Tata Motors posts Q1 loss at Rs 3,698 cr as JLR continues to make a dent

Jaguar Land Rover reported a loss of 402 million pounds and its loss before tax stood at 383 million pounds.

Tata Motors, on July 25, posted a big loss of Rs 3,698 crore in June quarter on weakness in domestic as well as Jaguar Land Rover volumes.

Jaguar Land Rover reported a pre-tax loss of 395 million pounds, compared to 264 million pound loss in the same period a year ago, on quarterly revenues that declined 2.8 percent year-on-year to 5.1 billion pounds resulting from the weaker market conditions, the company said.

Additional plant shutdown time and delays in WLTP (Worldwide Harmonised Light Vehicle Test Procedure) certification resulting from Brexit contingency planning also contributed to the lower sales and profits, it added.

It was a worst-than-expected loss at a bottom-line level as the consolidated loss was estimated at Rs 2,127 crore and JLR loss at 236 million pounds for the quarter ended June 2019, according to a poll of analysts conducted by CNBC-TV18.

JLR retail sales (including China JLR) slipped 11.6 percent to 1,28,615 units and wholesales fell 9.9 percent to 1,18,550 vehicles in Q1 YoY.

The company had posted a consolidated loss of Rs 1,902.37 crore in June quarter last year and a profit of Rs 1,117.48 crore in March quarter 2019.

Tata Motors said financial performance at group level reflects the historical seasonality and continued challenging market conditions globally (JLR), but the company retained its guidance saying project charge is on track to achieve 2.5 billion pounds of profit and cash improvements by the end of the year.

With China stabilizing and an exciting product line-up, JLR expects to return to growth soon and its financial results to improve over the balance of the year, it added.

The company said Jaguar Land Rover continued to benefit from the ongoing impact of its £2.5 billion profit and cash improvement program, which delivered a further £100 million of cost-savings and £300 million reductions to previously planned investment in the quarter, taking the total savings to date to 1.7 billion pounds.

Consolidated revenue during the quarter declined by 7.8 percent to Rs 61,467 crore compared to year-ago.

On standalone front, wholesales degrew by 22.7 percent to 1,36,705 units and retail sales declined 12.6 percent compared to year-ago with commercial vehicle sales falling 19.5 percent and passenger vehicle down 30.1 percent in Q1 YoY.

"The continued slow down across the auto industry due to weak consumer sentiments, liquidity stress and the impact of axle load effect particularly in medium/heavy duty, impacted overall demand," Guenter Butschek, CEO and MD, Tata Motors said.

The company said standalone business (domestic) recorded a loss of Rs 97.10 crore for the quarter ended June 2019 against a profit of Rs 1,187.65 crore in the previous year due to negative operating leverage and lower other income including dividend.

Standalone revenue from operations fell sharply by 20 percent year-on-year to Rs 13,352 crore in Q1, it added.

But the company remained confident about domestic industry saying it expects the performance to gradually improve in the rest of the year and both businesses (commercial vehicle and passenger vehicle) will focus on stepping up retail growth, improve dealer profitability, launch exciting products while driving rigorous cost reduction as it transitions smoothly to BS-VI.

Tata Motors' finance costs increased by Rs 336 crore to Rs 1,712 Cr during Q1 YoY, including Rs 112 crore on account of lease liability accounting under IFRS 16.

The company said closing net automotive debt increased to Rs 46,500 crore reflecting the cumulative negative free cash flow and an increase of Rs 6,000 crore on account of change in lease liability accounting under IFRS 16.

The stock was down 35 percent in the last 3 months and hit a 52-week low of Rs 141 on February 8, 2019.

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