported, while pre-tax losses, despite narrowing, still sat near £260 million.
It was the impact of delays in the rollout of the newly released DB12 that saw the fiercest backlash though, with analysts having said previously that the fate of next year’s targets rested largely on Aston Martin meeting delivery timelines this year.
“With losses coming in ahead of expectations, there is little reason for the market to give Aston Martin the benefit of the doubt for even the smallest misstep,” AJ Bell’s Russ Mould said on the results.
“It’s crucial that Aston Martin comes good on its plans to fire up its profit and cash flow engines - there is a limit to the market’s patience and generosity,” Sophie Lund-Yates of Hargreaves Lansdown added.
These targets include £2 billion in revenue and £500 million in adjusted earnings.
One glimmer of positivity came from Aston’s increased margins from 9% to 13% year-on-year, which analysts attributed to strong demand for its cars.
Aston anticipates margins to improve to 20% by the end of the year, outdoing City expectations, Jefferies pointed out.
There are wider concerns, however, about the company’s inevitable need to electrify in the long term.
Jefferies highlighted the looming need for Aston Martin to electrify, labelling the inescapable shift to electric vehicles as a key risk for the manufacturer.
How much this shift will cost will be key, the bank noted, adding that wider trends around luxury demand and competition are also in play.
Aston Martin has made some headway in its bid to electrify, with September and October bringing news of a partnership with Lucid Group Inc (NASDAQ:LCID) and government funding respectively for battery development.
However, Lund-Yates argued that this was not enough to convince investors, adding there was “no proof-proving pudding to be had just yet”.
Shares slid 13.4% to 189.6p.