Aston Martin OEM - Spotlight

George Flynn, Senior High Yield Bond Analyst

Mark Remington, Global High Yield Bond Fund Manager​ ​

Roman Ermolin, Fixed Income Analyst

Aston Martin OEM has been in the spotlight in the recent months, following a growing support for the F1 Team. Both led by Lawrence Stroll, the company underwent a huge revamp with bringing on the new CFO (Doug Lafferty) and CEO (Adrian Hallmark) as well as completely changing the entire product line. Aston has launched four completely brand-new models (DB12, DBX707, Vantage and Vanquish) as well as retired two existing models (DBX and DBS). The new management with an activist shareholder in Stroll, are envisioning a completely different business model for Aston with a lot more desirable and expensive models, bringing in the new strategic partners like Lucid as well as utilising the current F1 frenzy by releasing “Limited Edition” £1,000,000+ price tag cars to improve the margins.

The main question on everyone’s mind is the Free Cash Flow (FCF) infliction point that we have been waiting for. In the last six years, Aston has been FCF negative and solely relied on the equity injections from the shareholder base, but this is coming to an end with management targeting a FCF positive year in 2025. Expensive debt has been a drag on the FCF, and the management is keen to address this in the near future as well. Rating agencies have continued the positive momentum having recently upgraded Aston from CCC- to B-. If the new management plan is successful, the company can get a second chance in becoming the industry leader in the luxury sport segment.

Overall, it has been an interesting journey so far and we are closely watching what happens next…

Sources:

AM Annual Report, https://www.astonmartinlagonda.com/investors/annual-report
S&P Global Market Intelligence, https://www.spglobal.com/market-intelligence/en
Management Presentation, https://www.astonmartinlagonda.com/investors/results-and-presentations

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