Tata Motors profit dips but exceeds estimates
MUMBAI:Tata Motors Ltd’s quarterly profit fell 16.8% from a year earlier as losses at its Indian business partially offset a surge in sales at its British luxury unit Jaguar Land Rover (JLR).
Net profit fell to ₹4,336 crore in the three months ended March 31, from ₹5,211 crore in the year earlier. Revenue declined 2.9% to ₹77,272 crore from ₹79,549 crore a year ago. A Bloomberg poll of 23 analysts had estimated the Mumbai-based company to report fiscal fourth-quarter net sales of ₹78,797 crore and profit of ₹2,575.9 crore.
C Ramakrishnan, chief financial officer of Tata Motors Group, said the company’s consolidated operating performance was impacted by volatility in the India business, particularly the commercial vehicles business.
Sales of Jaguar sedans and Land Rover sports utility vehicles, however, rose 13% to 179,509 units in the three months to March from a year earlier, driven by strong demand in the UK, the US, Europe and China.
The robust volume growth widened JLR’s operating margin to 14.5%, the highest in three quarters. The higher Ebitda margin has mainly been driven by a change in foreign exchange treatment, said Nitesh Sharma, analyst at PhillipCapital India.
During the March quarter, Tata Motors reviewed the presentation of foreign exchange gain/(loss) in the income statement. It attributed it to a continued increase in hedging activity and volatility in foreign exchange rates.
Ramakrishan said that due to geopolitical tensions in some of JLR’s key markets margins will be under pressure for the consolidated entity in FY18.
He forecast a 14-15% Ebitda margin for the full year. JLR has outlined capital expenditure of £4 billion for the current fiscal. Besides product development, it will also be utilised for building JLR’s new facility in Slovakia.
Ralf Speth, chief executive officer (CEO) of JLR, said the firm will introduce an electric car next year. He said that even as China shows a silver lining and the UK has been stable, uncertainties are abound due to Britain’s exit from Europe.
Tata Motors India operations slipped back also into the red. It reported a loss of ₹829.04 crore against net profit of ₹397.95 crore a year ago. Total income rose 6.7% to ₹15,092.44 crore.
Guenter Butschek, MD and CEO of Tata Motors, said the operating performance of the India business was adversely affected by uncertainties related to the GST, demonetisation and the Supreme Court’s judgement banning sales of vehicles with older emission technology from April 1.