Domestic turnaround, Jaguar Land Rover boosts Tata Motors net profit 3-fold

Mumbai: A remarkable turnaround of its struggling domestic unit, and record high volumes and margin improvements at its marquee British business have boosted Tata Motors Group net profit by three-fold to Rs 5,177 crore in the three months to March from over Rs 1,717 crore a year ago.

Profit at its British unit Jaguar Land Rover, which has been its cash machine for many years now, soared 56.3 percent to 472 million pounds from 302 million pounds a year ago, driven by record sales across its key markets of Europe, China and the US.

While JLR’s retail sales in Europe soared 55 percent in the quarter under review, its deliveries in China climbed 19 percent, driven by the local production of the Land Rover Discovery Sport SUV and the ramp up of the Jaguar XE sedan.

This helped JLR, for the first time, cross the half-a-million sales mark at 5,21571 units for the year.

The China JV turned in a net profit of 49 million pounds during the quarter, apart from some write-back from the provisions made for the losses from the fire at its godown last year, the company said.

The profit would have been higher had it not been for the Rs 1,580-crore charge the company has taken for the recall of 1 lakh unit of its XF model from the JLR stable in the US due to faulty airbags supplied by the Japanese supplier Takata and towards some doubtful investments it has done in the past, Group Chief Financial Officer C Ramakrishanan said here late in the evening.

He said the bottomline was also impacted to some extent by unfavourable forex movements. The bottomline gain was partly offset by higher depreciation and amortisation expenses, adverse revaluation of euro payables.

The city-based company’s consolidated sales grew 18.76 percent to Rs 79,926 crore during the reporting quarter.

What is more important is the remarkable turnaround of its domestic unit which has been struggling for the past many years.

On a standalone basis, Tata Motors India reported a net profit of Rs 465 crore for the fourth quarter against a net loss of Rs 1,164.25 crore a year ago.

Standalone net sales stood at Rs 12,459.51 crore against Rs 10,676.19 crore, driven primarily by truck and bus business and partly by the demand for its new cars - the Bolt, Zest and the new Nano.

For the full year, the domestic unit posted a net profit of Rs 234.23 crore as against a whopping net loss of Rs 4,738.95 crore in 2014-15. Domestic net sales rose 16.87 percent to Rs 41,948 crore from Rs 35,890.5 crore in FY15.

Though earnings were announced late in the evening, the Tata Motors counter closed up 4.2 percent at Rs 420.55 on the BSE, whose benchmark Sensex inched up 0.3 per cent in a dull trade after four days of rally. On a standalone basis, Tata Motors saw its M&HCV sales clipping at 26.6 per cent in the March quarter on the back of the continued replacement demand, initial fleet expansion demand, infrastructure spending and better profitability of the freight operators.

LCV sales also started showing growth trend with a growth of 11.8 percent in Q4. Exports of the commercial vehicles grew 26.6 percent during the period, taking the overall CV sales growth, including exports, to 19.5 percent.

Sales, including exports, of commercial and passenger vehicles for the quarter stood at 1,44,507 units, representing a growth of 3.9 percent and taking the revenues for the quarter to Rs 12,570 crore, up from Rs 10,786 crore last year.

JLR revenue for the quarter rose to 6,594 million pounds from 5,826 million pounds, helping margin improve to 16.2 percent for the quarter, from 14.3 percent a year ago.

JLR revenue for Q4 stood at 6,594 million pounds, compared to 5,826 million pounds, driven by wholesale volumes, which excluding China, rose to 149,895 units, up 19.8 percent. China sales stood at 12,532 units.

JLR got an insurance refund and other recoveries of Rs 555 crore on account of the vehicles damaged at the Tianjin port explosions in China.

JLR full year revenue rose to 22.21 billion pounds, up from 21.87 billion pounds, while profit after tax for the year declined to 1.31 billion pounds from to 2.04 billion pounds.

The company said it will invest 3.75 billion pounds in capex in fiscal 20117, up from 3.14 billion pounds in FY16.

The company had free cash flow 791 million pounds after 3.14 billion pounds of investment in the year gone by.

The capex will be spent on expansion of global production capacity, new technologies and new vehicles such as the Jaguar F-Pace and the Range Rover Evoque Convertible that will unleash the potential of both brands in the future, Ralf Speth, JLR Chief Executive, said.

JLR, the largest automotive manufacturer in the English isles, saw its retail sales rising by 13 percent to 521,571, breaking the half-million mark for the first time as the company continued to expand its product portfolio, with award-winning, innovative new models including the Land Rover Discovery Sport, Jaguar XE and XF.

The combination of an increased demand for new models, solid growth in markets, including Europe, North America and Britain, helped support full-year financial revenues of 22.2 billion pounds, up 342 million pounds on the previous 12-month period.

“JLR has produced and sold more cars than at any time in our history. We are now the largest automotive manufacturer in Britain,” Speth said, adding during the year the JLR has delivered sustainable, profitable growth and introduced new models like the Discovery Sport, Jaguar XE and the XF.