Days after announcing it was cutting nearly a third of its 4,000-person workforce, McLaren reported a Q1 loss of $164.3 million.
Super car maker McLaren Group is the latest automaker to highlight how hard the global pandemic has been on the industry, reporting its pre-tax loss in the first quarter jumped to 133 million pounds, or $164.3 million, from just 18 million pounds, or $22.2 million, during the same period a year ago.
Similarly, the company’s revenues dropped from 284 million pounds, or $348.1 million, to 109 million pounds, or $134.7 million, during year-ago timeframe.
The British company, which has automotive, racing and applied divisions, saw its sales drop more than two-thirds in the first quarter from 953 vehicles to just 307 units, in spite of a newly introduced model, the 765 LT.
(British super car maker McLaren cuts 1,200 jobs.)
McLaren’s newest entry is the 765LT, but sales for the company during the first quarter were down significantly, putting the company substantially in the red.
Despite the tough first quarter, officials were optimistic moving forward. They noted that even though second quarter earnings were expected to be in line with Q1, the second half of the year would see a turnaround and they’ve already seen the start of that in May in China.
The difficult first quarter financials come on the heels of the company’s announcement to cut nearly a third of its 4,000-person workforce – 1,200 jobs – after cost-cutting measures weren’t enough to allow the company to carry on.
In addition to the move to reduce its expenditures, McLaren also attempted to raise up to 275 million pounds, or $339.6 million, in bonds with headquarters and collection of historic racing cars as collateral. The car collection is reported to be worth an estimated $300 million.
(McLaren eyeing synthetic fuels for future models.)
That move came after the company’s request for a 150-million pound, or $181 million, loan from the British government was rejected. Government officials declared the company had not exhausted all of its other options. The company sought the additional funding even after receiving a £300 million, or $363 million, capital injection from shareholders.
The new McLaren Elva offers power, speed, handling and comfort, but it isn’t enough to overcome the global drop in car sales.
Company officials noted they were “looking at a number of potential financing alternatives, secured and unsecured, of up to 275 million pounds equivalent to strengthen its liquidity position.”
Even the company’s historically successful Formula One racing team, which finished fourth overall last year, is taking hits, including chopping 70 jobs from the 800+ person racing team. However, some of that it attributable to new F1 rules requiring teams to meet a $145 million budget cap.
(McLaren taking orders for new supercar.)
McLaren said revenues of its racing division fell 4.4 million pounds down due to the reduced prize fund resulting from the Formula One season not starting. That was partially offset by 4.1 million pounds of increased sponsorship, however.