Tata Motors Turnaround 2.0 strategy on track, reports profit of Rs 1,188 crore; Jaguar Land Rover impacted by duty reduction in China and uncertainty over diesel vehicles in Europe
31 Jul 2018 | 6611 Views | By Nilesh Wadhwa
Tata Motors has announced its financial results for Q1 FY2019. While it has reported overall consolidated revenues of Rs 67,081 crore, an increase of 14 percent year on year, the loss after tax is Rs 1,864 crore, compared to a profit after tax of Rs 3,182 crore for the same ...
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Tata Motors has announced its financial results for Q1 FY2019. While it has reported overall consolidated revenues of Rs 67,081 crore, an increase of 14 percent year on year, the loss after tax is Rs 1,864 crore, compared to a profit after tax of Rs 3,182 crore for the same period last year. Last year, Tata Motors’ financial results for Q1 saw a one-time gain of Rs 3,609 crore last year, on the back of calculations in Jaguar Land Rover’s pension payments.
In Q1 FY2019, JLR sold a total of 145,510 units; wholesales (excluding Chery JLR) were down 7.7 percent on the back of sales deferral in China and planned dealer stock reduction; The luxury carmaker reported revenue of euro 5,222 million (Rs 39,917 crore), down 7 percent, and a loss after tax of euro 210 million (Rs 1,605 crore).
Tata Motors (standalone, including joint operations) sold 176,868 units, with sales of commercial vehicles growing 63 percent albeit on a lower previous year base, and passenger vehicle sales up 49 percent. The company reported revenues of Rs 16,803 crore, up 83 percent. The profit after tax was Rs 1,188 crore.
Commenting on the results, Natarajan Chandrasekaran, chairman, Tata Group, said: “I am delighted with the progress made by the domestic business on their ‘Turnaround 2.0’ strategy. We continue to gain market share while strongly improving profitability in both commercial vehicles and passenger vehicles. Our drive for increased transparency continues with separate segmental results for the CV and PV businesses from this quarter. I believe that with our focused efforts, we are well positioned to ‘Win Decisively’ in CV and ‘Win Sustainably’ in PV.
With regard to JLR, we faced multiple challenges including temporary issues like China duty impact as well as the market issues like diesel concerns in UK and Europe. Despite these challenges, we remain committed to deliver the planned margins we outlined earlier this year and appreciate the urgency to address our challenges with speed. Towards this, we will step up all round execution. We will leverage our product portfolio to grow faster and drive down costs to improve operating leverage of the business. We will also calibrate our capital spends to minimise cash outflow. With these focused efforts, I am confident that Tata Motors Group will deliver competitive, consistent and cash accretive growth in the medium to long term.”
JLR to invest Rs 34,400 crore in FY2019 to support future growth
According to Tata Motors, JLR will continue to invest in new vehicles, next-generation automotive technologies and facilities to support its future sustainable growth, with total investment spending of euro 1.1 billion (Rs 8,408 crore) for the quarter. This investment spending and seasonal working capital outflows of euro 1.0 billion (Rs 7,644 crore) led to negative operating cash flow of Euro 1.7 billion (Rs 12,995 crore). The company plans to invest in the region of £4.5 billion (Rs 34,398 crore) in the current financial year.
Dr Ralf Speth, CEO, Jaguar Land Rover, said: “We had a pre-tax loss in the first quarter, reflecting the impact of the announcement of the duty reduction in China as well as planned dealer stock reduction in the quarter. We also continue to be impacted negatively by uncertainty over diesels in Europe along with Brexit and additional diesel taxes in UK. Given these issues, we will remain focused on driving growth and simultaneously reducing costs and boosting operational efficiency and capability, taking the necessary steps to shape our future. We expect sales and financial results to improve over the remainder of the financial year, driven by continued ramp-up of new models, most recently the electric Jaguar I-Pace, and with the new lower duties effective in China”.
“We remain true to our pioneering spirit and our ability to create innovative and exciting cars that our customers will love. Given the success of recently introduced models such as the Jaguar E-Pace and the Range Rover Velar, along with our huge investment commitment in electrified technologies, we remain confident to deliver sustainable profitable growth,” concluded Dr Speth.
Tata Motors firing on all cylinders as Turnaround 2.0 paying off
According to Guenter Butschek, managing director and CEO, Tata Motors, “FY2018 was a turnaround year for us with significant improvement in operational and financial performance. We continued this momentum in Q1 FY19 as well with the launch of Turnaround 2.0 strategy to ‘Win Decisively in CV, Win Sustainably in PV’ and further strengthen our execution capabilities. I am happy to see that we are now delivering on this strategy with strong month-on-month sales growth, with both the CV and PV businesses witnessing further increase in market share.
The Q1 FY2019 net revenue is the highest in Tata Motors’ history and the operational profit for Q1 FY2019 is the highest since Q1FY13. In line with our new organisation structure, our reporting segments are changed to commercial vehicles and passenger vehicles from this quarter. As I look ahead, there could be a few challenges in the short term particularly in commercial vehicles as the new regulations on axle loads come into effect but remain positive on the long-term potential of the Indian market and I am confident that Tata Motors is taking the right steps to drive competitive, consistent, cash accretive growth.”