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Aston Martin Lagonda

Aston Martin Lagonda Global Holdings plc Balancing growth and brand positioning

£mH1 2019H1 2018% change
Total wholesale volumes12,4422,2996%
Revenue407.1424.9(4%)
Adjusted EBITDA222.0105.9(79%)
Adjusted operating (loss) / profit2(35.2)64.4
Total adjusting items3(9.1)
Operating (loss) / profit(37.7)64.4
(Loss) / profit before tax(78.8)20.8
Diluted EPS (pence)(28.0)4.3

1Number of vehicles including specials; 2Alternative performance measures are defined in the Appendix; 3Adjusting items are detailed in note 4 of the Interim Financial Statements

Dr Andy Palmer, Aston Martin Lagonda President and Group CEO, said:

“As described in our trading statement on 24 July, both our retail and wholesale volumes have increased year-on-year. However, we are disappointed that our projections for wholesales have fallen short or our original targets impacted by weakness in two of our key markets as well as continued macro-economic uncertainty. Accordingly, we have taken action to reduce wholesale guidance for 2019. We are also improving efficiency across the business, whilst protecting the brand.

Retail growth of 26% in the first half was driven by demand for the Vantage and DBS Superleggera, and sharply increased sales in the US and China reflecting our underlying strength and increasing our overall market share. We have also been encouraged by demand for Specials with the development of the sold out Aston Martin Valkyrie and the oversubscribed Valhalla models. Our preparations for the DBX, our first SUV, remain on track and our new St Athan facility has been commissioned. With the UK’s exit from the European Union imminent, we have enacted our plans to ensure operational readiness for the supply of parts and cars.

We remain focused on execution of the Second Century Plan, financial discipline, long-term sustainable growth and ensuring we have the right funding structure in place. The strength of our brand underpins our confidence in the long-term opportunities ahead.”

Key results

·     Retail unit sales +26%, with increased share of luxury market against backdrop of difficult market conditions for the wider auto-industry

·      Revenues fell to £407m as fewer Specials and core mix (more Vantage) offset growth in wholesale units

·     Operating profit reduced year-on-year due to the planned costs of expansion, an improved retail financing offer, lower Specials volume and lower Average Selling Price (ASP); In addition to a one-off £19m provision for a doubtful debt relating to the sale of legacy Intellectual Property in the prior year

·      Core wholesales +9%; Total unit growth +6%, with planned lower Specials volume (36 vs 95)

·      Continued strength in Americas (+54%) and APAC (+24%), including China (+39%), offset softness in the UK (-17%) and EMEA (-19%)

·   Core ASP £140k (H1 2018: £146k); Group ASP at £145k (H1 2018: £167k) reflecting increased Vantage mix, improvements to lease offerings and fewer Specials

·   Net cash from operations at £21m driven by planned £71m inventory build and substantial reversal of c.£90m receivable from December 2018 

·   Net debt at £732m with adjusted net leverage of 4.7x last 12 months (LTM) adjusted EBITDA (December 2018: £560m, 2.3x LTM adjusted EBITDA); reflects placement of $190m of mirror bonds 1 April 2019, investment in the period (including capex of £162m), and seasonally low cash position

·    No change in Q4 weighting to deliveries, both core and Specials (DB4 GT Zagato continuations); Lower fixed cost run-rate in the second half as marketing costs fall and efficiencies are delivered

·      Plan reflects continued external uncertainty for remainder of 2019, which we will monitor into 2020

Product expansion continues

·    DBX on track with new St Athan facility now commissioned and manufacturing first pre-production cars; DBX dynamic appearance at Goodwood Festival of Speed; Encouraging feedback from customer clinics in key markets of China and the US

·      Deliveries of DBS Superleggera Volante begin in Q3 and Vantage AMRs deliver in Q4 2019

·     Aston Martin Valkyrie made its dynamic debut at the British Grand Prix in July and its racing sibling is set to campaign at 24 Hours of Le Mans in 2021

·    Over-subscribed AM-RB 003 special named as Aston Martin Valhalla; Powered by all new Aston Martin hybrid V6 turbo mid-engine

All metrics and commentary in this announcement exclude adjusting items unless stated otherwise and certain financial data within this announcement have been rounded.