Diesel vehicles account for around 90% of JLR’s sales in Europe but consumers are increasingly moving to hybrid and electric vehicles.
The company’s consolidated net sales during the period increased 4% year-on-year at Rs 77,000 crore, but was a tad below Bloomberg estimates. Ebitda declined 24% at Rs 6,522 crore, again below estimates, while margins stood at 8.5% against 11% in the same period last year.
Ralf Speth, JLR chief executive, said “Jaguar Land Rover reported strong third quarter sales in the UK and North America, but our overall performance continued to be impacted by challenging market conditions in China. We continue to work closely with Chinese retailers to respond to current market conditions with a ‘Pull’ based approach to vehicle sales. Today, we are also announcing a non-cash exceptional charge to reduce the book value of our capitalised investments. This accounting adjustment is consistent with the other decisive actions that we must take as part of our ‘Charge’ and Accelerate transformation programmes to create an efficient and resilient business, enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry. We are taking the right decisions now to prepare the company for the new technologies and strong product offensive for the future. This is a difficult time for the industry, but we remain focused on ensuring sustainable and profitable growth, and making targeted investments, that will secure our business in the future”.
Diesel vehicles account for around 90% of JLR’s sales in Europe but consumers are increasingly moving to hybrid and electric vehicles. Further, performance in a key market like China continues to be weak. According to Balaji, weak sales and de-stocking impacted the company’s performance there.
On Brexit the company exuded confidence that a deal will be reached soon and borders will continue to be free. However, the company needs to be prepared for the worst also. On a standalone basis, which is the India business, Tata Motors profit during the quarter increased threefold to Rs 618 crore and revenues grew by 1.5% at Rs 16,200 crore.
Total sales volume declined 0.5% at 1,71,354 units due to challenging conditions in the domestic market, the company said. In the domestic market M&HCV sales were down 15%, while passenger vehicles were up by 3%.
“Fiscal year 2019 so far has been a challenging period for the industry. Despite the muted growth, Tata Motors has delivered strong results, registered an impressive profitable growth this year on the back of exciting products, renewed brand positioning and aggressive cost reduction,” Tata Motors CEO and MD Guenter Butschek said.
Tata Motors shares closed up 2.64% at `182.90 on the BSE on Thursday. However, the results were announced post-trading hours.