The new Artura is a PHEV

Moody’s Investors Service has changed its outlook for McLaren Holdings to negative from stable.

The supercar maker was reported at the weekend to have opened talks with existing shareholders, including the sovereign wealth funds of Bahrain and Saudi Arabia, about injecting at least GBP250m into the business in coming months.

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Moody’s said: “The outlook change to negative reflects McLaren’s very weak Q3 2022 results and heightened uncertainty about the company’s ability to achieve an operational turnaround in the next 12-18 months. The negative outlook also reflects Moody’s concerns about McLaren’s weak liquidity despite additional funding received from its shareholders.”

Moody’s said the automaker’s Q3 2022 financial results showed wholesale volume, revenue, profitability and cash flow generation well below the rating agency’s previous expectations with actual wholesales of 545 units compared to Moody’s previous forecast of slightly above 1,000.

McLaren had cited industry wide semiconductor shortages and ongoing supply constraints as the key reasons for low production volume which resulted in a company-reported EBITDA loss of GBP54m for the first nine months of 2022. Cash balance reduced to GBP47m at the end of September 2022 compared with GBP77m at the end of 2021 despite an equity injection in Q3 2022 of US$125m, Moody’s said.

Based on the weak results for the first nine months of 2022 and the technical issues of the Artura, Moody’s revised downwards its forecast for 2022-23. The rating agency now expects McLaren to wholesale only around 2,000 cars in 2022 and around 3,000 in 2023. Although improving, the rating agency projects Moody’s-adjusted EBITDA to remain negative at around GBP190m in 2022 and around GBP80 million in 2023.

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“The negative outlook reflects the failure to improve volumes, earnings and cash flow generation in recent quarters which has resulted in a weakening liquidity profile despite the recent equity injection. [It] also reflects the uncertainty of the timing of Mclaren’s operational and financial recovery in the light of the recently announced need for technical upgrades to the new Artura.”