Published: Fri, February 08, 2019
Economy | By

Jaguar Land Rover posts £3.4 billion loss in final quarter of 2018

Jaguar Land Rover posts £3.4 billion loss in final quarter of 2018

Shares of Tata Motors Ltd on Friday plunged as much as 30%, its maximum single day fall since February 1993, as many brokerages downgraded the stock and cut its target price after the company posted the biggest loss in India's corporate history due to an impairment charge for its luxury vehicle unit Jaguar Land Rover.

Sales for the quarter were £6.2bn, down from £6.3bn a year earlier. While revenues at the United Kingdom subsidiary were down 1 per cent to 6,233 million pounds over the year-ago quarter, margins contracted by 360 bps to 7.3 per cent.

Speaking with CarAdvice in October past year, Jaguar Land Rover CEO Ralf Speth said the production slowdown was caused by something of a ideal storm.

"We have five global regions around the world and we are more or less nicely balanced in terms of volume across these markets, but depending on the level of downturn in China, the impact is most likely heavily affect the premium vehicle market as a whole, no ifs or buts", Speth said.

Weak demand persists in China, and market share losses could continue for JLR, due to structural issues in the distribution network and rising competitive intensity, analysts expect.

Jaguar Land Rover says half of the exceptional charge was due to an accounting acknowledgement that investments in machinery and plants were worth less than previous calculations suggested.

"We are taking the right decisions to prepare the company for the new technologies and strong product offensive that will enable a long term future of sustainable profitable growth". It delivered £500m of the programme in the third quarter.

The company announced last month that it would reduce its global workforce by 4,500 people.

"This is expected to result in a one-time exceptional redundancy cost of around 200 million pounds", it added. They had already slumped more than 50 per cent in the past 12 months through Thursday on concerns about Jaguar Land Rovers waning sales, profitability, high capital-expenditure need and the impact of Brexit.

JLR has announced that its electric drive units are to be produced at its Engine Manufacturing Centre at the Wolverhampton site. The company also had a £1.9bn undrawn credit facility available at the end of the quarter.

Tata Group Chairman N Chandrasekaran said the company's domestic business continues the strong momentum and has delivered market share gains as well as profitable growth.

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