A worker checks under the hood of a Land Rover Discovery sport utility vehicle (Photographer: Patrick T. Fallon/Bloomberg)  
A worker checks under the hood of a Land Rover Discovery sport utility vehicle (Photographer: Patrick T. Fallon/Bloomberg)  

Q4 Results: Tata Motors’ Profit Nearly Halves As JLR Pain Continues

Tata Motors Ltd.’s profit in the quarter ended March nearly halved but beat analyst estimates as muted sales in India and difficulties with its Jaguar-Land Rover unit continue.

Profit fell 47 percent over last year to Rs 1,117.5 crore, according to its stock exchange filing. That compares with the Rs 570-crore estimate of analysts polled by Bloomberg.

  • Revenue fell 4 percent year-on-year to Rs 86,422 crore.
  • Operating income declined 6 percent to Rs 8,019.5 crore.
  • Operating margin narrowed 20 basis points to 9.3 percent.
  • Margin for Jaguar Land Rover fell 300 basis points to 9.8 percent.

Jaguar Land Rover, that contributes the bulk of Tata Motors’ profit, is facing a hard time across geographies. Sales in China, its fastest growing market, have been plummeting, while in Europe a shift away from fossil fuels has hurt the iconic carmaker. Demand in the U.K. is also affected by uncertainty around Brexit and the clampdown on diesel automobiles. That has forced the automaker to cut nearly 5,000 jobs as part of its $3.2-billion savings plan.

Last quarter, Tata Motors had posted a Rs 26,993-crore loss in the previous quarter—the largest-ever loss reported by an Indian company—mainly due to a non-cash write-off in the value of Jaguar Land Rover.

In India, too, carmakers have been facing a slowdown since the muted festive sales in November last year. Also, a liquidity crunch due to Infrastructure Lending & Financial Services crisis has spilled over to the auto industry as a significant number of purchases are made through vehicle finance.

“Q4FY19 has been extremely tough with market sentiments remaining muted, impacting demand across segments. The industry outlook is not going to be anything different in the short term due to multiple uncertainties,” Guenter Butschek, chief executive officer and managing director of Tata Motors, was quoted as saying in a media statement. “To mitigate this impact, we have strengthened our actions under the ongoing turnaround.”

With intense sales activation, new product launches, continued thrust on cost reduction, we have been able to improve our business performance across the board and post strong financial results for the fiscal while improving our market shares.
Guenter Butschek, CEO and MD, Tata Motors

Shares of Tata Motors Ltd. closed a whopping 7.53 percent higher, ahead of the announcement, while the benchmark S&P BSE Sensex closed 3.69 percent up.

Focus On JLR

Jaguar Land Rover became operationally profitable during the quarter with a pre-tax profit of £260 million. The company spent on its “Charge” transformation programme to boost sales and improve cost savings. That seemed to have worked in the U.K. and North America. Sales in both regions rose over 8 percent. Continued weakness in China, however, led to a 5.8 percent decline.

“JLR has been among the first companies to address multiple headwinds simultaneously sweeping the automotive industry, with concerted action to reduce complexity and transform its business through cost and cash flow improvements,” Ralf Speth, chief executive of JLR, said in the statement.

JLR will make a comeback as a “leaner and fitter” company, Speth said.

Other Highlights

  • Net debt stood at Rs 28,394 crore at the end of the quarter.
  • Free cash flow stood at Rs 19,200 crore.
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