the impact of the dispute between Aston Martin and one of its
members of the dealer network,
group of clients, initiated legal proceedings against the members of the board of directors of
Nebula related to the withholding of certain customer deposits on the Valkyrie
Aston Martin estimates an impact of Â£ 15million on EBITDA and cash flow this
year. Although this will not affect the note, it will dampen the
profits and cash flows in 2021 and slow down its expected recovery in terms of S&P
EBITDA and Free Operating Cash Flow (FOCF) adjusted by Global Ratings for 2021.
We do not expect sales volumes to suffer and Aston Martin is committed to
deliver the ordered models to customers as scheduled.
Adjusted EBITDA is expected to approach breakeven by 2022, following a
difficult 2020. However, we see a small possibility that Adjusted EBITDA
remain negative, if there is a financial impact in 2022. We do not take into account
any change in the baseline scenario for next year at this point. Aston Martin
capitalizes its research and development (R&D) costs – we adjust EBITDA,
treat them as expenses.
At present, we assume that the withholding of deposits by car dealers
turn out to be a one-off event. Deposits for the group’s Special range will remain
directly with Aston Martin in the future, instead of going through a third
Party. If we see any indication that this is not the case, or if the impact on
EBITDA is higher than expected, Aston Martin credit indicators could be
negatively, which reduces the rating margin and delays its recovery.
Further declines in EBITDA generation in the medium term or any
liquidity could entail a downside risk.
The company is evolving in accordance with our expectations and we expect its
measures will improve in 2021, but pandemic risks persist. Wholesale
volumes in 2021 are expected to be around 6,000 vehicles, increasing to over
7,000 in 2022 in line with management expectations. It implies total income
nearly Â£ 1 billion in 2021 and over Â£ 1.1 billion in 2022 (including revenue
sales of parts and maintenance of vehicles, brand and motorsport
We still expect Aston Martin Lagonda (AML) to generate
EBITDA, taking into account capitalized R&D expenses. It would mean a debt to
EBITDA and FOCF to debt remaining deeply negative or insignificant, and the
the capital structure is proving unsustainable.
Our forecasts remain vulnerable to changing macroeconomic conditions,
especially if the pandemic restrictions affect Aston Martin
manufacturing facilities in the
This report does not constitute a rating action.