Tata Motors consolidated Q3 net vaults 67% to Rs2,906 cr on robust JLR sales
05 February 2021
Tata Motors has reported a 67 per cent year-on-year growth in its consolidated net profit at Rs2,906.45 crore for the fiscal third quarter ended December 2020, on the back of robust sales of JLR models, especially in the Chinese market.
Volumes rose on improved product mix and cost-saving measures. Profit in the year-ago period was Rs1,738.3 crore.
Consolidated revenue from operations grew 5.5 per cent to Rs75,653.8 crore in Q3 FY21. Positive free cash flows stood at Rs2,200 crore.
Tata Motors said its retail sales in the domestic market rose 66 per cent q-o-q to 152,100 units, up 3 per cent y-o-y. Commercial vehicle sales were down 24 per cent y-o-y at 74,900 units while passenger vehicle sales rose 56 per cent to 77,200 units.
India operations continued its strong growth in the quarter with CV witnessing a sequential recovery and PV witnessing continued strong growth of its “NEW FOREVER” portfolio. PV absolute EBITDA is the highest in last 10 quarters. CV profitability improved sequentially due to better mix (higher MHCV and ILCVs) and ongoing cost savings. Business generated strong positive free cash flows led by the cash savings initiatives which yielded Rs2,600 crore in the quarter and Rs5,100 crore year to date.
Despite continued pandemic related uncertainties, supply bottlenecks and commodity inflation, Tata Motors expects to consolidate gains and end the fiscal year on a strong note.
The company also invested around Rs547 crore in products and technologies.
The quarter reflected strong sequential recovery in JLR retail sale s in all the markets except UK where Q3 remains seasonally lower. The business achieved 6.7 per cent EBIT margin and strong positive free cash flows of £0.6 billion, reflecting the recovery in sales, favourable mix and charge+ delivery.
Jaguar Land Rover reported profit before tax of £439 million for the October-December 2020 quarter, up £374 million on prior quarter and £121 million year-on-year. Improved profits reflect revenue of £6 billion, up £1.6 billion from Q2 while still lower than last year. Positive free cash flow (FCF) of £562 million, a Q3 record ‘Charge+’ transformation savings of £0.4 billion in Q3.
Electrified options have been extended to 12 JLR models, including 8 plug-in hybrid, 11 mild-hybrid, and the all-electric Jaguar I-PACE. Despite prevailing external risks, JLR expects to deliver strong EBIT margins and positive FCF in Q4.
Fiscal Q3 retail sales of 128,469 vehicles were up 13.1 per cent on Q2 but still 9 per cent lower than pre-Covid levels a year ago. Sales in China were up 20.2 per cent on the prior quarter and up 19.1 per cent year-on-year. Most other regions also witnessed a sequential recovery though still below prior year. Sales of the new Land Rover Defender grew to 16,286 units, up 66 per cent over the previous quarter.
Profit before tax (PBT) was £439 million (after £37 million of exceptional charges), up £374 million from Q2 and £121 million from a year ago. The significant improvement reflects revenue of £6 billion, up £1.6 billion from Q2 while still lower than pre-Covid levels a year ago, with favourable sales mix, cost performance and partial reversal of prior period reserves for emissions and residual values. EBIT margin improved to 6.7 per cent (+400bps year on year).
Looking ahead, Jaguar Land Rover said the company remains encouraged by the Brexit trade deal agreed in December between the UK and the European Union. This has avoided the risk of tariffs on automotive parts and finished vehicles, although there will still be increased customs administration requirements.
The approval of effective Covid-19 vaccines is also encouraging, with the promise of an eventual end to the pandemic. While the current infection rates and associated restrictions are a challenge, all of the company’s plants are open and majority of retailers in most regions remain open. In markets where showrooms are closed by restrictions, for example in the UK, sales are generally able to continue through online ordering systems on a “click and deliver” basis.
Jaguar Land Rover expects a gradual improvement in sales supported by new and refreshed vehicles incorporating the latest technologies. Recent new products include the short wheel-base Land Rover Defender 90 and the refreshed 21 model year Range Rover Velar, Land Rover Discovery, Jaguar F-PACE, E-PACE and XF. Additionally, electrification has been extended to most JLR models, including 8 with PHEV, 11 with MHEV, and the all-electric Jaguar I-PACE.
Despite the external challenges, the company continues to expect to generate strong EBIT margins and positive free cash flow in Q4 FY21 and targets achieving positive free cash flow in subsequent years, reduce net debt and increase financial resilience.
“Looking ahead, these challenges continue, including the Covid pandemic and its impact on the global economy, the UK’s new trading relationship with the EU and the significant technological changes taking place in the automotive industry. In this environment, I’m working with my management team on plans to realise an exciting future for Jaguar Land Rover, which I look forward to sharing in due course,” Thierry Bolloré, CEO of Jaguar Land Rover, said.
Tata Motors sais its Q3FY21 wholesales (including exports) increased 18.8 per cent to 153,480 units. In the domestic market, volumes performance was mixed with M&HCV sales up 7 per cent, ILCV sales up 10.5 per cent while sales of SCVs and Pick-Ups were down 9.2 per cent and CV Passenger sales down 71.9 per cent.
Domestic PV volumes were up 87.5 per cent while domestic wholesales were higher than retails by 2,500 units in CV as pipeline inventory is rebuilt post BS VI transition to healthy levels. Domestic retail sales continue to be higher than wholesales in PV due to continued strong demand.
Tata Motors said its market shares of M&HCV was steady at 59 per cent, while that of ILCV improved sharply to 46 per cent and SCV started improving its marker share. PV market share at 7.8 per cent was up 300bps over FY20.
The company ended the quarter with a strong liquidity of Rs5,600 crore.
Looking ahead, Tata Motors expects demand situation to improve. The company is debottlenecking its supply chain and ramping up the output addressing the supply constraints. In commercial vehicles, the company will focus on increasing market share further with specific focus on SCVs, continue to enhance its customer engagement and improve the profitability of the business. In passenger vehicles, the company said, it would continue to enhance the sales momentum by leveraging its portfolio and “Reimagining” the front end. The company is confident of achieving the targeted savings of Rs6,000 crore and expects to finish strong this fiscal.
“We improved our operational and financial performance by reducing costs, generating free cash flows, providing ‘best in class’ customer experience. Despite the current global challenge of semiconductor supplies, we are confident of keeping our performance improvement on track in this quarter to close the year on a high for an even stronger play in FY22,” Guenter Butschek, CEO and MD, Tata Motors, said.