MG Rover 'facing £300m loss'

MG Rover claims to be on the road back to profit

Troubled carmaker MG Rover is preparing to announce a loss of £300m for the first eight months of its independence from BMW, according to press reports.

The British car maker was bought for a nominal £10 from BMW by the Phoenix Consortium last year.

Its losses are worse than many industry analysts feared, according to reports in several Sunday newspapers.

But MG Rover is expected to claim the figures are in line with plans to halve losses next year and break into profit in 2002.

New models

The biggest losses have reportedly come in operating costs, restructuring and difficulties over the split from BMW.

But the company is believed to have a debt-free balance sheet and £200m in cash reserves due an interest free loan from BMW.

The reported £300m loss - about £1.2m a day - is also down from the £880m a year the group was losing under BMW's ownership.

But it is expected to fuel concerns about the group's long-term prospects.

Some industry analaysts believe MG Rover will struggle to survive without a partner and it could become a prime take-over target.

An official trading announcement is expected from MG Rover in April or May.

Since taking over, the Phoenix Consortium has tried to capitalise on the MG brand in an effort to get the loss-making operation back on the road to profit.

In January, it unveiled four new sportier models based around its existing Rover range.

After producing 205,000 vehicles last year, MG Rover expects to churn out 190,000 cars this year, increasing to 210,000 in 2002.