Jaguar Land Rover announces $A6.2 billion loss

Andrew Cummings
February 10, 2019

Jaguar Land Rover's owner Tata Motors Ltd stunned markets by posting the biggest-ever quarterly loss in Indian corporate history of about $4 billion on slumping China sales, sending its shares crashing as much as 30 percent.

The extent of the financial problems besetting Britain's largest automotive manufacturer and employer has been laid bare less than a month after it announced 4,500 job cuts across its United Kingdom facilities, mainly in the West Midlands.

The cost of the voluntary scheme will be recognised in the quarter ending March 31, the company said. That compared to a profit of Rs 12bn for the same period past year.

In the three-month period, sales increased for the new Jaguar E-PACE and the electric Jaguar I-PACE as well as the refreshed Range Rover and Range Rover Sport, while the slowdown in China accounted largely for lower sales of other models.

In a filing with the BSE, the automaker said its performance was impacted by challenging market conditions particularly in China and inventory corrections.

JLR yesterday (7) announced a net loss of Rs 270 billion in the quarter ended in December owing to a £3bn write-down on JLR. JLR reported a loss for the third consecutive quarter.

Sales in China fell 47% y-o-y last quarter offsetting 21% and 18.4% increase in North America and the United Kingdom respectively. "Despite the muted growth, Tata Motors has delivered strong results, registered an impressive profitable growth this year on the back of exciting products, renewed brand positioning and aggressive cost reduction".

"Taking decisive actions to make the business "Fit for Future" by stepping up competitiveness, reducing costs and improving cash flows".

JLR's Chinese sales, which account for roughly one-in-seven of its global sales, fell 40 per cent year-on-year, which offset growth in the United States and British markets.

Plummeting sales in China are compounding Jaguar Land Rover's challenges that include the industry's shift away from vehicles powered by petrol and diesel - a stronghold for the company. We are committed to our core objectives of winning decisively in CVs, sustainably in PVs and proactively in EVs.

Kotak Institutional Equities has also maintained a "buy" rating on Tata Motors.

Credit-default swaps protecting Jaguar Land Rover's debt against non-payment using five-year contracts surged to record high 813 basis points on Wednesday.

The company continues to invest in new vehicles, electrification, and technology.

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