Aston Martin lays out plan to quadruple profit within five years

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Aston Martin is aiming to quadruple its favoured profit measure within five years with a plan to double revenues and become a cash-generating business.

The luxury car maker said on Tuesday it was targeting £2.5bn of revenues — double 2022 levels — and £800mn of adjusted earnings before interest, tax, depreciation and amortisation by 2027-28.

Raising profit margins on its upcoming models and increasing car sales by pushing into electric vehicles from 2025 would help the business generate gross margins of 40 per cent, it said.

Chair and owner Lawrence Stroll on Monday predicted that the company, which sold 6,400 cars in 2022, could one day make 17,000 models a year.

The business is aiming to cement recent investor confidence that has helped shares quadruple over eight months after years of sliding amid concerns over its financing levels.

Aston Martin, which last summer brought in Saudi Arabia’s sovereign wealth fund as an investor, has raised more than £1.5bn over the past three years.

Aston’s new financial goals include improving the health of its balance sheet, targeting a net leverage ratio of one, and becoming “sustainably” free cash positive.

“The focus that we have is on making sure that the balance sheet is robust,” said chief financial officer Doug Lafferty ahead of Tuesday’s investor update. “I think the actions taken over the last 12 months mean that we’ve made good progress in that.”

The update comes the day after Stroll predicted the business “will hit” its previously stated midterm targets for 2025 of generating £2bn of revenues and £500mn of ebitda.

Stroll, who led a bailout in 2020, has been trying to turn round a business that has been ailing since its 2018 stock market listing. Aston has been trying to wean itself off chasing higher sales by aligning supply with demand.

Aston is in the process of refreshing its core sports car models, which account for roughly half of its sales.

The company, which expects to launch its first core all-electric model by the end of 2025, this week revealed a partnership with EV start-up Lucid to supply the batteries and driving systems.

Lucid’s systems will feed into Aston’s new electric platform, which will be able to underpin battery models from small sports cars to the largest SUVs that it plans to make.

Mercedes-Benz, which sells Aston engines and other technology, will also supply some of the electrical systems for the new platform, which will underpin all future Aston battery cars.

Lucid chief executive Peter Rawlinson said the partnership was the first for the company’s fledgling technology division, which aims to sell its systems to other businesses, as well as being a “validation of the technology” developed by the group.

He said the efficiency of the driving unit, which has been made compact enough to fit inside a carry-on suitcase, was twice that of systems made by Tesla, where Rawlinson was previously a senior engineer.