Investing.com -- Shares of Aston Martin Lagonda (LON:AML) traded lower on Wednesday following its Q3 results, which largely met market expectations but incremental issues continue to weigh on market sentiment.
The British automaker posted Q3 wholesale volumes of 1,641 units, generating £392 million in revenue and £51 million in adjusted EBITDA, aligning with expectations.
Free cash flow, however, remained negative at £-81 million, a continuation of financial strain in the context of phasing challenges and increased inventory buildup ahead of an ambitious Q4 production ramp-up.
Following a recent guidance adjustment, Aston Martin reasserted its plan to deliver over 2,300 units in Q4—a substantial jump that recalls year-end volumes from prior years and represents a crucial test of its execution capabilities.
Supply chain disruptions and broader macroeconomic pressures, particularly in China, have hindered Aston Martin’s production and deliveries, affecting its inventory and sales momentum.
Although the company’s Q3 order book extends into the first quarter of 2025, analysts pointed out that this doesn’t offer as robust a demand buffer as hoped, especially given its limited dealer demonstrator inventory.
The company expects demand to strengthen as new models become available globally, but recent results underscore the need for more consistent production cadence and demand visibility.
While Aston Martin’s current liquidity appears stable, with a Q3 cash balance of £157 million, Barclays (LON:BARC) emphasized that the automaker must show steady execution progress to meet its ambitious targets for 2025.
The company aims for £500 million in EBITDA and positive free cash flow by then, though Barclays’ estimates remain somewhat conservative, projecting a £451 million EBITDA and a potential free cash flow shortfall.
The Q3 figures reflect improvements in Aston Martin’s personalization options, which contributed to a 14% year-to-date rise in average selling prices to £250,000, driven by demand for bespoke options.
Core average selling prices were down slightly compared to last year, largely due to a challenging comparison with high-margin models that have since been discontinued.
Additionally, the company’s performance in the ultra-exclusive Special segment, particularly the Valiant, is expected to boost year-end deliveries, offering a promising revenue uplift.
Despite reassurances from management and strong shareholder support, Aston Martin faces an uphill path to sustained profitability.
In the near term, Aston Martin’s path is fraught with challenges, including production risks, supply chain volatility, and potential demand softening in key markets like China.
Analysts flagged these as critical factors that could affect Aston Martin’s ability to meet its financial targets, adding pressure to an already delicate turnaround effort under new CEO Adrian Hallmark.