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Consolidated revenue rose 3.7 per cent over a year, to Rs 72,256 crore. Net profit for the quarter declined two per cent over a year to Rs 3,508 crore, better than analysts had estimated.
Sales performance was better than the Street's estimates, as those of Jaguar Land Rover (JLR, its prime multinational subsidiary) in North America and UK had offset the impact of a weaker model mix and slower sales in China. The product portfolio underwent a major change over the past year, which led to some volatility in sales. The quarterly numbers suggest some of the turmoil is settling as new products hit the market.
JLR revenue fell 1.6 per cent to £5.78 billion. Operating profit declined 24 per cent to £834 million. JLR's operating margin fell to 14.4 per cent from 18.6 per cent in the comparable quarter a year before. JLR's profit declined 26 per cent to £440 mn. However, the company got an exceptional item of £30 mn as insurance claim for recoveries related to a fire at its Tianjin (china) unit. Adjusting for this, JLR’s net profit is down 31 per cent to £410 mn.
Explaining JLR’s performance, the management said: “The year over year decrease broadly reflects softer sales in China and model mix and non-recurrence of an annual China tax rebate (received in Q3 of FY15 but in the current year was received in Q1) and other items.”
The India business also grew at a healthy pace, driven by continued traction in sales of medium and heavy commercial vehicles (CVs). India business revenues rose 10.4 per cent over a year to Rs 10,001 crore, driven by volume growth of 14.8 per cent of medium and heavy CVs. The company said this came on the back of continued replacement demand, initial fleet expansion demand and better profitability of freight operators. India business margins were 5.7 per cent against a negative 8.2 per cent in the corresponding quarter last year.
Healthy sales, ongoing cost reduction and other margin improvement initiatives had resulted in improvement of operating margins, after adjusting for some one-off items, it said. Loss at the standalone business narrowed to Rs 201 crore after tax against Rs 2,123 crore in the corresponding quarter a year before.
Religare Institutional Equities said: “Overall adjusted profit after tax (consolidated) at Rs 3,460 crore came in above the estimate. While the consolidated top line was largely in line with estimates, profit after tax was higher due to lower taxes.”