Tata Motors Q1 net up 42% on JLR pension plan benefit

Tata Motors on Wednesday reported a 41.54 per cent jump in net profit to ~3,199.93 crore for the June quarter of the current financial year, benefiting from a one-time gain relating to changes made to the JLR pension plans. It had posted consolidated net profit of ~2,260.4 crore in the April-June period of last financial year.

“WE ARE WORKING WITH RENEWED FOCUS AND ENERGY TO IMPROVE PERFORMANCE OF OUR COMMERCIAL AND PASSENGER VEHICLE BUSINESSES” GUENTER BUTSCHEK MD and CEO, Tata Motors

A one-time gain of ~3,609 crore (£437 million) embellished Tata Motors’s net profit for the AprilJune quarter. The company, which also owns luxury car brand Jaguar Land Rover (JLR), posted a 41.6 per cent growth in profit at ~3,200 crore, against ~2,260 crore it posted in the same quarter last financial year.

Without the one-time gain that came from changes in JLR’s pension plans, the company would have reported a loss on forex impact. The performance is, therefore, below analysts’ expectations of ~1,4151,480 crore.

“Consolidated profit for the quarter was lower by ~793 crore due to translation impact from British pound to rupee,” the company said in its filing. Income for the quarter declined 9.59 per cent to ~59,972 crore, as its operating performance was hit by lower wholesale volume sales of Jaguar Land Rover, excluding sales from the group’s China joint venture, and a slowdown in its heavy vehicle business, among other factors.

The standalone business (which primarily includes the domestic commercial and passenger vehicle) remained in the red, like in last few quarters. The loss here was ~467 crore, against ~26 crore profit in the corresponding period of the previous financial year. Sales declined over 11 per cent to ~9,207 crore. Volumes sold (including exports) of commercial and passenger vehicles for the quarter stood at 111,860 units, down 11.8 per cent. The decline was mainly on account of 35 per cent drop in sales of medium and heavy commercial vehicles, though the passenger vehicle business posted a growth of 4.7 per cent. “While the first quarter results have not met our expectations, we are working with renewed focus and energy to improve performance of our commercial and passenger vehicle businesses,” Guenter Butschek, managing director and chief executive officer, said. Outside the standalone business, JLR’s revenue increased by 5 per cent to £5.6 billion. Its profit before tax rose 49 per cent to £595 million due to gains from pension plans. JLR retailed 37,463 units in the quarter, up 3.5 per cent. Shares ended the day at ~416.75apiece, down3.17, onBSE. “TataMotorsreportednumbers below ours as well as consensus expectations. Margin pressures inboththestandalonebusiness (due to declining volumes and heightened discounting) and JLR (on accountofhighermaterial costs and variable marketing expenses particularly in the US) led to operating profit almost halving on a year-on-year basis. We maintain our neutral view on the stock,” said Bharat Gianani, research analyst at Sharekhan.