Sales surge drives Jaguar Land Rover to Q1 profit and record free cash flow

Financials at luxury car maker, Jaguar Land Rover (JLR), are improving, helped by an easing in supply chain issues, particularly for micro-chips, better volumes, mix and pricing.

The manufacturer reported first quarter figures for the three months to June 30, 2023, today (July 25) which revealed the group’s best first quarter free cash flow on record, at £451m.

Revenues in the first quarter of its 2024 financial year were £6.9bn, up 57% on the same quarter a year ago, with wholesale volumes of 93,253, up 30% year on year.

Wholesale sales are the finished cars JLR sells as a business, as opposed to retails which are vehicles customers buy from retailers.

Profit before tax and exceptional items in the quarter was £435m, up from a £524m loss a year ago.

The higher profitability year-on-year reflects favourable volume, mix, pricing and foreign exchange revaluation offset partially by higher inflation and supplier claims.

Free cash flow for the period was £451m, the best first quarter cashflow on record. This contributed to a strengthening of the company’s balance sheet with cash increasing to £4bn and net debt reduced to £2.5bn.

Total liquidity was at £5.5bn including the £1.52bn undrawn revolving credit facility maturing in March 2026.

The order book remained strong with more than 185,000 client orders at quarter end, reducing from 200,000 at March 31, 2023, in line with expectations, as chip and other supply constraints continue to improve.

Range Rover, Range Rover Sport and Defender demand remains strong and accounted for 76% of the order book.

JLR said second quarter production and cashflow is expected to be lower than quarter one, reflecting the annual summer plant shutdown while wholesales and profitability are expected to be more in line with recent quarters.

The group, which has production plants at Halewood in Merseyside and Solihull and Castle Bromwich in the West Midlands, has also confirmed Adrian Mardell and Richard Molyneux as chief executive and chief financial officer, respectively, while also announcing a £4bn gigafactory in Somerset, funded by owner Tata, to make battery cells to electrify JLR’s next generation modern luxury vehicles.

Adrian Mardell said: “I am pleased to report a third consecutive quarter of strengthening financial performance for JLR.

“We have had a strong start to the financial year and delivered our highest production levels in nine quarters and our highest Q1 cashflow on record.

“This is testament to the thousands of determined people in the business working tirelessly to deliver every aspect of our Reimagine strategy.”

Richard Molyneux said: “The good financial performance in the quarter reflects the strength of our luxury brands.

“The record Q1 cashflow of £451m brings our net debt down to £2.5bn on our journey to become net cash positive. Looking ahead, we aim to deliver continuing improvements in results by executing our Reimagine strategy and generating the cash to invest in our electric future.”