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JLR continues to drive profits at Tata Motors

Saturday, 9 November 2013 - 12:22pm IST | Place: Mumbai | Agency: DNA
Consolidated net jumps 71%; posts loss on standalone basis in second quarter.

Tata Motors continued to outperform in the quarter ended September 30 on the back of strong performance of its UK subsidiary Jaguar Land Rover (JLR).

On consolidated basis, the company reported a 71% year-on-year rise in net profit during the July-September quarter at Rs 3,542 crore. Company’s Ebitda grew to 16.3% in the reporting quarter from 13.5% a year ago.

However, on a standalone basis, the company continued its poor show on account of slowdown in the domestic passenger vehicle and commercial vehicle segments, and high competitive intensity. On a standalone basis, Tata Motors reported a loss of Rs 804 crore during the quarter as compared with a profit of Rs 867 crore (which included dividend from JLR) in the corresponding quarter last year. Overall, Tata Motors’s commercial and passenger vehicle sales for the quarter declined 32.5% yoy as it sold 150,930 units.

Standalone operating margins dropped to 2% as against 5.9% registered a year ago. Its local market share for the first half stood at 6.1%.

“The profits were impacted due to challenging macroeconomic environment, tight lending, increase in diesel prices. High competitive intensity impacted the margins,” company’s president and chief financial officer, C Ramakrishnan told reporters.

On the other hand, JLRcontinued its strong performance on account of new launches and growth in markets like China and the US. Net profit grew 66% to 507 million pounds year on year.
Wholesale and retail volumes for JLR for the quarter grew 31.6% and 21.1%, respectively on a yoy basis. Margins grew to 17.8% as against 14.8%.

“We are not just growing in China. We are growing all over the world and even in Europe, despite the challenging economic scenario,” said Ralf Speth, chief executive officer for JLR.

The company, however, expects the pressure to continue on the domestic front with the ongoing slowdown and high competition. It expects the above average monsoon to improve rural consumption growth in the second half of the year; also starting of the infrastructure projects and JNNURM Phase 2, may drive CV and bus volumes.

“We expect JLR performance to remain strong, led by product actions and continued growth in emerging markets, particularly China. Domestic business could bounce back strongly along with economic recovery, though we have not factored this in, given limited visibility,” said Rikesh Parikh, VP institution corporate broking, Motilal Oswal Securities.

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