Tata Motors Q3 net at Rs1,215 cr; standalone profit back in black

Tata Motors' domestic operations are back in the black with Rs183 crore net profit for the fiscal third quarter ended 31 December 2017. India's largest commercial vehicle maker reported a consolidated third quarter net profit of Rs1,215 crore.

The company had reported a net loss of Rs1,046 crore in the corresponding quarter of the previous year. The company had reported losses at a standalone level for the preceding five quarters.

Tata Motors said its profits were boosted by sharp growth in revenues led by strong volumes in the commercial vehicles segment and cost reduction.

Consolidated profit at Rs1,215 crore grew nearly 11-fold year-on-year, although Tata Motors' mainstay, Jaguar Land Rover, missed market expectations due to weak sales in the third quarter.

Consolidated net profit for the year-ago period stood at Rs111.6 crore, the company said.

Consolidated revenue from operations grew 16 per cent to Rs74,156 crore compared to Rs63,933 crore in December quarter of the 2016-17 financial year.

Consolidated operating profit or EBITDA (earnings before interest, tax, depreciation and amortisation) for the October-December 2017-18 quarter grew 80 per cent to Rs8,671 crore while profit margin expanded by 420 basis points to 11.7 per cent.

Pre-tax profits of UK-based luxury carmaker Jaguar Land Rover were lower at 192 million pound for the quarter compared to 255 million pound in Q3FY17 which had included an $85 million insurance recovery.

"Profitability was impacted by the run-out of the 17 model year Range Rover and Range Rover Sport and higher depreciation & amortisation resulting from continued investment to drive profitable growth," the company said.

Operating profit margin for JLR, however, expanded by 160 basis points to 10.9 per cent year-on-year.

JLR's China and overseas markets expanded while the UK, the US and European markets declined, reflecting ''challenging'' conditions with cyclical weaknesses in the UK and the US, increasing diesel uncertainties in the UK and the rest of Europe, besides Brexit problems.

Revenue from operations during the quarter increased 4.3 per cent to 6,310 million pound compared to the year-ago quarter due to slow volume growth.

Retail sales rose 3.5 per cent YoY to 1.54 lakh units and wholesale volumes increased 2.2 per cent to 1.33 lakh units in Q3.

"China and overseas market were up while the UK, US and European markets were lower reflecting more challenging conditions with cyclical weakness in the UK and US, increasing diesel uncertainty in the UK and Europe, and Brexit uncertainty in the UK," JLR said.

Tata Motors' passenger and commercial vehicle business performance was strong for the quarter as standalone profit stood at Rs183.7 crore in Q3 against a loss of Rs1,045.9 crore in same period last year.

Revenue increased 58 per cent to Rs16,102 crore while pre-tax profits stood at Rs201 crore (an EBIT margin of 3.3 per cent) compared to apre-tax loss of   Rs1,032 crore (EBIT margin of -6.4 per cent) in Q3 FY17.

''The Turnaround Strategy is delivering results for us as is evident in share gain in an intensely competitive market and improved profitability enabled by a slew of new product launches and customer centric initiatives. The regulatory landscape on emission norms including BSVI, EVs and alternative fuel sources are significant challenges for the industry and Tata Motors is ready to play its part, while we continue on our journey to drive competitive, profitable growth,'' Guenter Butschek, Tata Motors CEO & MD, said.

Standalone volumes increased 29 per cent YoY and 11.6 per cent QoQ to 1,71,000 units from 1,32,000 units, with commercial vehicle volumes showing an increase of 34.4 per cent and passenger vehicles 17.5 per cent YoY.

EBITDA growth of over 77-fold at Rs1,383 crore and sharp margin expansion of 840 basis points at 8.6 per cent in Q3 YoY.

Butschek said the regulatory landscape on emission norms including BSVI, electric vehicles and alternative fuel sources were significant challenges for the industry and Tata Motors was ready to play its part.

The results were announced after the closure of the trading hours.

The ''turnaround strategy'' is delivering results, according to Tata Motors Chairman N Chandrasekaran.

''Our focus on market share gain, coupled with operational improvements, is working well, with both the commercial and passenger vehicle businesses delivering improved results,'' he said.

Chandrasekaran said the company would continue to reduce cost and invest prudently in products.

Tata Motors invested Rs 10.21 billion in products, platforms, and technologies during the quarter in its domestic business.

Finance cost during the quarter increased by Rs 377 crore YoY to Rs 1,247 crore due to higher borrowings while free cash flow in Q3 was negative Rs5,159 crore reflect higher investments, lower operating profits and adverse working capital in JLR due to new product launches.