Tata Motors sees JLR back in profit this year
JLR posted a £3.6-bn loss on revenues of £24.2 bn in fourth quarter
MUMBAI/BENGALURU: Tata Motors Ltd expects its luxury Jaguar Land Rover (JLR) arm to return to profit this financial year helped by cost cuts and a recovery in Chinese demand, it said on Monday, after the group’s fourth-quarter profit fell less than expected.
Finance chief PB Balaji told reporters he expected Chinese sales of its sleek Jaguar saloons and Land Rover sport-utility vehicles to return to growth “a quarter from now.”
Brexit-related disruption and a slowdown in sales in China, once JLR’S fastest-growing market, have hammered Tata’s finances. Three months ago, it posted the biggest quarterly loss in Indian corporate history.
“Metrics (in China) have started stabilising, return on sales have picked up dramatically and at the same time our inventories at the dealers have come down significantly,” Balaji said. “We should start seeing China come back to growth a quarter from now,” he added.
Tata, India’s biggest automaker by revenue, said tighter control of expenses and a turnaround at JLR helped dull the impact of an economic slowdown at home as it posted its first quarterly profit for the fiscal year that ended on March 31.
Tata earned ₹1,117 crore in net profit in January-march. That was ahead of the ₹338 crore average of 10 analyst estimates compiled by Refinitiv IBES, though lower than ₹2,125 crore a year earlier.
Meanwhile, JLR posted a loss
TATA MOTORS EARNED ₹1,117 CR IN NET PROFIT FOR THE THREE MONTHS ENDED MARCH 31—ITS FIRST QUARTERLY PROFIT IN THIS FISCAL
of £3.6 billion on revenues that declined £1.6 billion year-on-year to £24.2 billion due to lower fullyear unit sales against the backdrop of weaker demand in China.
In the 12-month period, the company said the previously announced third quarter noncash impairment charge of £3.1 billion and the redundancy costs taken in the fourth quarter contributed to a full-year pre-tax loss of £3.6 billion.
Ralf Speth, JLR chief executive, said: “Jaguar Land Rover is on track to make at least £2.5 billion of investment, working capital and profit improvements by March 2020 through its Charge transformation programme”.
“The company has already delivered the first £1.25 billion, with £150 million of cost efficiencies, £400 million of working capital improvements and £700 million of investment savings achieved by March 2019”.
Reporting results for the fourth quarter and financial year ending March 31 2019, the company said in the last quarter, JLR returned to profitability, generating pre-tax profits of £269 million before exceptional items as the ‘charge’ transformation programme delivered cost and cash improvements.
“After £149 million of redundancy costs as part of the ongoing transformation, pre-tax profit was £120 million. Revenues of £7.1 billion were down £421 million year-on-year as growing demand in key markets such as the UK and US helped offset weaker China market conditions”, it said.
Over the financial year, JLR said it saw encouraging demand for new models including the Jaguar E-PACE sporty compact SUV, the Range Rover Velar midsize SUV, the refreshed Range Rover and Range Rover Sport (both including plug-in hybrid options) and the all-electric Jaguar I-PACE.