Tata Motors Q4 Profit Beats Estimates Despite 17% Fall; Jaguar Land Rover Cushions Impact
Weakness in the India business and a stronger rupee weighs on Tata Motors.
Tata Motors Ltd.’s consolidated net profit fell in the three months ended March, weighed down by its India business and an appreciation in the value of the rupee.
India's largest commercial vehicle manufacturer saw fourth quarter profit decline 17 percent to Rs 4,296 crore compared to the same period last year, according to its stock exchange filing. The depreciation of the British pound against the rising rupee led to a Rs 1,074-crore hit on consolidated profit, which still managed to beat analyst estimates.
Revenue fell 2.6 percent to Rs 78,746.8 crore on a year-on-year basis.
Standalone Pain Continues
The India business also weighed down the company's overall revenue. On a standalone basis, Tata Motors reported a loss of Rs 818 crore for the quarter. Tata's commercial vehicle segments witnessed muted demand, and "lower than expected buying" ahead of the stricter Bharat Stage-IV emission norms, it said in a separate media statement. The medium and heavy commercial vehicle segment, and the light commericial vehicle segment saw sales in the fourth quarter fall 2.2 percent and 6.1 percent respectively over the same quarter last year.
Weaker commercial vehicle sales were partially offset by the passenger vehicle segment which grew 44 percent over last year, on the back of continued strong demand for its new hatchback Tata Tiago, the statement added.
It has been a challenging and highly volatile year, which followed a period of low demand and inconsistent recovery in the prior years in the automotive sector in India.Tata Motors Media Statement
Tata Motors is exploring possibility of monetising the non-core assets and some investments of its standalone business, said C Ramakrishnan, chief financial officer of Tata Motors said in the press briefing.
Jaguar Land Rover Cushions Impact
Tata Motors' luxury unit Jaguar Land Rover reported a profit of £557 million in the fourth quarter, an increase of 18 percent over the same quarter last year. Operating margins expanded 80 basis points to 14.5 percent.
Retail sales at JLR went up 13 percent year-on-year, reflecting higher volumes in China, North America, U.K. and Europe, according to the media statement said. Sales were largely driven by demand for the new F-Pace, the first sports utility vehicle in JLR's lineup.
Tata Motors plans to pump in over £4 billion into JLR during financial year 2017-18, including an investment in its upcoming production facility in Slovakia, Chief Finance Officer C Ramakrishnan said in a meeting with analysts.
He expects the margin pressures seen by JLR in FY17 to continue in the current financial year but hopes to achieve operating margins of 14-16 percent in the medium term.
American Depository Receipts (ADRs) for Tata Motors, which represents the number of shares traded on a U.S. exchange, rose 7 percent on JLR’s robust performance in the January-March quarter, Bloomberg data showed.
