Good day, and thank you for standing by. Welcome to the Aston Martin Lagonda Results Call with CEO, Tobias Moers and CFO, Ken Gregoire. I would now like to hand the conference over to your first speaker today, Tobias Mers. Please go ahead.
Thanks very much, And hello, everyone, and welcome to S. Martin's first half twenty twenty one results Q and A. I'm Tobias Mers, CEO, and I'm joined by Ken Gregoire, CFO. I hope you have had the chance to see our H1 twenty twenty one results accompanied by our video. And in summary, I'm really pleased with the good progress We have made and we have delivered results in line with our plans.
Both revenues and wholesales traveled in the half compared to last year. And we reached a double digit EBITDA margin at 10%. In the statement, you can see some notable milestones we've achieved. I'm particularly pleased with the healthy demand we are seeing for our products and the strong pricing dynamics we are achieving. This is for sure a result of operating as a luxury company with the right supply to demand balance, which we achieved in quarter 1, And that's earlier than we had originally expected.
As well, we have made excellent progress on Project Horizon. All of these actions are aimed at transforming Aston Martin into a world class as well performance oriented Ultra luxury automaker. And we are right on track with that. With that, we're happy to take your questions. And thanks very much for joining us.
Thank Gregoire. And your first question today comes from the line of Charles Caldicott of Redburn. Please ask your question.
Good morning. Thanks for taking my questions. I have 2, please. So the first, as you mentioned there, the average selling price for your core models has gone up a lot. It's pretty much the highest it's ever been.
Obviously, there's a few moving parts in there, including the regional mix, the higher option take rates, I guess, the DBX and Clearly, lower dealer incentives as well. So can you sort of give us an idea of what's really driving the higher ASP for your core models And how much of it is sustainable? And then my second question was going to be on electrification. So Mercedes revealed that it is developing a new dedicated electric platform for its sports cars last week called AMG. EA.
Can you just confirm whether your agreement with them, which I think extends to 2027, includes access to that platform? And if so, when we should expect the first product on it?
Maybe I take the ASP question first. Charles, you're right that the Strong ASP and the ASP for the core vehicles does reflect the factors that you mentioned. We've got DBX. We have but the biggest driver of the year on year improvement is the significantly lower customer and retail financing support But we have been pursuing as a strategy for Aston Martin with some success this year. And Although it's always the core ASP is always going to ebb and flow by quarter because of regional and seasonal mix, we do expect it to continue Strongly through the second half of the year.
I said Okay. The thing is with ASP, and I think it pays off That we cleared the stock for the sports cars. This is one I think that was the most important topic to achieve these That level of ease. Coming to your second question, the electrification. Yes, I saw what Mercedes announced, AMG EA.
Yes. I always told everybody they have more than one pop Form in place for the future because I know that. It's a bit too early to talk in detail about that, but expect something, yes? So we're going to team up with Mercedes because it was always part of our technology transfer agreement. And for sure, we're in discussion and what we can achieve.
And so now everybody has an understanding what is possible, but I don't want to talk too much into detail at the moment. Okay. Thank you. You're welcome.
Thank you. Your next question today comes from the line of Henning Crossmoyn of HSBC. Please ask your question.
Hi, good morning Tobias and Ken. My first question is on the nebula effect. My understanding is that you said in for 2022, you said in the press You can manage that within current expectations. And my understanding was that, that was in reference to the about €250,000,000 EBITDA Consensus at the time. So I'm wondering if you can share a little bit more color on that.
So what would it have been without the effect. And ultimately, what I'm getting at is that you're suggesting it's a net positive over time. So I'm wondering when the €15,000,000 from this year and And also the additional effect in 2022, where's the inflection point and how much comes on top of your original expectation then Reversing the negative effects that you're seeing over the next couple of years. That's my first question, please. Then the second question is on the mix Between GT Sports and DBX, it's good to see that DBX is now more than half of the volume.
If I recall correctly, the wait lists For DBX, we're a little bit shorter at the Q1 stage than they were for GT and Sports. So I was wondering if you could just update us on that. Is that still the case? And I understand with your suggestion that DBX will remain more than 50% of the mix. Can I just ask if you're deliberately producing more DBXs and deliberately managing so that the waitlist For DBX are shorter and can you just discuss the rationale of that again a little bit?
Thank you.
Well, maybe I'll take
the Nebula
project point.
At this point in time, there is no update on that that we can give you. The financial effect I expect for 2021 Remains as we disclosed and including that we did take the €5,000,000 provision for doubtful debts in the first half of the year in these results. And for 2022, it remains the case that the negative financial effect It's containable within the guidance, and I don't have anything to add to that. That just remains the case. The Nebula contract that we had was a multiyear contract.
So it's beyond that point For several years, the balance of it being net positive over time Takes place. But right now, because the matter is subject to Action in the courts on a number of different fronts. We really can't say any more about it at this time.
Regarding DBX and sports cars, order intake for both Car lines is in line with our expectations and order book are reached out into quarter 4. Both car lines were important for us. And First time probably, I don't know. I don't know everything about the history, but retailer was stronger than wholesale for us in the first half. That's very good.
And that's part of that ASP situation. And this is the strategy for the future, and we keep going with that. Expect DBX in sports cars is kind of a fifty-fifty mix this year. Then we will bring another wire. We may increase the portfolio of DBX for next year.
Too early to talk about next year numbers, but Yes. Deepak is going to see some expansion in the portfolio for 2022.
Okay. Thank you. And just two clarifications, if I may. So you on Charles' question from earlier, you Expect the core ASP to remain relatively stable in H2. Did I understand that correctly?
Yes. Yes. Look, it always as I was Hinting at, if you like, it ebbs and flows by quarter because of regional mix, Seasonal mix. But broadly, it's in a zone where it's in a strong zone, and we expect it to continue in that region into the second half, driven by similar factors, driven by the fact that we continue to maintain The strategy of balancing supply with demand in order that including an order that we can Keep the level of customer and retail financing incentives low.
Yes, understood. And sorry, just to also clarify on Charles' Second question, I just don't want to go away and feel less certain about your Mercedes agreement. My understanding was that agreement is such that it would include state of the art technology from Mercedes, whatever it is, over the length of the contract. So now I understand there's additional conversations to be had, whether it does include AMG EA or not? Or is that a wrong interpretation?
Is it fair to go away and say, well, whatever is state of the art for Mercedes, you're going to have access to that?
You probably know my roots, okay? So I think I always put a bit In the direction there are more than 1 barrier and then 1 platform to come. And yes, we are on our path, but I cannot Disclosed too much at the moment.
It's not possible.
Okay. Thank you. But we're going to have access to the right technology for the brand. Take it that way.
That's helpful. Thank you, Tobias.
Okay.
Thank you. We take our next question, which comes from the line of George Galius of Goldman Sachs. Please go ahead.
Yes. Thank you for taking my question. So the first question I had was just on the volume guidance. Obviously, you're seeing a very nice sequential development in terms of your volumes. And as you mentioned, the retail is outpacing the wholesale.
With that in mind, would you be Had to go materially above the 6,000 wholesales that you're targeting for this year if the retail demand is there? Or Are you planning to keep that as a cap and happy to see the wait list build as the retail demand comes in? And the second question I had was just on the Valhalla deposits. Obviously, you unveiled the Valhalla. It looks Extremely exciting prospects.
Could you just give us some insight into what deposits were taken historically on the Valhalla? And when do you plan to start taking deposits on the product now that you've unveiled it? Then finally, A question just on the EU proposals around CO2. Obviously, they're proposing an end to the small vehicle manufacturer Exemption from 2,030 as well as 0 emissions from the tailpipe in 2,035. Do you see that as having a major impact on your strategic planning over the next decade?
Or is that something That won't have a big impact over the next 5 to 7 years, but it's something you'll have to take into consideration with, I guess, the next Generation of Planning. Thank you.
Let me take the first question. Yes. Is the 6,000 a dogma? No, it's not. If retail demand picks up, We have some expectation for retail demand for the future.
And you saw our projection of the 10,000 cars. We are always able to improve or increase our performance on the manufacturing side. So we are really flexible now. That was part of Project Horizon to bring us on a very flexible and agile situation in the manufacturing and we are now there. So that's you really like to have a certain order book, yes?
You like that? Because if In luxurious business, retail should be minimum the same level. Now with the stock clearance of sports cars, It was clear that retail is going to be overachieving the wholesale. But yes, we are flexible with our numbers. Valhalla is We have a certain level of down payments with the company did from 2019 ongoing.
With unveiling the new Valhalla, we see Really an overwhelming response of everybody who placed the deposit. We are starting to sell the car now, the new Valhalla. And we We just had yesterday a few customers in here in Gayden. And yes, it's a good journey. And Everybody was positive more than positive surprised about what we unveiled as the new Valhalla Regarding the performance level of the car that it's going to be a hybrid, a plug in hybrid.
We're going to take it to Pebble Beach in 2 weeks, 3 weeks. And it is so kind of really good as a response that we decided to build a second show car. I think that speaks for itself. And the third question was, if you do a strategy for a company And this is what we did. And you don't consider that turn into the electric drive Future, you did the wrong strategy.
So our strategy is not infected by that or compromised by that. There is no need for adjustment of our strategy.
Great. Thank you very much.
Thank you. And your next question today comes from the line of Ashkar Cakkar of JPMorgan. Please go ahead. Your line is now open.
Thank you. Akshat from JPMorgan. 2 from my side, please. The first one on DBX and China. Are you generally happy with the sales momentum that you're seeing in the region for the SUV?
And how are you doing versus competitors like Lamborghini, Bentley and Rolls Royce In China specifically, please. And also how the customer feedback and response to the new derivative going into production in Q3, how has that been so far? And that's the first one. The second one is kind of a follow-up on the deposits balance. Deposits were up $7,000,000 in the first half of twenty twenty one.
How do you expect this to trend by year end and into 2022 as you deliver the Valkyrie and the AMR Pro, please? Thank you.
Maybe I'll take the second question first. On the overall deposit balance, our Intent, our target, our plan is to more or less maintain that deposit balance through time. Yes, we'll see some unwind relating to Valkyrie deliveries in Q4 of this year And in relation to Valkyrie deliveries next year. But at the same time, as Tobias was just saying, we've just launched the Yuvalhalla and we have other plans not yet announced yet that will give us A pipeline of plans for our specials going into the future. So our target is more or less to maintain that deposit balance Over the next year or 2, although it will always ebb and flow, but we're clear about what our intent is.
John, on DBX, in our expectations, we're doing good. So you see different Patents in the different regions, but DBX is for us at the moment in line with the expectation. And honestly, we didn't unveil The derivative, what we're going to bring in the quarter for finally to customers. So that's too early to talk about.
Thank you.
Thank you. Your next question today comes from the line of Russ Snyder of Bank of America. Please go ahead.
Yes, good morning all. I just have got a few follow-up questions. I want to get back again on this pricing issue Because also in your presentation, we just see the year on year impact. So I mean obviously, it has been quarter on quarter also not being bad. But in terms of Just earnings contribution and the price impact.
It seems to me that the price impact on earnings sequentially Was rather limited. Would you agree to that so that we have kind of stable pricing Q1 versus Q2? Or you would disagree to that? The second question that I had that related again to your comment in your release that you have got a good visibility On GT Sport and DBX, so maybe you can provide more details again on the waiting times for the various models. It seems to me that The GT line is selling a little bit worse in sports.
So just want to know if that impression is right. And the last one that is again coming back to EU Fit for 55 because it says basically there will be an ice Car ban as of 2,035, does that imply also for you that you plan not to sell any ice car anymore in Europe In 2,035 or are there any exemptions that I'm not aware of?
I'd Start with going back to the ASP point. Sequentially, quarters, Yes. Q2 was similar to Q1. It varies a little bit because of mix and seasonal factors. And Going into Q3, Q4, I would expect it to continue to vary a little bit in the range it's in Because of mix and seasonal factors.
And therefore, yes, when you look year on year, the biggest improvement is in It's kind of Q1 of last year to Q1 of this year and then sequentially over time the improvement year on year looks different. But overall, we're happy with the development of the ASP and the strong position it's in. Okay, for sure. I mean, the EBITDA performance of the business in the first half of the year being Substantially £130,000,000 higher than the EBITDA of the first half of last year. And there's a number of contributing factors
to that.
£25,000,000 of that improvement was driven by the lower, favorable marketing or incentive support. So That's very clear that's and you see the benefits in our numbers.
Okay.
Coming to the question about the ice ban in Europe. Probably I'll call but I'll take this to Canada. We have to face the reality. And I think it's not a final decision Regarding small manufacturers. But anyway, we established a strategy for the company, and we Be clear that we have to move to electric driven future, and that is part of our strategy.
So is that worldwide the case that we don't have any ice anymore? I don't know at the moment, like everybody else. So Where it's reasonable doable or where it's doable regarding the region and the region has a clear understanding about ice, no ice, For sure, we're going to be electric. And if there is some regions that it's a challenge for everybody to get a grid up and running for a fully electric drive everywhere. So yes, it's a journey and we are on the journey as well, but it's part of our strategy.
And come back to my initial point, what we put when we pushed out a strategy in 2,030, We have a portfolio for electric cars and it's next generation sports car. And I'm talking about current generation and the success The next generation after the current generation, that's going to be fully electric. That's given and that's part of our journey.
And the 50% penetration target that you have for 2030, that is a global target, right? What would that imply in terms of penetration target for Europe specifically? Is it something in the range of 75% or
I don't know. I don't know. I don't know. If it's worldwide more than 50, we are able to do that. That's kind of a rough numbers.
I saw what Mercedes pushed out that they're going to be fully erected by 2,030. Depends on the region was to add to that sentence, you have a close look on it. I don't know. The next generation sports car is supposed to be fully electric. I'm going to this means that 100% of the sports cars then is fully electric.
Do we still sell some hybrid DBX? Probably, yes. But the good side of the story in the luxurious business, You don't see in the business and the segment where we are in, you don't see and this is what I see in our strategy, you don't see The impact on the margin like on small amount of small cars, this is what you've done in the forecast. You don't see that.
All right. Just to follow-up on the first question that I had regarding waiting times. I think you have not commented on that yet.
Sorry, I just forgot that. We ended Q4 with both car lines. And honestly, sports cars are doing better than everybody from what we saw last year. So we're really pleased about order intake for sports cars. Having new derivatives in the sports cars like Vantage Formula 1 Edition, That's really that's selling really well.
And the good thing of that variant is we see new customers coming to the brand, Younger customers, so that so it happened at the moment something with the brand, having Formula 1 in place, Bringing a very sporty variant out of or derivative out of the Vantage. I just had visits on 2 dealerships last week, and everybody told me it's unbelievable. We see new customers Coming into dealership, traffic is increasing in the dealerships. That's it pays off that we change our portfolio.
All right. Excellent. Thank you.
Your next question today comes from the line of Stephanie Vincent of JPMorgan. Please go ahead.
Hi. Thank you very much for taking my question. Just a few, if I may, just on liquidity and cash flow. Can you talk about in terms Of deposits, how much of your current liabilities or trade payables are related to those as of the 30th June, Also given the DBX and the rising amount of sales in China, can you verify that the Cash, I guess, that's available to you. You talked about quite a small amount that's unavailable.
But is there any cash outside of that we need to be aware of. And then finally, I think in prior bond documentation, you did speak about potentially Trimming some of your real estate outside of your core manufacturing facilities. Is there any intent to do this Over 2021 or 2022, especially given COVID and some of the trimming of real estate that we've seen, for other businesses. That would be helpful. Thank you.
Thanks, Stephanie. On the deposits At the end of the half, they were circa £270,000,000 similar level to the end of the 2020. And as I said earlier, our intent is to continue to raise new deposits relating to Valhalla and other specials we have in the pipeline, in order to sustain that balance, That's our target and we're very clear on that. In terms of cash, yes, the vast majority of our cash is In the UK and available to us from that point of view, there's some cash that's in China, some Which is kind of in the region of I want to say in the region of £30,000,000 £40,000,000 In China, which is available to us in China, and we take steps over time In the normal way to repatriate that cash back to the U. K.
Via dividends as and when we can. So that's normal. And your last question was?
Site strategy.
Site Strategy, I mean, we're kind of mostly done on the strike strategy in exiting these Buildings that we had in various places in the U. K, so probably the bigger parts of that are done for now.
Yes, it's almost done. Side consolidation has been done. So all the sports cars are now engaging in the main factory. The specials are here in the main factory. So there is no shadow organization anymore in Sanddersen is on a journey and that's going to start after the summer break.
We are on a line consolidation to put everything In a different much more efficient way how we're going to assemble them DBX. Yes, there's still a few opportunities, but The majority is done, yes. So within almost 9 months and that's what the company can really be proud about. So yes. But efficiency is not never going to
stop, yes, for sure not.
Thank you very much.
Thank you. Your next question today comes from the line of Christoph Laskarvi of Deutsche Bank. Please ask your question.
Good morning. Thank you for taking my questions. It's really follow ups only on the DBX. You commented on the regional performance and it's Pretty strong in Asia and China and the U. S.
My question will be how actively are you steering those sales currently? Are you actively moving the units into those regions and that at the detriment of the European demand? Or is it essentially reflecting The order intake? And then the second question will be a bit on the order intake of the DBX. Are you currently limiting orders For the base model in order to keep the excitement up for the new variant that is coming up?
Well, are you accepting all orders that are coming in the store for base even though you're launching the new one soon? Thank you.
Orders of the DBX, we take every order we can get, honestly. So we take every order from retail side, Which means the customer is behind. If you bring a new variant, you're always careful and you monitor your stock properly and you face it a bit Down and or you move it a bit down and increase your dealer stock on the new variant depends on the region, depends on the variant. But that's a normal business in automotive. And the alignment of our production, it's on a total difference.
So we are on a much more agile and flexible way how we align our production capabilities to the regional demand. So and this is everything is retail driven and stock driven. So that's the company is doing a total different job how to align Production line loading to the demand in the region. But this is just another result of our Move to being a luxurious automaker and align production and stock and retail. So retail is we retail more cars in the first half than we wholesale.
I think that stands for itself. Thank you.
And just a follow-up to Stephanie's question. Stephanie, Page 21 of the stat accounts that we released here, note 2, gives a little bit of detail To the cash that's in China and also the arrangement we have in China that's enabled us to deposit cash in China and utilize that Cash in the U. K. To maintain the liquidity available to us. Happy to talk through technicalities of that 1 on 1 if needs be.
Thank you. Your next question today comes from Charles Caldicott of Redburn. Please ask your question.
Hi, thanks. I just had a couple of follow ups. On the Valhalla, I think you've been quoted as saying that instead of the previously discussed price tag of £1,000,000 It's going to be significantly less than that, but that you're potentially going to do around 1,000 units over 2 years instead of the 500 limits that was previously discussed. Can you just confirm that those numbers are how we should be thinking about Valhalla, maybe just discuss what's led you to increased production like that? And then my other question, I just wanted to ask on the raised guidance for the D and A.
Can you just explain that a little bit more? What's the program timing related to?
Yes. Let me take the depreciation and amortization point first. We've been working, As you know internally on plans for our refreshes of our sports car models And as we develop those plans, we're obviously working very hard to launch them as soon as possible and also to Address as many of the make them a very substantial refresh and technological updates, infotainment update, Electrical architecture update and really address all of the customer features and attributes that we want to deliver that Supports the promise of the Aston Martin brand. And in doing so, there are some elements of technology, which Maybe previously might have been assumed to run a bit longer, but we're taking a conscious decision to change in order to make the refresh as substantial As possible and that's resulted in some depreciation and amortization, needing to run a bit faster than it was previously assumed.
Should I take the Valhalla question? Since I joined the business, I had A complete review about Valhalla, what we're going to do with Valhalla, where we're going to move Valhalla, what is on our understanding about the definition of supercar. And basically a target for us, what we get right, try to achieve when it comes to EBITDA, EBIT contribution Margin with products and every lineup and everything is now to follow that KPI set. And Valhalla with the realignment and I can confirm you got the point. We talk about openly we talked about €6,75,000 for the car Without tax, it is a limited production run for 2 years, 2024 and 2025.
So we're going to have the first deliveries by end of our Q4 of 2023, it's a very simple answer. It's A very, very robust business case for us. And this was the reason to move the car In that ballpark, it is hypercar performance for supersports car pricing and But what we get as a demand and a revenue and feedback from our potential customers as new as well new customers coming to the brand Regarding the technical KPIs and details of their cars is really amazing. And that was the reason for bringing the car there. And As I mentioned in my previous discussions, I think we have to find our own path and our own pattern Footprint when it comes to the new Aston Martin with the specials.
And Valhalla is one new interpretation of a sweet spot for a special.
Great. Thanks.
Thank you. And your next Today comes from the line of Thomas Besson of Kepler Cheuvreux. Please ask your question.
Thank you very much. It's Thomas Besson, I have three questions, please. Firstly, I'd like you to discuss a little bit, if you don't mind, about the Ability to differentiate electrified or electric cars for ultra luxury brands versus new brands, Do you believe that it's going to be as easy to differentiate your vehicles when it comes to EVs when it was Hi, vehicles. That's the first question. The second, you mentioned in your prepared speech, The video we were able to watch this morning before this call, several management changes.
Can you just give us an update on where you stand in terms of reshuffling Your management team, is it done? Or should we expect more? I think that since the IPO, there has been Multiple changes notably on the sales front, people responsible for your distribution of your products. Can you say a few words about that as well? And finally, I'd like to come back to the comments you've made about orders.
I'm not sure I understood. Did you say that for both sports cars and SUV, all those run into Q4? Or did I understand incorrectly? Thank you.
Last question. First, order intake, order bank is into Q4, Not just at Q4, it's into Q4 for both. Leadership team there, yes, we made many changes honestly. And I certainly believe in strong leaderships. And I think we form at the moment One of the most strongest leadership teams in the automotive business in U.
K. That's what I think what we do. And we are not through that journey. There's still more to come, but I cannot talk in detail about that, honestly. But yes, we changed Direction and on manufacturing side, we appointed a new head of quality.
We appointed a new head of technical after sales. The orchestration of the sales is in a new hand now. Marcom, we hired somebody new. We could Always good, good persons, people with their great reputation in the industry, with other brands as well. Very diverse leadership.
That's really good, but very strong. Then coming back To the question regarding ICE and EV, I'm not concerned about a journey into AV because it's when it comes to an EV, I think it's more about the brand than it is Even currently, so the brand is the major differentiator when it comes to the EVs because 0 to 100, 0 to 60, That's really very democratic in future for everybody. So everybody can achieve a 3.5 second acceleration from 0 to 100. So the brand the brands plays the major role. And therefore, we started to prepare ourselves to do so.
When it comes and brand is linked with customer experience. And this is one of our most important topics Regarding how Aston Martin provide an excellent outstanding luxury oriented ultra luxury oriented brand experience and customer experience. There was one point, for example, to decide that we're not going to use Mercedes NAF system and Mercedes Connected car systems for the future anymore. So we build our own ecosystem when it comes to the connected car. And I'm going to it's about to start with the facelift of the sports cars.
So that's very, very important. And we can always talk about the emotion [SPEAKER STEPHEN ROBERT BINNIE:] When you don't have any ice anymore in a car, but we have a lot of ideas to overcome that.
Thank you.
You're welcome.
That does conclude the Q and A session for today. Back to Tobias for closing remarks now.
Thanks from our side for joining us that morning or that afternoon, whatever time you are. Happy to take your questions, and I'm looking forward. And please stay tuned on our journey. Thanks very much. It was a great experience with you.
Thanks.
That does conclude our results call for today. Thank you all for participating.