Jaguar Land Rover returns to profit in Q2
Carmaker Jaguar Land Rover (JLR) has returned to profit in the second quarter of its financial year despite “headwinds” from the ongoing COVID-19 crisis.
With lockdowns in place in many counters across the world and factory production largely shut down, JLR reported a huge pre-tax loss of £413m in the three months to June 30. But in the following quarter, to September 30, the company is reporting a pre-tax profit of £65m.
Revenues for the second quarter were £4.4bn, 52.2% higher than the first quarter. Despite seeing a return to profit in the quarter JLR said the figure was significantly lower than the £156m profit for the same period a year ago.
JLR employs around 4,000 people at its factory at Halewood in Merseyside, assembling the popular Range Rover Evoque and Land Rover Discovery Sport. After emerging from lockdown JLR has reintroduced two shifts at the plant, as it has at its other sites in the West Midlands.
A report in the Sunday Times earlier this month claimed JLR’s new chief executive Thierry Bolloré was aiming to streamline the businesses by scrapping six current and planned models, including the Merseyside-produced Land Rover Discovery Sport. The company declined to comment on the speculation.
Following the last results, Mr Bolloré said: “Although Jaguar Land Rover is not immune to the headwinds impacting the global automotive industry, it has the foundations in place to generate long-term sustainable profitability.
“I have been encouraged by the strengths of the company – reflected by its brand appeal and the capabilities of its employees – that will enable it to seize new opportunities in a rapidly-changing industry.
“I am confident these qualities and a strong product strategy with a focus on financial discipline will equip Jaguar Land Rover to address challenges in the period ahead.”
JLR said it sold 113,569 vehicles in three months ending September 30. This was a big rise from from sales of 74,067 in the previous quarter but still down 11.9% from pre-COVID levels a year ago. China sales were up up 14.6% on the prior quarter and 3.7% year-on-year. September also saw sales up 28.5% year-on-year in China.
Free cash flow was positive during the quarter, standing at £463m, after £531m of investment spending.The positive cash flow primarily reflects a £528m recovery in working capital following the restart of production and the reopening of the global retailer network.
Cost and cash improvements from the Project Charge+ transformation programme in the quarter totalled £600m, including £300m of cost and £300m of investment savings. Total savings year-to-date are now £1.8bn and the company is on track to achieve the £2.5bn target for the full year ending March 31, 2021.
The company, owned by India’s Tata Motors, ended the second quarter of with solid liquidity of £5bn, comprising more than £3bn of cash and short-term investments and a £1.9bn undrawn revolving credit facility. It has since completed a $(US)700m five-year unsecured bond issued in October 2020, increasing pro forma September liquidity to £5.5bn.