Tata Motors posts another massive loss on falling JLR sales, margins

Tata Motors Ltd on Monday reported a large loss for the second quarter in a row, as sales at its British luxury vehicle unit Jaguar and Land Rover fell and as margins shrank on high commodity prices and supply chain issues.

The company posted a consolidated net loss of Rs 4,441 crore for the July-September quarter, up more than 14 times the Rs 314 crore it had lost in the same period last year. 

On a sequential basis, the company fared only marginally better than during the first quarter of this financial year when it had booked a consolidated net loss of Rs 4,451 crore. 

Tata Motor’s losses on a year-on-year basis widened even as it recorded a 14% increase in its revenue from operations to Rs 61,378 crore from Rs 53,530 crore that it had registered during the same period last year.  

At the operating level, the company saw its operating consolidated margins shrink 210 basis points to 8.4%, as it was hit by rising input costs owing to commodity inflation and supply chain constraints. While JLR margins narrowed 380 basis points to 7.3%, India margins expanded 130 basis points to 3.9%.

Revenue from the Indian business jumped 91% over the year-ago period. But on an overall basis, the India business was in the red with a pre-tax loss of Rs 800 crore. 

Tata Motors said that its good top-line numbers were on account of a strong show in the domestic commercial and passenger vehicle segments. 

The company’s stock gained 0.6% to Rs 486.4 on the National Stock Exchange by the end of trade.

Tata Motors Q2: Other highlights

1) Jaguar Land Rover reported £3.9 billion in revenue, down 11.1%, with a pre-tax loss of £302 million.

2) JLR’s free cash flow for the quarter was at £664 million; its EBIT margin fell 500 basis points to -4.7%.

3) JLR retail sales (including the China joint venture) were 92,710 vehicles, down 18.4%.

4) Tata Motors standalone wholesale volume (including exports) increased 56.3% to 171,823 units.

5) Finance costs increased by Rs 378 crore to Rs 2,327 crore due to higher gross borrowings.

Tata Motors management commentary

The automaker said the global semiconductor shortage was tough to forecast as the situation remained dynamic. The company, however, said that its UK-based Jaguar Land Rover (JLR) unit was expecting a gradual recovery in the second half of the current financial year. 

“While supply remains constrained, JLR will continue to take mitigating actions, including prioritising the production of higher margin vehicles for the available supply of semiconductors and closely managing costs to bring down the break-even point for the business,” the auto major said in a filing. 

“The global semiconductor shortage remains challenging but I’m pleased to see the actions we have been implementing reduce the impact. With strong customer demand with a record order book, we are well placed to return to strong financial performance as semiconductor supply begins to improve,” said JLR CEO Thierry Bollore.

Bollore said JLR continues to execute its “reimagine strategy” to realise the full potential of the business and create the next generation of the “most desirable” luxury vehicles for the “most discerning of customers” – starting with the new Range Rover.