Tata Motors‘ Jaguar Land Rover Automotive has reported a a pre-tax loss of GBP264m for the three-month period ending 30 June 2018.
The company said this was due to lower wholesales, higher China incentives combined with an unfavourable balance sheet currency revaluation and higher depreciation and amortisation resulting from continuing investment.
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Earnings before interest, tax and depreciation (EBITDA) were GBP325m (6.2% margin).
Retail sales for the quarter rose 5.9% year on year to 145,510 vehicles reflecting growth for the Range Rover Velar and Sport, Land Rover Discovery and Jaguar E-Pace. However, wholesales (including the China JV) were 13,950 units lower than retails, primarily reflecting lower wholesales in China in advance of the reduction in import duties from 25% to 10% on 1 July and production scheduling to de-stock inventories in other markets.
Revenue for the quarter fell 6.7% to GBP5.2bn (US$6.8bn) primarily as a result of the lower wholesales and increased incentives in China.
CEO Ralf Speth said: “We had a pre-tax loss in the first quarter, reflecting the impact of the announcement of the duty reduction in China as well as planned dealer stock reductions in the quarter. We also continue to be impacted negatively by uncertainty over diesels in Europe along with Brexit and additional diesel taxes in UK.
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By GlobalData“Given these issues, we will remain focused on driving growth and simultaneously reducing costs and boosting operational efficiency and capability, taking the necessary steps to shape our future. We expect sales and financial results to improve over the remainder of the financial year, driven by continued ramp-up of new models and with the new lower duties effective in China.”
The company said it “continues to invest over proportionally in new vehicles, next-generation automotive technologies and facilities to support its future sustainable growth with total investment spending of GBP1.1bn for the quarter”.
This investment spending and seasonal working capital outflows of GBP1.0bn led to negative operating cash flow of GBP1.7bn. The company plans to invest in the region of GBP4.5bn in the current financial year.
Customer deliveries of the company’s first ever battery electric vehicle, the Jaguar I-Pace are beginning following its launch in March this year.
The profitability target for the full financial year ending 31 March 2019 (FY19) remains within the previous 4-7% planned margin shared for FY19-FY21.
Speth added: “We remain true to our pioneering spirit and our ability to create innovative and exciting cars that our customers will love. Given the success of recently introduced models such as the Jaguar E-Pace and the Range Rover Velar, along with our huge investment commitment in electrified technologies, we remain confident to deliver sustainable profitable growth.”
