Aston Martin Announced 2013 Full Year Result

Here is the highlight:

– Revenue increased 13% to GBP 519 million;
– Full year adjusted EBITDA up 22% to GBP 84.8 million;
– Global retail volumes increased 11% to around 4,200 units.

However, we cannot declare Aston Martin is making progress financially. This is because revenue and EBITDA tell us nothing about the financial health of a company.

Revenue just informs you how many money they will suppose to collect for selling their inventory; we do not know the cost of making the goods.

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is just telling you what money the company has, before lenders collect their interests/principles, government collects the taxes and the cost of the company asset/equipements. A positive EBITDA does not necessarily mean the company is generating cash, because it ignores expenses in working capital and capital expenditures (have you noticed Aston Martin is also announcing its plan to develop a new sports car platform? That expense will not be counted in the EBITDA).

Especially for Aston Martin, from my previous analysis, its biggest problem is its relatively high financing expense, which caused its big net loss in 2011 and 2012. But as explained above,  EBITDA does not reflect financing cost.

The fact that Aston Martin does not provide us the most important data: net income and also the cash flow statements, to evaluate its financial performance worries me. Its behaviour of selectively reporting only partial financial data signals a red flag to us.

Although Mercedes-Benz is helping Aston Martin to develop new engines, it has refused to participate in any other collaboration. From my point of view this shows Mercedes-Benz does not consider co-development with Aston Martin other than the engine part will be profitable for them.


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