Q3 profits dip at Jaguar Land Rover

VEHICLE manufacturer Jaguar Land Rover has reported a 21% drop in third quarter sales as customers erode margins by turning to its cheaper models.

Ironically, the outstanding global success of its Halewood-made Range Rover Evoque is the principal contributor to the decline.

Nevertheless, profits have held up and for the fiscal year to date, pre-tax profits reached £1.2bn, up 20% compared to the same period last year.

A massive investment in the development of the business is also hampering short-term growth. Indian parent Tata Motors has invested around £2bn into the business this year to grow capacity and develop new products – part of the investment is seeing the development of the new £355m engine plant near Wolverhampton.

Similar investment may also be pumped into the business during the coming 12 months as it looks to introduce new models and consolidate its assault on the Chinese market through its new joint venture production partnership with Chery.

Tata said JLR’s pre-tax profit for the three months ended December 31, 2012, was £404m (Q3 2011/12: £509m). Profit after tax was £296m, compared with £393m for the corresponding period in 2011/12.

For the year to date there was better news with revenues for the nine months ended December 31, 2012, up to £10.7bn (2011/12: £9.3bn).

Operating margin for the nine months to December 31, 2012, stood at 14.4%, with pre-tax profit and post-tax profits standing at a respective £1.1bn and £837m, against £976m and £785m for the corresponding period last year.

It said continued strong revenue and operating performance were supported by strong demand for products, favourable market mix and a favourable exchange rate. However, these were partially offset by the model mix.

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