McLaren Group, the British supercar maker and Formula One team-backer, has provided lenders with positive indications of an improvement in its financial performance despite facing a record loss of £873m in the 2020 fiscal year.
According to sources familiar with the matter, McLaren has informed its bondholders that it recorded a loss of £873m in the 12 months ending 31 December. This figure includes a significant non-cash impairment charge of £375m, which reflects asset writedowns related to production issues.
However, the company’s financial struggles were resolved earlier this year with the completion of a financial restructuring. The restructuring resulted in Bahrain’s sovereign wealth fund, Mumtalakat, taking full ownership of the group. Mumtalakat is currently in discussions about potential technology partnerships that could lead to the sale of a minority equity stake in McLaren.
Although the results have not been officially released yet, they reveal that McLaren’s first quarter of the 2024 financial year was its most profitable in nearly five years. The company reported an underlying profit of £3m, with revenues rising by 52%.
In response to an inquiry from Sky News, McLaren stated that its strong start to the year can be attributed to a 28% increase in wholesale volumes. The company’s 750S model is sold out until 2025, and orders for the GTS are exceeding expectations.
Paul Walsh, the executive chairman of McLaren, expressed optimism about the company’s future, saying, “These results demonstrate the strong fundamentals of our business, where demand for our iconic high-performance luxury sports cars surpasses supply. We have a positive outlook following significant transformation measures over the past year.”
As part of its efforts to increase sales, McLaren has expanded its retail network by opening dealerships in Australia, Japan, and its largest showroom in Dubai.
On the business front, Sainsbury’s reported a rise in profits, Nestle saw a decrease in sales after price hikes, and Labour promised a publicly owned rail system. McLaren’s road car models include the Artura Spider, P1, and Senna. The company has also seen some of its former shareholders receive warrants that would benefit from a future ‘liquidity event,’ such as an initial public offering or sale of the company.
Additionally, McLaren Racing, the division that oversees the F1 and other racing operations, has its own external shareholders following a deal made during the pandemic.
The restructuring has simplified McLaren’s structure, creating opportunities for potential technology partnerships with automotive original equipment manufacturers (OEMs) in the years to come. The company is transitioning towards becoming a hybrid and electric vehicle company.
During the COVID-19 pandemic, McLaren faced significant financial strains, leading to a comprehensive restructuring that involved cutting hundreds of jobs and raising significant amounts of equity and debt to strengthen its balance sheet. The company also received financial support from Mumtalakat and struck a sale-and-leaseback deal for its headquarters in Surrey.
In the same year, McLaren also sold McLaren Applied Technologies, which generates revenue from sales to corporate clients. Founded in 1963 by Bruce McLaren, the company has a rich history and is among the most renowned names in British motorsport. In its 50 years of competing in F1, McLaren has won eight constructors’ championships, and its drivers have included Mika Hakkinen, Lewis Hamilton, Alain Prost, and Ayrton Senna. The team has a total of 180 Grand Prix wins, three Indianapolis 500s, and won the Le Mans 24 Hours on its debut.
The company’s separate divisions were reunited in 2017 following the departure of Ron Dennis, the veteran McLaren boss who oversaw the most successful period in the team’s history. Mr. Dennis sold his stake in a £275m deal after a dispute with fellow shareholders.
