DIVERSIFYING A company is always a challenge and doing so during a downturn is even more difficult. But doing it successfully provides a great buzz. We have just released our 2010 results, showing 50% growth in revenue and a 300% year-on-year increase in profit to £4.9m. Achieving these results was justification for the decisions we have taken to diversify our business.
Cosworth had its recession in 2006/07 when a number of key contracts were lost. But chief executive Tim Routsis implemented a diversification programme that saw Cosworth expand its engineering offering to sectors outside its traditional motorsport market.
One of the things that can be forgotten when you’re expanding is to carry on innovating. However, despite changes in the business, Cosworth has continued to do so, and has created new products. We have done this by being disciplined and allowing engineers the time and finance to apply their creative ingenuity. As a result, Cosworth engineering can now be seen not only in the UK, but in India and the US, and in a range of sectors, including defence, clean energy and sailing.
When the recession hit, Cosworth had already been through the dips and hurdles that many companies were just approaching. We had reshaped our business and invested time and money in innovation.
The fact that we have been growing so quickly means there is a lot to do at Cosworth, so my role has expanded into areas outside of the finance function, such as global IT, insurance and facilities. As Cosworth has diversified, the finance function has had to evolve to meet the changing demands.
Part of this has involved developing the team to address the larger business as well as expanding it with expertise from the sectors into which we were moving. The risk profiles of each market segment are very different, and customer needs can be diverse. A performance road car enthusiast is a different customer to the Ministry of Defence.
As a result, we had to adapt our approach. We couldn’t insist on doing it our way. Take the defence market: if you don’t dance the way they want you to, you don’t get a date. You have to learn how to deal with an organisation to make it as easy for the customer as you possibly can.
Cosworth also knows the importance of education, and we feel a responsibility to educate the UK’s future engineers. A project in which we are proud to take part is the Bloodhound SSC. It will be the world’s fastest car and travel at 1,000mph during its record attempt in South Africa. In March, we held an educational event for children from the local area. They met Bloodhound SSC driver Andy Green and created their own balloon cars to better understand the engineering concepts behind the vehicle. Having 60 excited children on site made for a great day.
We have an engineering team who do what they say they are going to do and do it when they say they’re going to, which is rare. This allows us to create record-breaking engines for Aston Martin, deliver blast impact monitoring systems to protect soldiers in the battlefield, provide marine analytic tools used by Olympic and America’s Cup sailing teams, and launch a Subaru that is as quick as a Ferrari.
We wanted that landmark 50% growth and it felt great when we achieved it. From a finance perspective, it was proof that we had kept a balance between giving the organisation the space to grow and having enough discipline to manage the bottom line. I can honestly say it has been a lot of fun, and we are set to grow again this year. The mountain continues to go up and we will climb it.
Mark Palethorpe is chief financial officer at Cosworth Group.