(Bloomberg) -- Aston Martin Lagonda Global Holdings Plc plunged after the luxury sports-car maker lowered its guidance for the year, blaming supply chain disruption and weak demand in China.
The shares dropped as much as 28% in London trading on Monday, the biggest intra-day move since March 2020. The stock has almost halved since the start of the year.
The British carmaker said fires and floods had affected top automotive suppliers, while others had run into financial difficulty and even collapsed. This delayed component deliveries, which caused vehicles to take longer to complete in recent months.
Aston Martin has had experience dealing with “instability” among suppliers in the past, new Chief Executive Officer Adrian Hallmark said on a call with analysts. “What is different now over the past six-to-nine months is the blue-chip suppliers have had fires, floods or administrators appointed to an extent and a scale that I personally haven’t seen in my career.”
The warning is part of broad woes led by a downturn in demand in China and disappointing EV demand. Supply issues have also been a negative, with Porsche, BMW, Mercedes-Benz and Jaguar Land Rover affected by floods at a key aluminum supplier in Switzerland.
Aston Martin predicts annual sales will now be about 1,000 vehicles — around 15% — lower than before. Adjusted earnings before interest, tax and amortization will be slightly below last year’s level, and the carmaker no longer expects positive free cash flow during the second part of the year.
Volkswagen AG on Friday also lowered its outlook, following Mercedes and BMW, due to disappointing sales at its core namesake brand and a drop in demand in China. Stellantis NV on Monday also reduced forecasts.
Aston Martin was rescued by Lawrence Stroll in 2020 but the billionaire is struggling to turn around the company, which has required several capital raises since he took over. Stroll is betting that releasing more models more frequently and the hype around Formula One racing will help revive the company.
What Bloomberg Intelligence Says:
Aston’s guidance cut for 2024 — resulting in a 25% cut to consensus Ebitda) — is not unexpected amid a wave of auto warnings and provides a reset for new CEO Adrian Hallmark to enter 2025 with a full complement of new or refreshed models. The loss of 1,000 units in 2H is blamed on supply constraints and China (vs. 536 units sold there in 2023), while a failure to meet a 2H target of positive free cash may lead to a further capital raise and creates an overhang on the stock.
— BI analysts Michael Dean and Giacomo Reghelin
The guidance cut is the first move by Hallmark, the former Bentley Motors Ltd. boss who started this month and is tasked with changing Aston Martin’s fortunes.
The company said Monday it won’t hit its previous 40% gross margin target for this year.
(Updates with shares, CEO comment)
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