Tata Motors' share price tanks on Jaguar Land Rover losses

Gladys Abbott
February 9, 2019

Excluding that one-off charge, Jaguar Land Rover posted a £273 million pre-tax loss between October and December, against revenues of £6.2 billion.

As part of Jaguar Land Rover's plans to achieve £2.5 billion (S$4.39 billion) of investment, working capital and profit improvements by March 2020, the company in January said it would slash its global workforce by 4,500.

JLR, which is the UK's largest vehicle maker and has its engine manufacturing plant at the i54 north of Wolverhampton, sold 144,602 cars compared to 154,447 a year ago. U.S. sales rose 20 per cent and 18 per cent in the UK.

The Tata Motors share closed marginally higher today after credit ratings agency Fitch Ratings said it has placed the credit rating of the Tata Group firm on negative watch, stating increasing risks for its British luxury auto unit - Jaguar Land Rover (JLR) - over a potentially chaotic Brexit.

Tata Motors Ltd on Thursday forecast its United Kingdom unit Jaguar Land Rover (JLR) Automotive Plc.to incur an operating loss this fiscal year mainly because of continued muted demand in JLR's single-largest market, China. The firm has also been buffeted by Brexit woes and weaker business for diesel cars that account for bulk of its sales in Europe.

Speth said: "This is a hard time for the industry but we remain focused on ensuring sustainable and profitable growth and making targeted investments that will secure our business in the future". In JLR, the market conditions continue to be challenging particularly in China.

"Today, we are also announcing a non-cash exceptional charge to reduce the book value of our capitalised investments".

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JLR chief executive Ralf Speth said: "This accounting adjustment is consistent with the other decisive actions that we must take. enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry". It delivered £500m of the programme in the third quarter.

Auto manufacturers across the world are facing many challenges, from the transition to electric vehicles, Brexit uncertainty and regulatory pressure on demand for diesel.

JLR is also launching new versions of its Range Rover Evoque and Land Rover Defender models this year as it tries to stay on the front foot with its product portfolio even as it cuts back on spending.

JLR has announced that its electric drive units are to be produced at its Engine Manufacturing Centre at the Wolverhampton site.

JLR ended the quarter with £2.5bn of cash, after repaying a U.S. $700m bond which matured in December.

On a standalone basis, Tata Motors posted PAT of Rs 617.62 crore as against Rs 211.59 crore in the year-ago quarter.

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