Sales in China, where the high-end market is still growing, tanked. JLR has long been a profit center for the whole company
Tata Motors Ltd’s Jaguar Land Rover unit can’t seem to get back in the right lane.The Indian automaker’s luxury arm dropped into the red in the quarter ended September 30, posting a pretax loss of 90 million pounds ($116 million), with Ebit margins below breakeven and volumes down. Sales in China, where the high-end market is still growing, tanked. JLR has long been a profit center for the whole company. This time it took the domestic Indian business down with it, reversing recent signs of recovery there.
Not only was JLR’s performance dismal, there were few indications of a brighter future. The maker of Range Rovers and the E-Pace electric SUV ran more than 600 million pounds of negative free cash flow in the quarter, making a 2.3 billion-pound cash burn for the first half of the year – almost double the amount in the same 2017 period. Kenneth Gregor, chief financial officer of the U.K.-based unit, said he expected negative free cash flow for the full year.
To show it’s trying to fix things, JLR announced Project Charge, a two- to three-year plan to boost profitability and cash flow. The aim is to bring in as much as 2.5 billion pounds over the next 18 months. Investment plans were cut from 4.5 billion pounds a year to 4 billion pounds for this year and the next, saving about 1 billion pounds overall – half of the six-month cash burn. In the latest quarter alone, though, total investment outlays were 1 billion pounds. Further reductions will be tough because much of this spending isn’t variable.
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