Tata Motors net profit hits China speed bump

By: | Published: August 8, 2015 1:11 AM

The country's largest automobile firm by revenues, Tata Motors on Friday disappointed the Street on almost all fronts by lagging estimates.

Tata MotorsTata Motor’s Ebitda declined 18.2% to Rs 9,109 crore and margin declined 230 basis points to 14.9%. (Reuters)

The country’s largest automobile firm by revenues, Tata Motors on Friday disappointed the Street on almost all fronts by lagging estimates. On the back of a dismal performance of its luxury car arm Jaguar Land Rover (JLR) due to the slowdown in the Chinese economy, consolidated net profit during the April-June quarter fell 48.7% year-on-year to s Rs 2,769 crore. This was the fourth consecutive quarterly fall in the company’s net profit.

Consolidated revenue during the period also disappointed with a decline of 5.7% to Rs 61,019.5 crore on lower sales and a weaker geographic mix at JLR which, however, was partially offset by strong revenue growth in the standalone business on continued medium & heavy commercial vehicle (MHCV) growth. Consolidated net sales were down 6.18% at Rs 60,180.57 crore.

The company’s Ebitda declined 18.2% to Rs 9,109 crore and margin declined 230 basis points to 14.9%. Other income increased 44% to Rs 307.23 crore and tax expenses reduced by 25.8% to Rs 1,570.3 crore year-on-year while finance cost jumped 18.2% to Rs 1,117.4 crore during the same period. Tata Motors posted a forex loss of Rs 107.3 crore in Q1 against a forex gain of Rs 94 crore in the year-ago period.

The net profit of the JLR division registered a 29% decline during the period at £492 million. Revenue also declined 6.6% to £5,002 million on a yearly basis due to weak performance in China.

The Chinese market accounts for around 20% of JLR sales. “The financial performance in the quarter was lower than the strong corresponding quarter last year due to softer sales in China partially offset by strong performance in the UK, Europe and North America,” the company said. Operating profit during the quarter slipped 24.5% to £821 million.

Gr10

Land Rover maintained healthy sales in the quarter with the Range Rover, Range Rover Sport Discovery and Defender all up compared with the corresponding quarter last year. Further, the Discovery Sport performed well, already outselling the Freelander that it replaced. Evoque sales were lower due to the ramp-up of localised production in China and softer market conditions there. Jaguar sales volumes were down as sales of the XF and XJ fell ahead of the all-new lightweight XF and the refreshed XJ 16MY, on sale in autumn this year, partially offset by the successful introduction of the new Jaguar XE.

Tata Motors’ standalone (domestic business) saw an improvement due to a recovery in the passenger vehicle and MHCV segments. Net profit declined 34.6% to Rs 257.6 crore while revenues were up 20.7% at Rs 9,297 crore.

During the period the company sold 1.17 lakh vehicles, up 6.2% compared with the same period last year. The passenger vehicle business saw good resurgence on new launches Zest, Bolt and GenX Nano. Sales in the segment grew by 27.4% and MHCV volumes jumped 20.7% y-o-y. However, light commercial vehicle (LCV) volumes (Tata Ace) continued to be under pressure with sales sliding 19% due to a tough financing environment and lack of last-mile load availability.

On Friday, Tata Motors shares closed 2.52% higher at Rs 392.55 on the BSE.

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