Tata Motors on Wednesday beat analysts' estimates to post a nearly 42% Y-o-Y jump in its net profit at Rs 3,200 crore during the April-June quarter mainly on the back of one-time gain relating to recent changes made to JLR pension plan.
Tata Motors on Wednesday beat analysts’ estimates to post a nearly 42% Y-o-Y jump in its net profit at Rs 3,200 crore during the April-June quarter mainly on the back of one-time gain relating to recent changes made to JLR pension plan. Excluding this one-time gain the company would have posted a net loss due to a forex loss of Rs 631 crore.
Revenues for the auto major on the domestic front were impacted due to ban on BS III (Bharat Stage 3) vehicles from April 1 and the transition to the goods and services tax during the quarter. Also, lower wholesale volumes excluding from China JV — Chery Jaguar Land Rover, along with continuation of higher competitive incentive levels and launch and growth costs impacted overseas performance. Consequently, the net sales dropped by 10% y-o-y to Rs 58,493.37 crore, which was below analyst estimates.
The most important segment for the company, the medium and heavy commercial vehicles (M&HCV), witnessed a sharp fall of 34.8% in sales on account of pre-buying in March due to change in emission norms. However, its passenger vehicles sales for the period grew by 4.7% y-o-y, on the back of strong demand for its next generation launches of Tiago, Hexa and Tigor.
According to Bloomberg estimates, Tata Motors was expected to report a consolidated net profit of Rs 1,387 crore, while the revenues were expected to be Rs 59,788 crore.
With the fall in sales volumes, the consolidated Ebitda (earnings before interest, tax, depreciation and amortization) also came in lower by over 26% to Rs 5,596 crore during the quarter. Ebitda margins dragged by 215 basis points to 9.56%.
On a standalone level, the company reported a net loss of Rs 467 crore verus a net profit of Rs 26 crore in the corresponding period last year. Standalone net sales stood at Rs 9,094 crore, which was a decline of 11.6% on a y-o-y basis.
Guenter Butschek, managing director and CEO, Tata Motors said that while the first quarter results have not met the company’s expectations, it is working to improve performance of its commercial and passenger vehicle businesses. “Our focus on topline, market share growth, major cost reduction initiatives and efficiency improvements have been significantly enhanced and accelerated in the last few months,” he said.
Meanwhile, Jaguar Land Rover’s profit before tax grew by 49% y-o-y to 595 million pounds boosted by a change in its pension plans. The revenue of the company grew by 244 million pounds to 5.6 billion pounds in the quarter. JLR’s sales for the period rose by 3.5% to 1,37,463 units, with strong demand for its flagship models, the range Rover, Jaguar XF and the Jaguar F-Pace. Sales growth for JLR continued to remain strong in China and North America. Ralf Speth, CEO, Jaguar Land Rover said, “The foundation of our journey of sustainable, profitable growth continues to be our investment in products, plants and people as we become a technology-driven company.”
“We expect the forex losses to come down in the next couple of quarters. In the future we would like to have more flexibility in our capex spending. Car sales in regions like UK, US and EU are pretty low but the economic growth remains robust in these regions. So, we are optimistic,” Speth later said in a conference call with analysts.