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Consolidated net profit of Tata Motors, India’s biggest automobile company, dipped by a whopping 56 per cent in the final quarter of last financial year as China, Jaguar Land Rover’s biggest market, slowed down considerably.
The Mumbai-based company posted Rs 1,717-crore net profit for the quarter ended March, against Rs 3,918 crore in the corresponding quarter last year. Bloomberg had estimated Tata Motors to report a net profit of Rs 4,092 crore for the quarter.
The management warned there could be further pressure on margins in the current and upcoming quarters, which accounts for 45 per cent of the total yearly revenue, even as China, where margins of all luxury car makers has been under pressure, remains a concern.
Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins are expected to be slightly weaker in 2015-16 against 2014-15, a company official said.
“Higher depreciation and amortisation costs and adverse mark-to-market of the unrealised hedges and revaluation of foreign currency debts hit margins,” the company clarified. Tata Motors skipped paying dividend for the year, a first in 13 years. JLR has outstanding debt of £2.5 billion (Rs 25,000 crore), out of which at least two-thirds is US dollar denominated. The two brands suffered a forex loss of £220 million (Rs 2,200 crore) during the quarter.
JLR was offset by unfavourable operational forex net of realised hedges, due to a weaker dollar and renminbi for the first half of FY15 and a weaker euro throughout the year, the company stated.
Consolidated net sales for the reporting quarter stood at Rs 67,297, a growth of 3 per cent, against Rs 65,616 crore reported in the same quarter last year hit by a flat growth in revenue from JLR. Ebitda margins declined to 13.7 per cent in the quarter from 16.5 per cent reported in the same quarter last year.
The two British luxury brands reported net profit decline of 33 per cent to £302 million (Rs 3,020 crore) for the reporting quarter against £449 million (Rs 4,490 crore). This was one of JLR’s biggest falls in net profit in recent years.
Ralf Speth, chief executive officer, Jaguar Land Rover, said, “We will now have smaller cars with reduced margins. In China, there is a gradual decline (in demand) in the top (segment) but not in the mid-segment like the (Mercedes) C Class, which is growing but SUV is growing as well.” Speth declined to give margin guidance for the current and upcoming quarters.
JLR volume increased 4 per cent to 129,205 units during the quarter, against 124,307 units in the corresponding quarter last year. Share of retails in China declined to 19 per cent from 24 per cent.
In India, incremental volumes from newly-launched Zest and Bolt helped Tata Motors post a 16 per cent increase in volumes of passenger vehicles to 43,228 units in the reporting quarter against 36,996 units sold in corresponding quarter last year.
