Tata Motors’ Profit Misses Estimate On Weakness In Jaguar Land Rover
Tata Motor’s profit jumped 13 times in the December ended quarter, but still missed estimates.
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Tata Motors Ltd.’s profit missed estimates by a wide margin in the October-December quarter because of lower sales in the U.S. and European markets.
Net profit jumped nearly 13 times to Rs 1,198.6 crore a year ago, the company said in an exchange filing today. The sharp rise was due to a low base in the same quarter last year, partly on account of demonetisation coupled with a loss of Rs 1,046 crore incurred by Jaguar Land Rover.
- Revenue rose 16 percent to Rs 74,156 crore, in line with the Rs 74,200 crore estimate.
- Operating profit jumped 80 percent on a yearly basis to Rs 8,671 crore.
- Operating margins expanded to 11.7 percent from 7.5 percent.
The bottom line, however fell short of the BloombergQuint estimate of Rs 2,450 crore by a wide margin as deliveries at Jaguar Land Rover grew at a slower 3.5 percent pace in the quarter due to weak demand in North America and Europe, Tata Motors said in the press statement accompanying the earnings filing. While the unit “saw 14.6 percent retail growth in China and 18.2 percent in overseas markets, this was offset by flatter demand in U.S., U.K., and mainland Europe”, the statement added.
Jaguar Land Rover’s operating margin contracted to 10.9 from 12.5 percent in the same quarter last year, as the company offered sizable discounts in an effort to clear out inventories of older models of Range Rover and Range Rover Sport before introducing the latest versions.
Despite headwinds and uncertainty in some markets, Jaguar Land Rover still delivered increased unit sales as we continued to launch schedule for new models including the significantly enhanced Range Rover family and all-new Jaguar E-Pace.Ralf Speth, Chief Executive Officer, JLR
Speth expects a stronger fourth quarter driven by new models, seasonality and improved profitability. JLR is also scheduled to launch its first electric car, the Jaguar I-Pace and Range Rover plug-in hybrid later this year, he added.
India Unit
The turnaround strategy for Tata Motors's standalone unit is well on track with strong volumes and improved profitability on the back of the cost reduction, the company said.
Our focus on market share gain coupled with operational improvements is working well, with both commercial and passenger vehicles business delivering improved results.N Chandrasekaran, Chairman, Tata Motors
- Net revenue rose 59 percent to Rs 16,102 crore
- Ebitda margin up 750 basis points to 9 percent
Tata Motors’ shares rose closed 3.14 percent higher at Rs 395.8 apiece, before the announcement of the results.