A McLaren 720S on the factory floor in Woking, the UK. Picture: CHRIS J RATCLIFFE / AFP
A McLaren 720S on the factory floor in Woking, the UK. Picture: CHRIS J RATCLIFFE / AFP

London  — Formula One team owners McLaren saw group revenue drop from £284m to £109m in the first quarter of 2020 due to the Covid-19 pandemic, results on Thursday showed.

The sports car maker reported a plunge in car sales to 307 units over the three months, compared to 953 in the same period in 2019, as dealerships closed and factory production halted.

It said second quarter figures were expected to be in line with Q1, but saw a stronger performance in the second half and also detected the first signs of recovery during May, particularly from China due to relaxed restrictions.

The group, which is made up of the automotive, racing and applied divisions, saw its pretax loss balloon to £133m from a previous £18m. The Woking-based company said McLaren Group was “looking at a number of potential financing alternatives, secured and unsecured, of up to £275m equivalent to strengthen its liquidity position”.

The figures provide a backdrop to the redundancies and restructuring announced on Tuesday, with more than a quarter of the 4,000-strong workforce to go. The layoffs will impact the applied technologies, automotive and racing businesses, as well as support and back-office functions, the company said.

“We now have no other choice but to reduce the size of our workforce,” chair Paul Walsh said in a statement.

The F1 team, which finished fourth in 2019, is expected to shed 70 of its 800-plus employees, though it said this mainly reflects the need to meet F1's $145m budget cap to be introduced in 2021.

McLaren said revenues of its racing division were £4.4m down on first quarter of 2019 due to the reduced prize fund resulting from the season not starting. However, this  was partially offset by £4.1m  of increased sponsorship. F1 expects to start racing in July, with plans to complete a reduced season of 15-18 grands prix compared to the 22 originally scheduled.

 McLaren has struggled in recent months to raise cash after bondholders sought to block plans by the company to raise emergency funds by mortgaging its headquarters and historic-car collection, stating that the site and the classic cars are already pledged as collateral on $700m of bonds sold in 2017.

The company is controlled by sovereign wealth fund Bahrain Mumtalakat Holding.

Reuters, Bloomberg