First-half revenue rose 38% to £629mn, driven by a sharp increase in deliveries of its Special models, which carry much higher average selling prices. Total deliveries rose 21% to 2,331 cars.
Underlying operating losses narrowed by 10% to £109mn, reflecting the better gross margins on its Special models.
Free cash outflows improved from £321mn to £198mn, driven by lower operating losses and capital expenditure. Net debt rose by 12% to £1.5bn.
Full-year guidance was largely maintained, with underlying operating profit expected to rise towards breakeven (consensus: £91mn loss), helping to materially improve free cash outflows (2025: £410mn outflow).
The shares were broadly flat in early trading.
Our view
Aston Martin’s revenues raced much higher over the first half as production of its premium-priced special models ramped up. But rising operating and debt costs are eating away at the benefits. It’s likely to remain a long road back to profitability, with underlying operating losses only set to narrow this year.
Production issues with the Valhalla appear to have been resolved, and it should help push margins higher this year. But Aston Martin’s developed a bit of a reputation for overpromising and underdelivering in recent times. As a result, we still remain cautious about the extent of the improvement forecast for this year.
Tariffs are expected to remain a headwind in 2026. The current regime allows the first 25,000 UK cars to be exported to the US each quarter to be subject to a basic tariff of 10%, on a first-come, first-served basis. Anything over that in each quarter will be subject to a much higher tariff of 27.5%. Given the lack of control, and the fact that nearly 40% of Aston Martin’s revenue comes from the Americas, this is a significant trip hazard.
The group’s lack of scale continues to weigh on the business, with volumes expected to remain flat at around 5,448 cars this year. It means that even a small dip in volumes can have a big negative impact on profits and vice versa. Returning to profitability will require Aston Martin to grow volumes again, especially its higher-priced specials like the Valhalla, benefitting from the improved efficiencies that greater scale brings.
In the meantime, asset sales and headcount cuts have been leaned on to free up cash. While these actions provide a short-term buffer, they’re not a viable long-term plan, with the latter making it particularly difficult to increase future output.
The current high level of debt and the associated financing costs are also major problems. Interest costs on its debt pile are rising and draining cash from the business, so the group still expects negative free cash flows this year. That could spell real trouble if it runs out of funds to meet these obligations. As a reminder, debt investors are in the driving seat when it comes to claims on assets if Aston Martin fails to meet scheduled debt payments.
If management can deliver the expected improvements this year, there could be upside on offer. However, we’re quite sceptical given the high rate of cash burn, as well as potentially higher costs and weaker customer demand due to the Middle East conflict. As a result, we see scope for full-year losses to end up slightly wider than expected.
Environmental, social and governance (ESG) risk
Most of the auto industry falls into the medium risk category in terms of ESG. Product governance, particularly around safety, and the carbon emissions from companies’ products and services are key risk drivers. Business ethics, labour relations and operational carbon emissions are also contributors to ESG risk.
According to Sustainalytics, Aston Martin’s management of ESG risks is strong.
ESG issues are overseen by the board and overall disclosure is strong. There’s a robust environmental policy in place, with a commitment to net zero for scope 1 and 2 emissions by 2030 and scope 3 emissions by 2039 and has interim targets in place. However, AML doesn’t divulge sustainability-linked revenue and environmental impact isn’t systematically considered in the design phase. Although some of AML’s facilities are externally certified, scope is unclear and its product and safety programme needs improvement.
Aston Martin key facts
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This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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