Tata Motors Q4 net profit slumps 49% to Rs 1,109 cr as Jaguar Land Rover sales hit; expects tepid demand

Mumbai: Tata Motors on Monday reported a 49 percent decline in consolidated net profit to Rs 1,108.66 crore for the quarter ended 31 March, mainly due to lower revenues and exceptional charge on account of its British arm Jaguar Land Rover. The company had posted a consolidated net profit of Rs 2,175.16 crore in the corresponding period previous fiscal.

Its total consolidated revenues during the period under review stood at Rs 87,285.64 crore as against Rs 91,643.44 crore in the year-ago period, registering a decline of 4.75 percent. During the quarter, JLR had announced a voluntary redundancy programme and accordingly had an exceptional charge of Rs 1,367.22 crore. For the entire 2018-19, the company posted a consolidated net loss of Rs 28,724.20 crore, compared to a net profit of Rs 9,091.36 crore in 2017-18, mainly on the back of the impairment charge of Rs 27,837.91 crore being recognised in the third quarter of FY2019.

Total income stood at Rs 3,04,903.71 crore for the last fiscal as against Rs 2,96,298.23 crore in 2017-18. "We are delighted to return to profits in the fourth quarter after a loss in the third. The turnaround 2.0 has delivered well as far as our domestic business is concerned," Tata Motors Group CFO PB Balaji told reporters here.

He further said the challenging market conditions will continue right through the space in India and in the next six months, we expect a tepid demand domestically because of the liquidity situation easing as well as capacity starting to ease out on action bound regulation changes and changing sentiment.

 Tata Motors Q4 net profit slumps 49% to Rs 1,109 cr as Jaguar Land Rover sales hit; expects tepid demand

Representational image. Reuters.

The company's domestic business posted a standalone net profit of Rs 106.19 crore for the fourth quarter as against net loss of Rs 499.94 crore during the same period previous fiscal. Standalone total revenue from operations stood at Rs 18,561.41 crore as compared to Rs 19,173.46 in the fourth quarter a year ago.

For the fiscal ended 31 March, the company's standalone profit stood at Rs 2,398.93 crore against a net loss of Rs 946.92 crore in the preceding financial year. Total revenue from operations for 2018-19 was Rs 69,202.76 crore, as compared to Rs 58,689.81 crore in FY18.

Balaji further said the fourth quarter market conditions were adverse due to significant stress on liquidity, higher capacity arising from axle load norm changes and lower economic activity.

Commenting on the performance, Tata Motors CEO and MD Guenter Butschek said, "Q4 of FY19 has been extremely tough with market sentiment remaining muted, impacting demand across segments. The industry outlook is not going to be anything different in the short term due to multiple uncertainties. To mitigate this impact, we have strengthened our actions under the ongoing turnaround".

He further said that with intense sales activation, new product launches, continued thrust on cost reduction, the company has been able to improve its business performance across the board and post strong financial results for the fiscal while improving the market shares.

"Passenger vehicles business has been able to close FY19 with EBIDTA break-even. Our electric vehicles business has started making early inroads into the market and is set to grow. With our updated vision of becoming the most aspirational brand, consistently winning in CV, PV and EV, we remain optimistic for FY20," Butschek added.

In the case of the JLR business, during the quarter the company returned to profitability with pre-tax profits of 269 million euros before exceptional items as the 'Charge' transformation programme delivered cash and cost cash improvements. Revenues of 7.1 billion euros were down 421 million euros year-on-year as weaker China market conditions were partially offset by growing demand in key markets like the UK and US. In FY19, the company made a pre-tax loss of 358 million euros before exceptional items, from lower unit sales in China.

Balaji said the company hopes to get back to the previous normative growth numbers for JLR. "It's undeniable at this point in time considering the global environment, the Brexit, the trade war with China, that it's not going to be easy. But keeping this in mind, we have already taken a lot of measures in terms of our Chinese business and we are expecting a turnaround here from where it is today," Balaji added.

When asked about the capex for the company, Balaji said, "while we spend Rs 3,800 crore for JLR last fiscal, it's likely to be around Rs 4,000 crore this fiscal and we will see optimisation opportunities just like this year we did. For Tata Motors on standalone, it will be around Rs 4,000 crore for the domestic business".

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Updated Date: May 21, 2019 07:55:27 IST