Monday, 24 September, 2018

Tata Motors turns worthwhile at standalone stage after 5 quarters

Jaguar Land Rover profits fall amid slower progress in US and Europe Tata Motors turns worthwhile at standalone stage after 5 quarters
Theresa Hayes | 06 February, 2018, 17:24

The company had reported losses at a standalone level for the preceding five quarters.

Tata Motors said consolidated net profit for the three months ending December was 11.99 billion rupees ($187.15 million), up from 937.7 million rupees a year earlier when Indians were dealing with the fallout of demonetisation. The company's investment spending exceeded £1 billion in the third quarter and is expected to be in the region of £4-£4.35 billion for the full year. The standalone business posted an EBITDA margin of 9% last quarter, up 750 basis points on-year.

However, the profit lagged behind analysts' expectations as the British luxury unit suffered from weaker demand in the U.S., the U.K, and Europe.

Ahead of the earnings, shares of Tata Motors closed 3.1% higher at 396.05 rupees on the BSE, outperforming a almost 1% decline in the benchmark index. The were announced after the closure of the trading hours.

The "turnaround strategy" is delivering results, according to Tata Motors Chairman N Chandrasekaran.

Chandrasekaran said the company would continue to reduce cost and invest prudently in products.

On a standalone basis, Tata Motors' passenger and commercial vehicle business grew strongly with revenue rising 57.8 per cent at Rs 16,101.6 crore over the previous year, driven by strong volume growth.

Shah said, "While JLR's product launch cycle is well placed, adverse industry development (weakening demand in US/EU/UK) is likely to exert pressure on margins", highlighting that there exist risks of further increase in variable marketing spend (not in our base case). No timeframe was specified for this reduction. India's largest commercial vehicle maker reported a consolidated third quarter net profit of Rs1,215 crore. The consolidated profits are lower than analysts' expectations of more than Rs 30 billion.

The turnaround strategy for India market seems to be working as the company reported profits of ₹183 crore on a standalone basis compared to a loss of ₹1,045 crore in the corresponding period past year. The company said profitability at JLR was impacted by the run-out of certain models, higher depreciation, and amortisation, resulting from continued investment to drive profitable growth.

Similarly, as part of changes in the CV segment, the company is rolling out a new platform for products apart from introducing a new range of engines in order to phase out the earlier ones.

Ralf Speth, Jaguar Land Rover CEO, said: "Despite headwinds and uncertainty in some markets, Jaguar Land Rover still delivered increased unit sales as we continued the launch schedule for new models including the significantly enhanced Range Rover family and all-new Jaguar E-PACE.we expect a stronger all-around performance in the Fourth Quarter driven by new models, seasonality, and improved profitability". JLR's EBIDTA margins increased 80 basis points to 10.9 per cent in the quarter. The company here said that its turnaround strategy was well on track in the domestic operations.