Strong sales of luxury Jaguar and Land Rover vehicles helped India’s Tata Motors triple its first-quarter net profit, more than making up for a drop in domestic sales.

India’s biggest automaker by revenue bought British carmaker Jaguar Land Rover (JLR) in 2008, and it has been propping up profits at its parent for the past few years — helped by strong sales growth in China, the world’s biggest auto market.

Jaguar’s and Land Rover’s retail sales in the April-June quarter rose 22% to 115,596 units from a year ago, while sales of its domestic trucks, buses and passenger vehicles declined by 28% to 110,612 units.

Operating margins at its JLR business rose to 20.3% from 15.8% a year ago, while margins at its Indian business fell to minus 2.8% from 2.3%.

Tata Motors, part of the $100bn Tata conglomerate, said consolidated net profit rose to Rs53.98bn ($882.31mn), the highest in nine quarters, compared with Rs17.26bn a year ago.

Analysts had expected, on average, profit of Rs37.1bn, according to Thomson Reuters I/B/E/S.

Consolidated revenue rose 38.2% to Rs646.83bn.

While Tata dominates the trucks and buses segment in India, its passenger cars have failed to lure customers away from local rival Maruti Suzuki and foreign competitors including Hyundai Motor Co and Honda Motor.

The company has struggled to banish an image that its cars are not cool because they are used as taxis and also due to the legacy of its ultra-cheap Nano, perceived as a poor man’s car.

Tata will launch a new car in India today, its first new offering in four years, in a bid to regain market share and plug losses in its domestic business, which has also been hit by an economy that is battling its longest spell of below-5% growth in a quarter of a century.

India’s car industry is expected to grow by 5 to 10% this fiscal year, which started on April 1, an industry body said this month, as the new Narendra Modi-led government works to revive stalled reforms and boost consumer confidence.

 

 

Bilfinger

German industrial services group Bilfinger, whose chief executive resigned last week after two profit warnings, said cost cuts in the second half of the year should help cushion an expected fall in annual profit.

Bilfinger yesterday reported a 30% drop in second-quarter earnings before interest, tax and amortisation (EBITA), adjusted for one-time items to €65mn ($87mn), due to weak demand in the energy market.

At the power division — which produces, supplies and installs boiler components for power plants — earnings plummeted by 74% to 9mn euros.

The industrial services and construction group has been trying to wean itself off a business model vulnerable to price wars in the building sector, shifting its focus to higher-margin engineering and services for industrial facilities, power plants and real estate.

But the strategy failed when Germany’s big utilities cut spending due to the country’s shift from nuclear power to greener energy sources.

The group issued two profit warnings within around six weeks, blaming weak demand from energy companies and the loss of a project in South Africa, prompting chief executive Roland Koch to step down last week.

Bilfinger said last week that it expected 2014 adjusted EBITA to drop to between 340mn and 360mn euros from 409mn in 2013. In the first half, adjusted EBITA was €111mn.

Bilfinger said it expected to make €50mn of cost savings this year, as plans announced last year to cut 1,250 administrative jobs start to take effect. The company aims to reduce annual costs by 80mn to 90mn euros from 2016.

Chief financial officer Joachim Mueller said the company planned to reduce costs further at its industrial division, although job cuts would be fewer than the 200-300 announced last month at the power division’s high pressure piping business.

Bilfinger is about 20% owned by Swedish activist investor Cevian, which has been seeking to expand its footprint in Germany. Bilfinger’s share price is now about 14% lower than when Cevian started investing in the company in 2011.

Its major clients are utilities, industrial companies, plant manufacturers and research institutes. Its biggest rivals include Alstom Power, Apiq, Balcke-Duerr, Doosan-Babcock, Mitsubishi-Hitachi.

 

 

Synthomer

Chemical maker Synthomer raised its interim dividend by 25% and said it would periodically consider returning excess cash to shareholders, sending its shares up as much as 9%.

The company, which supplies speciality emulsion polymers used in construction, textiles, paper and latex gloves, said it planned to move its regular dividend policy to 2.5 times earnings cover effective this year.

Synthomer, formerly known as Yule Catto & Co, raised its interim dividend to 3 pence per share from 2.4 pence per share a year earlier. “It’s been obvious for some time that the cash flow of the business would warrant a bigger dividend,” Chief Financial Officer David Blackwood told Reuters.

Blackwood said the company would consider paying a special dividend when appropriate to keep Synthomer’s leverage ratio from falling below one.

The updated dividend policy prompted investors to look beyond a largely expected 7% fall in first-half profit due to increased competition in Asia.

Underlying pretax profit fell to £45mn ($75.5mn) for the six months ended June 30 as increased competition among glove makers in Asia hurt margins, while underlying revenue fell about 9% to £510mn, the company said.

The company also reiterated that underlying pretax profit for the year would be similar to last year’s.

“Synthomer has been one of the worst performers year-to-date, underperforming the sector,” Morgan Stanley analyst Paul Walsh wrote in a note.

“However, the prospect of an end to the downgrade cycle and an improved dividend policy atop further cash return potential, we expect upside support to shares today.”