Tata Motors-owned Jaguar Land Rover (JLR) on Thursday posted a pre-tax loss of 273 million pounds in its latest financial results and blamed a fall in sales of its luxury vehicles on challenging market conditions in China.
The UK's largest car manufacturer reported revenues of 6.2 billion pounds, down from 6.3 billion pounds a year ago, as part of the results for the October-December 2018 three-month period. The sales of its cars for the quarter stood at 144,602 vehicles, down from 154,447 a year ago.
"Jaguar Land Rover reported strong third quarter sales in the UK and North America, but our overall performance continued to be impacted by challenging market conditions in China," said JLR CEO Ralf Speth.
"This is a difficult time for the industry, but we remain focused on ensuring sustainable and profitable growth, and making targeted investments, that will secure our business in the future," he said.
The JLR CEO also unveiled plans for a non-cash exceptional charge to reduce the book value of the company's capitalised investments.
The UK-based car giant, acquired by Tata Motors in 2008, noted that the automotive industry was facing significant market, technological, and regulatory headwinds.
Given the muted demand scenario and the associated impact on the financials, JLR said it had concluded that the carrying value of capitalised investments should be adjusted down, resulting in a non-cash 3.1 billion pounds pre-tax exceptional charge and an overall pre-tax loss of 3.4 billion pounds for the quarter.
Speth noted: "This accounting adjustment is consistent with the other decisive actions that we must take as part of our Charge' and Accelerate' transformation programmes to create an efficient and resilient business, enabling Jaguar Land Rover to counter the multiple economic, geopolitical, technological and regulatory headwinds presently impacting the automotive industry.
"We are taking the right decisions to prepare the company for the new technologies and strong product offensive that will enable a long-term future of sustainable profitable growth."
While he made no reference to the automotive industry's concerns over a hard Brexit this time, Speth has previously made several interventions urging the UK government to strike an amicable withdrawal agreement with the European Union (EU) to ensure the supply chains are not adversely impacted.
JLR reported that its sales in Europe were up slightly, despite an 8 per cent drop in the overall market.
During the last quarter, it claimed that sales increased for the new Jaguar E-PACE and the electric Jaguar I-PACE as well as the refreshed Range Rover and Range Rover Sport, while the slowdown in China accounted largely for lower sales of other models.
"The financial results mainly reflect lower sales in China and higher depreciation and amortisation of investment expenses. The third quarter was also impacted by one-off factors including costs related to planned reduction in inventories, warranty reserve adjustments and currency and commodity revaluation," JLR said in a statement.
The company said it had realised 500 million pounds of cash improvements through the Charge programme in the third quarter.
As part of its plans to achieve 2.5 billion pounds of investment, working capital and profit improvements by March 2020, the company announced in January that it would reduce its global workforce by 4,500 people. This is expected to result in a one-time exceptional redundancy cost of around 200 million pounds.
It warned that its earnings before interest and taxes (EBIT) margin for the full financial year ending March 2019 is expected to be marginally negative, which will result in a pre-tax loss for the year before exceptional items.
JLR said it continues to invest in exciting products, electrification, and technology, with the all-new Range Rover Evoque launched recently and the new Land Rover Defender to be revealed later this year.
In addition, the company said it has announced further investment in electrification with Electric Drive Units to be produced at its UK Engine Manufacturing Centre, and a new Battery Assembly Centre to be established in the UK.
Jaguar Land Rover also opened its new manufacturing facility in Slovakia at the end of October last year, where production of the Land Rover Discovery has now begun.
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