18/03/2008
NEWS STORY
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Honda's Formula One team may have not scored any points in the season opening Grand Prix but its latest accounts show that the team has posted its first ever operating profit.
In an article for the Express newspaper, Pitpass contributors Christian Sylt and Caroline Reid analysed the team's financial results and found that Honda reversed a £3.2m operating loss in 2005 into a £1m profit the following year. This came on the back of a 25% increase in turnover to £122m and victory on the track. In Hungary 2006, the team's British driver Jenson Button took Honda to its first Grand Prix win since it was set up by cigarette company British American Tobacco in 1999. Honda bought the team three years ago for an estimated £130m and fuels its huge budgets.
Honda's team had costs of £121m in 2006 with payment of its 558 staff representing a quarter of this. It also invested heavily in infrastructure with a £20m increase in the value of its plant and machinery as its new windtunnel came into use. This was financed by intercompany borrowings but its improved performance attracted some new sponsors. BAT increased its sponsorship from £24m to an estimated £33m to make the most of exposure through F1 before a ban on tobacco advertising began late in the season.
The team's performance has stalled since then falling from fourth to eighth in the standings last year. Its financials are likely to have become bleaker as Honda ran an entirely sponsor-free car in 2007 to promote an environmental charity. This puts more pressure on the team to deliver this year as Honda is also supplying engines and chassis to the Super Aguri F1 team which was bought recently by UK-based automotive consultancy firm Magma.