India’s Tata Motors reported a sharp rise in second-quarter profits yesterday, helped by higher sales of its Jaguar and Land Rover cars, but warned of challenges ahead for its flagship British subsidiary.
Jaguar Land Rover (JLR), which has been driving Tata Motors’ profits for several years, expects sales in the UK and United States to soften because of competition but is confident of growth in China, JLR CEO Ralf Speth told reporters in Mumbai.
“We know that overall the economies are stronger around the world but it’s also clear that we see, one or the other, weakness from a political side, from an economy side. Think about Brexit, think about the US at the current moment,” Speth said.
JLR plans to launch several new products next year including the Jaguar XF Sportbrake sport-utility vehicle (SUV), the E-Pace, a compact SUV, and the I-Pace, its first electric sports car, Speth said after the company announced a three-fold rise in profit.
Tata Motors’ consolidated net profit for the quarter ended September 30 rose to Rs24.83bn ($382mn) compared with Rs8.28bn a year ago, helped by strong demand for Range Rover Velar and other new models.
Analysts on average had expected a net profit of Rs14.99bn, according to Thomson Reuters data.
Pre-tax profit at JLR rose 38% to £385mn ($505mn) and its margin on earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 11.8% from 10.9% a year ago.
Retail sales of its Jaguar saloons and Land Rover sport-utility vehicles were up 5% on the same quarter last year, as an increase in sales in China helped offset lower UK sales.
JLR, Britain’s biggest carmaker, has said it is already feeling the first effects of Brexit, with EU citizens from outside the UK demanding more secure employment contracts and international suppliers less willing to commit to investing in the country.
While JLR will spend between 4 and £4.5bn on capital expenditure this year, going forward it will expand its product portfolio in a very controlled manner to ensure sustainable, profitable growth, Speth said.
Second-quarter losses at Tata Motors’ domestic business narrowed to Rs2.95bn from Rs6.31bn a year ago, helped by a 30% jump in revenues.
Tata Motors chief executive Guenter Butschek said work on turning round the company’s domestic car and truck business was underway.
The plan focuses on launching new products, reducing costs and consolidating its supply chain, he told reporters.
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