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Williams on track to lose 20m from stalled supercar project

NEWS STORY
17/06/2013

Much like Williams’ performance in last week’s Canadian Grand Prix when Valtteri Bottas qualified third but finished in fourteenth place, the recent announcement that the team will supply batteries to the Formula E electric series has been followed up with news which is slightly less positive.

Writing in American motor magazine AutoWeek, Pitpass’ business editor Christian Sylt broke the news about Williams supplying the batteries to Formula E and today he has revealed that the team apparently has a gap to plug.

In an article for the Sunday Express Sylt reveals that Williams is expected to lose up to 20m in revenue this year after Jaguar put the brakes on a hybrid supercar which the two companies were developing.

The Jaguar C-X75 was announced in 2010 and was powered by a turbocharged 1.6-litre petrol engine as well as two electric motors. It was due to have a top speed of 205 mph and a price tag of up to 1m.

The weak economic climate led Jaguar to announce in December last year that it will not put the car into production. The decision impacted Williams due to the technical collaboration it had with the British marque.

In the year-ending 31 December 2012 Williams’ revenue accelerated 22% to 127m but a report by Switzerland’s Bank am Bellevue forecasts that it will dip to 102.2m in 2013. Bank am Bellevue was the sole global book runner for Williams when it listed on the Frankfurt Stock Exchange in 2011 and its report puts the drop in revenue down to the collapse of the collaboration agreement with Jaguar.

Since the supercar project stalled Williams has been hard at work trying to recoup the lost revenue. Last week it signed the deal with Formula E and it is understood that Williams will be paid up to 10m annually for this once the championship launches next year.

Despite the slight setback with Jaguar, Bank am Bellevue describes Williams as a highly attractive investment opportunity with long-term growth prospects. It forecasts a boost to its bottom line as costs are expected to fall by 40m this year turning a 4.6m net loss in 2012 into a 9.5m after-tax profit in 2013.

Williams’ loss last year was driven by an accounting technicality as the team wasn’t allowed to include in its revenue a 9.4m one-off payment for signing a new commercial agreement to remain in F1 until the end of 2020. The payment was received but would need to be paid back if the team withdraws from F1 before the end of 2015. Even though it has no intention of exiting, the conditional nature of the payment meant that it had to be excluded.

Team principal Sir Frank Williams says “our strategy is to continue to grow and deliver long term returns for shareholders through a combination of improved performance on track and an ambitious diversification programme that is seeing our technologies introduced into a growing range of applications. A 22% increase in turnover last year is encouraging and we are looking ahead to the future with optimism.”

The majority of Williams’ revenue comes from prize money and sponsorship with its biggest partner believed to be Venezuelan oil company PDVSA. Its lead driver, Pastor Maldonado, is also Venezuelan and at last year’s Spanish Grand Prix he won Williams’ first race since 2004. The team finished eighth in 2012 but currently lies one place lower down the standings and has yet to score a point after seven races. It last won the F1 championship in 1997 and, in a bid to boost its fortunes, last month Williams signed a deal to switch its F1 engine supplier from Renault to Mercedes in 2014.

Sir Frank Williams holds a 50.3% stake in the business with 19.4% floated in Frankfurt. The third largest shareholder is former executive director Toto Wolff who has said he plans to sell his 16% stake in the team following his move to Mercedes in January. If Williams finishes the year with the hefty profit predicted by Bank am Bellevue then he may well end up regretting jumping ship.

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