Tata Motors' Q2 losses down 79% to Rs216.6 crore
29 October 2019
Tata Motors Group reported a 79 per cent year-on-year reduction in fiscal second quarter losses on the back of improved performance at Jaguar land Rover and gains in Chinese market, which offset by decline in sales of medium and heavy vehicles in India.
Tata Motors reported a net loss of Rs216.6 crore for the July-September 2019-20 quarter against a net loss of Rs1,048.80 crore in the corresponding quarter of the previous financial year.
Revenue from operations of Land Rover improved by 8 per cent to £6 billion during Q2 of FY20.
Jaguar's EBITDA margin stood at 13.8 per cent which is among the highest in the last 16 quarters, the company claimed. EBIT margin came at 4.8 per cent.
The group's consolidated revenue stood at Rs65,432 crore, lower than Rs71,981.08 crore in the comparable quarter of the previous year. Sales volume, however, was higher than CNBC-TV18 poll estimate of Rs63,434 crore.
Consolidated EBITDA came at Rs7,045 crore against the CNBC-TV18 poll of Rs5,401 crore, while consolidated EBITDA margin stood at 10.8 per cent.
Tata Motors said Jaguar Land Rover is on track to achieve £2.5 billion of cash and profit improvements with £2.2 billion achieved to date. During the quarter Tata Motors launched the all new Defender and completed a £625 million UKEF-backed facility in October where the “reimagined” icon for the 21st century will be manufactured.
Free cash flow at JLR was a negative £64 million for the quarter, a £559 million year-on-year improvement. This progress reflects the better profitability and a £154 million decrease in investment spending to £841 million for the period. At quarter end, Jaguar Land Rover had cash of £2.85 billion and a £1.9 billion undrawn credit facility.
Since then, the company has completed a £625 million five-year amortizing loan facility backed by a £500 million guarantee from UK Export Finance (UKEF) and signed a new £100 million working capital facility for fleet buybacks.
For the financial year ending 31 March 2020, Jaguar Land Rover continues to expect year-on-year improvement and to target a 3-4 per cent EBIT margin with cash flow increased over last year.
“Jaguar Land Rover has returned to profitability and revenue growth. This is testament to the fundamental strength of our business, our award-winning products, new technologies and operating efficiencies. We were one of the first companies in our sector to address the challenges facing our industry. As such, it is encouraging to see the impact of our Project Charge transformation programme and improvement initiatives in the China market start to come through in our results, “Ralf Speth, JLR Chief Executive commented.
“Our people have responded very positively to the challenging circumstances over the past year. The improved performance this quarter reflects their ongoing passion and determination. Looking forward, we will continue our product offensive, broadening our range of electrified vehicles on the journey towards our Destination Zero future,” he added.
In India, Tata Motors reported a sharp decline in both PV and CV markets during the quarter, causing a 44 per cent year-on-year decline in revenue to Rs10,000 crore. Profit before tax stood at Rs1,270 crore, impacted primarily by MHCV decline of 59 per cent.
Though the near-term market situation is fluid, we are optimistic on the medium-term outlook of this market and will continue to drive our Turnaround strategy and transition seamlessly to BSVI, the company stated.
The company said it is focusing on securing ecosystem viability and retail acceleration.
The board of directors of TML approved a preferential allotment of ordinary shares and warrants to the promoter, Tata Sons, for an aggregate consideration of around Rs6,500 crore subject to shareholder approval. Strong support from Tata Sons will benefit all shareholders by allowing the business to focus on the long-term strategy, reduce debt levels and provide rating support to the TML Group, the company stated in a release.