Lotus collides with recession, turning profit into £14m loss
Malaysian parent company invests heavily to keep elite British marque on the road
Sunday 18 October 2009
Lotus, the historic British marque reversed from a £2m after-tax profit to a £14.6m loss in the year to March, according to the car manufacturer's latest accounts. This was driven by increased costs as its owner, the Malaysian car company Proton, invested in it through the recession.
The company took on 185 staff to prepare for last July's launch of the Evora, its first new model in 14 years. And in an effort to boost turnover, new variants of existing models were introduced and the dealer network expanded to cover more emerging markets including Saudi Arabia, Indonesia and Taiwan.
But the downturn has taken its toll as Lotus produced only 2,202 cars during the year compared with 2,649 in 2008. Revenue from sales and services fell 5.9 per cent to £73.7m but this was offset by growth in Lotus's high-tech engineering consultancy division which left revenues for the year up 1.9 per cent to £110.9m. However, the increased investment battered the company's profit margin as costs rose 16.6 per cent to £124.2m.
Parent company loans from Proton increased nearly six-fold and bank loans rose by a factor of 10 to bring total borrowing to £72m. Shareholders' funds slid from £17m to a deficit of £4.5m, but the accounts state that another Proton subsidiary will support Lotus as necessary for another 12 months. With deliveries of the Evora beginning last June, the road ahead should be smoother.
The Evora, the world's first mid- engine, four-seater supercar, was launched to great acclaim at last year's British International Motorshow. It will debut in the US early next year with an automatic variant, following in 2011.
North and South America are Lotus's largest markets bringing in £36.2m, while growing sales in Asia and Africa demonstrate its success at attracting emerging markets. In contrast, the UK is not only Lotus's second-smallest market but it is the only one which declined during the year shrinking by 5.6 per cent to provide £24.5m of the company's turnover.
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