TaMo Net up on One-off Gains, but Rev­enue Falls Com­pany cites fall in over­all sales vol­ume, con­trac­tion in big truck seg­ment in In­dia

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

Mum­bai: Tata Mo­tors posted a 42% in­crease in first-quar­ter con­sol­i­dated net profit, with a large one-time gain on ac­count of changes to the au­tomaker’s pen­sion ben­e­fit plans mask­ing a poor op­er­a­tional per­for­mance.

Profit rose to .₹ 3,200 crore in the quar­ter through June from .₹ 2,260 crore a year ear­lier, with the one-time gain of .₹ 3,609 crore boost­ing the lat­est num­ber.

Net con­sol­i­dated rev­enue fell 10% to .₹ 58,651 crore, which it blamed on lower whole­sale vol­umes, ex­clud­ing from unit Jaguar Land Rover’s China joint ven­ture, higher com­pet­i­tive in­cen­tive lev­els in the mar­ket to boost sales and a sig­nif­i­cant con­trac­tion in the medium and heavy truck seg­ment in the In­dian busi­ness. Earn­ings mar­gin be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion shrank 5.3 per­cent­age points to 9.9%. JLR sales were up 30% from a year ear­lier in China and 16% in North Amer­ica (16%), while re­main­ing sta­ble in Europe and fall­ing 14% in the UK, the com­pany said in a state­ment.

The Bri­tish lux­ury-ve­hi­cle unit has been the money spin­ner for Tata Mo­tors for sev­eral years now, off­set­ting its weak per­for­mance in the home mar­ket of In­dia and prop­ping up the con­sol­i­dated re­sults. Strong per­for­mance in the January-March quar­ter also af­fected the sales num­bers in the first fis­cal quar­ter, the

Profit rose to 3,200 crore in the quar­ter through June from 2,260 crore a year ear­lier, with the one-time gain of 3,609 crore boost­ing the lat­est num­ber

com­pany said. Also, prod­uct launches and spend­ing on growth in­creased cost.

On the stand­alone, or In­dian, busi­ness, a dou­ble-digit de­cline in com­mer­cial ve­hi­cle sales and slug­gish pas­sen­ger ve­hi­cle vol­umes pulled rev­enue lower by 11% to .₹ 9,207 crore. It posted a stand­alone loss of .₹ 467 crore for the quar­ter. Man­ag­ing di­rec­tor Guenter Butschek said the re­sults had not met in­ter­nal ex­pec­ta­tions. The com­pany is work­ing with re­newed fo­cus and en­ergy to im­prove per­for­mance of its com­mer­cial and pas­sen­ger ve­hi­cle busi­nesses, he said. The com­pany’s fo­cus on rev­enue and mar­ket share growth, cost re­duc­tion ini­tia­tives and ef­fi­ciency im­prove­ments has sig­nif­i­cantly en­hanced in the last few months, he said.

“Lever­ag­ing the ex­pected mar­ket re­cov­ery, we are con­fi­dent that th­ese ini­tia- tives will help us to present sig­nif­i­cant im­prove­ment of our fi­nan­cials in the com­ing quar­ters,” he said. Ac­cord­ing to bro­ker­age house Sharekhan, the earn­ings were be­low ex­pec­ta­tions.

Mar­gin pres­sures in both the stand­alone busi­ness (due to de­clin­ing vol­umes and height­ened dis­count­ing) and JLR (on ac­count of higher ma­te­rial costs and vari­able mar­ket­ing ex­penses, par­tic­u­larly in the US mar­ket) led to oper­at­ing profit fall­ing sharply from a year ear­lier, an­a­lyst Bharat Gianani said.

“Go­ing ahead, in­creased com­pet­i­tive in­ten­sity and con­tin­ued forex losses in the JLR hedge book would main­tain pres­sure on the mar­gins,” he wrote in a note to clients, while main­tain­ing a ‘Neu­tral’ view on the stock.

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