Tata Motors plunges 5% on Q4 numbers; here's what brokerages say

Andrew Cummings
May 22, 2019

For the fourth quarter, Tata Motors reported standalone net profit of ₹106 crore, compared to net loss of ₹500 crore in the same period previous year.

Indian carmaker Tata Motors on Monday reported a 47 percent fall in quarterly profits after being hit by new struggles to sell its luxury Jaguar Land Rover cars in China and other key markets.

Ebitda for Jaguar Land Rover fell 40 bps to 9.8 per cent, while that of domestic business expanded 80 bps to 7 per cent.

The result was ahead of the 3.38 billion rupees average of 10 analyst estimates compiled by Refinitiv IBES, but was still lower than 21.25 billion rupees a year earlier. On the upside, sales in the United Kingdom and North America were up 8.4% and 8.1%, respectively.

China's recent economic slowdown - caused in part by its trade war with the U.S. - has hit JLR hard, and was cited as one of the main reasons for the announcement of 4,800 job losses earlier this year.

Revenue was down £1.6 billion ($3 billion) to £24.2 billion ($45.1 billion), while global sales dipped 5.8% to 578,915 vehicles on the back of dramatically reduced demand in China.

Jaguar Land Rover first announced a £2.5 billion turnaround programme earlier this year.

Nevertheless, the yearly loss is more bad news for British auto manufacturing, which has suffered a number of crushing blows in recent months, with Japanese giants Nissan and Honda both announcing plans to abandon the United Kingdom in February.

The company said the plunge was mainly due to lower revenues and exceptional charge on account of its British arm Jaguar Land Rover (JLR).

In the U.S., around 2,300 jobs will go.

JLR's CEO Ralf Speth stated that the company is "reducing complexity" and transforming its business by cost savings and cash flow improvements, citing the fourth-quarter profits as an example of the ongoing turnaround.

"We are focused on the future as we overcome the structural and cyclical issues that impacted our results in the past financial year". Speth continued that JLR will "go forward as a transformed company that's leaner and fitter", and that the sustained investment in new products and technologies will drive future demand.

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