McLaren Racing suffers increased losses after Honda divorce

McLaren Group Ltd, which is the parent company of McLaren Racing, has announced that they increased their turnover from £870 million to £1.25 billion last year.

This was their first year with an all-new legal structure that joined the three separate divisions of the group: McLaren Applied Technologies, McLaren Automotive and of course, McLaren Racing. This put all three divisions under a single umbrella company, McLaren Group.

Despite the increase in turnover, the company did suffer an overall operating deficit, meaning that they spent more than they earned across the year.

Even with the 45% increase in wholesale unit sales, the group lost £5 million. This loss was caused by the £96 million operating defecit logged by the racing division, which equates to the money that they lost due to the split from Honda.

The team's divorce from Honda came at quite a cost, as they lost a lot of commercial income, as well as dropping a free engine supply in favour of a customer relationship with Renault.

The team also finished in ninth place in the constructors' championship in 2017, which lead to an estimated loss of £10 million in prize money.

However, they also gained a large investment from Michael Latifi, father of Nicholas, who purchased a 10% stake in the company for £203.1 million.

This was received in addtion to funding from the City which enabled the team to buy back the shares that were owned by ex-CEO and chairman Ron Dennis, who was ousted from the position he held for 37 years in June 2017.

There was positive news from McLaren Automotive, as they continued to grow. They acheived a 45% increase in global wholesales of their cars in 2017, and took almost 5000 orders across the year.

This meant that for the first time, the Automotive division was a billion-pound business. They are expected to continue this rate of progression, as they aim to release 18 new models by 2025, in what is known as their 'Track25' strategy.

Also, the scale of car production is planned to reach 6000 units per year.