Tata Motors Q3 net profit tanks 52% as Jaguar Land Rover margins dwindle
Rising investment costs and falling profitability at the British carmaker, whose profits have propped up its weaker parent for the past year and half, combined with a drop into the red for the Indian company's domestic business.
JLR said operating margin was 14 percent in the December quarter, down from 17 percent a year ago, also due in part to a shift towards less profitable models.
JLR expects operating margin to remain stable in the coming quarters, Chief Finance Officer Ken Gregor told reporters, describing earlier margins as "extraordinary".
"The challenge for us as a business is to sustain at roughly the levels that they are at right now," he said.
Increasing reliance on lower-margin models like the Land Rover Evoque and Freelander and adverse currency movements saw JLR's profit margin fall, and free cash flow turned negative just months after it paid its weaker parent a maiden dividend.
JLR's cheaper, lower-margin Evoque and Freelander compact SUVs accounted for 52.5 percent of all Land Rover retail sales in the quarter, up from 43.7 percent a year earlier.
Currency fluctuations shaved off 50 basis points from JLR margins in the December quarter, the company said. The pound rose 0.7 percent against the dollar during the quarter, denting profits earned in the United States.
Tata's net profit for the third quarter of the financial year
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