Jaguar Land Rover to drive further savings after announcing third quarter profit rise

Jaguar Land Rover, which announced this morning its CEO is to stand down in September, posted a pre-tax profit of £318m in the final quarter of 2019, boosted by demand for its new Halewood-built Range Rover Evoque, recovering sales in China and a major cost-cutting drive.

Announcing its results for the three months to the end of December, Jaguar Land Rover Automotive saw revenues increase to £6.4bn, up 2.8% year-on-year.

Global sales fell 2% despite a marked recovery in China, which was up nearly one-quarter on last year’s disappointing levels.

Product mix was stronger, with global sales of the new Range Rover Evoque luxury compact SUV up 30% and the refreshed Land Rover Discovery Sport rising 9.2%.

Both models are made at the Halewood plant in South Liverpool.

The company’s pre-tax profit of £318m in the quarter represented a £591m year-on-year improvement versus the £273m loss in the third quarter of last year (before an exceptional non-cash asset impairment of £3.1bn in Q3 of the prior year).

JLR said the improvement reflected a combination of the higher China volume, stronger product mix, lower operating costs and favourable foreign exchange.

The company also hailed the success of its major cost-cutting drive, Project Charge, which saw operating costs reduced by £154m, investment by £200m, and inventories by £405m in the quarter.

This brings the total cost and cashflow improvements to £2.9bn, exceeding the £2.5bn target three months ahead of schedule.

The company has started the next phase of Project Charge, which will primarily target cost savings and deliver a further £1.1bn of cost and cashflow improvements for a total of £4bn of improvements by March 2021.

Last week JLR announced it was planning to axe around 10% of its Halewood workforce as part of its cost-cutting plans. The plant employs around 4,000 staff with a further 500 agency workers on site.

CEO Ralf Speth said: “In the third quarter Jaguar Land Rover sustained year-on-year revenue and profit growth as we continued to transform our business. Conditions in the automotive industry remain challenging but we are encouraged by the recovery in our China business and the success of the new Range Rover Evoque.

“Our proactive and decisive actions are creating a more robust, resilient business, transforming today for tomorrow.”

Speth is due to leave his role at the end of his current contract after 10 years in charge to become a non-executive vice-chairman of the business.

He said: “I feel very honoured to have worked with so many dedicated and creative people, both inside and outside of Jaguar Land Rover.  We have elevated Jaguar and Land Rover. I want to say thank you for all their support and commitment.

“Personally, I am looking forward to new and exciting challenges.”

Natarajan Chandrasekaran, chairman of Jaguar Land Rover, Tata Motors and Tata Sons, said: “I want to thank Ralf for his passion and commitment over the last 10 years.  Ralf developed Jaguar Land Rover from a niche UK centric manufacturer to a respected, technological leading, global premium company.

“I am delighted that Ralf has agreed to maintain his relationship with Jaguar Land Rover by becoming non-executive Vice Chairman.”

“Ralf will also remain on the board of Tata Sons.

Chandrasekaran added that a search committee has been formed to identify a suitable successor.