Full year revenue rose 79% to £1.1bn as the number of wholesale vehicles nearly doubled as conditions normalised following Covid restrictions. Average selling price was also higher, reflecting increased demand and a favourable product mix. On a two-year basis, revenue rose 12%.
Underlying cash profits (EBITDA) were £137.9m, up from a loss of £70.1m from 2020. This was driven by a higher number of Special edition car sales and improved manufacturing efficiency.
In 2022 the group's expecting the number of wholesales to rise above 6,600 and underlying cash profit growth of around 50%.
The shares rose 2.8% following the announcement.
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Our view
Aston Martin's strategy shift is kicking into high gear. ''Project Horizon,'' which aims to cement the brand's image as a top-tier vehicle maker and improve efficiency by offering made-to-order cars has driven a considerable fall in losses.
The strategy shift included a complete overhaul of the way Aston Martin sells cars. The group ran down dealer inventory levels, helping demand outpace supply. This supported stronger pricing and added to the cache that comes with buying an Aston Martin. It also helped the group surpass its goal to sell 6,000 vehicles this year.
Crucially, higher-margin Specials sales more than doubled. Customers sign up and pay a deposit for these rare models before they're built, allowing for tighter working capital control. The cars have also become cheaper to make thanks to efficiency improvements. Demand for Specials is also a bellwether for the group's success repositioning itself at the top of the luxury car market. In order to charge £150,000 for a car, the owner needs to feel like James Bond driving it.
But we have some concerns about longer-term growth.
Management's targeting revenue of £2bn, with underlying cash profits of £500m by 2024/25. That will require Aston Martin to move roughly 10,000 vehicles per year - 66% more than what's expected in 2022. We suspect that will include a substantial proportion of electric vehicles, an area the group's been slow to develop. The first hybrid cars rolled off the showroom floors in China during the fourth quarter, but fully electric cars won't materialise until 2030.
Brand positioning could insulate it somewhat from the shift away from petrol, but electric is the direction of travel for automakers. The group's partnership with Mercedes enabled the group to bring EVs to market, but we worry buyers won't be wowed by a Merc engine in Aston Martin clothing.
Remaining top-of-mind among its customers is expensive, and with free cash flow still in the red, Aston Martin's debt pile continues to swell. Liquidity isn't an immediate concern, but the debt will make it difficult to weather any unforeseen challenges.
Near-term, the group's strategy looks likely to deliver steady growth. But the execution of the electrification strategy will be a key driver of long-term success, and we've yet to see whether customers will come along for the ride. Dragging around an eyewatering debt pile makes it tricky to manoeuvre, particularly as interest rates and inflation continue to rise. While we're encouraged by management's steps to improve Aston Martin's value proposition, there's still a long road ahead.
Aston Martin key facts
All ratios are sourced from Refinitiv. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.
Full Year Results
Total vehicle sales rose 82% to 6,178, including 98 Specials. That reflected growth across all geographies, with the two largest segments Asia Pacific and Americas more than doubling to 1,815 and 1,984 vehicles respectively. These areas benefitted from strong SUV demand.
SUV sales rose 98% and made up 48.6% of total vehicles sold. Sports sales grew 114% to 1,479 and GT sales rose 42% to 1,589. Higher-margin Special edition car sales more than doubled. The group launched its first hybrid DBX vehicles in China during the fourth quarter.
The group's core average selling price rose to £150,000 from £136,000, excluding the impact of higher-priced Specials sales. This was driven by strong demand with cars sold to customers by dealers outpacing those sold to the dealerships.
Free cash outflow was £123.2m, an improvement from last year's £539.3m outflow. Higher profits and changing in the timing of deliveries were behind the advance.
Net debt rose from £727m to £892m, reflecting the free cash outflow and a slight increase in borrowing.
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