Tata Motors‘ Jaguar Land Rover boosted pre-tax third quarter profit to GBP439m, up GBP374m quarter on quarter and GBP121m year on year.
The automaker said “improved profits reflect revenue of GBP6bn, up GBP1.6bn from Q2 while still lower than pre-COVID levels a year ago, with favourable sales mix, cost performance and partial reversal of prior-period reserves”.
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Positive free cash flow of GBP562m set a Q3 record.
The company said it achieved ‘Charge+’ transformation savings of GBP0.4bn in Q3, increasing the total for the first three quarters of the fiscal year (ending 31 March, 2010) to GBP2.2bn.
Despite COVID and “other risks”, JLR still expects to deliver strong EBIT margins and positive free cash flow in Q4.
Fiscal Q3 retail sales were 128,469 vehicles, up 13.1% on Q2 but still 9% lower than a year ago. Sales in China were up 20% on the prior quarter and up 19.1% year on year. Most other regions were also up on the preceding quarter while down from the 2019/2020 third quarter. Sales of the new Land Rover Defender grew 66% to 16,286 units.
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By GlobalDataThe GBP439m of pretax profit was after GBP37m of exceptional charges). EBIT margin improved to 6.7% (+400bps year-on-year).
The Project Charge+ savings of GBP0.4bn included GBP0.2bn of cost and GBP0.2bn of investment efficiencies. Savings year-to-date have reached GBP2.2bn and the company said it was “well on track” to reach the GBP2.5bn full year target.
“We are pleased to report these strong profits and record third quarter cash flows. It reflects our focus on prioritising profitable sales and delivering cost and cash improvements. While sales have not yet fully recovered to pre-COVID levels in most markets, it was pleasing to see China sales up year on year for the second quarter in a row and sales of the new Defender continuing to grow,” said CFO Adrian Mardell.
In a statement, Jaguar Land Rover said it “was encouraged by the Brexit trade deal agreed in December between the UK and the European Union. This has avoided the risk of tariffs on automotive parts and finished vehicles, although there will still be increased customs administration requirements.
“The approval of effective COVID-19 vaccines is also encouraging, with the promise of an eventual end to the pandemic. While current infection rates and associated restrictions are a challenge, all of the company’s plants and the majority of retailers are open. In markets where showrooms are closed by restrictions, in the UK in particular, sales are generally able to continue through remote solutions such as a ‘click and deliver’ basis.
“In this environment, Jaguar Land Rover continues to expect a gradual improvement in sales supported by new and refreshed vehicles incorporating the latest technologies.”
JLR noted electrification had now been extended to 12 of the 13 Jaguar Land Rover models, including eight PHEV, 11 MHEV plus the now well established Jaguar I-Pace BEV.
Thierry Bollore said: “I am encouraged by the improved financial performance in this first full quarter as CEO of Jaguar Land Rover. This performance is a credit to the outstanding efforts of the employees to overcome many challenges this year and I would like to thank every one of our colleagues for their contribution, particularly those who are working safely in our plants and facilities.
“Looking ahead, these challenges continue, including the COVID pandemic and its impact on the global economy, the UK’s new trading relationship with the EU and the significant technological changes taking place in the automotive industry.
“In this environment, I’m working with my management team on plans to realise an exciting future for Jaguar Land Rover, which I look forward to sharing in due course.”
