McLaren optimistic on Automotive as coronavirus crisis continues

The McLaren Group is optimistic regarding the prospects for its luxury sports car maker following the COVID-19 crisis dealt a big hit to earnings this year, executive chairman Paul Walsh said on Sunday.

McLaren’s third-quarter results released in November showed group revenues up 60% on the previous quarter but dropped 61% on the corresponding period of last year.

McLaren Automotive represents the majority of group revenues.

“The way to look at McLaren is that we have a highly profitable cash-flow positive automotive business,” Walsh informed reporters on a video call after McLaren Racing declared U.S.-based MSP Sports Capital was taking a major minority shareholding in the F1 team.

“Yes, we have had temporary setbacks as all companies did during the coronavirus, but already we’re starting to see a revival in demand.

“That’s probably been led by activity in Asia, but I see that coming through to Europe and then progressively the U.S. so we’re optimistic around our prospects for Automotive.

McLaren Group, which consists Automotive and Racing divisions and also an applied technologies unit, is majority-owned by Bahrain’s sovereign wealth fund Mumtalakat.

“What we have now done is fundamentally ring-fence Racing. So the cash requirements of the next two to three years, McLaren Group does not have to worry about. That’s in essence what this transaction does for us,” Walsh said.

Plans to sell and lease back the group’s global headquarters in Woking remained unaffected by Sunday’s announcement, he said.

He said: “We will have to refinance our debt… I don’t like a lot of debt, so if we can get a very efficient piece of capital put in place through the sale and leaseback with our long-term commitment to stay there, why wouldn’t we do that?”