JLR reports lower sales and bigger loss for first quarter
Luxury car maker Jaguar Land Rover experienced a 42.4% downturn in sales in the first quarter, and a £413m pre-tax loss, it revealed today.
The manufacturer, which has car plants in Halewood, Merseyside, and Castle Bromwich and Solihull in the West Midlands, said revenues for the three months ending June 30, were £2.9bn.
However, it said the pre-tax loss was only £18m worse, compared with year-on-year comparatives.
The Chery Jaguar Land Rover joint venture in China achieved break-even profits in the quarter.
Free cash flow was minus £1.5bn, including a one-time working capital outflow of £1.1bn resulting from the plant shutdowns, which is about £500m better than previous guidance.
Despite the significant impact of COVID-19, the company successfully completed £647m of new funding and ended the quarter with solid liquidity of £4.7bn, including £2.75bn of cash and short-term investments and a £1.9bn undrawn revolving credit facility.
The group said the UK market was particularly impacted with industry volumes down 70.1% for the quarter and Jaguar Land Rover sales down 69.5%.
However, sales improved month-by-month within the quarter across all regions as economies re-opened, with June retails down 24.9%.
The recovery in China and North America was particularly encouraging, the group said. Retails in China were down just 2.5% for the three-month period, while in North America they were up 2.2% year-on-year for the month of June.
About 98% of Jaguar Land Rover’s retailers worldwide are now fully or partially open and all the company’s plants have resumed production, with the exception of the Castle Bromwich facility, which will gradually restart from August 10.
Prof Sir Ralf Speth, Jaguar Land Rover chief executive, said: “Jaguar Land Rover has reacted with resilience and agility to the extraordinary challenges faced in the first three months of the new fiscal year, adapting rapidly to the widespread macro-economic disruption and uncertainty facing our industry.
“Through this unprecedented time, we have continued to bring outstanding new vehicles to market, electrifying our multi-award-winning range and building demand for the new Land Rover Defender, an icon reimagined for the digital age.
“As the lockdowns ease, we will emerge from the pandemic with our most advanced product line-up yet, and with the financial and operating measures in place to return to long-term sustainable profit.”
Sales of the new Land Rover Defender have started to ramp up in the quarter in the UK, Europe, North America, and some overseas markets, with sales beginning in China and other markets from July onwards.
Plug-in hybrid and the recently-announced Hard Top commercial derivatives will be available later in the year.
The expected recovery in sales will also be supported by the newly-revealed enhancements to the Halewood-built Range Rover and Range Rover Sport. These flagship vehicles are now available with special editions and a suite of upgrades.
Although the outlook remains very uncertain given COVID-19, Jaguar Land Rover expects a gradual increase in sales, profitability and cash flow over the year.
In the second quarter, volumes may not recover sufficiently to generate a profit, but cash flow is forecast to be positive, supported by recovery in working capital as production resumes.