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Bond Market News
Aston Martin’s Bonds Drop on Profit Warning
October 1, 2024
Aston Martin’s bonds dropped by 2–3 points after the luxury sports-car maker lowered its revenue guidance for the year. According to the revised guidance, Aston Martin predicts annual sales of 1,000 vehicles, 15% lower than before. The company does not expect to hit its previous 40% gross margin target this year, nor does it expect to generate positive free cash flow during the second part of the year. The company is facing significant challenges due to disruptions caused by fires and floods affecting major automotive suppliers, leading to delays in component deliveries and longer vehicle completion times. Its new CEO, Adrian Hallmark, noted that the scale of supplier instability has reached unprecedented levels since the start of his career. The company is also grappling with a downturn in demand, particularly in China, and disappointing electric vehicle sales. This situation follows similar outlook reductions from Volkswagen, Mercedes, and BMW, highlighting broader industry woes. Aston Martin’s shares dropped 28% in London trading on Monday, the biggest intraday move since March 2020.
Its 10% 2029s bond dropped by 2.62 points to 98.4, yielding 10.3%.
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