Aston Martin - comment

Volumes were below our expectations, and the shift away from Specials deliveries meant that gross margin fell from 39% to 28% in H1. Given the target of 40% this is disappointing, but management expects margins will improve to 37% for the Full Year. AML is expecting a stronger H2 and forecasts free cash flow generation in Q3/Q4, but this will require a strong delivery performance and no further snags with the US tariff regime. A tariff level of 10% is a relief, but there is also a first-come, first-served quota of 100,000 car exports to the US, and Jaguar Land Rover accounts for 75% of it. AML is lobbying the UK government for fair access. If the quota is filled, then the tariff moves from 10% to 27%. AML has said this is a 2025 problem, and they will be able to manage deliveries/production from 2026. Cash and available facilities were £228m (£123m in cash), but will be boosted by £110m from the sale of the F1 team stake, which is due to complete imminently.