Record sales see Jaguar Land Rover bolster Indian parent
Strong sales by Jaguar Land Rover have helped to bolster the performance of its Indian-parent, Tata Motors.
Tata announced today a near 17% fall in year-on-year profits – and it could have been much worse had it not been for JLR’s strong margins, which were an above-expectation 14.5%.
JLR announced record global sales figures last month as demand for products such as the Jaguar F-Pace and Discovery Sport continued to grow around the world.
The performance helped to offset sluggish domestic sales for the Indian business.
Revenue for the full year was £24.3bn, reflecting the higher sales volumes. Pre-tax profit was £1.6bn, up £53m compared to last year, with favourable volume and mix as well as £151m of recoveries – which related to the impact of the 2015 explosion at the Chinese port of Tianjin when the company lost around 6,000 vehicles.
The performance was offset by higher marketing costs, depreciation and amortisation and other items. In the year, cash flow before financing was £295m after total investment spending of £3.4bn.
Q4 revenue reached £7.3bn, with pre-tax profit of £676m and earnings of £654m – representing a 9% margin.
Ralf Speth, CEO, Jaguar Land Rover, said: “These solid results demonstrate the appeal of our products and our ability to deliver strong, profitable and sustainable growth. We are continuing to invest significantly in new models and innovation, as shown by the new Land Rover Discovery, the forthcoming Range Rover Velar and all-electric Jaguar I-PACE, reinforcing our commitment to new technologies and providing new and compelling customer experiences.”
During the 2016-17 financial year, JLR invested over £3.4bn, which includes the new £1bn manufacturing plant in Nitra, Slovakia, and the ongoing expansion of its UK facilities.
In the 2017-18 financial year Jaguar Land Rover plans to invest more than £4bn in the expansion of its product portfolio, innovative technologies, research and development and increasing its manufacturing capacity.
Last week it was granted planning permission for a new 300,000 sq ft logistics centre at its Lode Lane plant in Solihull.
Kenneth Gregor, Chief Financial Officer, said: “We remain committed to our ambitious growth plans despite seasonal variations in demand and global economic challenges. We remain focused on maintaining our financial discipline and plan to fund future investment from operating cash.
“Jaguar Land Rover is pleased to end the fiscal year on a strong note, despite the geopolitical and volatile economic environment. We believe we have strong and exciting product actions and plans to continue to drive profitable volume growth.”JLR, the UK’s largest manufacturer of premium luxury vehicles, achieved retail sales of 604,009 vehicles (including sales from its Chinese joint venture) for the financial year ended March 2017.
Retail sales for the fourth quarter of the latest financial year were 179,509 vehicles, up 13% on the same quarter a year ago, and March sales reached 90,838 units, up 21% on March 2016.
Retail sales for the full financial year were up year-on-year in China (32%), North America (24%), the UK (16%) and Europe (13%), although sales in other Overseas markets were down 6%.
In March alone, retail sales were up in Europe (21%), North America (21%), China (21%) and Overseas markets (6%) compared to March 2016. In the UK, March sales were up 26.5% to a record 31,778 vehicles.
The robust performance had led analysts to predict JLR margins might be higher than 13% – despite a reduction in the manufacturer’s average selling price of around 1% quarter-on-quarter due to a higher contribution of cheaper models in the overall sales.