Raphael Stevens

Aston Martin Lagonda’s pretax losses swelled in 2022, but an improved guidance on EBITDA and wholesale units for 2023 boosted shares.
The company intends to become “sustainably free cash flow positive” from 2024.

The exterior of an Aston Martin store.
Jeremy Moeller | Getty Images News | Getty Images

LONDON — British luxury carmaker Aston Martin Lagonda forecasts better profitability this year, after widening its 2022 pretax losses on the back of a weakening U.K. currency.
The company more than doubled year-on-year pretax losses to £495 million ($598 million) in 2022, from £213.8 million in 2021, saying earnings were “materially impacted” by a revaluation of some U.S. dollar-denominated debt, “as the GBP [U.K. currency] weakened significantly against the US dollar during the year.”

Adjusted operating losses also swelled to £118 million last year, from £74 million in 2021. Revenues rose by 26% on the year to £1.38 billion, with gross profit up by 31% year-on-year to £450.7 million.
Despite acknowledging supply chain and logistics disruptions — which have been pervasive in the automotive industry, notably as a result of semiconductor shortages — the company said its wholesale volumes increased by by 4% year-on-year to 6,412. The figure included more than 3,200 of vehicles from the Aston Martin DBX range, of which more than half were driven by the launch of the DX707 SUV model unveiled in February last year.
Aston Martin Lagona shares soared, up 14% at 10 a.m. London time, after Aston Martin Lagonda issued more optimistic guidance for this year.
“For 2023 we expect to deliver significant growth in profitability compared to 2022, primarily driven by an increase in volumes and higher gross margin in both Core and Special vehicles,” it said Wednesday, flagging a pick-up in activity in the second half of 2023.
“In addition to the ramp up of the already sold-out DBS 770 Ultimate, we expect deliveries of the first of our next generation of sports cars to commence in Q3.”

The company expects wholesale sale volumes to pick up to 7,000 units in 2023, anticipating its adjusted earnings before interest, taxes, depreciation and amortization to add roughly 20%.
It noted the ongoing pressures of a volatile operating environment, high inflation rates and “pockets of supply chain disruptions.”
“Our order book’s never been stronger,” Aston Martin Lagonda Executive Chairman Lawrence Stroll told CNBC last month. “The future is fantastic, the cars are coming, fundamentals of the business are extremely strong. And demand has never been stronger.”

Stroll on Wednesday reiterated the company’s target to deliver 10,000 wholesale units over the coming years, as well as the target to become “sustainably free cash flow positive from 2024,” after raising £654 million of equity capital in a move that also saw Saudi Arabia’s Public Investment Fund become an anchor shareholder.
“Over the last three years, I have consistently referenced our target to deliver around £2bn of revenue and £500m of adjusted EBITDA by 2024/25,” Stroll said. “I am extremely proud that given the strong progress we have made to transform Aston Martin into a truly ultra-luxury business, demonstrated by the trajectory of our ASP and gross margin, we are on track to meet these financial targets, but with significantly lower volumes than I originally envisaged.”
“2022 in line with consensus is already positive news for AML,” Jeffrey analysts said in a Wednesday note, flagging the upside of the company’s guidance on units and EBITDA margin.

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Rocket Lab reported fourth-quarter revenue of $51.8 million.
Its order backlog doubled over the past year: From about $241 million in contracts at the end of 2021 to $503.6 million at the end of 2022.
“We pride ourselves on executing and we’ll back ourselves to execute this year,” Rocket Lab CEO Peter Beck told CNBC.
The company also completed the first production building for its coming Neutron rocket, as well as started construction of a launch pad for the rocket in Virginia.

Electron rockets undergo preparation for launch.
Rocket Lab

Rocket Lab said Tuesday it has doubled its order backlog — from about $241 million in contracts at the end of 2021 to $503.6 million at the end of 2022 — and made progress on the Neutron rocket that it’s developing.
“2022 we are generally very, very happy with, and what’s important to me is that we did what we said we’re going to do,” Rocket Lab CEO Peter Beck told CNBC.

“We pride ourselves on executing and we’ll back ourselves to execute this year,” Beck added.
The space company also reported fourth-quarter revenue of $51.8 million, up 88% from a year prior, with an adjusted EBITDA loss of $14.5 million – which was 75% wider than the fourth quarter a year ago. It had $484.3 million in cash on hand at the quarter’s end.
Rocket Lab conducted two successful launches of its Electron vehicle during the quarter, generating $12 million in revenue. Its broader Space Systems division continues to bring in the bulk of its revenue, generating $38.8 million.
The company also announced completion of the first production building for its coming Neutron rocket, built at NASA’s Wallops flight facility in Virginia. Rocket Lab began production of the first Neutron tank structures, as well as construction of the launch pad for the rocket. As for the next major milestone in development, Beck told CNBC that will be when there are “complete tanks rolling out” of its factory.
“With a composite launch vehicle, when the actual parts are coming off the molds, then that’s a far stronger indicator of progress than anything else,” Beck said. “To get to that point where we’re actually manufacturing these parts I think is a huge milestone in itself, but a bigger milestone is when a tank actually rolls out the door.”

Alongside its results, Rocket Lab announced a contract for four Electron launches from satellite company Capella Space. Those missions are scheduled to begin in the second half of the year.

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Shares of Rocket Lab are up 19% so far this year, as of Tuesday’s close at $4.50.
The company last month launched its first mission from the U.S. successfully. It aims to complete as many as 14 more Electron launches this year. For the first quarter of 2023, Rocket Lab expects to see launch revenue of about $18 million, and between $32 million to $35 million in Space Systems revenue.
Beck noted that Rocket Lab’s path to profitability is impacted by the “really heavy investments” it’s making in Neutron.
“I don’t think we’re terribly off our model in that respect, but it is heavily influenced by the spending rate and the success of the Neutron program, ultimately,” Beck said.
The company also announced that Bessemer Venture Partners’ David Cowan is leaving Rocket Lab’s board of directors in the first quarter, after nine years advising the company.

The company’s Electron rocket lifts off from LC-2 at NASA’s Wallops Flight Facility in Virginia on Jan. 24, 2023.
Brady Kenniston / Rocket Lab

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In November, Rivian reaffirmed its full-year guidance of an adjusted loss before income, taxes, depreciation and amortization of $5.4 billion.
For 2023, Rivian forecast vehicle production of 50,000 vehicles. That would be roughly double last year’s amount but below many analyst expectations of around 60,000.
Rivian is focusing on ramping up production of its R1 truck and SUV as well as an electric delivery van it builds for Amazon, its largest individual shareholder.

Rivian electric pickup trucks sit in a parking lot at a Rivian service center on May 09, 2022 in South San Francisco, California. 
Justin Sullivan | Getty Images

Electric vehicle startup Rivian Automotive reported mixed fourth-quarter earnings and a lackluster production outlook after the bell Tuesday.
Shares of Rivian were down by roughly 8% during extended trading. The stock closed Tuesday at $19.30 a share, up 4.6% for the session.

Here’s how Rivian performed in the period, compared with analysts’ estimates as compiled by Refinitiv:

Adjusted loss per share: $1.73 vs. $1.94 estimated
Revenue: $663 million vs. $742.4 million estimated

The company reported an adjusted loss before interest, taxes, depreciation and amortization of nearly $5.2 billion in 2022, narrower than guidance of a $5.4 billion loss in November.
For 2023, Rivian forecast vehicle production of 50,000 vehicles. That would be roughly double last year’s amount but below expectations of roughly 60,000, as estimated by several Wall Street analysts.
“Supply chain continues to be the main limiting factor of our production; during the quarter we encountered multiple days of lost production due to supplier shortages. We expect supply chain challenges to persist into 2023 but with better predictability relative to what was experienced in 2022,” the company said in its letter to shareholders.

Rivian said it expects to achieve a positive gross profit in 2024. Net loss for the fourth quarter was $1.7 billion — a narrower result than the $2.5 billion loss it reported a year earlier. Quarterly revenue of $663 million jumped from $54 million in the year-earlier period when the company had just started making its first products.

The results follow difficult times for the electric vehicle startup that have included slower-than-expected production, unexpected pricing pressure and plans to lay off 6% of its workforce in a bid to conserve cash.
Rivian is focusing on ramping up production of its R1 truck and SUV as well as an electric delivery van it builds for Amazon, its largest individual shareholder.
As of the end of last year, the company had about $12.1 billion in cash remaining, down from $13.8 billion at the end of the third quarter and $15.5 billion as of June 30. Capital expenditures for the fourth quarter were $294 million compared to $455 million during the year-earlier period.
Rivian said while inflation has been a factor in its supply chain, it will continue to take steps to ramp up production and reduce material costs by slimming down its engineering and vehicle design, along with commercial cost-down efforts.
The company’s forthcoming R2 model, for example, will use a simplified assembly and sourcing process to achieve “a meaningfully lower cost structure,” CEO RJ Scaringe said on an analyst call following the earnings report.
He added the automaker is “in a very different position with our supply chain today” relative to a year ago, which will help the company execute on more “aggressive cost and pricing” measures.
“It won’t necessarily be a linear path over the course of the next several quarters but we will start to see those impacts as early as Q1 as we start to reduce the material costs in our vehicles and the technology introductions,” said Chief Financial Officer Claire McDonough.
— CNBC’s Phil LeBeau contributed to this report.

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General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits.
The cuts affect about 500 positions, according to a person familiar with the plans, which were announced internally Tuesday.

Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE

DETROIT – General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits.
The cuts affect about 500 positions, according to a person familiar with the plans, which were announced internally Tuesday. They will be across various functions of the company, said the person, who asked not to be named because the plans are not public.

The timing of the cuts, which were first reported by The Detroit News, is odd. They come roughly a month after GM CEO Mary Barra and CFO Paul Jacobson told investors that the company was not planning any layoffs.
In a Tuesday letter viewed by CNBC, GM Chief People Officer Arden Hoffman confirmed the company’s goal of $2 billion in cost savings over the next two years, which “we’ll find by reducing corporate expenses, overhead, and complexity in all our products.”
The letter characterized the cuts,  which follow performance evaluations, would impact a “small number of global executives and classified employees following our most recent performance calibration.” The cuts started Tuesday and will continue based on location.
The company reiterated the cuts being a result of performance in an emailed statement, saying the cuts assist in “managing the attrition curve as part of our overall structural costs reduction effort.”
At the end of last year, GM employed about 86,000 hourly workers and 81,000 salaried employees worldwide. The 500 job cuts make up less than 1% of GM’s salaried workforce.

Jacobson told investors last month that the company expected to reduce employee headcount through attrition rather than layoffs.
Until recently, the automotive industry was largely unaffected by job cuts that had plagued the technology sector in recent quarters.
Ford Motor earlier this month confirmed it would cut 3,800 jobs in Europe over the next three years to adopt a “leaner” structure as it focuses on electric vehicle production. Others such as Rivian Automotive also made salaried cuts, while Stellantis said it would idle a plant in Illinois.

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Target will spend between $4 billion and $5 billion on capital expenditures in the fiscal year.
The big-box retailer plans to open and remodel stores, launch fresh brands and offer curbside services.
Target leaders acknowledged the retailer may have to work harder to get consumers to boost their spending.

An increased number of mannequins feature clothing and shoes throughout the remodeled Target store in Orange, California.
Jeff Gritchen | MediaNews Group | Getty Images

NEW YORK — As Target sees growth slowing in sales and customer traffic, the company said Tuesday it will spend between $4 billion and $5 billion in the coming fiscal year to offer fresh merchandise, new services and faster delivery.
Target aims to launch or expand more than 10 private label brands, open about 20 new stores and offer curbside delivery to customer motorists who won’t have to leave their cars.

In addition, the retailer plans to remodel about 175 existing stores. It also intends to expand a network of hubs to make it cheaper and faster to get online orders to customers.
“In an environment where consumers are making tradeoffs, more of the same is not going to get it done,” Christina Hennington, Target’s chief growth officer, said Tuesday at an investor event in New York.
She said the retailer’s newer and trendier products are the ones that keep selling, even as inflation pushes shoppers to pay closer attention to their spending.
Target, which reported fourth-quarter earnings Tuesday, shared details about its strategy to attract shoppers who have become more reluctant to spring for the discretionary merchandise they bought during the first two years of the Covid pandemic.
Target plans to offer more items at lower price points, such as $3, $5, $10 and $15. It kicked off the year stocked up on everyday essentials like food or cleaning products. Inventory in discretionary categories fell about 13% compared with a year ago.

“Given value is absolutely top of mind right now, being able to deliver affordable joy differentiates us in the marketplace,” CEO Brian Cornell said. “And that’s a clear advantage in the near term and remains our focus over the long term.”

A shopper entering a Target store in New York.
Scott Mlyn | CNBC

The retailer’s dilemma

Target plans to spend less on capital expenditures than this past fiscal year, when it spent $5.5 billion. Its goal for store projects is also slightly lower compared to the 23 new stores and about 200 remodeled ones it announced for fiscal 2022.
The investment plans underscore a dilemma that other retailers face, as well: As the economic backdrop remains uncertain and high inflation persists, companies will have to get creative and work harder to win over customers — or risk posting weak sales.
Other retailers’ plans reflect that challenge, too. Walmart and Home Depot’s forecasts both anticipate a slowdown, yet they recently announced wage increases to attract and retain store workers. Home Depot said it will spend $1 billion on workers’ wage increases to help boost customer service, even as it projected approximately flat sales growth for the fiscal year.
Alongside its investment plans, Target said it aims to reduce up to $3 billion in total costs over the next three years, saying it wanted to become more efficient after its revenue grew about 40% since 2019.
Target is one of many retailers that dealt with whiplash over the past year, as shopping patterns changed dramatically, said Jessica Ramirez, a senior retail analyst at Jane Hali & Associates. She said retailers realized, once again, they must listen to customers, stay nimble and “future-proof” their businesses.
“You have to really pay attention,” she said. “If apparel isn’t moving well, what are the categories where things are moving? Are they [customers] going to walk in for groceries and then if they see something for return to office and it’s a good price, they’ll pick it up?”

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Norwegian Cruise Line’s stock fell over 10% after posting weaker-than-expected guidance for the year.
The company reported losses that were wider than Wall Street expected, but it beat on revenue.
Norwegian expects its struggled with high debt loads and costs to continue in the first half.

A view of the Norwegian Encore cruise ship during its inaugural sailing from PortMiami, which took place from Nov. 21-24, 2019.
Orlando Sentinel | Tribune News Service | Getty Images

Norwegian Cruise Line shares fell more than 10% on Tuesday after the company posted wider losses than expected and offered soft guidance for the year, despite persistent travel demand.
The cruise company reported fourth quarter losses of $1.04 per share, more than analysts’ estimates of 85 cents.

Norwegian is also projecting full-year earnings per share of 70 cents in 2023, well below expectations of $1.04. The guidance comes as the company struggles to reduce the costs and debt weighing down the business. Norwegian had $13.6 billion in debt as of Dec. 31.
As Norwegian tries to climb back to profitability, it didn’t offer much confidence for the first half of 2023.
CEO Frank Del Rio said the company’s first 2023 quarter “will be the highest cost quarter,” but added that the second half will be better. Norwegian is projecting losses of 45 cents per share in the first quarter, 10 cents higher than Wall Street had anticipated.
Norwegian said its costs continue to rise, exacerbated by inflation, even as it returns more ships to service. Del Rio did not rule out an equity raise to manage debt, but he said it wouldn’t be “prudent to issue more equity to de-lever the company,” even though “there’s a lot of work to do.”
Strong demand is giving the company hope it can ride out the difficulties.

“We’ve seen very, very strong record – near record booking levels dating back to November,” said Del Rio. “So we simply don’t see a weakening consumer.”
Norwegian has lagged behind its competitors, although others are still posting losses as the industry battles higher fuel prices and interest rates.
Royal Caribbean saw its stock jump after posting narrower than expected fourth quarter losses and bookings earlier in February. Morgan Stanley had upgraded the rival company in January, naming it the “superior cruise operator” coming out of the pandemic.
–CNBC’s Seema Mody contributed to this report.

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