Cosworth, the engine supplier to four F1 teams, made its first profit for several years in 2008 according to its latest accounts. The company returned to its F1 roots in 2010 after a three-year hiatus but its turnaround was not driven by this. Instead it has embarked on an aggressive diversification and cost-cutting strategy over the past few years and has now begun to reap the rewards.

The company accelerated from a £3.2m pre-tax loss to a £160,000 profit in 2008 despite revenues falling by £200,000 to £29.4m. Cosworth's revenues from North America were down by 33.7% to £10.2m as a result of Champ Car going bust. Champ Car owed Cosworth $7.4m for engines provided to its teams and it didn't get a penny back as the accounts reveal that "no amounts have been recorded in the accounts in respect of this claim." However this loss was more than offset by gains in Europe.

Cosworth's revenues from the UK and Europe increased by 51.2% to £17.3m in 2008 and the engine of this growth - no pun intended - was its involvement with aerospace. In late 2007 Cosworth gained accreditation under the AS9100 standard which is a widely adopted quality management system for the aerospace industry. This led to it winning contracts with government military organisations and Rolls Royce.

Its bottom line ballooned as total costs were slashed by 16.2% to £27.9m due to a reduction in spending on raw materials and 30 staff being cut to give the company a total of 315.

Cosworth got an added boost from its owners, US racing entrepreneurs Kevin Kalkhoven and Gerald Forsythe, waiving £18.9m of debt which the company owned them. This gave Cosworth net assets of £5m compared to net liabilities of £13.8m the previous year. The accounts state that "the shareholder took the decision reflecting its confidence in the business and to provide the capital base to take full advantage of Cosworth's expansion opportunities."

With this new lease of life Cosworth added £1m of plant and machinery during 2008 and spent £2.4m on research and development in preparation for its return to F1. The accounts add that Cosworth's "revenues' in its traditional motorsport market showed decline year on year as the sport continues to seek cost savings." However its next set of accounts will be revved up by a £1.2m deposit which was lodged in 2009 by each of the F1 teams using its engines this year. The FIA's decision to prioritise an independent engine supplier for the new teams couldn't have come at a better time.